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

FORM 10-K

(Mark One)

x[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ~~For the fiscal year ended: March 31, 2010~~

oFor ~~TRANSITION~~the ~~REPORT~~fiscal ~~PURSUANT~~year TOended: ~~SECTION~~March 1331, ~~OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~2011

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________to _____________

Commission File No. 001-34440

CHINA NUTRIFRUIT GROUP ~~LIMITED~~ ~~---------------------------------------------------------------------------------------------------------------------------------------~~ LIMITED(Exact name of registrant as specified in its charter)

Nevada	87-0395695	~~87-0395695~~
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
(State or other jurisdiction of incorporation or	(I.R.S. Employer Identification No.)
organization)

5th Floor, Chuangye Building, Chuangye Plaza Industrial Zone 3, Daqing Hi-Tech Industrial Development Zone Daqing, Heilongjiang ~~China~~ 163316 People’s Republic of China(Address of principal executive offices)

(86) 459-8972870(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the ~~Exchange~~ Act:

Title of each class	Name of each exchange on which registered
Common Stock, par value $0.001 per share	NYSE Amex LLC

Securities registered pursuant to Section 12(g) of the Exchange Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o [ ] No [X] x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o [ ] No x [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x [X] No o[ ]

Indicate by check mark ifwhether ~~disclosure of~~the ~~delinquent~~registrant ~~filers~~has ~~pursuant~~submitted electronically toand ~~Item~~posted ~~405~~on ofits ~~Regulation~~corporate ~~S-K~~Website, isif ~~not~~any, ~~contained~~every Interactive ~~herein,~~Data ~~and~~File ~~will~~required ~~not~~to be ~~contained,~~submitted and posted pursuant to ~~the~~Rule ~~best~~405 of ~~registrant’s~~Regulation S-T ~~knowledge,~~(§ ~~in definitive~~232.405 ~~proxy~~of orthis ~~information~~chapter) ~~statements~~during ~~incorporated~~the bypreceding ~~reference~~12 inmonths ~~Part~~(or ~~III~~for such ofshorter ~~this~~period ~~Form~~that ~~10-K~~the orregistrant ~~any~~was ~~amendment~~required to ~~this~~submit ~~Form~~and ~~10-K.~~post such files).

~~Indicate~~Yes by[ ] No ~~check~~[ ] mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

~~Large~~Indicate ~~Accelerated~~by ~~Filer~~check omark ~~Accelerated~~if ~~Filer~~disclosure oof ~~Non~~delinquent filers pursuant to Item 405 of Regulation S-~~Accelerated~~K ~~Filer~~is ~~(Do~~not contained herein, and will not ~~check~~be contained, ifto athe ~~smaller~~best ~~reporting~~of ~~company)~~registrant’s oknowledge, ~~Smaller~~in ~~reporting~~definitive ~~company~~proxy xor information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer [ ]	Accelerated Filer [ ]
Non-Accelerated Filer [ ]	Smaller reporting company [X]
(Do not check if a smaller reporting company)

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o [ ] No x [X]

As of September 30, ~~2009~~2010 (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the shares of the registrant’s common stock held by non-affiliates (based upon the closing price of such shares as reported on the NYSE AMEX) was approximately $~~20.3~~23 million. Shares of the registrant’s common stock held by each executive officer and director and each ~~by each~~ person who owns 10% or more of the outstanding common stock have been excluded from the calculation in that such persons may be deemed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

There were a total of 36,~~718~~915,~~772~~762 shares of the registrant’s common stock outstanding as of June 2520, ~~2010~~2011.

DOCUMENTS INCORPORATED BY REFERENCE

None.

CHINA NUTRIFRUIT GROUP LIMITED
Annual Report on FORM 10-K
For the Fiscal Year Ended March 31, 2010
TABLE OF CONTENTS
PART I
Item 1.	Business.	1
Item 1A.	Risk Factors.	13
Item 1B.	Unresolved Staff Comments.	13
Item 2.	Properties.	25
Item 3.	Legal Proceedings	25
Item 4.	(Removed and Reserved)	25
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
	Securities	25
Item 6.	Selected Financial Data	26
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	36
Item 8.	Financial Statements and Supplementary Data	36
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	36
Item 9A.	Controls and Procedures.	36
Item 9B.	Other Information.	37
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	37
Item 11.	Executive Compensation.	41
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	42
Item 13.	Certain Relationships and Related Transactions, and Director Independence	42
Item 14.	Principal Accounting Fees and Services	44
PART IV
Item 15.	Exhibits, Financial Statement Schedules.	45

CHINA NUTRIFRUIT GROUP LIMITED

Annual Report on FORM 10-K

For the Fiscal Year Ended March 31, 2011

TABLE OF CONTENTS

PART I

Item 1.	Business.	1
Item 1A.	Risk Factors.	12
Item 1B.	Unresolved Staff Comments.	12
Item 2.	Properties.	25
Item 3.	Legal Proceedings	25
Item 4.	(Removed and Reserved)	25

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	25
Item 6.	Selected Financial Data	26
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	33
Item 8.	Financial Statements and Supplementary Data	34
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	34
Item 9A.	Controls and Procedures.	34
Item 9B.	Other Information.	35

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	35
Item 11.	Executive Compensation.	38
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	40
Item 13.	Certain Relationships and Related Transactions, and Director Independence	40
Item 14.	Principal Accounting Fees and Services	42

PART IV

Item 15.	Exhibits, Financial Statement Schedules.	43

Special Note Regarding Forward Looking Statements

~~This~~In ~~Annual~~addition ~~Report~~to onhistorical ~~Form~~information, ~~10-K~~this ~~contains~~report contains forward-looking statements within the meaning of Section 27A of the Securities Act ~~of 1933, as amended,~~ and Section 21E of the ~~Securities~~ Exchange Act ~~of 1934, as amended~~. ~~Such~~We ~~statements~~use ~~include,~~words ~~among others,~~such those concerning our expected financial performance; strategic and operational plans; management forecast; economies of scales; litigation; potential and contingent liabilities; management’s plans; taxes; as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and that a number of risks and uncertainties could cause actual results of the Company to differ materially from those anticipated, expressed or implied in the forward-looking statements. The words “believe,” “expect,” “anticipate,” “project,” “~~targets~~target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. ~~All~~Such statements ~~other~~include, ~~than~~among ~~statements~~others, ofthose concerning ~~historical~~market ~~fact~~and ~~are~~industry ~~statements~~segment ~~that~~growth ~~could~~and bedemand ~~deemed~~and ~~forward-looking~~acceptance ~~statements. Risks~~of new and ~~uncertainties~~existing ~~that~~products; ~~could~~any ~~cause~~projections ~~actual~~of ~~results~~sales, toearnings, ~~differ~~revenue, ~~materially~~margins ~~from~~or other ~~those~~financial ~~anticipated~~items; ~~include~~any ~~risks~~statements ~~related to our views on the growth~~ of the ~~fruit industry~~plans, ~~particularly~~strategies ~~the~~and ~~specialty~~objectives ~~fruit industry; general economic conditions, our~~of ~~ability~~management tofor ~~overcome~~future ~~competition in the Chinese fruit processing market~~operations; ~~the~~any ~~impact~~statements ~~that~~regarding afuture ~~downturn~~economic conditions or ~~negative~~performance; ~~changes~~uncertainties inrelated ~~the~~to ~~industries~~conducting ~~in which our products are sold could have on our~~ business ~~and profitability; any decrease~~ in ~~the availability,~~ ~~or increase in the cost~~China, ofas ~~raw~~well ~~materials~~as ~~and~~all ~~energy;~~assumptions, ~~our~~expectations, ~~ability~~predictions, tointentions ~~simultaneously~~or beliefs ~~fund~~about ~~the~~future ~~implementation~~events. ofYou ~~our~~are ~~business~~cautioned ~~plan~~that ~~and~~any ~~invest~~such inforward-looking statements ~~new~~are ~~projects;~~not ~~economic,~~guarantees ~~political,~~of ~~regulatory,~~future ~~legal~~performance and ~~foreign~~involve ~~exchange~~ risks ~~associated with~~and ~~international~~uncertainties, ~~expansion;~~as ~~loss~~well ofas ~~key~~assumptions, ~~members~~that, ofif ~~our~~they ~~senior~~were ~~management; and unexpected changes~~ to ~~China’s~~ever ~~political~~materialize or prove ~~economic~~incorrect, ~~situation and legal environment. Additional disclosures regarding factors that~~ could cause our results ~~and performance~~ to differ materially from ~~results~~those expressed or ~~performance~~implied ~~anticipated~~ by ~~this~~such ~~Report~~forward-looking ~~are~~statements. ~~discussed~~Such inrisks ~~Item~~and uncertainties, ~~1A.~~among ~~“Risk~~others, ~~Factors.”~~ include:

~~Readers are urged to carefully review and consider the various disclosures made by us in this Report and~~ our ~~other~~ability ~~filings with the SEC. These reports attempt~~ to ~~advise~~attract ~~interested~~new ~~parties~~customers; of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this Report speak only as of the date hereof and we disclaim any obligation to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.
market demand for our existing and new products;
our ability to employ and retain qualified employees;
our ability to stay abreast of market trends and technological advances;
competition and competitive factors in the markets in which we compete;
general economic and business conditions in China and in the local economies in which we regularly conduct business, which can affect demand for our products;
changes in laws, rules and regulations governing the business community in China in general and the fruit processing industry in particular; and
the risks identified in Item 1A. “Risk Factors” included herein.

All statements other than statements of historical fact are statements that could be deemed forward-looking statements. We assume no obligation and do not intend to update these forward-looking statements, except as required by law.

Use of Terms

Except as otherwise indicated by the context, all references in this report to: (i) “we,” “the Company,” “us,” “our company,” “our,” and “China Nutrifruit” are to the combined businesses of China Nutrifruit Group Limited and its consolidated subsidiaries; (ii) “Fezdale” are to Fezdale Investments Limited, a British Virgin Islands corporation, our direct, wholly-owned subsidiary; (iii) “Solar Sun” are to Solar Sun Holdings Limited, a Hong Kong corporation, our indirect, wholly-owned subsidiary; (iv) “Jumbo Gloss” are to Jumbo Gloss Limited, a British Virgin Islands corporation, our direct wholly-owned subsidiary; (v) “Longheda” are to Daqing Longheda Food Company Limited, a Chinese corporation, our indirect, wholly-owned subsidiary; (viiv) “Securities Act” are to the Securities Act of 1933, as amended; (~~vii~~v) “Exchange Act” are to the Securities Exchange Act of 1934, as amended; (~~viii~~vi) “RMB” are to Renminbi, the legal currency of China; (ixvii) “U.S. dollar,” “$” and “US$” are to the legal currency of the United States; and (xviii) “China,” “Chinese” and “PRC” are to the People’s Republic of China~~; and (xi) “BVI” are to the British Virgin Islands~~.

PART I

ITEM 1. BUSINESS.

~~BUSINESS.~~ Business Overview

We are a leading producer of premium specialty fruit based ~~Business~~products ~~Overview~~in China. We are primarily engaged, through our indirect Chinese subsidiaries, in developing, processing, marketing and distributing a variety of food products processed primarily from premium specialty fruits grown in Northeast China, mainly including golden berry, crab apple, blueberry, raspberry, blackcurrant and seabuckthorn. Our primary product offering includes concentrate juice, nectar, glazed fruits, concentrate pulp as well as fresh fruits. We have been producing our premium specialty fruit based products since 2004.

We are a holding company and conduct all our operations through our indirect, wholly-owned subsidiary, Longheda, which is a leading producer of premium specialty fruit-based products in China. We develop, process, market and distribute a variety of food products processed primarily from premium specialty fruits grown in Northeast China, including golden berries, crab apple, blueberries and raspberries. Our products include fruit concentrate, nectar, and glazed fruits as well as fresh fruits. 1

We sell our products through ana ~~extensive~~ nationwide sales and distribution network covering 20approximately 18 provinces ~~and 47 cities~~ in China. As of March 31, ~~2010~~2011, this network was comprised of 75approximately 44 distributors. Our processed fruit products are mainly sold to food producers for further processing into fruit juice and other fruit related foods, and our fresh fruits are mainly sold to fruit supermarkets.

Quality and safety are of primary importance to us. We have 1established quality control and food safety management systems for all stages of our business, including raw material sourcing, producing, packaging, storage and transportation of our products. We currently operate from our manufacturing facilities located in Daqing and Mudanjiang, Heilongjiang province, China, where an abundant supply of a variety of premium specialty fruits is available. We have five fruit processing lines with an aggregate capacity of 17,160 tons.

~~Our~~Corporate ~~manufacturing~~History ~~facility is located in Daqing City~~ and Mu Dan Jiang City, Heilongjiang Province, China where abundant supply of various premium specialty fruits is readily available. We have five fruit processing lines with an aggregate capacity of 17,160 tons. Structure

We are a Nevada holding company and conduct substantially all ~~Our~~of ~~sales~~our ~~revenue~~business ~~grew~~in byChina 29through our operating subsidiaries, Longheda and Daqing Senyang Fruit and Vegetable Food Technology Company Limited (“Daqing Senyang”).2% We inindirectly own all of the ~~fiscal~~equity ~~year~~in ~~ended~~Longheda ~~March~~as ~~31,~~a ~~2010~~result toof ~~$72.9~~our ~~million~~100% ownership ~~from~~of ~~$56~~Fezdale and Fezdale’s intermediate ownership of Solar Sun Holdings Limited.4 ~~million~~Both inFezdale ~~the~~and ~~fiscal~~Solar ~~year~~Sun ~~ended~~Holdings ~~March~~Limited ~~31,~~are ~~2009~~intermediate holding companies and have no other significant assets and operations. ~~Net~~Longheda ~~income~~was incorporated ~~increase~~in byChina ~~326~~in 2004.1% Subsequently, in ~~the~~a ~~fiscal~~series ~~year~~of ~~ended~~transactions ~~March~~between 2007 31and 2008, ~~2010~~Solar toSun ~~$19.3~~Holdings ~~million from~~Limited $4acquired 100% ownership of Longheda.1 Jumbo ~~million~~Gloss inLimited ~~the~~is ~~fiscal~~a ~~year~~private ~~ended~~limited ~~March~~liability 31company that was established on October 13, 2009. ~~Our~~under ~~gross~~the ~~margin~~laws ~~for~~of the ~~fiscal~~British ~~year~~Virgin ~~ended~~Islands. ~~March~~Jumbo 31Gloss Limited has no business operations other than its 100% ownership of Daqing Senyang which was incorporated in China on June 29, 2010 ~~was~~for 45the purpose of operating our new fruit and vegetable powder production.6% We expect the new fruit and vegetable powder production line to begin operations in July 2011, and its annual production capacity is expected to be approximately 10,000 tons.

The following chart reflects our organizational structure as of ~~Corporate~~the ~~History~~date ~~and~~of ~~Structure~~this report.

We ~~are~~were aoriginally ~~Nevada~~incorporated ~~holding~~in ~~company~~the ~~and~~State ~~conduct substantially all~~ of ~~our~~Utah ~~business~~on ~~in China through our operating subsidiary~~April 22, ~~Longheda.~~1983 Weunder ~~indirectly own all of~~ the ~~equity~~name inPortofino ~~Longheda~~Investment, asInc. aIn ~~result~~January of1984, we changed our ~~100%~~name ~~ownership~~to ofFashion ~~Fezdale~~Tech ~~and~~International, ~~Fezdale’s intermediate ownership of Solar Sun~~Inc. ~~Both~~In ~~Fezdale~~April ~~and~~1999, ~~Solar~~our ~~Sun~~stockholders approved ~~are~~a ~~intermediate~~merger ~~holding~~with ~~companies~~Fashion ~~and~~Tech ~~have~~International, ~~no other significant assets and operations~~Inc. ~~Longheda was incorporated in China in 2004. Subsequently~~, in a ~~series~~Nevada ~~of transactions between~~corporation, ~~2007~~to ~~and~~change ~~2008,~~the ~~Solar~~domicile ~~Sun~~of ~~acquired~~the ~~100%~~Company ~~ownership~~from ofUtah ~~Longheda~~to Nevada. ~~Jumbo~~We ~~Gloss~~were is a developmental-stage ~~private limited liability~~ company ~~that~~from ~~was~~inception ~~established~~to onJanuary ~~October~~1, 131984, ~~2009~~when ~~under~~we became the ~~laws~~holding company of ~~the~~certain ~~British~~operating ~~Virgin~~or ~~Islands~~development-stage subsidiaries. AsFrom ofApril 1, ~~the~~1985 ~~date~~to ofAugust ~~this~~14, ~~Report~~2008, ~~Jumbo~~we ~~Gloss~~re-entered ~~has~~development-stage ~~no business operations~~status.

~~The following chart reflects our organizational structure as of the date of this report.~~ 2

WeOn ~~were~~August ~~originally~~14, ~~incorporated~~2008, we acquired Fezdale in ~~the~~a ~~State~~reverse acquisition oftransaction, ~~Utah~~which oninvolved ~~April~~a ~~22,~~financing ~~1983~~transaction ~~under~~and ~~the~~a ~~name~~related share ~~Portofino~~exchange ~~Investment,~~transaction ~~Inc~~whereby all of our current business operations were acquired by Fezdale. In ~~January~~the ~~1984~~share exchange transaction, we100% ~~changed~~of ~~our~~the ~~name~~issued toand outstanding ~~Fashion~~shares ~~Tech~~of ~~International,~~Fezdale ~~Inc.~~were Inexchanged ~~April~~for ~~1999~~30,166,878 shares of our common stock, thereby making the existing stockholders ~~approved~~of aFezdale ~~merger~~owners ~~with~~of ~~Fashion~~83.5% of ~~Tech~~our ~~International,~~stock ~~Inc~~and also making Fezdale our wholly owned subsidiary. In the related financing transaction, we completed a ~~Nevada~~private ~~corporation,~~placement toin ~~change~~which ~~the~~we ~~domicile~~sold 3,085,840 newly issued shares of ~~the~~our ~~Company~~common ~~from~~stock ~~Utah~~for toaggregate ~~Nevada.~~proceeds of $8.6 million.

2Our Industry

WeAccording ~~were~~to a ~~developmental-stage~~report ~~company~~on ~~from~~China’s ~~inception~~fruit toprocessing ~~January~~industry 1issued by Beijing Business & Intelligence Consulting Co. Ltd., ~~1984~~an independent market research firm, ~~when~~which weis ~~became~~hereinafter referred to as the ~~holding~~“BBIC Report”, ~~company~~China’s fruit processing industry has grown significantly in the past several years. The total output of ~~certain~~processed ~~operating~~fruit orproducts in China grew from ~~development-stage~~$22.2 ~~subsidiaries~~billion in 2006 to $66.2 ~~From~~billion ~~April~~in 12009, ~~1985~~representing a Compound Annual Growth Rate (“CAGR”) of approximately 31.4%. The sales value of processed fruit products in China grew from $21.0 billion in 2006 to ~~August~~$65.2 ~~14,~~billion ~~2008,~~in we2010, ~~re-entered~~representing ~~development-stage~~a ~~status~~CAGR of approximately 32.7%. The following table sets forth the output and CAGR of four categories of processed fruit products.

OnOutput ~~August~~Value ~~14,~~Breakdown ~~2008,~~of weFruit ~~acquired~~Processing ~~Fezdale~~Industry in ~~a reverse~~ ~~acquisition~~China(in ~~transaction,~~Billions ~~which involved a financing transaction and a related share exchange transaction whereby all~~ of ~~our current business operations were acquired by Fezdale~~U. In the share exchange transaction, 100% of the issued and outstanding shares of Fezdale were exchanged for 30,166,878 shares of our common stock, thereby making the existing stockholders of Fezdale owners of 83S.~~5% of our stock and also making Fezdale our wholly owned subsidiary. In the related financing transaction~~$, weexcept ~~completed a private placement in which we sold 3,085,840 newly issued shares of our common stock~~ for ~~$8.58~~CAGR ~~million.~~data)

Our Industry

		2006		2007		2008		2009		2010	CAGR
Canned Fruit	$	3.7	$	4.3	$	6.3	$	7.8	$	9.7	27.25%
Deep Processed Fruit*		13.1		16.1		23.6		29.1		41.8	33.65%
Fruit Juice and Beverage		4.4		5.7		7.6		10.2		11.2	26.31%
Glazed Fruits		1.0		1.4		2.0		2.6		3.5	36.78%

~~According~~* toDeep aprocessed ~~report~~fruits oninclude ~~China’s fruit processing industry issued by Beijing Business & Intelligence Consulting Co. Ltd. (“BBIC~~nectar,” ~~and such~~dried ~~report is hereinafter referred to as the “BBIC Report”), an independent market research firm, China’s~~ fruit ~~processing~~and ~~industry has grown significantly in the past several years. The total output of processed~~ fruit ~~products in China~~ ~~grew from $16.8 billion in 2005 to $49.7 billion in 2009~~wine, ~~representing a compound annual growth rate (“CAGR”) of 31~~etc.~~15%~~ . The sales value of processed fruit products in China grew from $17.0 billion in 2005 to $47.0 billion in 2009, representing a CAGR of 28.95% . The following table sets forth the output and CAGR of four categories of processed fruit products.

~~Output~~Source: ~~Value~~2006-2011 ~~Breakdown~~Chinese of Fruit ~~Processing~~processing ~~Industry~~industry inInvestment ~~China (in~~Decision ~~Billions~~Consultation ofand ~~U.S.$~~Industrial Competitiveness Research Report, ~~except~~Beijing Business ~~for~~& ~~CAGR~~Intelligence ~~data)~~Consulting Co. Ltd.

	2005	2006	2007	2008	2009	CAGR
Canned Fruit	3.0	3.7	4.3	6.3	7.8	26.98%
Deep Processed Fruit*	9.7	13.1	16.1	23.6	29.1	31.61%
Fruit Juice and Beverage	3.3	4.4	5.7	7.6	10.2	32.59%
Glazed Fruits	0.7	1.0	1.4	2.0	2.6	38.83%
* Deep processed fruits include nectar, dried fruit and fruit wine, etc.

The table below sets forth the sales and CAGR of the fruit processing industry in China from 2006 to 2010

~~Source:~~Sales ~~2006-2009~~of Fruit ~~processing~~Processing ~~industry~~Industry ~~research~~in ~~report~~China, ~~Beijing~~2006-2010(in ~~Business~~Billions &of ~~Intelligence~~U.S.$, ~~Consulting~~except ~~Co.~~for ~~Ltd.~~CAGR data)

BBIC projected that the total sales value of processed fruit products in China will reach $68.7 billion in 2012 which equates to growth of 46.2% during the four-year period from 2009 to 2012. The table below sets forth the sales of fruit processing industry in China from 2005 to 2009 and estimated sales of fruit processing industry in China from 2010 to 2012.

		2006			2007			2008			2009			2010			CAGR
Sales	$	21.0		$	26.1		$	37.9		$	47.0		$	65.2		$	32.74%

~~Sales~~Source: ~~and~~2006-2011 ~~Estimated~~Chinese ~~Sales of~~ Fruit ~~Processing~~processing ~~Industry~~industry inInvestment ~~China~~Decision Consultation and Industrial Competitiveness Research Report, ~~2005-2012~~Beijing Business & Intelligence Consulting Co. Ltd.

(in Billions of U.S. $)	2005	2006	2007	2008	2009	2010E	2011E	2012E
Sales	16.0	21.0	26.1	37.9	47.0	53.2	61.0	68.7
Source: 2006-2009 Fruit processing industry research report, Beijing Business & Intelligence Consulting Co. Ltd.

We anticipate that growth in China’s fruit processing industry, especially, premium specialty fruit-based products, will mainly be driven by the following factors:

WeThe ~~anticipate~~low ~~that~~per ~~growth~~capita inrate ~~China’s~~of fruit ~~processing~~consumption ~~industry,~~in ~~especially~~China. With approximately a quarter of the world’s population, China represents a key growth driver for the ~~premium~~global ~~specialty~~fruit food market. Per capita fruit~~-based~~ ~~products,~~juice ~~will~~consumption ~~mainly~~in beChina ~~driven~~is bycurrently well below that of major developed ~~the~~countries ~~following~~according ~~factors:~~to Euromonitor.

~~The~~Growing ~~low~~affluence ~~per~~fosters ~~capita~~increased ~~rate~~consumption of processed fruit ~~consumption~~products. in China’s economy has grown significantly in recent years. ~~With~~According ~~approximately~~to athe ~~quarter~~National Bureau of Statistics of China (the “NBS”), ~~world~~China’s ~~population,~~gross ~~China represents~~domestic aproduct ~~key~~(“GDP”) ~~growth~~has ~~driver~~increased ~~for~~from ~~the~~RMB12.0 trillion ~~global~~($1.6 ~~fruit~~trillion) ~~food~~in ~~market~~2002 to RMB39.8 ~~Even~~trillion ~~though~~($5.8 trillion) in 2010. ~~China~~According isto the ~~largest~~Economic ~~producer~~Blue ofBook ~~apples,~~issued ~~third~~by ~~largest~~the ~~producer~~Academy of ~~oranges~~Social Science of China, China’s GDP is expected to grow 9.9% in 2010 and the growth rate will ~~one~~reach of10% ~~the~~in ~~top~~2011. ~~producers~~China’s ofeconomic ~~pears~~growth ~~and~~has ~~peaches~~resulted in a significant increase in household disposable income in China. According to the ~~world~~NBS, between 2002 and 2009, urban household disposable income per capita ~~fruit~~increased from ~~juice~~RMB7,703 ~~consumption~~($1,055) into ~~China~~RMB17,175 is($2,512), ~~currently~~or ~~well~~a ~~below~~CAGR ~~that~~ of ~~major~~approximately ~~developed~~12.1%, and ~~countries~~rural ~~according~~per capita cash income increased from RMB2,476 ($339) to ~~Euromonitor~~RMB5,153 ($754), or a CAGR of approximately 11.0%. We believe that as GDP and disposable income increase, processed fruit products will become more affordable and consumers will generally spend an increasing portion of their disposable income on healthy nutritional products, such as our premium specialty fruit-based products.

Growing affluence fosters increased consummation of processed fruit products. China’s economy has grown significantly in recent years. According to the National Bureau of Statistics of China (the “NBS”), China’s gross domestic product (“GDP”) has increased from RMB12.0 trillion ($1.6 trillion) in 2002 to RMB33.5 trillion ($4.9 trillion) in 2007. According to a report issued by the World Bank in March 2010, it is estimated that China’s GDP will grow at an annual growth rate of 9.5% in 2010. China’s economic growth has resulted in a significant increase in household disposable income in China. According to the NBS, between 2002 and 2009, urban household disposable income per capita increased from RMB7,703 ($1,055) to RMB17,175 ($2,512), or a CAGR of 12.1%, and rural per capita cash income increased from RMB2,476 ($339) to RMB5,153 ($754), or a CAGR of 11.0% . We believe that as GDP and disposable income increase, processed fruit products will become more affordable and consumers will generally spend an increasing portion of their disposable income on healthy nutritional products, such as our premium specialty fruit-based products. 3

3Greater health awareness is expected to affect consumption of fruit and processed fruit products. We believe that concern for improved living standards and growing household disposable income have led to greater health awareness among the population. As people become more affluent, we believe that their spending on quality health food and nutritional products, like our products, will increase. The juice beverage market in China continued growing steadily in 2010 as the growth in urban population and disposable income continued to drive demand for natural and healthy beverage products. According to the BBIC Report, the world fruit juice consumption is expected to increase from 33 billion liters in 1997 to 74 billion liters in 2020.

~~Greater~~Government ~~health~~aims ~~awareness is expected~~ to ~~affect~~promote ~~consumption~~the growth of ~~fruit~~China’s ~~and processed~~ fruit processing ~~products~~industry. WeAccording ~~believe~~to ~~that~~the ~~improved~~BBIC ~~living~~Report, ~~standards~~approximately ~~and~~20-30% of ~~growing~~fruit ~~household~~grown ~~disposable~~in ~~income~~China ~~have~~is ~~led~~lost, toless ~~greater~~than ~~health~~50% ~~awareness~~of ~~among~~ the ~~population.~~ Astotal ~~people~~harvested ~~become~~fruit ~~more~~can be ~~affluent~~commercialized, weand ~~believe~~less ~~that~~than ~~their~~10% ~~spending~~of onthe ~~quality~~total ~~health~~commercialized ~~food~~fruit ~~and nutritional products, like our products, will increase~~is processed. ~~The~~We ~~juice~~believe ~~beverage~~that ~~market~~the inChinese ~~China~~government ~~continued~~will ~~growing~~promote ~~steadily in 2009 as~~ the ~~growth in~~development ~~urban~~of ~~population~~the ~~and~~fruit ~~disposable income continued to drive demand for natural~~ and ~~healthy~~fruit ~~beverage~~processing ~~products.~~industry, ~~According~~as toevidenced ~~the~~by ~~BBIC Report,~~ the ~~world~~“Development Program ~~fruit~~of ~~juice~~Food ~~consumption~~Processing isIndustry ~~expected~~2006-2010” toreport ~~increase~~issued ~~from~~by 33the ~~billion~~PRC ~~liters~~Ministry of inAgriculture ~~1997 to 74 billion liter in 2020~~(“MOA”).

~~Government~~Our aims to promote the growth of China’s fruit processing industry. According to the BBIC Report, approximately 20-30% of fruit grown in China is lost, less than 50% of the total harvested fruit can be commercialized, and less than 10% of the total commercialized fruit is processed. We believe that the Chinese government will promote the development of the fruit and fruit processing industry, as evidenced by the “Development Program of Food Processing Industry 2006-2010” report issued by the PRC Ministry of Agriculture (“MOA”). The MOA aims to increase the fruit processing ratio to 10%-15% and the fruit commercialization ratio to above 60%, and to reduce the lost fruit ratio to 10%-15% by 2010. We believe the government’s five year plan will further facilitate the growth of the fruit processing industry in China. Products

Our ~~Products~~primary product offerings include concentrate juice, nectar, glazed fruits, concentrate pulp as well as fresh fruits. We are also in the process of developing several new products.

~~Our~~The ~~primary~~following ~~product~~charts ~~offering~~set ~~includes~~forth ~~fruit~~our ~~concentrate,~~product ~~nectar,~~offerings categorized ~~glazed~~by ~~fruits and~~both ~~beverages~~product asand ~~well~~source asfruit ~~fresh~~type ~~fruits.~~in Weterms ~~are~~of ~~also~~net insales for the fiscal ~~process~~years of2011 ~~developing~~and ~~several~~2010: ~~new products.~~

~~The~~Product ~~following~~Mix ~~charts~~– ~~set~~By ~~forth~~Product ~~our products categorized by both products and source fruits type in terms of revenue for the fiscal years 2010 and 2009:~~

~~Product Mix – By Product~~ 4

4Product Mix – By Fruit Type

~~Product~~Concentrate ~~Mix – By Fruit Type~~ Juice

Concentrate juice is our primary product line, accounting for 5approximately 48.0% and 47.6% of our total net sales in fiscal years 2011 and 2010, respectively. We currently produce primarily six types of concentrate juice: golden berry, crab apple, blueberry, raspberry, seabuckthorn and blackcurrant. We currently have two concentrate production lines which are allocated for the production of all of six types of concentrates with an annual total production capacity of 9,960 tons. We plan to continue to focus on concentrate juice, which is our fastest growing product line with the greatest market demand. To achieve this end, we are upgrading our concentrate juice production line in Mudanjiang which is expected to be completed in July 2011 and will increase its designed production capacity from 6,000 tons to approximately 9,000 tons. In addition, we also started the construction of a new multi-purpose concentrate paste production line in Zhaoyuan, Helongjiang province with a production capacity of approximately 9,600 tons which is expected to begin trail production in July 2011.

Among the six types of concentrate, the new seabuckthorn and ~~Fruit~~blackcurrant ~~Concentrate~~concentrate generally have the highest gross margin and crab apple concentrate consumes most of our production capacity even though it has a relatively lower gross margin. We produce more crab apple concentrate despite its relatively lower gross margin mainly because of the high demand for crab apple products and abundant supply of fresh crab apples, which has the largest supply in Northeast China as compared to the other source fruits.

~~Fruit~~Crab ~~concentrate~~apple is ~~our~~a ~~primary~~special ~~product~~species ~~line,~~of ~~accounting~~apple ~~for~~which ~~approximately~~has ~~47.5%~~much ~~and~~higher acidity ~~51.2%~~than ofthe ~~our~~normal ~~total~~species ~~revenue~~of inapple. ~~fiscal~~The ~~years~~apple ~~2010~~concentrate ~~and~~produced ~~2009,~~in China ~~respectively.~~commonly Wehas ~~currently~~an ~~produce~~acidity ~~four types~~ of ~~fruit~~1.2 ~~concentrate:~~to ~~golden~~1.8 ~~berry,~~while crab apple, ~~blueberry~~concentrate ~~and~~typically ~~raspberry.~~has Weacidity ~~currently~~over ~~have~~3.2. ~~two~~The ~~concentrate~~only ~~production~~way ~~lines~~to ~~which~~raise ~~are allocated for~~ the ~~production~~acidity of ~~all~~apple concentrate ofis ~~four~~to ~~types~~mix ofit ~~concentrates~~ with ananother ~~annual~~apple ~~total~~concentrate ~~production~~with ~~capacity~~higher ofacidity. Since ~~9,960~~apple ~~tons.~~concentrates Wethat ~~plan~~are toexported ~~continue~~from China to ~~focus~~overseas onmarkets ~~fruit concentrate~~are ~~which~~usually isrequired ~~our~~to ~~fastest~~have ~~growing~~an ~~product~~acidity ~~line~~of ~~with~~no ~~greatest~~less ~~market demand~~2.0, Tothe ~~achieve~~local ~~this~~producers ~~end,~~of weapple concentrate ~~plan~~need tolarge ~~add~~quantities ~~one~~of ~~more~~high ~~fruit~~acidity apple concentrate ~~juice~~to ~~production~~add ~~line~~to their ~~with~~low aacidity ~~production~~apple ~~capacity~~concentrate. ~~of 6~~Therefore,~~000~~ ~~tons~~crab apple concentrate is in high ~~fiscal~~demand ~~year~~in ~~2011~~the market.

Among the four types of concentrate, raspberry concentrate has the highest gross margin and crab apple concentrate occupies most of our production capacity even though it has a lower gross margin. We produce more crab apple concentrate despite its relatively lower gross margin mainly because of the high demand for crab apple products and abundant supply of fresh crab apples which has the largest supply in Northeast China as compared to the other three source fruits. Nectar

~~Crab~~Our ~~apple~~nectar isproduct aline ~~special~~accounted ~~species~~for ofapproximately ~~apple~~8.3% ~~which~~and 9.5% ~~has much higher acidity than normal species~~ of ~~apple.~~our ~~The~~total ~~apple~~net ~~concentrate~~sales ~~produced~~ in ~~China~~fiscal ~~commonly~~years ~~has~~2011 anand ~~acidity~~2010, ~~of 1~~respectively.2 toNectar is ~~1.8~~an ~~while~~unfermented ~~crab~~and ~~apple~~unconcentrated ~~concentrate~~pulp ~~typically~~product. ~~has~~To ~~acidity~~produce ~~over~~nectar, ~~3.2. The only~~fresh ~~way~~fruits toare ~~raise~~crushed ~~the~~and ~~acidity~~then ofinstantaneously ~~apple~~sterilized ~~concentrate~~under ishigh totemperature without ~~mix~~adding itany ~~with~~additives ~~another~~other ~~apple~~than ~~concentrate~~citric ~~with higher acidity~~acid. ~~Since~~It preserves the nutritional ~~apple~~value ~~concentrates~~and ~~that~~flavor ~~are~~of ~~exported~~the ~~from~~fresh ~~China~~fruit toand ~~overseas~~elongates ~~market~~shelf ~~are~~life. ~~usually~~Nectar is ~~required~~easy to ~~have~~store anand ~~acidity~~transport, ofthus noproviding ~~less 2.0,~~ the ~~local~~ producers of ~~apple~~fresh ~~concentrate~~fruit based ~~need~~products ~~large~~a ~~quantity~~much ofbetter ~~high~~alternative ~~acidity~~material ~~apple~~than ~~concentrate~~fresh ~~to add to its low acidity apple concentrate~~fruit. ~~Therefore, crab apple concentrate is in high demand in the market.~~

~~Nectar~~ 5

~~Our~~We ~~nectar~~currently ~~product~~produce ~~line accounted for approximately 9.5%~~ and ~~13.2%~~sell tonectar ~~our~~products ~~total~~using ~~revenue~~only ~~in fiscal years 2010 and 2009, respectively~~golden berries. ~~Nectar~~Our ~~is an unfermented and unconcentrated pulp product. To produce~~ nectar, ~~fresh~~products ~~fruits~~ are ~~crushed~~commonly ~~and~~re-processed ~~then instantaneously~~into ~~sterilized~~a ~~under~~wide ~~high~~variety ~~temperature~~of products, ~~without~~including ~~adding~~bottled ~~any~~fruit ~~additives~~juice, ~~other~~fruit ~~than~~ice ~~citric~~cream, ~~acid.~~nectar Itbeverages, biscuits, ~~preserves~~fruit ~~the~~jam ~~nutrition~~ and ~~flavor of the fresh~~ fruit ~~to the greatest extent and has a long shelf life~~yogurt. ~~Nectar~~Our isnectar ~~easy~~products towere ~~store~~certified ~~and transport,~~as ~~and~~green ~~thus~~food ~~providing~~by the ~~producers~~China ofGreen ~~fresh~~Food ~~fruit~~Development ~~based~~Center ~~products~~in aMay ~~much better alternative material than fresh fruit~~2006.

WeGlazed currently produce and sell nectar products using only golden berries. Our nectar products are commonly re-processed into a wide variety of products, including fruit concentrate, fruit ice cream, nectar beverage, biscuits, fruit jam and fruit yogurt. Our nectar products were certified as green food by China Green Food Development Center in May 2006. Fruits

Our glazed fruits product line accounted for approximately 25.6% and 22.8% of our total net sales in fiscal years 2011 and 2010, respectively. Glazed ~~Fruits~~fruit is preserved fruit with high sugar content and is a popular, traditional Chinese food. Glazed fruits have a long shelf life and are commonly consumed as snacks.

~~Our~~We currently produce and sell our glazed fruits ~~product~~products ~~line~~using golden ~~accounted~~berries, ~~for~~blueberries, ~~approximately~~seabuckthorn ~~22.8%~~ and 10blackcurrant.9% toWe launched our glazed ~~total~~blueberry ~~revenue~~products in ~~fiscal~~December ~~years~~2009 ~~2010~~and seabuckthorn and blackcurrant glazed fruit products in the second fiscal quarter of 2011 which were well received by our customers. In December 2009, ~~respectively.~~we ~~Glazed~~added ~~fruit~~a isnew ~~preserved~~glazed ~~fruit~~fruits production line with ~~high~~an ~~sugar~~annual ~~content~~production ~~and~~capacity isof ~~a popular~~1,200 ~~traditional~~tons ~~Chinese~~in ~~food~~our Daqing factory which increased our total annual production capacity of glazed fruit products to 2,400 tons. ~~Glazed~~We are in the process of upgrading our glazed fruits production line in our Daqing facility, which is expected to be completed in July 2011. We expect that after the upgrade, this glazed fruits ~~have~~production aline will ~~long~~be ~~shelf~~able ~~life~~to ~~and~~produce ~~are~~dried ~~commonly~~fruit ~~consumed~~products, asincluding ~~snacks~~dried golden berry and dried cherry tomato.

We currently produce and sell our glazed fruits products using golden berries and blueberries. We launched our glazed blueberry products in the second quarter of fiscal year 2010 which were well received by our customers. In December 2009, we added a new glazed fruits production line with an annual production capacity of 1,200 tons in our Daqing factory which increased our total annual production capacity of glazed fruit products to 2,400 tons. Our glazed fruits are mainly sold as a premium snack. Due to the special taste of ~~our~~ golden berries and blueberries, our products are also commonly used in a wide variety of foods such as baked foods. Our glazed golden berry fruit products were certified as green food by China Green Food Development Center in May 2006.

~~Fresh~~Concentrate ~~Fruit~~ Pulp

~~Sales~~Since ~~from fresh golden berries accounted for approximately 3.0% and 4.3% to our total revenue in~~ fiscal ~~years~~year ~~2010 and 2009~~2008, ~~respectively.~~due Weto ~~sell~~demand ~~fresh~~from ~~golden berries to~~ our distributors, ~~during~~we started ~~the~~to ~~picking~~distribute ~~season~~apple ~~which~~concentrate ispulp ~~typically~~products ~~mid~~and ~~July~~pear toconcentrate ~~mid~~pulp ~~November~~products. ~~every~~These ~~year.~~concentrate Weproducts ~~purchase~~are ~~fresh~~processed ~~golden~~by ~~berries~~third ~~from~~party ~~local~~vendors according ~~farmers~~to inour ~~Heilongjiang~~technical ~~province~~requirements and ~~sort them into different grades~~standards. ~~Only~~Sales ~~the~~from ~~top-grade~~concentrate pulp ~~golden~~contributed ~~berries~~approximately ~~that~~15.5% ~~are freshest~~ and ~~have the best color, shape and aroma are sold as fresh fruit~~12.9% ~~The rest~~ of ~~the~~our ~~fresh~~total ~~golden~~net ~~berries~~sales ~~are~~in ~~further~~fiscal years ~~processed~~2011 ~~into~~and ~~glazed fruits~~2010, ~~nectar or concentrate~~respectively.

6Fresh Fruit

~~Golden~~Sales ~~berries~~from ~~are~~fresh ~~especially~~golden ~~difficult~~berries toaccounted ~~preserve~~for approximately 2.6% and ~~usually~~3.0% ~~perish~~of ~~within~~our ~~one~~total ~~week~~net ~~after~~sales ~~harvest.~~in Tofiscal ~~achieve~~years ~~longer~~2011 ~~shelf~~and ~~life~~2010, respectively. weWe ~~keep~~sell fresh golden berries to our distributors during the picking season which is typically mid-July to mid-November every year. We purchase fresh ~~fruit~~golden inberries ~~ice~~from ~~houses~~local ~~before~~farmers wein ~~pack~~Heilongjiang province and sort them ~~with~~into ~~preservative~~different ~~packing~~grades. ~~With~~Only ~~these~~the ~~measures,~~top-grade ~~our products~~golden ~~can~~berries ~~generally~~that ~~remain~~are freshest ~~fresh~~and ~~after~~have ~~long~~the ~~distance~~best ~~transportation~~color, shape and ~~have~~aroma atare ~~least~~sold ~~one~~as ~~week~~fresh ~~longer~~fruit. The rest of ~~shelf~~the ~~life~~fresh ~~than~~golden ~~other~~berries ~~similar~~are ~~products~~further inprocessed ~~the~~into ~~market~~glazed fruits, nectar, or concentrate.

Golden berries are especially difficult to preserve and usually ~~Beverage~~perish within one week after harvest. To achieve longer shelf life, we keep the fresh fruit in ice houses before we pack them with preservative packing. With these measures, our products can generally remain fresh after long distance transportation and ~~others~~have at least one week longer of shelf life than other similar products in the market.

~~Beverage~~ Others

Beverages accounted for approximately 4.2% ~~and 8.2%~~ of our total ~~revenue~~net sales in fiscal years 2010 ~~and 2009, respectively~~. Beverage products usually require large capital for advertising and special sales and marketing efforts. We decided to cease beverage production in March 2010 and believe that we will be more profitable by focusing on our primary high-end premium products.

~~Others~~ New products under development

~~Since~~We ~~fiscal~~plan ~~year 2008, due~~ to ~~demand~~further ~~from~~diversify our ~~distributors,~~product wemix ~~started~~ to ~~distribute~~cater ~~apple~~to different ~~concentrate~~customer ~~pulp~~tastes ~~products~~ and ~~pear~~preferences. ~~concentrate~~We ~~pulp~~are ~~products.~~building ~~These~~a ~~concentrate~~new ~~products~~fruit ~~are~~and vegetable ~~processed~~power byproduction ~~third~~line, ~~party~~which ~~vendors~~is ~~according~~expected to ~~our~~become ~~technical requirements~~operational ~~and~~in ~~standards~~July 2011. ~~Sales~~We ~~from~~plan ~~other~~to ~~products~~produce ~~contributed~~tomato ~~approximately 12.9%~~ and ~~12.2%~~pumpkin ofpowder ~~our~~in ~~total~~the ~~revenue~~first inyear ~~fiscal~~of operation ~~years~~of ~~2010~~this ~~and~~production ~~2009, respectively~~line.

~~New products under development~~ 6

We plan to further diversify our product mix to cater to different customer tastes and preferences. We are currently developing glazed blackcurrant and seabuckthorn which are expected to be completed in fiscal year 2011. Production

Production ~~Production~~ Facility

Our primary production facility is located in Daqing, Heilongjiang province, ~~which~~and started production in 2004. The facility is located on aan approximately 24,217-square-meter tract ~~where we have land use rights until May 2055~~ and encompasses approximately 5,998 square meters of plant and warehouse space. We built another processing facility in ~~Mu Dan Jiang~~Mudanjiang, Helongjiang province in August 2008 where a 6,000 ~~tons~~ ton concentrate juice production line is located.

We currently own and operate five fruit processing lines with an aggregate processing capacity of 17,160 tons. The average utilization rate of our fruit processing lines was approximately 94.75% in fiscal year ~~2010~~2011. Since fresh fruits are difficult to preserve, particularly in the hot season, we generally keep no inventory of fresh fruits during production. We believe the current utilization rate of the fruit processing lines is close to the highest rate we can achieve while maintaining no inventory. Our production is mainly conducted from mid -July to mid -November each year because our primary source fruits are typically harvested during that time and must be processed right away.

To meet the expected growth of our business and to broaden our product ~~portfolio~~offerings, we are currently building a new fruit and vegetable powder manufacturing facility with an expected annual production capacity of approximately 10,000 tons in Daqing. The new facility is funded by proceeds from our preferred stock offering in 2009 and is expected to begin production in ~~approximately September 2010~~July 2011. The new facility will produce tomato, pumpkin and other popular fruit and vegetable powders that can be used as ingredients in a variety of products, including baby food, ready-to-drink mixes, instant soup mixes, snacks and other confectionery items. We plan to build another fruit and vegetable powder production line with an expected annual production capacity of approximately 10,000 tons in Daqing. We are also currently constructing a new factory facility in Zhaoyuan, Helongjiang which will house a new multi-purpose concentrate paste production line with an expected annual production capacity of approximately 9,600 tons. We plan to use this new multi-purpose concentrate paste production line to produce tomato paste initially. As part of our vertical integration strategy, we anticipate not only selling the concentrate paste products to customers, but also using the concentrate paste products as raw materials for our fruit and vegetable powder production line during the non-harvest season. We plan to leverage our established supplier relationship and distributor network to cross sell our new fruit and vegetable powder products and concentrate paste products.

We ~~are~~upgraded ~~also~~our ~~currently upgrading all fruit~~ concentrate juice production lines at our facilities in Daqing and MuMudanjiang ~~Dan~~in ~~Jiang,~~2010. ~~which~~The ~~have~~upgrades aincluded ~~total~~the ~~fruit~~purchase of ~~concentrate~~additional ~~annual~~equipment ~~production~~and ~~capacity~~implementation of ~~9,960~~more ~~tons~~advanced production techniques. ~~The~~We ~~upgrades~~are ~~include~~in ~~purchase~~the process of ~~additional~~upgrading our glazed fruit production line ~~equipments~~in our Daqing facility and ~~implementation~~the concentrate juice production line in our Mudanjiang facility, which is expected to be complete before the commencement of the ~~more~~new ~~advanced~~production season in July 2011. We expect that the upgraded glazed production ~~techniques~~line will be able to produce dried golden berry. In addition, the planned upgrade to the concentrate juice production line in Mudanjiang is expected to increase its annual production capacity from 6,000 tons to approximately 9,000 tons. We expect the upgrading will result in more efficient use of raw materials and have a favorable impact on gross margin. ~~We expect the upgrading to be completed before July 2010.~~

7Production Process

The processing of our concentrate juice, nectar and glazed ~~Production~~fruits ~~Process~~begins with the collection of fresh fruits from fruit farmers. Fresh fruits are first sorted and washed after arriving in our facility. Cleaned fresh fruits then go through the following processes to be made into different products.

~~The~~Nectar: ~~processing~~crush offresh ~~our fruit concentrate, nectar and glazed~~ fruits ~~begins~~into ~~with~~tiny ~~the~~granules ~~collection~~– ofbeat ~~fresh~~crushed fruits ~~from~~into raw ~~fruit~~nectar ~~farmers.~~– ~~Fresh~~homogenize ~~fruits~~raw ~~are~~nectar ~~first sorted and washed after arriving~~ in ~~our~~a ~~facility.~~blending ~~Clean~~tank ~~fresh~~– ~~fruits~~pasteurize ~~then~~and sterilize gothe ~~through~~raw ~~the following~~nectar ~~processes~~– tofill beaseptic ~~made~~bags ~~into~~with ~~different~~sterilized ~~products~~nectar.
~~Nectar~~Concentrate juice: crush and beat fresh fruits into ~~tiny~~mashes ~~granules~~ – ~~beat~~press ~~crushed~~fruit mashes ~~fruits~~until ~~into~~fruit ~~raw~~juice ~~nectar~~comes out – ~~homogenize~~mix raw ~~nectar~~fruit injuice awith ~~blending~~proper ~~tank~~amount –of compound ~~pasteurize~~enzyme to remove pectin and ~~sterilize~~starch – filter concentrate fruit juice in three-way concentrators to achieve the ~~raw~~target ~~nectar~~content of soluble solids, acidity and other quality standards as well as no additives – fill ~~aseptic~~the aseptic bags with ~~sterilized nectar~~concentrates.
~~Fruit~~Concentrate ~~concentrate~~pulp: crush and beat fresh fruits into mashes – ~~press fruit mashes until fruit juice comes out –~~ mix raw fruit pulp ~~juice with proper amount of compound enzyme to remove pectin and starch~~ – filter concentrate ~~fruit~~pulp ~~juice~~ in three-way concentrators to achieve the target content of soluble solids, acidity and other quality standards as well as no additives – fill the aseptic bags with ~~concentrates~~concentrate pulp.

Concentrate pulp: crush and beat fresh fruits into mashes – mix raw fruit pulp – filter concentrate pulp in three-way concentrators to achieve the target content of soluble solids, acidity and other quality standards as well as no additives – fill the aseptic bags with concentrate pulp.7

Glazed fruits: separate fresh fruits into different grades – go through needling machine to get the fruits needled at the surface – blanch needled fruits in a blanching boiler – evacuate the air from fruits – soak evacuated fruits in sugar solution in a sugaring tank – bake sugared fruits in a group of tunnel dryers.

Quality Control

~~We place primary importance on quality.~~ Our production facility has ISO 9001 and HACCP series qualifications. We have established a quality control and food safety management system for the purchase of raw materials, fruit processing, packaging, ~~storage~~ storage and distribution. We have also adopted internal quality standards that we believe are stricter than the standards mandated by the PRC government. ~~We have a 16-person~~ Our quality control team to closely ~~monitor~~monitors and ~~test~~tests the quality of our products to ensure compliance with these standards.

High quality raw materials are crucial to the production of quality fruit products. Therefore, we rigorously examine and test fresh fruits arriving at our plant. Any fruits that fail to meet our quality standard will be rejected. We perform routine product inspection and sample testing at our production facility and adhere to strict hygiene standards. For example, every employee involved in production is required to change into specially made clothes, wear working caps and shoes. No one is allowed to enter our production room unless he or she is directly involved in the production process.

All of our products undergo inspection at each stage of the production process, as well as post -production inspection and final checking before distribution for sales. Products in storage or in the course of distribution are also subject to regular quality testing.

Raw Materials and Suppliers

Raw Materials

Our business depends on maintaining a regular, timely and adequate supply of high-quality fresh fruits, which accounted for approximately 74 79% of our cost of sales in fiscal year ~~2010~~2011. Our facility is strategically located in Heilongjiang province, where an abundant supply of source fruits is available. The close proximity of our facility to the orchards enables us to purchase fresh fruits at a lower cost. Our other raw materials mainly include packing materials (e.g. aseptic bags) and auxiliary processing materials (e.g. sugar and additives) that are widely available.

Suppliers and Supply Arrangements

We employ different procurement strategies to support our rapid growth based on the source fruit type. We coordinate primarily with the local government for the supply of golden berries and rely on a large group of vendors for the supply of other source fruits.

Golden berries in Heilongjiang are mainly grown in four fruit 8farms. We estimate that the annual output of golden berries at these four fruit farms is approximately 100,000 tons, which accounts for approximately 50% of the total output of golden berries in Heilongjiang province. Our processing volume of golden berries (including those sold as fresh fruits) in fiscal year 2011 was approximately 30,850 tons. We currently purchase a majority of our golden berries from two of these fruit farms -- Hailun and Nehe. It is costly and inefficient to purchase fresh fruits from each individual farmer so we coordinate with the local governments which plan and coordinate the overall fruit planting activities of individual farmers.

~~Golden~~We ~~berries~~normally insign ~~Heilongjiang~~written ~~are~~agreements ~~mainly~~with ~~grown~~the inlocal ~~four~~governments of ~~fruit~~Hailun ~~farms.~~and WeNehe ~~estimate~~at ~~that~~ the ~~annual~~beginning ~~output~~ of ~~golden~~each ~~berries~~year, atwhich ~~these~~generally ~~four~~have ~~fruit~~a one-year ~~farms~~term. isThe ~~approximately~~agreement ~~100,000~~typically ~~tons,~~sets ~~which~~forth ~~accounts for approximately 50% of~~ the total ~~output~~quantity of golden berries into ~~Heilongjiang~~be ~~province.~~purchased ~~Our~~by ~~processing~~us ~~volume~~and ofa ~~golden~~predetermined ~~berries~~minimum ~~(including~~price. ~~those~~The ~~sold~~local governments asdeliver ~~fresh~~the ~~fruits)~~demand ininformation ~~fiscal~~to ~~year~~individual ~~2010~~farmers ~~was~~and ~~approximately~~coordinate corresponding ~~33,000~~growth ~~tons.~~and Weharvesting ~~currently~~activities. ~~purchase~~In athe ~~majority~~picking ofseason, we submit our daily request of golden berries ~~from~~to ~~two~~the oflocal ~~these~~governments, ~~fruit~~who ~~farms~~then --instruct the ~~Hailun~~farmers ~~and~~to ~~Nehe.~~deliver Itfresh isfruits ~~costly~~to ~~and~~our ~~inefficient~~plant toon a timely basis. The final purchase ~~fresh~~price ~~fruits~~is ~~from~~based ~~each~~on ~~individual~~the ~~farmer~~prevailing market price, subject to a sopredetermined weminimum ~~coordinate~~price. ~~with~~This ~~the~~arrangement ~~local~~cuts ~~governments~~down ~~which~~our ~~plan~~procurement costs significantly and ~~coordinate~~allows the ~~overall~~local ~~fruit~~governments ~~planting~~to ~~activities~~protect and maximize the interests of ~~individual~~constituent farmers.

We ~~normally~~generally ~~sign~~purchase ~~written~~other ~~agreements~~source ~~with~~fruits ~~the~~directly ~~local~~from ~~governments~~vendors as ofthere ~~Hailun~~is ~~and~~no ~~Nehe~~centralized atfarm ~~the~~base ~~beginning~~for ofthese ~~each~~fruits. ~~year,~~As ~~which~~an ~~generally~~alternative, we have developed a ~~one-year~~large ~~term.~~group ~~The~~of ~~agreement~~agents ~~typically~~who ~~sets~~purchase ~~forth~~fruits from the ~~total~~local farmers ~~quantity~~and ofthen ~~golden~~re-sell ~~berries~~them to ~~be purchased by~~ us ~~and a predetermined minimum price~~. ~~The~~Our ~~local~~sourcing ~~governments~~staff ~~deliver~~maintains ~~the~~close communication ~~demand~~with ~~information~~our agents to ~~individual~~ensure ~~farmers~~their ~~and~~efficiency ~~coordinate corresponding growth~~ and ~~harvesting activities~~loyalty. InOur sourcing ~~the~~staff ~~picking~~also ~~season,~~spends wea ~~submit~~lot ~~our daily request~~ of ~~golden~~time ~~berries~~developing tonew ~~the local~~agents ~~governments,~~in ~~who then instruct~~ the ~~farmers~~planting area toof ~~deliver~~these ~~fresh~~ fruits ~~to our plant on a timely basis~~. ~~The~~We ~~final~~believe ~~purchase~~we ~~price~~have isestablished ~~based~~an oneffective ~~the~~and ~~prevailing market price, subject to a predetermined minimum price. This arrangement cuts down our~~loyal ~~procurement~~group ~~costs~~of ~~significantly~~agents ~~and~~who ~~allows~~are ~~the~~able ~~local governments~~ to ~~protect~~provide ~~and~~us ~~maximize~~with ~~the~~sufficient ~~interests~~fresh offruits ~~constituent~~to support ~~farmers~~our growth.

We purchase other source fruits, including blueberries, crab apples and raspberries, directly from vendors as there is no centralized farm base for these fruits. As an alternative, we have developed a large group of agents who purchase fruits from the local farmers and then re-sell them to us. Our sourcing staff maintains close communication with our agents to ensure their efficiency and loyalty. Our sourcing staff also spends a lot of time to keep developing new agents in the planting area of these fruits. We believe we have established an effective and loyal group of agents who are able to provide us with sufficient fresh fruits to support our growth. 8

Marketing, Sales and Distribution ~~Sales and Distribution~~

WeSales ~~currently sell our products directly to 75 regional distributors across 20 provinces~~ and 47 cities in China who then sell the products to various customers, including food processors, supermarkets and wholesale stores. As of March 31, 2010, our sales team consisted of 18 employees. We divide the national market into six regions and assign each region a sales team. Northern China is currently our biggest market, accounting for approximately 52% of our total revenue in fiscal year 2010. Distribution

We ~~generally~~currently ~~require~~sell our ~~distributors~~products directly to ~~pay~~approximately ~~the~~44 regional ~~full~~distributors ~~purchase price~~ in ~~cash~~China ~~before~~who wethen ~~deliver~~sell the products. ~~We also offer credit for our products~~ to ~~selected~~various ~~existing~~customers, including ~~distributors~~food ~~with~~processors, ~~long-term~~supermarkets ~~business relationships~~ and ~~excellent~~wholesale ~~credit records~~stores. ~~The~~ ~~credit~~As ~~term is generally up to 45 days. We utilize different pricing policies based on the type~~ of ~~source~~March ~~fruit. For instance~~31, 2011, ~~the price of~~ our ~~golden~~sales ~~berry~~team ~~products~~consisted isof ~~set~~18 ~~based on raw material costs to ensure stable profit margin~~employees. We ~~believe that~~divide ~~we are~~ the ~~largest~~national ~~golden~~market into ~~berry~~six ~~processor~~regions inand ~~China~~assign ~~and~~each ~~the~~region ~~only~~a ~~processor~~sales inteam. ~~Northeast~~Northern China ~~which~~is currently ~~allows~~our usbiggest tomarket, ~~have~~accounting ~~strong~~for ~~pricing~~approximately ~~power~~54.4% ~~For~~of ~~products based on other source fruits, we price~~ our ~~products~~total net atsales ~~the~~in ~~prevailing~~fiscal ~~market~~year ~~price~~2011.

~~Distributors~~We ~~normally~~generally ~~have~~require ~~distribution~~our ~~rights~~distributors to ~~sell~~pay ~~our~~the ~~products~~full ~~within~~purchase price ain ~~defined~~cash ~~territory.~~before Wewe ~~typically~~deliver ~~enter~~the ~~into~~products. aWe ~~one-year~~also ~~contract~~offer ~~with~~credit ~~each~~for of our products ~~distributors~~to atselected ~~the~~existing ~~beginning~~distributors ofwith ~~the~~excellent ~~year.~~credit ~~The~~records ~~contract~~and with ~~generally~~whom ~~requires~~we amaintained 15long-~~day~~term ~~notice of~~business ~~the~~relationships. ~~purchase~~The ~~amount~~credit ~~prior~~term tois generally ~~the~~up ~~required~~to ~~delivery~~45 ~~date~~days. We ~~have~~utilize different pricing policies based on the ~~right~~type of tosource ~~supervise~~fruit. ~~and~~For ~~monitor~~instance, ~~distributors’~~the ~~sale~~price of our ~~products.~~golden Weberry ~~generally~~products ~~have~~is aset based noon ~~return~~raw ~~policy.~~material ~~According~~costs to ~~our~~ensure ~~standard~~stable ~~distribution~~profit ~~agreement,~~margin. weWe ~~are~~believe ~~liable~~that ~~for~~we ~~any~~are ~~loss~~a ~~resulted~~leading ~~from~~golden aberry ~~quality~~processor ~~problem~~in ~~only~~China ifand the ~~distributor~~only ~~provides~~processor ~~certification~~in Northeast ~~from~~China ~~relevant~~which ~~authorities.~~allows ~~However,~~us ~~distributors~~to ~~will~~have ~~bear~~strong ~~any~~pricing ~~losses~~power. ~~caused~~For byproducts ~~their~~based on ~~negligence~~other insource ~~the~~fruits, ~~storage~~we ofprice ~~the~~our products. Weat ~~offer~~the noprevailing ~~sales rebates or~~market ~~rewards to our distributors~~price.

Distributors normally have distribution rights to sell our products within a defined territory. We ~~believe~~typically weenter ~~maintain~~into ~~stable~~a ~~relationships~~one-year contract with each of our distributors, ~~and~~at ~~many~~the beginning of ~~them~~the ~~have~~year. ~~been~~The ~~our~~contract generally ~~distributors~~requires ~~for~~a ~~more~~15-day ~~than~~notice ~~three~~of ~~years.~~the ~~Our~~purchase ~~top~~amount ~~ten~~prior ~~distributors~~to ~~accounted~~the ~~for~~required delivery ~~approximately 64~~date.6% ~~and~~We ~~53.9%~~have ofthe ~~our~~right ~~total~~to ~~revenue~~supervise inand ~~fiscal~~monitor ~~year~~distributors’ ~~2010~~sale of ~~and~~our ~~2009, respectively~~products. ~~The~~We ~~biggest~~generally ~~distributor~~have ~~accounted~~a ~~for~~no ~~approximately~~return 13policy.5% ~~and~~According ~~9.2%~~to our standard distribution agreement, we are liable for ~~fiscal~~any ~~years~~loss ~~2010~~resulted ~~and~~from ~~2009,~~a ~~respectively.~~quality problem Inonly ~~fiscal~~if ~~year~~the ~~2010,~~distributor ~~our~~provides ~~two~~certification ~~biggest~~from ~~distributors~~relevant authorities. ~~Laiyang~~However, ~~Yitian~~distributors ~~Fruit~~will ~~Juice~~bear ~~Company~~any ~~Limited~~losses ~~and~~caused ~~Beijing~~by their ~~Huanpenyuan~~negligence ~~Food~~in ~~Company~~the ~~Limited~~storage ~~accounted~~of ~~for~~the ~~approximately 13~~products.5% ~~and~~We ~~11.3%~~offer ofno ~~our~~sales ~~total~~rebates ~~revenue,~~or ~~respectively~~rewards to our distributors.

We believe we maintain stable relationships with our 9distributors, and many of them have been our distributors for more than three years. Our top ten distributors accounted for approximately 71.2% and 64.6% of our total net sales in fiscal year 2011 and 2010, respectively. The biggest distributor accounted for approximately 16.6% and 13.5% of our total net sales in fiscal years 2011 and 2010, respectively. In fiscal year 2011, our two biggest distributors Beijing Huanpenyuan Food Company Limited and Harbin Shengjinlai Economic and Technology Development Company Limited accounted for approximately 16.6% and 13.2% of our total net sales, respectively.

Marketing

As of March 31, ~~2010~~2011, we have ~~seven~~four marketing personnel ~~in our department~~ who are responsible for market research, promotion and advertisement. We strengthen our market presence through various types of ~~market~~marketing campaigns. We participate in ~~several~~ several domestic and international trade fairs, such as China National Sugar and Alcoholic Commodities Fair and International China Harbin Fair for Trade and Economic Cooperation. These trade fairs help to promote our reputation and name recognition in the industry.

Our Competition

Since we process premium specialty fruits grown in Northeast China, we face little direct competition from the processors of common fruits or broad-based food processors. Our main competitors are local fruit processors that offer products similar to ours. Most of our competitors are small-sized local processors that process only one or two types of specialty fruits. Compared to these competitors, we believe we have more diversified products, higher production capacity and greater resources. Our major competitors in China include Dalian Xinlian Food Company, Shandong Longkou Fudi Food Co. Ltd., Zhalantun Changzheng Beverage Factory and Muxing Quick Frozen Food Factory.

Research and Development

Our research and development activities focus on new product development for new premium specialty fruits and quality improvement. WeIn ~~currently~~fiscal year ~~have~~2011, ~~five~~we ~~employees~~successfully ~~dedicated~~launched toblackcurrant ~~research~~and seabuckthorn concentrate juice and ~~development~~glazed fruit products. WeAfter ~~also~~the ~~cooperate~~technology ~~with~~cooperation agreement with Heilongjiang Ba Yi Land Reclamation University (“HLAU”), an agriculture university in China~~. Since 2004~~, ~~our~~expired ~~company~~this ~~and HLAU have jointly developed six new products~~year, ~~four~~we ofconcentrated ~~which~~on ~~are~~our ~~now~~internal ~~our~~research and ~~principal~~development ~~products~~effort. OnWe ~~March~~benefited 7,from ~~2008,~~our wecooperation ~~entered~~with ~~into~~HLAU ~~a technology~~and ~~cooperation~~developed ~~agreement~~several ~~with~~kinds ~~HLAU~~of tofruit ~~develop~~and ~~several~~vegetable ~~new~~powder products, including ~~glazed blueberry~~ tomato, ~~blackcurrant~~pumpkin ~~concentrate, seabuckthorn concentrate~~ and ~~golden berry extracts~~carrot. ~~Under~~We ~~the~~are ~~agreement,~~also wedoing ~~will~~research ~~provide~~and adevelopment ~~total~~on ~~amount of approximately~~dried ~~$25,670~~fruit ~~(RMB 180,000) to HLAU for the development of the new~~ products and ~~all intellectual property rights of the~~ new ~~products~~fruit ~~belong~~paste ~~to our company~~products. ~~During~~We ~~the~~currently ~~year, we~~ have ~~successfully~~five ~~developed the glazed blueberry, blackcurrant concentrate~~employees ~~and~~dedicated ~~seabuckthorn~~to ~~concentrate.~~research ~~We are currently developing glazed blackcurrant~~ and ~~seabuckthorn which is expected to be completed in fiscal year 2011~~development.

Newly developed products will be put into production and commercialized when certain criteria are met, including: market demand is material, adequate supplies of raw material are secured to allow for efficient mass production, and production capacity is in place. 9

Newly developed products will be put into production and ~~Intellectual~~commercialized ~~Property~~when certain criteria are met, including: market demand is material, adequate supplies of raw material are secured to allow for efficient mass production, and production capacity is in place.

~~All~~Intellectual ofProperty our product formulations are proprietary. We have not registered or applied for protections in China for most of our intellectual property or proprietary technologies relating to the formulations of our products. See Item 1A, “Risk Factors—Risks Related to Our Business—Our inability to protect our trademarks, patent and trade secrets may prevent us from successfully marketing our products and competing effectively.” Although we believe that, as of today, patents and copyrights have not been essential to maintaining our competitive market position, we intend to assess appropriate occasions in the future for seeking patent and copyright protections for those aspects of our business that provide significant competitive advantages.

We ~~sell~~believe that our ~~fruit~~product ~~concentrate,~~formulations ~~glazed~~are ~~fruit~~proprietary ~~and~~or have ~~nectar~~proprietary ~~products~~aspects. ~~under~~We have not registered or applied for protections in China for most of our intellectual property or proprietary technologies relating to the ~~brand~~formulations of ~~“农珍之冠 ”~~our products. See Item 1A, “Risk Factors—Risks Related to Our ~~chairman~~Business—Our ~~Changjun~~inability to Yuprotect ~~transferred~~our ~~the~~trademarks, ~~trademark~~patent ~~for~~and ~~“农珍之冠~~ trade secrets may prevent us from successfully marketing our products and competing effectively.” inAlthough ~~both~~we believe ~~class~~that, 29as of today, patents and ~~class~~copyrights 32have tonot ~~our~~been ~~company~~essential to ~~which~~maintaining ~~was~~our ~~approved~~competitive bymarket ~~the~~position, ~~Trademark~~we ~~Office~~intend ofto ~~the~~assess ~~State~~appropriate occasions ofin ~~Administration~~the future for ~~Industry~~seeking patent and ~~Commerce~~copyright ofprotections ~~China~~for inthose aspects ~~March~~of ~~2009.~~our ~~The~~business ~~trademark~~that ~~expires~~provide insignificant ~~2018~~competitive advantages.

We ~~rely~~sell onour ~~trade~~concentrate ~~secret~~juice, ~~protection~~glazed fruit and ~~confidentiality~~nectar ~~agreements~~products under tothe ~~protect~~brand ~~our~~of ~~proprietary information and know-how~~“农珍之冠”. Our ~~management~~chairman ~~and~~Changjun ~~each~~Yu oftransferred ~~our~~the ~~research~~trademark ~~and development personnel have entered into a standard annual employment contract, which~~for ~~includes~~“农珍之冠” ain ~~confidentiality~~both ~~clause~~class ~~and~~29 ~~a clause acknowledging that all inventions, designs, trade secrets, works of authorship, developments~~ and ~~other~~class ~~processes~~32 ~~generated~~to ~~by them on~~ our ~~behalf~~company ~~are~~which ~~our~~was ~~property,~~approved ~~and~~by ~~assigning to us any ownership~~the ~~rights~~Trademark ~~that~~Office ~~they~~of ~~may~~the ~~claim~~State inof ~~those~~Administration ~~works. Despite our precautions, it may be possible~~ for ~~third~~Industry ~~parties to obtain~~ and ~~use,~~Commerce ~~without our consent, intellectual property that we own or are licensed to use. Unauthorized use~~ of ~~our~~ ~~intellectual~~China ~~property by third parties, and the expenses incurred~~ in ~~protecting~~March ~~our intellectual property rights, may adversely affect our business~~2009. ~~See~~The ~~Item~~trademark ~~1A,~~expires ~~“Risk~~in ~~factors—Risks Related to Our Business—Our inability to protect our trademarks, patent and trade secrets may prevent us from successfully marketing our products and competing effectively~~2018.”

We rely on trade secret protection and confidentiality 10agreements to protect our proprietary information and know-how. Our management and each of our research and development personnel have entered into a standard annual employment contract, which includes a confidentiality clause and a clause acknowledging that all inventions, designs, trade secrets, works of authorship, developments and other processes generated by them on our behalf are our property, and assigning to us any ownership rights that they may claim in those works. Despite our precautions, it may be possible for third parties to obtain and use, without our consent, intellectual property that we own or are licensed to use. Unauthorized use of our intellectual property by third parties, and the expenses incurred in protecting our intellectual property rights, may adversely affect our business. See Item 1A, “Risk factors—Risks Related to Our Business—Our inability to protect our trademarks, patent and trade secrets may prevent us from successfully marketing our products and competing effectively.”

Regulation

Because our operating subsidiaries are located in the PRC, we are regulated by the national and local laws of the PRC. The food industry, of which fruit based products form a part, is subject to extensive regulation in China. The following paragraphs summarize the most significant PRC regulations governing our business in China.

We are also subject to the PRC’s foreign currency regulations. The PRC government has controlled Renminbi reserves primarily through direct regulation of the conversion of Renminbi into other foreign currencies. Although foreign currencies, which are required for “current account” transactions, can be bought freely at authorized PRC banks, the proper procedural requirements prescribed by PRC law must be met. At the same time, PRC companies are also required to sell their foreign exchange earnings to authorized PRC banks and the purchase of foreign currencies for capital account transactions still requires prior approval of the PRC government.

Food Hygiene and Safety Laws and Regulations

As a producer of food products in China, we are subject to a number of PRC laws and regulations governing food safety and hygiene, including:

the PRC Product Quality Law;
the PRC Food ~~Hygiene~~Safety Law;
the Implementation Rules on the ~~Administration~~PRC ~~and~~Food ~~Supervision of Quality and~~ Safety ~~in Food Producing and Processing Enterprises (trail implementation)~~Law;
the ~~Regulation~~Measures onof the Administration ofon ~~Production~~the ~~Licenses~~New ~~for Industrial Products~~Food-Additives;

~~the General Measure on Food Quality Safety Market Access Examination;~~10

the ~~General~~Measures ~~Standards~~of ~~for~~the Filing of the ~~Labeling~~Enterprise Standard of ~~Prepackaged~~the ~~Foods~~Food Safety;
the ~~Standardization~~Implementation ~~Law~~Rules on the Administration and Supervision of Quality and Safety in Food Producing and Processing Enterprises;
the Regulation on ~~Hygiene~~the Administration of ~~Food~~Production ~~Additive~~Licenses for Industrial Products;
the ~~Regulation~~General onStandards ~~Administration~~for ofthe ~~Bar~~Labeling ~~Code~~ of ~~Merchandise;~~Prepackaged ~~and~~Foods;
the ~~PRC~~Standardization ~~Metrology~~ Law.;
~~These laws and regulations set out safety and hygiene standards and requirements for various aspects of food production, such as~~ the ~~use~~Regulation ofon ~~additives,~~Administration ~~production, packaging, handling, labeling and storage, as well as facilities and equipment. Failure to comply with these laws and regulations may result in confiscation~~ of ~~our~~Bar ~~products~~Code ~~and proceeds from the sales~~ of ~~non-compliant~~Merchandise; ~~products, destruction of our products~~ and ~~inventory, fines, suspension of production and operations, product~~ ~~recalls, revocation of licenses, and, in extreme cases, criminal liability.~~
~~Environmental~~the ~~Regulations~~ PRC Metrology Law.

WeThese ~~are~~laws ~~subject~~and toregulations set out safety and hygiene standards and requirements for various ~~governmental~~aspects ~~regulations~~of ~~related~~food toproduction, ~~environmental~~such ~~protection~~as the use of additives, production, packaging, handling, labeling and storage, as well as facilities and equipment. ~~The~~Failure ~~major~~to ~~environmental~~comply with these laws and regulations ~~applicable~~may result toin usconfiscation ~~include:~~ of our products and proceeds from the sales of non-compliant products, destruction of our products and inventory, fines, suspension of production and operations, product recalls, revocation of licenses, and, in extreme cases, criminal liability.

~~the~~ Environmental ~~Protection Law of the PRC;~~Regulations

~~the~~We ~~Law~~are ofsubject ~~PRC~~to onvarious ~~the~~governmental ~~Prevention~~regulations ~~and~~related ~~Control~~to environmental ofprotection. ~~Water~~The ~~Pollution;~~major environmental regulations applicable to us include:

~~Implementation~~the ~~Rules~~Environmental ofProtection ~~the~~ Law of ~~PRC on~~ the ~~Prevention and Control of Water Pollution~~PRC;
the Law of PRC on the Prevention and Control of ~~Air~~Water Pollution;
Implementation Rules of the Law of PRC on the Prevention and Control of Water ~~Air~~ Pollution;
the Law of PRC on the Prevention and Control of ~~Solid~~Air ~~Waste~~ Pollution; ~~and~~
Implementation Rules of the Law of PRC on the Prevention and Control of Air ~~Noise~~ Pollution.;
Wethe ~~have~~Law ~~obtained~~of ~~all~~PRC ~~permits~~on ~~and~~the ~~licenses~~Prevention ~~required~~and ~~for~~Control ~~production~~ of ~~our~~Solid ~~products~~Waste ~~and~~Pollution; ~~believe we are in material compliance with all applicable laws~~ and ~~regulations.~~
11the Law of PRC on the Prevention and Control of Noise Pollution.

~~Environmental~~We ~~Matters~~have obtained all permits and licenses required for production of our products and believe we are in material compliance with all applicable laws and regulations.

~~Our~~Environmental ~~manufacturing~~Matters facilities are subject to various pollution control regulations with respect to noise, water and air pollution and the disposal of waste and hazardous materials. We are also subject to periodic inspections by local environmental protection authorities. We believe we are in material compliance with the relevant PRC environmental laws and regulations and are not currently subject to any pending actions alleging any violations of applicable PRC environmental laws.

Our ~~Employees~~manufacturing facilities are subject to various pollution control regulations with respect to noise, water and air pollution and the disposal of waste and hazardous materials. We are also subject to periodic inspections by local environmental protection authorities. We believe we are in material compliance with the relevant PRC environmental laws and regulations and are not currently subject to any pending actions alleging any violations of applicable PRC environmental laws.

AsOur ofEmployees ~~March 31, 2010, we employed a total of 575 full-time employees. The following table sets forth the number of our employees by function.~~

Department		Number of Employees
Senior Management		12
Human Resources & Administration		63
Production		407
Procurement		3
Marketing		7
Sales		18
Logistic		36
Research & Development		5
Quality Control		16
Accounting		8
TOTAL		575

As of March 31, 2011, we employed a total of approximately 516 full-time employees. The following table sets forth the number of our employees by function.

Our employees are not represented by a labor organization or covered by a collective bargaining agreement. We have not experienced any work stoppages.

Department		Number of
		Employees
Senior Management		11
Human Resources & Administration		61
Production		348
Procurement		3
Marketing		4
Sales		17
Logistic		36
Research & Development		5
Quality Control		20
Accounting		11
TOTAL		516

We are required under PRC law to make contributions to the employee benefit plans at specified percentages of the after-tax profit. In addition, we are required by the PRC law to cover employees in China with various types of social insurance. We believe that we are in material compliance with the relevant PRC laws. 11

~~Seasonality~~Our employees are not represented by a labor organization or covered by a collective bargaining agreement. We have not experienced any material work stoppages.

AsWe ~~is typical in the fruit processing industry, we experience seasonality in our business. Our fruit processing lines~~ are ~~mainly~~required ~~carried~~under ~~out from~~PRC ~~mid~~law ~~July~~ to ~~mid~~make ~~November~~contributions ~~each~~to ~~year because our primary source fruits are~~the ~~typically~~employee ~~harvested~~benefit ~~during~~plans ~~that~~at ~~period~~specified ~~and~~percentages ~~must be processed right away. As a result~~ of ~~seasonality in production,~~ our ~~personnel,~~after-tax ~~working~~profit. ~~capital~~In ~~requirements~~addition, ~~cash~~we ~~flow~~are ~~and~~required ~~inventories~~by ~~vary~~PRC ~~substantially~~law ~~throughout~~to ~~the~~cover ~~year. In~~employees ~~fiscal~~in ~~year~~China ~~2010,~~with ~~sales during the second, third and forth fiscal quarters~~various ~~accounted~~types ~~for~~of ~~approximately~~social 26insurance.~~5%,~~ ~~24.4%~~We ~~and~~believe ~~36.2%~~that ~~of our total sales revenue respectively. Generally~~ we ~~experience~~are ~~lesser sales~~ in ~~the~~material ~~first~~compliance ~~fiscal quarter~~with ~~because~~the ofrelevant ~~lower~~PRC ~~demand and decreased inventory levels~~laws.

~~Insurance~~Seasonality

WeAs ~~have~~is ~~property~~typical ~~insurance~~in ~~for~~the ~~our~~fruit ~~facility~~processing ~~located~~industry, we experience seasonality in ~~Daqing~~our business. Our fruit processing production lines are mainly carried out from mid-July to mid-November each year because our primary source fruits are typically harvested during that period and Mumust ~~Dan~~be ~~Jiang~~processed ~~City~~right away. WeAs ~~believe~~a result of seasonality in production, our ~~insurance~~personnel, ~~coverage~~working iscapital requirements, ~~customary~~cash flow and inventories vary substantially throughout the year. ~~standard~~In fiscal year 2011, sales during the second, third and forth fiscal quarters accounted for ~~companies~~approximately 26.7%, 25.5% and 36.8% of ~~comparable~~our ~~size~~total innet ~~comparable~~sales respectively. ~~industries~~Generally we experience lesser sales in ~~China.~~the first fiscal quarter because of lower demand and decreased inventory levels.

~~We do not have any business liability, interruption or litigation insurance coverage for our operations in China.~~ Insurance companies in China offer limited business insurance products. While business interruption insurance is available to a limited extent in China, we have determined that the risks of interruption, cost of such insurance and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. Therefore, we are subject to business and product liability exposure. See Item 1A, “Risk Factors—Risks Related to Our Business—We have limited insurance coverage and do not carry any business interruption insurance, third-party liability insurance for our production facilities or insurance that covers the risk of loss of our products in shipment.”

12We have property insurance for our facility located in Daqing and Mudanjiang City. We believe our insurance coverage is customary and standard for companies of comparable size in comparable industries in China.

We do not have any business liability, interruption or ~~Litigation~~litigation insurance coverage for our operations in China. Insurance companies in China offer limited business insurance products. While business interruption insurance is available to a limited extent in China, we have determined that the risks of interruption, cost of such insurance and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. Therefore, we are subject to business and product liability exposure. See Item 1A, “Risk Factors—Risks Related to Our Business—We have limited insurance coverage and do not carry any business interruption insurance, third-party liability insurance for our production facilities or insurance that covers the risk of loss of our products in shipment.”

~~From~~Litigation time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

~~ITEM~~From 1Atime to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

~~RISK~~Available ~~FACTORS.~~ Information

~~The~~Our ~~shares~~Internet ofwebsite ~~our~~address ~~common~~is ~~stock~~www.chinanutrifruit.com. We ~~are~~make ~~highly~~available ~~speculative~~at inthis ~~nature~~address, ~~involve~~free aof ~~high~~charge, ~~degree~~our ofAnnual ~~risk~~Reports ~~and~~on ~~should~~Form 10-K, beQuarterly ~~purchased~~Reports ~~only~~on byForm ~~persons~~10-Q, ~~who~~Current ~~can~~Reports ~~afford~~on toForm ~~lose~~8-K, ~~the~~and ~~entire~~all amendments ~~amount~~to ~~invested~~those inreports ~~the~~as ~~common~~soon ~~stock. Before~~as ~~purchasing~~reasonably ~~any~~practicable ofafter ~~the~~such material ~~shares~~is ~~of common~~electronically ~~stock,~~filed ~~you~~with ~~should~~or ~~carefully~~furnished ~~consider~~to the ~~following~~United ~~factors~~States Securities ~~relating~~and toExchange ~~our~~Commission, ~~business~~or ~~and prospects~~SEC. ~~You~~ ~~should~~Information ~~pay~~available ~~particular~~on ~~attention~~our towebsite is ~~the~~not ~~fact~~incorporated ~~that~~by wereference ~~conduct~~in ~~all~~and ofis ~~our~~not ~~operations~~deemed ina ~~China~~part ~~and~~of ~~are~~this ~~governed~~report. byThe public amay ~~legal~~read and ~~regulatory environment~~copy ~~that~~any inmaterials ~~some~~we ~~respects~~file ~~differs~~with ~~significantly~~the ~~from~~SEC at the ~~environment~~SEC’s ~~that~~Public Reference ~~may~~Room ~~prevail~~at in100 ~~the~~F. UStreet, N.SE., ~~and~~Washington, ~~other~~DC, ~~countries~~20549. If ~~any~~The ofpublic may obtain information on the ~~following~~operation ~~risks~~of ~~actually~~the ~~occurs,~~Public ~~our~~Reference ~~business,~~Room ~~financial~~by ~~condition~~calling orthe SEC ~~operating~~at ~~results~~1-800-SEC-0330. ~~will~~The ~~suffer,~~SEC ~~the trading~~maintains ~~price~~an ofInternet ~~our~~site ~~common~~that ~~stock~~contains ~~could~~reports, proxy ~~decline~~and information statements, and ~~you~~other ~~may~~information ~~lose~~regarding ~~all~~issues orthat file ~~part~~electronically ofwith ~~your~~the ~~investment.~~SEC at www.sec.gov.

~~RISKS~~ITEM ~~RELATED~~1A. TORISK ~~OUR BUSINESS~~ FACTORS.

The ~~recent~~shares ~~financial~~of ~~crisis~~our ~~could~~common ~~negatively~~stock ~~affect~~are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who can afford to lose the entire amount invested in the common stock. Before purchasing any of the shares of common stock, you should carefully consider the following factors relating to our business, ~~results~~and prospects. You should pay particular attention to the fact that we conduct all of our operations, in China and are governed by a legal and regulatory environment that in some respects differs significantly from the environment that may prevail in the U.S. and other countries. If any of the following risks actually occurs, our business, financial condition or operating results will suffer, the trading price of our common stock could decline, and you may lose all or part of your investment.

While the financial crisis has stabilized in China, the global economy remains precarious and faces many challenges, which affect our business in a variety of ways. Our ability to access the capital markets may be restricted at a time when we would like, or need, to raise capital, which could have an impact on our flexibility to react to changing economic and business conditions. In addition, these economic conditions also impact levels of consumer spending, which have recently deteriorated significantly and may remain depressed for the foreseeable future. Consumer purchases of discretionary items generally decline during recessionary periods and other periods where disposable income is adversely affected. If demand for our products fluctuates as a result of economic conditions or otherwise, our revenue and gross margin could be harmed. 12

~~Any~~RISKS ~~ill~~RELATED ~~effects,~~TO ~~product~~OUR ~~liability~~BUSINESS claims, recalls, adverse publicity or negative public perception regarding particular fruits we use as raw materials, our products or our industry in general could harm our sales and cause consumers to avoid our products.

The ~~food~~recent ~~industry~~financial iscrisis ~~subject to risks posed by food spoilage and contamination, product tampering, product recall, and consumer product liability claims. Our operations~~ could benegatively ~~impacted~~affect ~~by both genuine and fictitious claims regarding~~ our ~~and our~~ ~~competitors’~~business, ~~products.~~results ~~In the event~~ of ~~product contamination or tampering~~operations, ~~we may need to recall some of our products. A widespread product recall could result in significant loss due to the cost of conducting a product recall including destruction of inventory~~ and ~~the~~financial ~~loss of sales resulting from the unavailability of the product for a period of time~~condition.

InWhile ~~addition,~~the ~~any~~financial ~~adverse~~crisis ~~publicity~~has orstabilized ~~negative~~in ~~public~~China, ~~perception~~the ~~regarding~~global economy ~~particular~~remains ~~fruits~~precarious weand ~~use~~faces asmany ~~raw materials~~challenges, ~~our~~which ~~products,~~affect our ~~actions relating to our products, or our industry~~ business in ~~general could result in~~ a ~~substantial~~variety ~~drop~~of inways. ~~demand~~Our ~~for~~ability ~~our products.~~to ~~This~~access ~~negative~~the ~~public~~capital ~~perception~~markets may ~~include~~be restricted ~~publicity~~at ~~regarding~~a ~~the~~time ~~safety~~when ~~or quality of particular fruits~~ we ~~use~~would aslike, ~~raw materials~~ or ~~products~~need, into ~~general~~raise capital, ofwhich ~~other~~could have ~~companies~~an orimpact ofon our ~~products~~flexibility ~~specifically.~~to ~~Negative~~react ~~public~~to ~~perception~~changing ~~may also~~economic ~~arise~~and ~~from~~business conditions. ~~regulatory~~In ~~investigations or product liability claims~~addition, ~~regardless~~these ofeconomic ~~whether~~conditions ~~those~~also ~~investigations~~impact ~~involve~~levels usof consumer orspending, ~~whether~~which ~~any~~may ~~product~~remain ~~liability~~depressed ~~claim~~for isthe ~~successful~~foreseeable ~~against us~~future. Consumer Wepurchases ~~could~~of ~~also~~discretionary ~~suffer~~items ~~losses~~generally ~~from~~decline aduring ~~significant product~~recessionary ~~liability~~periods ~~judgment~~and ~~against~~other ~~us.~~periods ~~Either~~where adisposable ~~significant~~income ~~product~~is ~~recall~~adversely oraffected. aIf demand ~~product~~for ~~liability judgment, involving either~~ our ~~company~~products orfluctuates ~~our~~as ~~competitors,~~a ~~could also~~ result ~~in a loss~~ of ~~consumer~~economic ~~confidence~~conditions inor otherwise, our ~~products~~revenue ~~or the food category,~~ and ~~an actual~~gross ormargin ~~perceived~~could ~~loss~~be ~~of value of our brands, materially impacting consumer demand~~harmed.

Any ~~fluctuations~~ill ineffects, product liability claims, recalls, adverse publicity or negative public perception regarding particular fruits we use as raw ~~material~~materials, ~~supply~~our products or our industry in general could harm our sales and ~~prices~~cause ~~may~~consumers ~~negatively~~to ~~impact~~avoid our ~~revenue~~products.

AThe ~~secure~~food ~~supply~~industry ~~of principal raw materials~~ is ~~crucial~~subject to ~~our~~risks ~~operation.~~posed ~~Fresh~~by ~~fruits~~food ~~accounted~~spoilage and ~~for~~contamination, ~~approximately~~product ~~74%~~tampering, ofproduct ~~our~~recall, ~~cost~~and ofconsumer ~~sales~~product liability ~~in fiscal year 2010~~claims. ~~The~~Our ~~per~~operations ~~unit~~could ~~costs~~be ofimpacted ~~producing~~by ~~our~~both ~~products~~genuine ~~are subject to the supply~~ and ~~price~~ ~~volatility~~fictitious ofclaims ~~raw~~regarding ~~materials,~~our ~~especially fresh fruits which are affected by factors such as weather, growing condition~~ and ~~pest that are beyond~~ our ~~control~~competitors’ products. ~~According~~In to the ~~BBIC~~event ~~Report, approximately 20-30%~~ of product ~~fruit~~contamination ~~grown~~or ~~in China is lost. Historically~~tampering, we ~~have~~may ~~been~~need ~~able~~ to ~~meet~~recall ~~our~~some ~~fresh~~of ~~fruit~~our ~~supply~~products. A ~~needs~~widespread byproduct ~~building~~recall ~~our~~could ~~processing~~result ~~facilities~~ in ~~close~~significant ~~proximity~~loss due to ~~orchards~~the ~~and~~cost of byconducting ~~collaborating~~a ~~with~~product ~~local~~recall ~~government~~including ~~and~~destruction ~~establishing an effective group~~ of ~~vendors.~~inventory ~~Increases~~and in the ~~price~~loss of sales ~~fresh~~resulting ~~fruits~~from ~~would~~the ~~negatively~~unavailability ~~impact~~of ~~our~~the ~~gross~~product ~~margins~~for ifa weperiod ~~are~~of ~~not able to offset such price increases through increases in our selling price or changes in our product mix~~time.

In addition, any adverse publicity or negative public 13perception regarding particular fruits we use as raw materials, our products, our actions relating to our products, or our industry in general could result in a substantial drop in demand for our products. This negative public perception may include publicity regarding the safety or quality of particular fruits we use as raw materials or products in general, of other companies or of our products specifically. Negative public perception may also arise from regulatory investigations or product liability claims, regardless of whether those investigations involve us or whether any product liability claim is successful against us. We could also suffer losses from a significant product liability judgment against us. Either a significant product recall or negative publicity, involving either our company or our competitors, could also result in a loss of consumer confidence in our products or the food category, and an actual or perceived loss of value of our brands, materially impacting consumer demand.

IfAny wefluctuations ~~cannot~~in ~~maintain~~raw amaterial ~~consistent~~supply and ~~cost-effective~~prices ~~supply~~may negatively ofimpact ~~source fruits,~~ our ~~results of operations, financial condition and business prospects will deteriorate~~revenue.

A secure supply of principal raw materials is crucial to our ~~The~~operation. ~~availability,~~Fresh ~~size,~~fruits ~~quality~~accounted ~~and~~for approximately 79% of our cost of ~~source~~sales ~~fruits~~in fiscal ~~for~~year ~~the~~2011. ~~production~~The per unit costs of producing our products are subject to the ~~operational~~supply ~~risks~~and ~~inherent~~price tovolatility ~~farming,~~of ~~such~~raw ~~as crop size~~materials, ~~quality,~~especially ~~and~~fresh ~~yield~~fruits ~~fluctuation~~which are ~~caused~~affected by ~~poor~~factors ~~weather~~such ~~and~~as weather, growing conditions, ~~pest~~ and ~~disease~~pests ~~problems,~~that ~~and other factors~~ are beyond our control. ~~These~~According ~~and~~to ~~other~~the ~~operational~~BBIC ~~risks~~Report, ~~could~~approximately ~~cause~~20-30% ~~significant~~of ~~fluctuations~~fruit grown in ~~the~~China ~~availability~~is ~~and~~lost. ~~cost~~Historically, ofwe ~~the~~have ~~source~~been ~~fruits~~able weto ~~use~~meet asour ~~raw~~fresh ~~materials.~~fruit supply ~~The~~needs ~~prices~~by ofbuilding our ~~fresh~~processing ~~source~~facilities ~~fruits~~in ~~and other~~close ~~raw~~proximity ~~materials~~to orchards ~~are~~and ~~generally~~by ~~determined~~collaborating bywith ~~the~~local ~~market,~~government and ~~may~~establishing ~~change~~an effective atgroup ~~any~~of ~~time~~vendors. Increases in ~~prices~~the ~~for~~price ~~any~~ of ~~these~~fresh ~~raw~~fruits ~~materials~~would negatively ~~could~~impact ~~have~~our agross ~~material~~margins ~~adverse~~if ~~impact~~we onare ~~our~~not ~~ability~~able to ~~achieve~~offset ~~profitability~~such price increases through increases in our selling price or changes in our product mix.

~~Currently,~~If we ~~source~~cannot ~~our~~maintain ~~fresh~~a ~~golden~~consistent ~~berries primarily from two fruit farms pursuant to cooperation agreements with local governments~~ and ~~other fruits from agents who procure fruit for us from individual farmers. While we believe that we have~~cost-effective ~~adequate~~supply ~~sources~~ of ~~raw~~source ~~materials and that we in general maintain good supplier relationships~~fruits, ~~if we are unable to continue to find adequate suppliers for~~ our ~~raw materials on economic terms acceptable to us, it will adversely affect our~~ results of operations, financial condition and business prospects will deteriorate.

The availability, size, quality and cost of source fruits for Wethe ~~compete~~production inof anour ~~industry~~products ~~that~~are issubject ~~brand-conscious~~to operational risks inherent to farming, such as crop size, quality, and ~~unless~~yield wefluctuation ~~are~~caused ~~able~~by topoor weather ~~establish~~and growing conditions, pest and ~~maintain~~disease ~~brand~~problems, ~~name~~and ~~recognition~~other factors beyond our ~~sales~~control. These and other operational risks could cause significant fluctuations in the availability and cost of the source fruits we use as raw materials. The prices of our fresh source fruits and other raw materials are generally determined by the market, and may bechange ~~negatively~~at ~~impacted~~any time. Increases in prices for any of these raw materials could have a material adverse impact on our ability to achieve profitability.

Our business is substantially dependent upon awareness and market acceptance of our products and brand by our targeted consumers. In addition, our business depends on acceptance by our independent distributors and consumers of our brand. Although we believe that we have made progress towards establishing market recognition for our brand “农珍之冠 ” in the Chinese fruit products industry, it is too early in the product life cycle of the brand to determine whether our products and brand will achieve and maintain satisfactory levels of acceptance by independent distributors and retail consumers. 13

Currently, we source our fresh golden berries primarily from Wetwo ~~compete~~fruit infarms anpursuant ~~industry~~to ~~characterized~~cooperation byagreements ~~rapid~~with ~~changes~~local governments and other fruits from agents who procure fruit for us from individual farmers. While we believe that we have adequate sources of raw materials and that we in ~~consumer~~general maintain ~~preferences~~good supplier relationships, soif ~~our~~we ~~inability~~are unable to continue ~~developing~~to ~~new~~find adequate ~~products~~suppliers tofor ~~satisfy~~ our ~~consumers’~~raw ~~changing~~materials ~~preferences~~on ~~would~~economic ~~have~~terms aacceptable ~~material~~to ~~adverse~~us, ~~effect~~it will onadversely affect our ~~sales~~results of operations, financial condition and ~~volumes~~business prospects.

~~Our~~Product ~~products~~liability ~~are~~claims ~~processed~~against ~~from~~us ~~premium specialty fruits and sell at a high price. A decline in the consumption of our products~~ could ~~occur as a~~ result ~~of a change~~ in ~~consumer preferences, perceptions and spending habits at any time. Future success~~ ~~will~~adverse ~~depend~~publicity ~~partly on our ability to anticipate or adapt to such changes~~ and topotentially ~~offer,~~significant onmonetary ~~a timely basis, new products that meet consumer preferences~~damages. Our failure to adapt our product offering to respond to such changes may result in reduced demand and lower prices for our products, resulting in a material adverse effect on our sales volumes, sales and profits.

~~Our~~As ~~current~~with ~~market~~other ~~distribution~~manufacturers ~~and~~of ~~penetration~~fruit isbased ~~limited~~products, aswe ~~compared~~are also exposed to risks associated with ~~the~~product ~~potential~~liability ~~market~~claims ~~and~~if sothe consumption of our ~~initial~~products ~~views~~results asin toinjury ~~customer~~or ~~acceptance~~death. Although our products have not been the subject of aany ~~particular~~product liability claims, if any such claims are brought against us, we cannot predict what impact such product ~~can~~liability claims beor ~~erroneous~~resulting negative publicity would have on our business or on our brand image. The successful assertion of product liability claims against us could result in potentially significant monetary damages, diversion of management resources and ~~there~~require ~~can~~us beto nomake ~~assurance~~significant ~~that~~payments ~~true~~and ~~market~~incur substantial ~~acceptance~~legal expenses. We do not have product liability insurance and have ~~will~~not ~~ultimately~~made beprovisions ~~achieved.~~for Inpotential ~~addition~~product liability claims. Therefore, ~~customer~~we ~~preferences~~may not ~~are~~have ~~also~~adequate ~~affected~~resources byto ~~factors~~satisfy ~~other~~a ~~than~~judgment ~~taste~~if a successful claim is brought against us. IfEven weif doa product liability claim is not ~~adjust~~successfully pursued to ~~respond~~judgment toby ~~these~~a claimant, we may still incur substantial legal expenses defending against such a claim and ~~other~~our ~~changes~~brand image and reputation would suffer. Finally, serious product quality concerns could result in ~~customer~~governmental ~~preferences~~actions against us, which, among other things, could result in the suspension of production or distribution of our ~~sales~~products, ~~may~~loss beof ~~adversely~~certain ~~affected~~licenses, or other governmental penalties.

If we become directly subject to the recent scrutiny, Wecriticism ~~rely~~and ~~primarily~~negative onpublicity ~~third~~involving U.S.-~~party~~listed ~~distributors~~Chinese companies, ~~which~~we ~~could~~may have ~~affect~~to ~~our~~expend ~~ability~~significant resources to ~~efficiently~~investigate and ~~profitably~~resolve ~~distribute~~the ~~and~~matter ~~market~~which could harm our ~~products~~business operations, ~~maintain~~stock ~~our~~price ~~existing~~and ~~markets~~reputation and ~~expand~~could result in a loss of your investment in our ~~business~~stock, ~~into~~especially ~~other~~if ~~geographic~~such ~~markets~~matter cannot be addressed and resolved favorably.

WeRecently, doU.S. ~~not~~public ~~sell~~companies ~~our~~that ~~products~~have ~~directly~~substantially toall ~~end~~of their ~~customers.~~operations ~~Instead~~in China, weparticularly ~~rely~~companies onlike ~~third~~us which have completed so-~~party~~called ~~distributors~~reverse ~~for~~merger transactions, have been the ~~sale~~subject of intense scrutiny, criticism and ~~distribution~~negative ofpublicity ~~our~~by ~~products.~~investors, Wefinancial ~~sell~~commentators and ~~our~~regulatory ~~products~~agencies, ~~through~~such anas ~~extensive~~the ~~nationwide~~United ~~sales~~States Securities and ~~distribution~~Exchange Commission. ~~network~~Much ~~covering~~of ~~20 provinces~~the scrutiny, criticism and 47negative ~~cities~~publicity inhas ~~China.~~centered around Asfinancial ofand ~~March~~accounting ~~31,~~irregularities ~~2010~~and mistakes, ~~this~~a ~~network~~lack ~~comprised~~of 75effective internal ~~distributors.~~controls Weover ~~typically~~financial doaccounting, ~~not~~inadequate ~~enter~~corporate ~~into~~governance policies ~~long-term~~or ~~agreements~~a ~~with~~lack ~~distributors~~of adherence thereto and, ~~have~~in nomany ~~control~~cases, ~~over~~allegations ~~their~~of fraud. ~~everyday~~As ~~business~~a ~~activities.~~result Toof the ~~extent~~scrutiny, ~~that~~criticism ~~our distributors~~and ~~are~~negative ~~distracted~~publicity, ~~from~~the publicly ~~selling~~traded ~~our~~stock ~~products~~of ormany doU.S. ~~not~~listed ~~expend~~Chinese ~~sufficient~~companies ~~efforts~~has sharply decreased in ~~managing~~value and, ~~selling~~in ~~our~~some ~~products~~cases, ~~our~~has ~~sales~~become ~~will~~virtually beworthless. ~~adversely~~Some ~~affected.~~of these ~~Our~~companies ~~ability~~are now subject to ~~maintain~~shareholder ~~our~~lawsuits, ~~distribution~~SEC ~~network~~enforcement actions and ~~attract~~are ~~additional~~conducting internal and external investigations into the allegations. It ~~distributors~~is ~~will~~not ~~depend~~clear onwhat aeffect ~~number~~this ofsector-wide ~~factors~~scrutiny, ~~many~~criticism ofand ~~which~~negative publicity ~~are~~will ~~outside~~have ofon our ~~control.~~company, ~~Some~~our ofbusiness ~~these~~and ~~factors~~our ~~include:~~stock ~~(i)~~price. If we become the ~~level~~subject of ~~demand~~any ~~for~~unfavorable ~~our~~allegations, ~~brand~~whether ~~and~~such ~~products~~allegations inare proven ato ~~particular~~be ~~distribution~~true ~~area;~~or ~~(ii)~~untrue, ~~our~~we ~~ability~~will have to ~~price~~expend ~~our~~significant ~~products~~resources atto ~~levels competitive~~investigate ~~with~~such ~~those~~allegations ~~offered~~and/or bydefend ~~competing~~our ~~products~~company. This situation will be costly and ~~(iii)~~time consuming and distract our ~~ability~~management from growing our company. If such allegations are not proven to ~~deliver~~be ~~products~~groundless, inour ~~the~~company ~~quantity~~and business operations will be severely and atyour ~~the~~investment ~~time~~in ~~ordered~~our bystock ~~distributors~~could be rendered worthless.

We compete in an industry that is brand-conscious, and 14unless we are able to establish and maintain brand name recognition our sales may be negatively impacted.

~~There~~Our ~~can~~business beis nosubstantially ~~assurance~~dependent ~~that~~upon weawareness ~~will~~and market beacceptance ~~able~~of toour ~~meet~~products ~~all~~and orbrand ~~any~~by ofour ~~these~~targeted ~~factors~~consumers. inIn addition, ~~any of~~ our ~~current~~business ordepends ~~prospective~~on ~~geographic~~acceptance ~~areas~~by ofour ~~distribution.~~independent ~~Furthermore,~~distributors ~~shortage~~and consumers of ~~adequate~~our ~~working~~brand. ~~capital~~Although ~~may~~we ~~make~~believe itthat ~~impossible~~we ~~for~~have usmade toprogress ~~do so. Our~~towards ~~inability~~establishing tomarket ~~achieve~~recognition ~~any~~for ofour ~~these~~brand ~~factors~~“农珍之冠” in athe ~~geographic~~Chinese ~~distribution~~fruit products ~~area~~industry, ~~will~~it ~~have~~is atoo ~~material~~early ~~adverse~~in ~~effect~~the onproduct ~~our~~life ~~relationships~~cycle ~~with~~of ~~our~~the ~~distributors~~brand into determine ~~that~~whether ~~particular~~our ~~geographic~~products ~~area,~~and ~~thus~~brand ~~limiting~~will ~~our~~achieve ~~ability~~and to maintain ~~and expand our~~satisfactory ~~market,~~levels ~~which~~of ~~will~~acceptance ~~likely~~by ~~adversely~~independent ~~effect~~distributors ~~our revenues~~ and ~~financial~~retail ~~results~~consumers.

We ~~generally~~compete doin ~~not~~an ~~have~~industry ~~long-term~~characterized ~~agreements~~by ~~with~~rapid ~~our~~changes in ~~distributors~~consumer preferences, ~~and~~so weour ~~may~~inability ~~need~~to continue developing new products to satisfy ~~spend~~our ~~significant~~consumers’ ~~time~~changing ~~and~~preferences ~~incur~~would ~~significant~~have ~~expense~~a inmaterial ~~attracting~~adverse ~~and~~effect on ~~maintaining~~our ~~key~~sales ~~distributors~~volumes.

Our ~~marketing~~products ~~and~~are ~~sales~~processed ~~strategy~~from ~~presently,~~premium ~~and~~specialty infruits ~~the future, will rely on the performance of our independent distributors~~ and ~~our ability to attract additional distributors. We generally have one-year written agreements with our distributors which~~ ~~are~~sell ~~renewable~~ at ~~the~~a ~~beginning~~high ~~of every year~~price. InA ~~addition,~~decline ~~despite~~in the ~~terms~~consumption of ~~the written agreements with certain of~~ our ~~significant~~products ~~distributors,~~could ~~we have no assurance~~ occur as toa ~~the~~result ~~level~~ of ~~performance~~a ~~under~~change ~~those~~in ~~agreements~~consumer preferences, orperceptions ~~that~~and ~~those~~spending ~~agreements~~habits ~~will~~at ~~not~~any ~~be terminated~~time. ~~There~~Future issuccess ~~also no assurance that we~~ will bedepend ~~able~~partly toon ~~maintain~~ our ~~current~~ability ~~distribution~~to ~~relationships~~anticipate or adapt ~~establish~~to such changes and ~~maintain~~to ~~successful~~offer, ~~relationships~~on ~~with~~a ~~distributors~~timely inbasis, new ~~geographic~~products ~~distribution~~that ~~areas~~meet consumer preferences. ~~Moreover,~~Our ~~there~~failure ~~is the~~to ~~additional~~adapt ~~possibility~~our ~~that~~product weoffering ~~will have~~ to ~~incur~~respond ~~significant expenses~~ to such ~~attract~~changes ~~and~~may ~~maintain~~result ~~key~~in ~~distributors~~reduced indemand ~~one~~and orlower ~~more~~prices offor our ~~geographic~~products, resulting ~~distribution areas~~ in ~~order~~a tomaterial ~~profitably~~adverse ~~exploit~~effect on our ~~geographic~~sales ~~markets.~~volumes, Wesales ~~may not have sufficient~~and ~~working capital to allow us to do so~~profits.

Our current market distribution and penetration is limited as ~~Failure~~compared towith ~~execute~~the potential market and so our ~~business~~initial ~~expansion~~views ~~plan~~as ~~could~~to ~~adversely~~customer acceptance ~~affect~~of ~~our~~a ~~financial~~particular ~~condition~~product can be erroneous, and ~~results~~there ofcan ~~operations~~be no assurance that true market acceptance will ultimately be achieved. In addition, customer preferences are also affected by factors other than taste. If we do not adjust to respond to these and other changes in customer preferences, our sales may be adversely affected.

We ~~are~~rely ~~currently~~primarily ~~building~~on athird-party ~~new~~distributors, ~~fruit and vegetable powder facility~~ which could isaffect ~~expected~~our toability ~~start production in fiscal year 2011. Our decision~~ to ~~increase~~efficiently ~~our production capacity was based in part on our projections of increases in our sales volume~~ and ~~growth~~profitably indistribute ~~the size of the premium specialty fruit~~ and ~~vegetable based product~~ market ~~in China. If actual customer demand does not meet~~ our ~~projections~~ products, wemaintain ~~will likely suffer overcapacity problems and may have to leave capacity idle, which may reduce~~ our ~~overall~~existing ~~profitability~~markets and ~~adversely affect our financial condition and results of operations. Our future success depends on our ability to~~ expand our business tointo ~~address growth in demand for our current and future products. Our~~other ~~ability~~geographic ~~to add production capacity and increase output is subject to significant risks and uncertainties, including:~~ markets.

We do not sell our products directly to end customers. Instead, we rely on third-party distributors for the ~~unavailability~~sale and distribution of ~~additional~~our products. ~~funding~~As toof ~~expand~~March 31, 2011, this network consisted of approximately 44 distributors. We typically do not enter into long-term agreements with distributors and have no control over their everyday business activities. To the extent that our ~~production~~distributors ~~capacity~~are detracted from selling our products or do not expend sufficient efforts in managing and selling our products, ~~purchase~~our ~~additional~~sales ~~fixed~~will be ~~assets~~adversely affected. Our ability to maintain our distribution network and attract ~~purchase~~additional ~~raw~~distributors ~~materials~~will depend on ~~favorable~~a ~~terms~~number orof atfactors, ~~all~~many of which are outside of our control. Some of these factors include: (i) the level of demand for our brand and products in a particular distribution area; (ii) our ability to price our products at levels competitive with those offered by competing products and (iii) our ability to deliver products in the quantity and at the time ordered by distributors.

~~delays and cost overruns as a result of a number of factors, many of which may be beyond our control, such as problems with equipment vendors and suppliers of raw materials;~~14

~~failure~~There can be no assurance that we will be able to meet all or any of these factors in any of our current or prospective geographic areas of distribution. Furthermore, a shortage of adequate working capital may make it impossible for us to do so. 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 maintain ~~high~~and ~~quality~~expand ~~control~~our ~~standards;~~market, which will likely adversely effect our revenues and financial results.

~~shortage~~We ofgenerally ~~source~~do ~~fruits;~~not have long-term agreements with our distributors, and we may need to spend significant time and incur significant expense in attracting and maintaining key distributors.

Our marketing and sales strategy presently, and in the future, will rely on the performance of our ~~inability~~independent distributors and our ability to attract ~~obtain~~additional distributors. We generally have one-year written agreements with our distributors which are renewable at the beginning of every year. In addition, despite the terms of the written agreements with certain of our significant distributors, we have no assurance as to the level of performance under those agreements, or ~~delays~~that those agreements will not be terminated. There is also no assurance that we will be able to maintain our current distribution relationships or establish and maintain successful relationships with distributors in ~~obtaining~~new geographic distribution areas. Moreover, ~~required~~there ~~approvals~~is bythe additional ~~relevant~~possibility ~~government~~that ~~authorities;~~we will have to incur significant expenses to attract and maintain key distributors in one or more of our geographic distribution areas in order to profitably exploit our geographic markets. We may not have sufficient working capital to allow us to do so.

~~diversion~~A large percentage of ~~significant~~our ~~management~~net ~~attention~~sales ~~and~~has ~~other~~been ~~resources;~~derived from sales to a limited number of distributors, and our business will suffer if sales to these distributers decline.

~~failure~~A tosignificant ~~execute~~portion of our ~~expansion~~net ~~plan~~sales ~~effectively~~historically has been derived from a limited number of distributors. Our top ten distributors accounted for approximately 71.2% and 64.6% of our total net sales in fiscal year 2011 and 2010, respectively. In fiscal year 2011, our two biggest distributors Beijing Huanpenyuan Food Company Limited and Harbin Shengjinlai Economic and Technology Development Company Limited accounted for approximately 16.6% and 13.2% of our total net sales, respectively. Any significant reduction in demand for products manufactured by any of these major distributors and/or their customers and any decrease in their demand for our products could harm our sales and business operations. The loss of one or more of these distributors could damage our business, financial condition and results of operations.

AsFailure ~~our business grows, we will need~~ to ~~implement~~execute ~~a variety of new and upgraded operational and financial systems, procedures and controls, including improvements to~~ our ~~accounting~~business ~~and~~expansion ~~other~~plan ~~internal management systems by dedicating additional~~could ~~resources~~adversely toaffect our ~~reporting~~financial ~~and~~condition ~~accounting functions,~~ and ~~improvements~~results toof ~~our record keeping and contract tracking system~~operations. We will need to respond to competitive market conditions and continue to enhance existing products and develop new products, and retain existing customers and attract new customers. We will also need to recruit more personnel and train and manage our growing employee base. Furthermore, we will need to maintain and expand our relationships with our current and future customers, suppliers, distributors and other third parties, and there is no guarantee that we will succeed.

We are currently building a new fruit and vegetable powder Iffacility wein ~~encounter~~Daqing ~~any~~and ofa ~~the~~new ~~risks~~factory ~~described~~facility ~~above,~~in orZhaoyuan ~~are~~with ~~otherwise~~a ~~unable~~new multi-purpose concentrate paste production line. We also plan to ~~establish~~build oranother fruit ~~successfully~~and ~~operate~~vegetable ~~additional~~powder production ~~capacity~~line orwith toan ~~increase~~expected annual production capacity ~~output~~of approximately 10,000 wetons ~~may~~in beDaqing. ~~unable~~Our decision to ~~grow~~increase our production ~~business~~capacity ~~and~~was ~~revenues,~~based ~~reduce~~in part on our ~~operating costs~~projections of market reception, increases ~~maintain~~in our ~~competitiveness~~sales orvolume ~~improve~~and growth in the size of the premium specialty fruit and vegetable based product market in China. If actual customer demand does not meet our ~~profitability~~projections, we will likely suffer overcapacity problems and may ~~our~~have ~~business~~to leave capacity idle, which may reduce our overall profitability and adversely affect our financial condition, and results of operations. ~~and~~Our ~~prospects~~future success ~~may~~depends beon ~~adversely~~our ~~affected~~ability to expand our business to address growth in demand for our current and future products. Our ability to add production capacity and increase output is subject to significant risks and uncertainties, including:

the unavailability of additional funding to expand our production capacity, 15 purchase additional fixed assets and purchase raw materials on favorable terms or at all;
~~Because~~delays weand ~~experience~~cost ~~seasonal~~overruns ~~fluctuations~~as ina ~~our~~result ~~sales,~~of ~~our~~a ~~quarterly~~number ~~results~~of ~~will~~factors, ~~fluctuate~~many ~~and~~of ~~our~~which may ~~annual~~be ~~performance~~beyond ~~will~~our ~~depend~~control, ~~largely~~such onas ~~results~~problems ~~from~~with ~~three~~equipment ~~quarters.~~vendors and suppliers of raw materials;
~~Our~~failure ~~business is highly seasonal in production, reflecting the harvest season of our primary source fruits during the months from mid-July~~ to ~~mid-November.~~maintain ~~Typically,~~high aquality ~~substantial~~control ~~portion~~standards; of our revenues are earned during our second, third and forth fiscal quarters. We generally experience lowest revenues during our first fiscal quarter. Sales in the second, third and forth fiscal quarters accounted for approximately 26.5%, 24.4% and 36.3% of our total revenues for the fiscal year ended March 31, 2010, respectively. If sales in these quarters are lower than expected, our operating results would be adversely affected, and it would have a disproportionately large impact on our annual operating results.
~~Due~~shortage ~~to our rapid growth in recent years, our past results may not be indicative~~ of ~~our~~source ~~future~~fruits; ~~performance and evaluating our business and prospects may be difficult.~~
~~Our business has grown and evolved rapidly in recent years as demonstrated by~~ our ~~growth~~inability into ~~net sales for the fiscal year ended March 31~~obtain, ~~2010~~or todelays ~~$72.9 million from $56.4 million during the prior fiscal year. We may not be able to achieve similar growth~~ in ~~future periods~~obtaining, ~~and~~required ~~our~~approvals historical operating results may not provide a meaningful basis for evaluating our business, financial performance and prospects. Moreover, our ability to achieve satisfactory production results at higherby ~~volumes~~ relevant isgovernment ~~unproven.~~authorities; ~~Therefore, you should not rely on our past results or our historical rate of growth as an indication of our future performance.~~
Wediversion ~~depend~~of ~~heavily~~significant onmanagement ~~key~~attention ~~personnel,~~ and ~~turnover~~other ofresources; ~~key employees~~ and ~~senior management could harm our business.~~
~~Our~~failure future business and results of operations depend in significant part upon the continued contributions of our key technical and senior management personnel, including Changjun Yu, our Chairman, Jinglin Shi, our Chief Executive Officer, Colman Cheng, our Chief Financial Officer, and Manjiang Yu, our Vice President of Sales. None of these key management members currently owns any shares of common stock or any other equity interest in the Company. Although they have signed employment agreements with our subsidiary Fezdale which include a non-competition provision which prohibits them from engaging in the food processing industry during the term of the agreement and for two years after the termination of employment, such employment agreements can be terminated at will. If we lose any of these key employees and are unable to ~~find~~execute ~~a qualified replacement in a timely manner,~~ our ~~business~~expansion ~~will~~plan ~~be negative impacted~~effectively. In addition, if a key employee fails to perform in his or her current position, or if we are not able to attract and retain skilled employees as needed, our business could suffer. Significant turnover in our senior management could significantly deplete the institutional knowledge held by our existing senior management team. We depend on the skills and abilities of these key employees in managing the reclamation, technical, and marketing aspects of our business, any part of which could be harmed by turnover in the future.

The concentration of ownership of our securities by our controlling stockholders who do not participate in the management of our business can result in stockholder votes that are not in our best interests or the best interests of our minority stockholders. 15

~~Mr.~~As ~~Yiu~~our ~~Fai~~business ~~Kung~~grows, ~~and~~we ~~Mr.~~will ~~Kwan~~need Moto ~~Ng,~~implement ~~collectively~~a ~~own~~variety ~~approximately~~of new ~~79%~~and ofupgraded ~~our~~operational ~~outstanding~~and ~~voting~~financial ~~securities~~systems, ~~giving~~procedures ~~them~~and ~~controlling~~controls, including ~~interest~~improvements into ~~the~~our ~~Company.~~accounting ~~However,~~and ~~neither~~other ~~Mr.~~internal ~~Kung~~management ~~nor~~systems by ~~Mr.~~dedicating Ngadditional isresources anto ~~executive~~our ~~officer~~reporting orand ~~director~~accounting ~~of the~~functions, ~~Company~~ and isimprovements ~~not a participant in any way in the day~~ to ~~day~~our ~~affairs~~record ofkeeping ~~the~~and ~~Company.~~contract ~~Mr.~~tracking ~~Kung and Mr~~system. NgWe ~~may~~will need ~~have~~to ~~little~~respond orto nocompetitive ~~knowledge~~market ofconditions ~~the~~and ~~details~~continue ofto ~~the~~enhance existing ~~Company’s~~products ~~operations~~ and dodevelop ~~not~~new ~~participate~~products, inand ~~the~~retain ~~corporate~~existing ~~governance~~customers ~~of the~~and ~~Company.~~attract Innew ~~addition,~~customers. ~~this~~We ~~concentration~~will ~~of ownership may~~ also ~~have~~need ~~the~~to ~~effect~~recruit ofmore ~~discouraging,~~personnel ~~delaying~~and ortrain ~~preventing~~and manage aour ~~future~~growing ~~change~~employee ofbase. ~~control~~Furthermore, ~~which~~we ~~could~~will ~~deprive~~need ~~our~~to ~~stockholders~~maintain ofand expand anour ~~opportunity~~relationships towith ~~receive~~our acurrent ~~premium~~and ~~for~~future ~~their~~customers, ~~shares as part~~suppliers, ofdistributors aand ~~sale~~other ofthird ~~our~~parties, ~~company~~ and ~~might~~there ~~reduce~~is ~~the~~no ~~price~~guarantee ofthat ~~our~~we ~~shares~~will succeed.

If we encounter any of the risks described above, or are ~~Our~~otherwise ~~inability~~unable to ~~protect~~establish ~~our~~or ~~trademarks~~successfully operate additional production capacity or to increase production output, ~~patent~~we may be unable to grow our business and ~~trade~~revenues, ~~secrets~~reduce ~~may~~our ~~prevent~~operating uscosts, ~~from~~maintain ~~successfully~~our ~~marketing~~competitiveness or improve our ~~products~~profitability, and ~~competing~~our ~~effectively~~business, financial condition, results of operations and prospects may be adversely affected.

~~Failure~~Because towe ~~protect~~experience ~~our~~seasonal ~~intellectual~~fluctuations property could harm our brands and our reputation, and adversely affect our ability to compete effectively. Further, enforcing or defending our intellectual property rights, including our trademarks, patents, copyrights and trade secrets, could result in ~~the expenditure of significant financial and managerial resources. We produce, market and sell~~ our ~~products under “农珍之冠 .” We regard our intellectual property~~sales, ~~particularly our trademarks and trade secrets to be of considerable value and importance to our business and our success. We rely on a~~ ~~combination of trademark, patent, and trade secrecy laws, and contractual provisions to protect~~ our ~~intellectual~~quarterly ~~property~~results ~~rights. There can be no assurance that the steps taken by us to protect these proprietary rights~~ will befluctuate ~~adequate~~and ~~or that third parties will not infringe or misappropriate~~ our ~~trademarks,~~annual ~~trade~~performance ~~secrets (including our flavor concentrate trade secrets) or similar proprietary rights. In addition, there can be no assurance that other parties~~ will ~~not assert infringement claims~~depend ~~against~~largely us, and we may have to pursue litigation against other parties to assert our rights. Any such claim or litigation could be costly and we may lack the resources required to defend against such claims. In addition, any event that would jeopardize our proprietary rights or any claims of infringement by third parties could have a material adverse affect on ~~our~~results ~~ability~~from tothree ~~market or sell our brands, and profitably exploit our products~~quarters.

Our business is highly seasonal in production, reflecting the 16harvest season of our primary source fruits during the months from mid-July to mid-November. Typically, a substantial portion of our revenues are earned during our second, third and forth fiscal quarters. We generally experience lowest revenues during our first fiscal quarter. Sales in the second, third and forth fiscal quarters accounted for approximately 26.7%, 25.5% and 36.8% of our total net sales for the fiscal year ended March 31, 2011, respectively. If sales in these quarters are lower than expected, our operating results would be adversely affected, and it would have a disproportionately large impact on our annual operating results.

WeDue ~~may~~to beour ~~exposed~~rapid togrowth ~~potential~~in ~~risks~~recent ~~relating~~years, to our ~~internal~~past ~~controls~~results may ~~over~~not ~~financial~~be ~~reporting~~indicative ~~and~~of our ~~ability~~future toperformance ~~have~~and ~~those~~evaluating ~~controls~~our ~~attested~~business toand prospects bymay ~~our~~be ~~independent auditors~~difficult.

AsOur ~~directed~~business byhas ~~Section~~grown ~~404~~and ofevolved ~~the~~rapidly ~~Sarbanes-Oxley Act of 2002, or “SOX 404”, the SEC adopted rules requiring public companies to include a report of management on the company’s internal controls over financial reporting~~ in ~~their~~recent ~~annual reports,~~years including Form 10-K. In addition, the independent registered public accounting firm auditing a company’s financial statements must also attest to the operating effectiveness of the company’s internal controls. Under current law,as wedemonstrated ~~were~~by ~~subject~~our togrowth ~~these~~in ~~requirements~~net ~~beginning~~sales ~~with our annual report~~ for the fiscal year ~~ending~~ended March 31, ~~2008,~~2011 to ~~although~~$87.0 ~~the~~million ~~auditor~~from ~~attestation~~$56.4 ~~was~~million ~~not required until our annual report~~ for ~~the~~ fiscal year ~~ending March 31, 2011~~2009. We ~~can provide~~may nonot ~~assurance that we will comply with all of the requirements imposed thereby. There can~~ be noable ~~positive~~to achieve ~~assurance~~similar ~~that~~growth wein ~~will~~future ~~receive~~periods, aand ~~positive attestation from~~ our ~~independent~~historical ~~auditors.~~operating Inresults may ~~the~~not ~~event~~provide wea ~~identify~~meaningful ~~significant~~basis ~~deficiencies~~for ~~or material~~evaluating ~~weaknesses in~~ our ~~internal~~business, ~~controls~~financial performance ~~that~~and weprospects. ~~cannot~~Moreover, ~~remediate~~our inability ato ~~timely~~achieve ~~manner~~satisfactory production orresults weat ~~are~~higher ~~unable~~volumes tois ~~receive~~unproven. aTherefore, ~~positive~~you ~~attestation~~should ~~from~~not rely on our ~~independent~~past ~~auditors~~results ~~with~~or ~~respect to~~ our ~~internal~~historical ~~controls,~~rate ~~investors~~of ~~and~~growth ~~others~~as ~~may~~an ~~lose~~indication ~~confidence in the reliability~~ of our future ~~financial statements~~performance.

WeOur ~~have~~growth ~~limited~~strategy ~~insurance~~may ~~coverage~~require ~~and~~additional docapital that may not ~~carry~~be ~~any~~available ~~business~~on ~~interruption~~favorable ~~insurance,~~terms ~~third-party liability insurance for our production facilities~~ or ~~insurance~~at ~~that covers the risk of loss of our products in shipment~~all.

~~Operation~~We ofhave, in the past, sold our ~~facilities~~common ~~involves~~stock ~~many~~to ~~risks,~~raise ~~including~~additional capital. ~~equipment~~Our ~~failures,~~business ~~natural~~expansion ~~disasters,~~requires ~~industrial~~significant ~~accidents,~~capital ~~power~~and ~~outages,~~although ~~labor~~we believe ~~disturbances~~that our current cash and ~~other~~cash ~~business~~flow ~~interruptions.~~from ~~Furthermore,~~operations ifwill ~~any~~be ofsufficient to meet our ~~products~~present ~~are~~and ~~faulty,~~reasonably ~~then~~anticipated cash needs, we may, in the ~~become~~future, ~~subject~~require additional cash resources due to ~~product~~changed ~~liability~~business ~~claims~~conditions, implementation of our strategy to expand our production capacity or other investments or acquisitions we may ~~have~~decide to ~~engage~~pursue. inIf aour ~~product~~own ~~recall.~~financial resources Weare doinsufficient ~~not~~to ~~carry~~satisfy ~~any~~our ~~business~~capital ~~interruption insurance~~requirements, ~~product~~we ~~recall~~may seek to sell additional equity or ~~third-party~~debt ~~liability~~securities ~~insurance~~or ~~for~~obtain ~~our~~additional ~~production~~credit facilities and orthere ~~with~~can ~~respect~~be tono ~~our products~~assurance tothat ~~cover~~such ~~claims~~financing ~~pertaining~~will tobe ~~personal~~available ~~injury~~as needed or, ~~property~~if oravailable, ~~environmental~~on ~~damage~~terms ~~arising~~favorable ~~from~~to ~~defects~~us. inAny ~~our~~additional ~~products,~~equity ~~product~~financing ~~recalls,~~may be ~~accidents~~dilutive onto ~~our~~shareholders ~~property~~and such additional equity securities may have rights, preferences or ~~damage~~privileges ~~relating~~that are senior to those of our ~~operations~~existing common stock. ~~Therefore,~~The ~~our~~incurrence ~~existing~~of ~~insurance~~indebtedness would result in increased debt ~~coverage~~service ~~may~~obligations ~~not~~and becould ~~sufficient~~require us to ~~cover~~agree ~~all~~to ~~risks~~operating ~~associated~~and ~~with~~financial covenants that would restrict our ~~business~~operations. AsIf awe ~~result,~~are weunable ~~may~~to begenerate sufficient ~~required~~cash toflow ~~pay~~from ~~for~~operating ~~financial~~activities ~~and~~or ~~other~~obtain ~~losses,~~funds ~~damages~~for required payments of interest and ~~liabilities,~~principal ~~including~~on ~~those~~such ~~caused~~additional byindebtedness, ~~natural~~or ~~disasters~~if ~~and~~we fail ~~other~~to ~~events~~comply ~~beyond~~with our ~~control~~ debt covenants, ~~out~~we ofwill ~~our~~be ~~own~~in default. Any failure by us to raise additional funds on terms favorable to us, ~~which~~or ~~could~~at ~~have~~all, acould ~~material~~limit ~~adverse~~our ability ~~effect~~to onexpand our business, ~~financial~~operations ~~condition~~ and ~~results~~could ofharm ~~operations~~our overall business prospects.

We ~~may~~depend beheavily ~~exposed~~on tokey ~~liabilities under the Foreign Corrupt Practices Act~~personnel, and ~~any~~turnover ~~determination~~of ~~that~~key employees weand ~~violated~~senior ~~the~~management ~~Foreign Corrupt Practices Act~~ could ~~have~~harm ~~a material adverse effect on~~ our business.

WeOur ~~are~~future ~~subject~~business toand ~~the~~results ~~Foreign~~of ~~Corrupt~~operations ~~Practice~~depend ~~Act,~~in significant orpart upon the ~~“FCPA”,~~continued ~~and~~contributions ~~other~~of ~~laws~~our ~~that~~key ~~prohibit~~technical ~~improper~~and senior ~~payments~~management orpersonnel, ~~offers~~including ofChangjun ~~payments~~Yu, toour ~~foreign~~Chairman ~~governments~~ and ~~their~~Chief Executive ~~officials~~Officer and ~~political~~Colman ~~parties~~Cheng, byour ~~U.S.~~Chief ~~persons~~Financial ~~and~~Officer. ~~issuers~~None asof ~~defined~~these bykey ~~the~~management ~~statute~~members ~~for~~currently ~~the~~owns ~~purpose~~any shares of ~~obtaining~~common stock or ~~retaining~~any ~~business~~other equity interest in the Company. WeAlthough they have ~~operations,~~signed ~~agreements~~employment agreements with ~~third~~our ~~parties~~subsidiary ~~and~~Fezdale ~~make~~which ~~sales~~include ina ~~China,~~non-competition provision which ~~may~~prohibits ~~experience~~them ~~corruption.~~from ~~Our~~engaging ~~activities~~ in ~~China create~~ the ~~risk~~food ofprocessing ~~unauthorized~~industry ~~payments~~during ~~or offers~~the term of ~~payments~~the byagreement ~~one~~and offor ~~the~~two ~~employees,~~years ~~consultants,~~after ~~sales~~the ~~agents~~termination orof ~~distributors~~employment, such ofemployment ~~our~~agreements ~~company,~~can ~~because~~be ~~these~~terminated ~~parties~~at ~~are~~will. ~~not~~If ~~always~~we ~~subject~~lose toany ~~our~~of ~~control.~~these key Itemployees isand ~~our~~are ~~policy~~unable to ~~implement~~find ~~safeguards~~a toqualified ~~discourage~~replacement ~~these~~in ~~practices~~a bytimely manner, our ~~employees. Also,~~business ~~our~~will ~~existing~~be ~~safeguards~~negatively ~~and~~impacted. ~~any~~In ~~future~~addition, ~~improvements~~if ~~may~~a ~~prove~~key employee fails to beperform ~~less~~in ~~than~~his ~~effective,~~or ~~and~~her ~~the~~current ~~employees~~position, ~~consultants, sales agents~~ or ~~distributors~~if ofwe ~~our~~are ~~Company~~not ~~may~~able ~~engage~~to inattract ~~conduct~~and retain ~~for~~skilled ~~which~~employees weas ~~might~~needed, beour ~~held~~business ~~responsible~~could suffer. ~~Violations of~~Significant ~~the~~turnover ~~FCPA may result~~ in ~~severe~~our ~~criminal~~senior ormanagement ~~civil~~could ~~sanctions,~~significantly ~~and~~deplete wethe ~~may~~institutional knowledge beheld ~~subject~~by toour ~~other~~existing ~~liabilities,~~senior ~~which~~management ~~could~~team. ~~negatively~~We ~~affect~~depend ~~our~~on ~~business,~~the ~~operating results~~ skills and ~~financial~~abilities ~~condition.~~of Inthese ~~addition,~~key ~~the~~employees ~~government~~in ~~may~~managing ~~seek~~the toreclamation, ~~hold~~technical, ~~our Company~~and ~~liable~~marketing ~~for~~aspects ~~successor~~of ~~liability~~our ~~FCPA~~business, ~~violations~~any ~~committed~~part byof ~~companies in~~ which wecould ~~invest~~be orharmed ~~that~~by weturnover in ~~acquire~~the future.

17 16

The concentration of ownership of our securities by our ~~RISKS~~controlling ~~RELATED~~stockholders TOwho ~~DOING~~do ~~BUSINESS~~not INparticipate ~~CHINA~~in the management of our business can result in stockholder votes that are not in our best interests or the best interests of our minority stockholders.

Mr. Yiu Fai Kung and Mr. Kwan Mo Ng, collectively beneficially ~~Adverse~~own ~~changes~~approximately 79% of our outstanding voting securities, giving them controlling interest in ~~political~~the Company. However, neither Mr. Kung nor Mr. Ng is an executive officer or director of the Company and ~~economic~~is ~~policies~~not a participant in any way in the day to day affairs of the ~~PRC~~Company. ~~government~~Mr. ~~could~~Kung ~~impede~~and Mr. Ng may have little or no knowledge of the ~~overall~~details ~~economic~~of ~~growth~~the Company’s operations and do not participate in the corporate governance of ~~China~~the Company. In addition, this concentration of ownership may also have the effect of discouraging, delaying or preventing a future change of control, which could ~~reduce~~deprive ~~the~~our ~~demand~~stockholders of an opportunity to receive a premium for their shares as part of a sale of our ~~products~~company and ~~damage~~might reduce the price of our ~~business~~shares.

WeOur ~~conduct~~inability ~~substantially~~to ~~all~~protect of our ~~operations and generate most of our revenue in China. Accordingly~~trademarks, ~~our~~patent ~~business, financial condition, results of operations~~ and ~~prospects are affected significantly by economic, political and legal developments in~~trade ~~China.~~secrets ~~The~~may ~~PRC~~prevent ~~economy~~us ~~differs~~ from ~~the~~successfully ~~economies~~marketing ofour ~~most~~products ~~developed~~and ~~countries in many respects, including:~~ competing effectively.

Failure to protect our intellectual property could harm our brands and our reputation, and adversely affect our ability to compete effectively. Further, enforcing or defending our intellectual property rights, including our trademarks, patents, copyrights and trade secrets, could result in the expenditure of significant financial and managerial resources. We produce, market and sell our products under “农珍之冠”. We regard our intellectual property, particularly our trademarks and trade secrets to be of considerable value and importance to our business and our success. We rely on a ~~higher~~combination ~~level~~of trademark and trade secrecy laws, and contractual provisions to protect our intellectual property rights. There can be no assurance that the steps taken by us to protect these proprietary rights will be adequate or that third parties will not infringe or misappropriate our trademarks, trade secrets (including our flavor concentrate trade secrets) or similar proprietary rights. In addition, there can be no assurance that other parties will not assert infringement claims against us, and we may have to pursue litigation against other parties to assert our rights. Any such claim or litigation could be costly and we may lack the resources required to defend against such claims. In addition, any event that would jeopardize our proprietary rights or any claims of ~~government~~infringement ~~involvement;~~by third parties could have a material adverse affect on our ability to market or sell our brands, and profitably exploit our products.

aWe ~~early~~may ~~stage~~be ofexposed ~~development~~to ofpotential ~~the~~risks ~~market-oriented~~relating ~~sector~~to ofour internal ~~the~~controls ~~economy;~~over financial reporting and our ability to have those controls attested to by our independent auditors.

As directed by Section 404 of the Sarbanes-Oxley Act of 2002, or “SOX 404”, the SEC adopted rules requiring public companies to include a report ~~rapid~~of ~~growth~~management ~~rate;~~on the company’s internal controls over financial reporting in their annual reports, including Form 10-K. In addition, the independent registered public accounting firm auditing a company’s financial statements must also attest to the operating effectiveness of the company’s internal controls. As a smaller reporting company, we are currently exempt from the auditor attestation requirements. We can provide no assurance that we will comply with all of the requirements imposed thereby. There can be no positive assurance that we will receive a positive attestation from our independent auditors, when required. In the event we identify significant deficiencies or material weaknesses in our internal controls that we cannot remediate in a timely manner or we are unable to receive a positive attestation from our independent auditors with respect to our internal controls, investors and others may lose confidence in the reliability of our financial statements.

~~a higher level of control over foreign exchange; and~~17

We have limited insurance coverage and do not carry any business interruption insurance, third-party liability insurance for our production facilities or insurance that covers the ~~allocation~~risk of ~~resources~~loss of our products in shipment.

Operation of our facilities involves many risks, including Asequipment ~~the~~failures, ~~PRC~~natural ~~economy~~disasters, ~~has~~industrial ~~been~~accidents, ~~transitioning~~power ~~from~~outages, labor adisturbances ~~planned~~and ~~economy~~other business interruptions. Furthermore, if any of our products are faulty, then we may become subject to product liability claims or we may have to engage in a ~~more~~product ~~market~~recall. We do not carry any business interruption insurance, product recall or third-~~oriented~~party ~~economy~~liability insurance for our production facilities or with respect to our products to cover claims pertaining to personal injury or property or environmental damage arising from defects in our products, ~~the~~product ~~PRC~~recalls, ~~government~~accidents ~~has~~on ~~implemented~~our ~~various~~property ~~measures~~or damage relating to ~~encourage~~our ~~economic~~operations. ~~growth~~Therefore, ~~and~~our ~~guide~~existing ~~the~~insurance ~~allocation~~coverage ofmay ~~resources~~not be sufficient to cover all risks associated with our business. ~~While~~As ~~these~~a ~~measures~~result, we may be required to pay for financial and other losses, damages and liabilities, ~~benefit~~including ~~the~~those ~~overall~~caused ~~PRC~~by ~~economy~~natural disasters and other events beyond our control, out ~~they~~of ~~may~~our ~~also~~own funds, which could have a ~~negative~~material adverse effect on usour business, financial condition and results of operations.

~~Although~~We ~~the~~may ~~PRC~~be ~~government~~exposed ~~has in recent years implemented measures emphasizing the utilization of market forces for economic reform, the PRC government continues~~ to ~~exercise~~liabilities ~~significant~~under ~~control over economic growth in China through~~ the ~~allocation~~Foreign ofCorrupt ~~resources,~~Practices ~~controlling~~Act ~~the~~and ~~payment~~Chinese ~~of foreign currency~~anti-~~denominated~~corruption ~~obligations~~laws, ~~setting~~and ~~monetary~~any ~~policy~~determination that ~~and~~we ~~imposing~~violated ~~policies~~these ~~that~~laws ~~impact~~could ~~particular~~have ~~industries~~a ormaterial ~~companies~~adverse ineffect ~~different~~on ~~ways~~our business.

We are subject to the Foreign Corrupt Practice Act, or FCPA, ~~Any~~and ~~adverse~~other ~~change~~laws inthat ~~economic~~prohibit ~~conditions~~improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute, for the purpose of obtaining or retaining business. We have operations, agreements with third parties and we make most of our sales in China. PRC also strictly prohibits bribery of government ~~policies~~officials. Our activities in China ~~could~~create ~~have~~the arisk ~~material~~of ~~adverse~~unauthorized ~~effect~~payments onor offers of payments by the ~~overall~~employees, ~~economic~~consultants, ~~growth~~sales inagents ~~China~~or distributors of our Company, ~~which~~even inthough ~~turn~~they ~~could~~may ~~lead~~not always be subject to aour ~~reduction~~control. It is our policy to implement safeguards to discourage these practices by our employees. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, sales agents or distributors of our Company may engage in ~~demand~~conduct for ~~our~~which ~~services~~we might be held responsible. Violations of the FCPA or Chinese anti-corruption laws may result in severe criminal or civil sanctions, and ~~consequently~~we ~~have~~may abe subject to other ~~material~~liabilities, ~~adverse~~which ~~effect~~could onnegatively affect our business, operating results and financial ~~prospects~~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.

PRC food hygiene and safety laws may become more onerous, which may adversely affect our operations and financial performance and lead to an increase in our costs which we may be unable to pass on to our customers. 18

~~Operators~~RISKS ~~within~~RELATED ~~the~~TO ~~PRC~~DOING ~~fruit~~BUSINESS ~~processing~~IN industry are subject to compliance with PRC food hygiene and safety laws and regulations. Such laws and regulations require all enterprises engaged in the production of fruit based products to obtain a hygiene license. They also set out hygiene standards with respect to food and food additives, packaging and containers, labeling on packaging as well as hygiene requirements for food production and sites, facilities and equipment used for the transportation and the sale of food. Failure to comply with PRC food hygiene and safety laws may result in fines, suspension of operations, loss of hygiene license and, in certain cases, criminal proceedings against an enterprise and its management. Although we are in compliance with current PRC food hygiene and safety laws and regulations, in the event that such laws and regulations become more stringent or widen in scope, we may fail to comply with such laws, or if we comply, our production and distribution costs may increase, and we may be unable to pass these additional costs on to our customers. CHINA

~~Uncertainties~~Adverse ~~with~~changes ~~respect~~in topolitical ~~the~~and ~~PRC~~economic ~~legal~~policies ~~system~~of the PRC government could ~~limit~~impede the ~~legal~~overall ~~protections~~economic ~~available~~growth toof ~~you~~China, which could reduce the demand for our products and usdamage our business.

We conduct substantially all of our ~~business~~operations ~~through our operating subsidiary in the PRC. Our operating subsidiary is generally subject to laws~~ and ~~regulations applicable to foreign investments in China and, in particular, laws applicable to~~generate ~~foreign-invested~~most ~~enterprises. The PRC legal system is based on written statutes, and prior court decisions may be cited for reference but have limited precedential value. Since 1979, a series~~ of ~~new~~our ~~PRC~~revenue ~~laws and regulations have significantly enhanced the protections afforded to various forms of foreign investments~~ in China. ~~However~~Accordingly, ~~since~~our ~~the~~business, ~~PRC~~financial ~~legal system continues to rapidly evolve~~condition, results ~~the interpretations~~ of ~~many~~operations ~~laws, regulations~~ and ~~rules~~prospects are ~~not~~affected ~~always~~significantly ~~uniform~~by ~~and enforcement of~~economic, ~~these~~political ~~laws, regulations~~ and ~~rules involve uncertainties, which may limit~~ legal ~~protections~~developments ~~available to you and us. In addition, any litigation~~ in China ~~may be protracted and result in substantial costs and diversion of resources and management attention~~. InThe ~~addition,~~PRC ~~all~~economy ofdiffers ~~our~~from ~~executive officers and all of our directors are residents of China and not of~~ the ~~United States, and substantially all the assets of these persons are located outside the United States. As a result, it could be~~ ~~difficult~~economies ~~for investors to affect service~~ of ~~process~~most indeveloped ~~the~~countries ~~United States or to enforce a judgment obtained~~ in ~~the~~many ~~United~~respects, ~~States against our Chinese operations and subsidiary.~~ including:

18a higher level of government involvement;
~~You~~a ~~may~~early ~~have~~stage ~~difficulty~~of ~~enforcing~~development ~~judgments~~of ~~against~~the ~~us.~~market-oriented sector of the economy;
~~We are~~ a ~~Nevada~~rapid ~~holding~~growth ~~company~~rate; and most of our assets are located outside of the United States. All of our current operations are conducted in the PRC. In addition, all of our directors and officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons is located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons. It may also be difficult for you to enforce in U.S. courts judgments on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, most of whom are not residents in the United States and the substantial majority of whose assets are located outside of the United States. In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts. Grandall Legal Group, our counsel as to PRC law, has advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. Courts in China may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions. China does not have any treaties or other arrangements that provide for the reciprocal recognition and enforcement of foreign judgments with the United States. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates basic principles of PRC law or national sovereignty, security or the public interest. So it is uncertain whether a PRC court would enforce a judgment rendered by a court in the United States.
Ifa wehigher ~~are~~level ~~found~~of tocontrol ~~have~~over ~~failed~~foreign toexchange; ~~comply with applicable laws, we may incur additional expenditures or be subject to significant fines~~ and ~~penalties.~~
~~Our operations are subject to PRC laws and regulations applicable to us. However, many PRC laws and regulations are uncertain in their scope, and~~ the ~~implementation~~allocation of ~~such laws and regulations in different localities could have significant differences~~resources. In certain instances, local implementation rules and/or the actual implementation are not necessarily consistent with the regulations at the national level. Although we strive to comply with all the applicable PRC laws and regulations, we cannot assure you that the relevant PRC government authorities will not later determine that we have not been in compliance with certain laws or regulations.

InAs ~~addition, our facilities and products are subject to many laws and regulations administered by~~ the PRC ~~State~~economy ~~Administration~~has ~~for~~been ~~Industry~~transitioning ~~and~~from ~~Commerce,~~a ~~the~~planned economy ~~PRC~~to ~~State~~a ~~Administration~~more ofmarket-oriented ~~Taxation~~economy, the PRC ~~Ministry~~government ofhas ~~Health and Hygiene Permitting~~implemented ~~Office,~~various ~~the~~measures ~~PRC~~to ~~General~~encourage ~~Administration~~economic ofgrowth ~~Quality Supervision, Inspection~~ and ~~Quarantine,~~guide ~~and~~ the ~~PRC~~allocation ~~State Food and Drug Administration Bureau relating to the processing, packaging, storage, distribution, advertising, labeling, quality, and safety~~ of ~~food products~~ resources. ~~Our~~While ~~failure to comply with~~ these ~~and~~measures ~~other~~may ~~applicable~~benefit ~~laws~~the ~~and~~overall ~~regulations~~PRC ~~in China could subject us to administrative penalties and injunctive relief~~economy, asthey ~~well as civil remedies, including fines, injunctions and recalls of our~~may ~~products.~~also ~~It is possible that changes to such laws or more rigorous enforcement of such laws or with respect to our current or past practices could~~ have a ~~material~~negative ~~adverse~~ effect on ~~our business, operating results and financial condition~~us. ~~Further, additional environmental, health or safety issues relating to matters that are not currently known to management may result in unanticipated liabilities and expenditures.~~

Although the PRC government has in recent years implemented ~~The~~measures emphasizing the utilization of market forces for economic reform, the PRC government ~~exerts~~continues ~~substantial~~to ~~influence~~exercise significant control over ~~the~~economic ~~manner~~growth in China ~~which~~through wethe ~~must~~allocation ~~conduct~~of ~~our~~resources, ~~business~~controlling ~~activities~~the payment of foreign currency-denominated obligations, setting monetary policy and imposing policies that impact particular industries or companies in different ways.

~~The~~Any ~~PRC~~adverse ~~government~~change ~~has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate~~ in ~~China~~economic ~~may~~conditions beor ~~harmed by changes in its laws and~~government ~~regulations,~~policies ~~including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters. We believe that our operations~~ in China ~~are~~could inhave a material ~~compliance~~adverse ~~with~~effect ~~all~~on ~~applicable~~the ~~legal~~overall ~~and~~economic ~~regulatory~~growth ~~requirements.~~in ~~However~~China, ~~the~~which ~~central~~in orturn ~~local~~could ~~governments~~lead ofto ~~the~~a ~~jurisdictions~~reduction in ~~which~~demand wefor ~~operate~~our services ~~may~~and ~~impose~~consequently ~~new,~~have ~~stricter~~a ~~regulations~~material oradverse ~~interpretations~~effect ~~of existing regulations that would require additional expenditures and efforts~~ on our ~~part~~ tobusiness ~~ensure our compliance with such regulations or interpretations~~and prospects.

~~Accordingly,~~PRC ~~government~~food ~~actions~~hygiene ~~in the future, including any decision not to continue to support recent economic reforms~~ and tosafety ~~return~~laws tomay abecome more ~~centrally planned economy or regional or local variations in the implementation of economic policies~~onerous, which ~~could~~may ~~have~~adversely aaffect ~~significant~~our ~~effect~~operations onand ~~economic~~financial ~~conditions~~performance ~~in China or particular regions thereof~~ and ~~could~~lead ~~require us~~ to an ~~divest~~increase ~~ourselves~~in ofour ~~any~~costs ~~interest~~which we ~~then~~may ~~hold~~be inunable ~~Chinese~~to ~~properties~~pass oron ~~joint~~to ~~ventures~~our customers.

Operators within the PRC fruit processing industry are subject 19to compliance with PRC food hygiene and safety laws and regulations. Such laws and regulations require all enterprises engaged in the production of fruit based products to obtain a hygiene license. They also set out hygiene standards with respect to food and food additives, packaging and containers, labeling on packaging as well as hygiene requirements for food production and sites, facilities and equipment used for the transportation and the sale of food. Failure to comply with PRC food hygiene and safety laws may result in fines, suspension of operations, loss of hygiene license and, in certain cases, criminal proceedings against an enterprise and its management. Although we are in compliance with current PRC food hygiene and safety laws and regulations, in the event that such laws and regulations become more stringent or widen in scope, we may fail to comply with such laws, or if we comply, our production and distribution costs may increase, and we may be unable to pass these additional costs on to our customers.

~~Future~~Uncertainties ~~inflation~~with inrespect ~~China~~to ~~may~~the ~~inhibit~~PRC ~~our~~legal ~~ability~~system tocould limit ~~conduct~~the ~~business~~legal inprotections ~~China~~available to you and us.

We conduct substantially all of our business through our Inoperating ~~recent~~subsidiaries ~~years,~~in the ~~Chinese~~PRC. ~~economy~~Our ~~has~~operating ~~experienced~~subsidiaries ~~periods~~are ofgenerally subject ~~rapid~~to ~~expansion~~laws and ~~highly~~regulations ~~fluctuating~~applicable ~~rates~~to offoreign ~~inflation~~investments in China and, in particular, laws applicable to foreign-invested enterprises. ~~During~~The ~~the~~PRC ~~past~~legal system ~~ten~~is ~~years~~based on written statutes, ~~the~~and ~~rate~~prior ofcourt ~~inflation~~decisions inmay ~~China~~be ~~has~~cited ~~been~~for reference asbut ~~high~~have aslimited 5precedential value.9% ~~and~~Since as1979, ~~low~~a asseries ~~-0.8%~~of .new ~~These~~PRC laws ~~factors~~and regulations have ~~led~~ tosignificantly enhanced the ~~adoption~~protections byafforded ~~the~~to various ~~Chinese~~forms ~~government,~~of ~~from~~foreign ~~time~~investments toin ~~time~~China. However, ofsince ~~various~~the ~~corrective~~PRC ~~measures~~legal system ~~designed~~continues to ~~restrict~~rapidly evolve, the ~~availability~~interpretations of ~~credit~~many orlaws, regulations ~~regulate~~and ~~growth~~rules are not always uniform and ~~contain~~enforcement ~~inflation~~of these laws, regulations and rules involve uncertainties, which may limit legal protections available to you and us. ~~High~~In ~~inflation~~addition, any litigation in China may be protracted and result in ~~the~~substantial ~~future~~costs ~~cause~~and ~~the~~diversion ~~Chinese~~of ~~government~~resources and management toattention. ~~impose~~In ~~controls~~addition, onall ~~credit~~of our executive officers and~~/or~~ ~~prices~~most of our directors are residents of China and not of the United States, orand tosubstantially ~~take~~all ~~other~~the ~~action~~assets of these persons are located outside the United States. As a result, ~~which~~it could ~~inhibit~~be difficult ~~economic~~for ~~activity~~investors to affect service of process in ~~China,~~the ~~and~~United ~~thereby~~States ~~harm~~or to enforce a judgment obtained in the ~~market~~United ~~for~~States against our ~~products~~Chinese operations and ~~our company~~subsidiary.

~~Restrictions on currency exchange may limit our ability to receive and use our sales revenue effectively.~~ 19

~~All~~You our sales revenue and expenses are denominated in RMB. Under PRC law, the RMB is currently convertible under the “current account,” which includes dividends and trade and service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and loans. Currently, our PRC operating subsidiary may ~~purchase~~have ~~foreign~~difficulty ~~currencies~~enforcing ~~for~~judgments ~~settlement~~against ~~of current account transactions, including payments of dividends to~~ us~~, without the approval of the State Administration of Foreign Exchange, or SAFE, by complying with certain procedural requirements~~. ~~However, the relevant PRC government authorities may limit or eliminate our ability to purchase foreign currencies in the~~ future. Since a significant amount of our future revenue will be denominated in RMB, any existing and future restrictions on currency exchange may limit our ability to utilize revenue generated in RMB to fund our business activities outside China that are denominated in foreign currencies.

We are a Nevada holding company and most of our assets are ~~Foreign~~located ~~exchange~~outside ~~transactions~~of bythe United States. Substantially all of our current operations are conducted in the PRC. ~~operating~~In ~~subsidiary~~addition, ~~under~~most of our directors and officers are nationals and residents of countries other than the ~~capital~~United ~~account~~States. A ~~continue~~substantial portion of the assets of these persons is located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons. It may also be ~~subject~~difficult for you to ~~significant~~enforce ~~foreign~~in ~~exchange~~U.S. ~~controls~~courts ~~and~~judgments ~~require~~on the ~~approval~~civil liability provisions of the orU.S. ~~need~~federal tosecurities ~~register~~laws ~~with~~against ~~PRC~~us ~~government~~and ~~authorities~~our officers and directors, ~~including~~most of ~~SAFE.~~whom are not residents in the United States and the substantial majority of whose assets are located outside of the United States. In ~~particular~~addition, ifthere ~~our~~is uncertainty as to whether the courts of the PRC ~~operating~~would ~~subsidiary~~recognize ~~borrows~~or ~~foreign~~enforce judgments ~~currency~~of ~~through~~U.S. ~~loans~~courts. ~~from~~Grandall Legal Group, our counsel as to PRC law, has advised us orthat ~~other~~the recognition and enforcement of foreign ~~lenders,~~judgments ~~these~~are provided ~~loans~~for ~~must~~under bethe ~~registered~~PRC Civil Procedures Law. Courts in China may recognize and enforce foreign judgments in accordance with ~~SAFE,~~the requirements of the PRC Civil Procedures Law based on treaties between China and ifthe wecountry ~~finance~~where the judgment ~~subsidiary~~is bymade ~~means~~or on reciprocity between jurisdictions. China does not have any treaties or other arrangements that provide for the reciprocal recognition and enforcement of ~~additional~~foreign ~~capital~~judgments ~~contributions~~with the United States. In addition, according ~~these~~to the PRC Civil Procedures Law, courts in the PRC will not enforce a ~~capital~~foreign ~~contributions~~judgment ~~must~~against beus ~~approved~~or byour ~~certain~~directors ~~government~~and ~~authorities,~~officers ~~including~~if they decide that the ~~Ministry~~judgment violates basic principles of ~~Commerce,~~PRC law or ~~MOFCOM~~national sovereignty, security or ~~their~~the ~~respective~~public ~~local counterparts~~interest. ~~These~~So ~~limitations~~it ~~could~~is ~~affect~~uncertain ~~their~~whether ~~ability~~a toPRC ~~obtain~~court ~~foreign~~would enforce ~~exchange~~a ~~through~~judgment ~~debt~~rendered ~~or equity~~by ~~financing~~a court in the United States.

~~Fluctuations~~If inwe ~~exchange~~are ~~rates~~found ~~could~~to ~~adversely~~have ~~affect~~failed ~~our~~to ~~business~~comply ~~and~~with ~~the~~applicable laws, ~~value~~we ofmay ~~our~~incur ~~securities~~additional expenditures or be subject to significant fines and penalties.

~~The~~Our ~~value~~operations ofare ~~our~~subject ~~common~~to ~~stock~~PRC ~~will~~laws beand ~~indirectly~~regulations applicable ~~affected~~to byus. ~~the~~However, ~~foreign~~many ~~exchange~~PRC ~~rate~~laws ~~between~~and ~~the~~regulations ~~U.S.~~are ~~dollar~~uncertain ~~and~~in ~~RMB~~their scope, and ~~between~~the ~~those~~implementation ~~currencies~~of ~~and~~such ~~other~~laws ~~currencies~~and regulations in ~~which~~different localities ~~our~~could ~~sales~~have ~~may~~significant ~~be denominated~~differences. ~~Appreciation~~In orcertain ~~depreciation~~instances, inlocal implementation ~~the~~rules ~~value of~~and/or the ~~RMB~~actual ~~relative~~implementation toare ~~the~~not ~~U.S.~~necessarily consistent ~~dollar~~with ~~would~~the ~~affect~~regulations ~~our~~at ~~financial~~the ~~results~~national ~~reported in U~~level.S. ~~dollar~~Although ~~terms~~we ~~without~~strive ~~giving effect~~ to comply ~~any~~with ~~underlying~~all ~~change~~the inapplicable ~~our~~PRC ~~business~~laws orand ~~results~~regulations, ofwe ~~operations.~~cannot ~~Fluctuations~~assure inyou that the ~~exchange~~relevant ~~rate~~PRC ~~will~~government ~~also~~authorities ~~affect~~will ~~the relative~~not ~~value~~later ofdetermine ~~any~~that ~~dividend~~ we have ~~issue~~not ~~that~~been ~~will~~in becompliance ~~exchanged~~with ~~into~~certain ~~U.S.~~laws ~~dollars,~~or ~~as well as earnings from, and the value of, any U~~regulations.~~S. dollar-denominated investments we make in the future.~~

In addition, our facilities and products are subject to many ~~Since~~laws ~~July~~and ~~2005,~~regulations ~~the~~administered ~~RMB~~by ~~has~~the noPRC ~~longer~~State ~~been~~Administration ~~pegged~~for toIndustry and Commerce, the ~~U.S.~~PRC ~~dollar.~~State ~~Although~~Administration of Taxation, the ~~People’s~~PRC ~~Bank~~Ministry of Health ~~China~~and ~~regularly~~Hygiene ~~intervenes~~Permitting inOffice, the ~~foreign~~PRC ~~exchange~~General ~~market~~Administration toof ~~prevent~~Quality Supervision, ~~significant~~Inspection ~~short-term~~and ~~fluctuations~~Quarantine, inand the ~~exchange~~PRC ~~rate,~~State Food and Drug Administration Bureau relating to the ~~RMB~~processing, ~~may~~packaging, storage, ~~appreciate~~distribution, oradvertising, ~~depreciate~~labeling, ~~significantly~~quality, inand ~~value~~safety ~~against~~of ~~the~~food Uproducts.S. ~~dollar~~Our failure to comply with these and other applicable laws and regulations in ~~the~~China could ~~medium~~subject us to ~~long~~administrative ~~term.~~penalties ~~Moreover~~and injunctive relief, itas iswell as civil remedies, including fines, injunctions and recalls of our products. It is possible that inchanges ~~the~~to ~~future~~such ~~PRC~~laws ~~authorities~~or ~~may~~more ~~lift~~rigorous ~~restrictions~~enforcement onof ~~fluctuations~~such inlaws ~~the~~or with ~~RMB~~respect ~~exchange~~to ~~rate~~our current or past practices could have a material adverse effect on our business, operating results and ~~lessen~~financial ~~intervention~~condition. inFurther, ~~the~~additional ~~foreign~~environmental, ~~exchange~~health ~~market~~or safety issues relating to matters that are not currently known to management may result in unanticipated liabilities and expenditures.

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

The PRC government has exercised and continues to exercise 20substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of the jurisdictions in which we operate may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.

~~Restrictions~~Accordingly, ~~under~~government ~~PRC~~actions ~~law~~in onthe ~~our~~future, ~~PRC~~including ~~subsidiary’s~~any decision ~~ability~~not to ~~make~~continue ~~dividends~~to support recent economic reforms and ~~other~~to ~~distributions~~return ~~could~~to ~~materially~~a more ~~and~~centrally ~~adversely~~planned ~~affect~~economy ~~our~~or ~~ability~~regional toor ~~grow~~local variations in the implementation of economic policies, ~~make~~could ~~investments~~have a significant effect on economic conditions in China or ~~acquisitions~~particular ~~that~~regions thereof and could ~~benefit~~require ~~our~~us ~~business,~~to ~~pay~~divest ~~dividends~~ourselves toof ~~you,~~any ~~and~~interest ~~otherwise~~we ~~fund~~then ~~and~~hold ~~conduct~~in ~~our~~Chinese ~~businesses~~properties or joint ventures.

Substantially all of our revenues are earned by our PRC subsidiary. However, PRC regulations restrict the ability of our PRC subsidiary to make dividends and other payments to its offshore parent company. PRC legal restrictions permit payments of dividend by our PRC subsidiary only out of its accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. Our PRC subsidiary is also required under PRC laws and regulations to allocate at least 10% of our annual after-tax profits determined in accordance with PRC GAAP to a statutory general reserve fund until the amounts in said fund reaches 50% of our registered capital. Allocations to these statutory reserve funds can only be used for specific purposes and are not transferable to us in the form of loans, advances or cash dividends. Any limitations on the ability of our PRC subsidiary to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business. 20

~~Failure~~Future toinflation ~~comply~~in ~~with~~China ~~PRC regulations relating to the establishment of offshore special purpose companies by PRC residents~~ may ~~subject~~inhibit our ~~PRC resident stockholders to personal liability, limit our~~ ability to ~~acquire PRC companies or to~~ ~~inject~~conduct ~~capital~~business ~~into~~in ~~PRC subsidiaries, limit our PRC subsidiary's ability to distribute profits to us or otherwise materially adversely affect us~~China.

In ~~October~~recent ~~2005~~years, ~~SAFE issued~~ the ~~Notice~~Chinese oneconomy ~~Relevant~~has ~~Issues~~experienced inperiods ~~the~~of rapid ~~Foreign~~expansion ~~Exchange Control over Financing~~ and ~~Return~~highly ~~Investment~~fluctuating ~~Through~~rates ~~Special~~of ~~Purpose~~inflation. ~~Companies~~These byfactors ~~Residents Inside China, generally referred to as Circular 75, which required PRC~~have ~~residents~~led to ~~register with~~ the ~~competent~~adoption ~~local~~by ~~SAFE branch before establishing or acquiring control over an offshore special purpose company, or SPV, for~~ the ~~purpose~~Chinese ~~of engaging in an equity financing outside of China on the strength of domestic PRC assets originally held by those residents. Internal implementing guidelines issued by SAFE~~government, ~~which~~from ~~became~~time ~~public~~to ~~in June 2007 (known as Notice 106)~~time, ~~expanded the reach~~ of ~~Circular 75 by (1) purporting to cover the establishment or acquisition of~~various ~~control~~corrective bymeasures ~~PRC~~designed ~~residents of offshore entities which merely acquire “control” over domestic companies or assets, even in the absence of legal ownership; (2) adding requirements relating~~ to ~~the~~restrict ~~source of~~ the ~~PRC~~availability ~~resident’s funds used to establish or acquire the offshore entity; (3) covering the use~~ of ~~existing~~credit ~~offshore entities for offshore financings; (4) purporting to cover situations in which an offshore SPV establishes a new subsidiary in China~~ or ~~acquires an unrelated company~~regulate orgrowth ~~unrelated assets in China;~~ and ~~(5)~~contain ~~making~~inflation. ~~the~~High ~~domestic~~inflation ~~affiliate~~may ~~of the SPV responsible for the accuracy of certain documents which must be filed~~ in ~~connection with any such registration, notably,~~ the ~~business~~future ~~plan~~cause ~~which describes~~ the ~~overseas~~Chinese ~~financing~~government ~~and the use of proceeds. Amendments~~ to ~~registrations~~impose ~~made~~controls ~~under~~on ~~Circular~~credit ~~75 are required in connection with any increase~~ and/or ~~decrease of capital~~prices, ~~transfer of shares, mergers and acquisitions, equity investment~~ or ~~creation~~to oftake ~~any~~other ~~security~~action, ~~interest~~which incould ~~any~~inhibit ~~assets~~economic ~~located~~activity in China ~~to guarantee offshore obligations~~, and ~~Notice~~thereby ~~106~~harm ~~makes~~ the ~~offshore~~market ~~SPV jointly responsible~~ for our ~~these~~products ~~filings. In the case of an SPV which was established,~~ and ~~which~~our ~~acquired a related domestic~~ company ~~or assets, before the implementation date of Circular 75, a retroactive SAFE registration was required to have been completed before March 31, 2006~~. This date was subsequently extended indefinitely by Notice 106, which also required that the registrant establish that all foreign exchange transactions undertaken by the SPV and its affiliates were in compliance with applicable laws and regulations. Failure to comply with the requirements of Circular 75, as applied by SAFE in accordance with Notice 106, may result in fines and other penalties under PRC laws for evasion of applicable foreign exchange restrictions. Any such failure could also result in the SPV’s affiliates being impeded or prevented from distributing their profits and the proceeds from any reduction in capital, share transfer or liquidation to the SPV, or from engaging in other transfers of funds into or out of China.

WeRestrictions ~~have~~on ~~asked~~currency ~~our~~exchange ~~stockholders,~~may ~~who~~limit ~~are PRC residents as defined in Circular 75, to register with the relevant branch of SAFE as currently required in connection with their equity interests in us and~~ our acquisitions of equity interests in our PRC subsidiary. However, we cannot provide any assurances that they can obtain the above SAFE registrations required by Circular 75 and Notice 106. Moreover, because of uncertainty over how Circular 75 will be interpreted and implemented, and how or whether SAFE will apply it to us, we cannot predict how it will affect our business operations or future strategies. For example, our present and prospective PRC subsidiary’s ability ~~to conduct foreign exchange activities, such as the~~ ~~remittance of dividends and foreign currency-denominated borrowings, may be subject~~ to ~~compliance~~receive ~~with Circular 75~~ and ~~Notice~~use ~~106 by~~ our ~~PRC~~sales ~~resident~~revenue ~~beneficial holders~~effectively.

InSubstantially ~~addition,~~all ~~such~~our ~~PRC~~sales ~~residents~~revenue ~~may~~and ~~not~~expenses ~~always~~are denominated bein ~~able~~RMB. toUnder ~~complete~~PRC law, the ~~necessary~~RMB ~~registration~~is ~~procedures~~currently ~~required~~convertible byunder ~~Circular~~the “current 75account,” which includes dividends and ~~Notice~~trade ~~106.~~and Weservice-related foreign ~~also~~exchange ~~have~~transactions, ~~little~~but ~~control~~not ~~over~~under ~~either~~the ~~our~~“capital ~~present~~account,” orwhich includes ~~prospective~~foreign direct orinvestment ~~indirect~~and ~~stockholders~~loans. ~~or the~~Currently, ~~outcome~~our ofPRC ~~such~~operating subsidiary ~~registration~~may ~~procedures.~~purchase Aforeign ~~failure~~currencies byfor ~~our~~settlement ~~PRC~~of ~~resident~~current ~~beneficial~~account transactions, ~~holders~~including orpayments ~~future~~of ~~PRC~~dividends ~~resident~~to ~~stockholders~~us, towithout ~~comply~~the ~~with~~approval ~~Circular~~of 75the State ~~and~~Administration ~~Notice~~of ~~106~~Foreign Exchange, ifor SAFE, ~~requires~~by ~~it,~~complying ~~could~~with ~~subject~~certain procedural ~~these~~requirements. ~~PRC~~However, ~~resident~~the ~~beneficial~~relevant ~~holders~~PRC togovernment authorities may ~~fines~~limit or ~~legal~~eliminate ~~sanctions,~~our ~~restrict~~ability ~~our~~to ~~overseas~~purchase orforeign ~~cross-border~~currencies ~~investment~~in ~~activities,~~the ~~limit~~future. Since a significant amount of our ~~subsidiary’s~~future ~~ability~~revenue will be denominated in RMB, any toexisting ~~make~~and ~~distributions~~future orrestrictions ~~pay~~on ~~dividends~~currency orexchange ~~affect~~may limit our ~~ownership~~ability ~~structure,~~to utilize ~~which~~revenue ~~could~~generated ~~adversely~~in ~~affect~~RMB to fund our business ~~and~~activities ~~prospects.~~outside China that are denominated in foreign currencies.

Foreign exchange transactions by our PRC operating subsidiary 21under the capital account continue to be subject to significant foreign exchange controls and require the approval of or need to register with PRC government authorities, including SAFE. In particular, if our PRC operating subsidiary borrows foreign currency through loans from us or other foreign lenders, these loans must be registered with SAFE, and if we finance the subsidiary by means of additional capital contributions, these capital contributions must be approved by certain government authorities, including the Ministry of Commerce, or MOFCOM, or their respective local counterparts. These limitations could affect their ability to obtain foreign exchange through debt or equity financing.

IfFluctuations ~~the China Securities Regulatory Commission, or CSRC, or another PRC regulatory agency determines that CSRC approval is required~~ in ~~connection~~exchange ~~with~~rates ~~the~~could ~~reverse~~adversely ~~acquisition~~affect ofour business ~~Fezdale~~and ~~or challenges~~ the ~~delayed~~value ~~payment~~ of ~~acquisition consideration~~our ~~by Solar Sun, the reverse acquisition may be unwound, or we may become subject to penalties~~securities.

OnThe ~~August~~value 8,of ~~2006,~~our ~~six~~common ~~PRC~~stock ~~regulatory~~will ~~agencies,~~be ~~including~~indirectly ~~the~~affected ~~CSRC, promulgated~~ by the ~~Provisions~~foreign ~~Regarding~~exchange ~~Mergers~~rate ~~and~~between ~~Acquisitions of Domestic Enterprises by Foreign Investors, or~~ the ~~“M&A~~U.S. ~~Rule”,~~dollar ~~which~~and ~~became~~RMB ~~effective~~and onbetween ~~September 8,~~those ~~2006.~~currencies ~~The~~and ~~M&A Rule, among~~ other ~~things,~~currencies ~~requires~~in ~~that~~which anour ~~offshore~~sales ~~company~~may ~~controlled~~be bydenominated. Appreciation ~~PRC companies~~ or ~~individuals~~depreciation ~~that~~in ~~have acquired a PRC domestic company for~~ the ~~purpose~~value of ~~listing~~ the ~~PRC~~RMB ~~domestic~~relative ~~company’s equity interest on an overseas stock exchange must obtain the approval of the CSRC prior~~ to the ~~listing~~U.S. ~~and~~dollar would ~~trading~~affect ofour ~~such~~financial ~~offshore~~results ~~company’s~~reported ~~securities~~in onU.S. andollar ~~overseas~~terms ~~stock~~without ~~exchange.~~giving effect Into ~~addition,~~any ~~when~~underlying anchange ~~offshore~~in ~~company~~our ~~acquires~~business aor ~~PRC~~results ~~domestic~~of ~~company, the~~operations. ~~offshore~~Fluctuations ~~company~~in ~~is generally required to pay~~ the ~~acquisition~~exchange ~~consideration~~rate ~~within~~will ~~three~~also ~~months~~affect ~~after~~ the ~~issuance~~relative value of ~~the~~any dividend ~~foreign-invested~~we ~~company~~issue ~~license~~that ~~unless~~will ~~certain~~be ~~ratification~~exchanged ~~from~~into ~~the~~U.S. ~~relevant~~dollars, ~~PRC~~as ~~regulatory~~well ~~agency~~as ~~is obtained. On September~~earnings 21from, ~~2006,~~and the ~~CSRC,~~value ~~pursuant to the M&A Rule~~of, ~~published~~any onU.S. ~~its~~dollar-denominated ~~official~~investments ~~web~~we ~~site~~make ~~procedures~~in ~~specifying documents and materials required to be submitted to it by offshore companies seeking CSRC approval of their overseas listings~~the future.

InSince ~~the~~July ~~opinion of our PRC counsel~~2005, ~~Grandall Legal Group,~~ the ~~M&A~~RMB ~~Rule~~has ~~concerning~~no ~~the~~longer ~~CSRC~~been ~~approval~~pegged ~~for acquisition of a PRC domestic company by an offshore company controlled by PRC companies or individuals does not apply~~ to our reverse acquisition of Fezdale because none of China Nutrifruit, Fezdale and Solar Sun is a “Special Purpose Vehicle” or an “offshore company controlled by PRC companies or individuals” as defined in the ~~M&A Rule~~U. ~~Our PRC counsel,~~S. ~~Grandall~~dollar. ~~Legal~~Although ~~Group, is also in~~ the opinion that, even though Solar Sun did not pay the consideration for acquiring 75% interest in Longheda within three months after the issuance of the foreign-invested company license, since the relevant provincial agency has issued document indicating the authorityPeople’s ~~awareness~~Bank of ~~such~~China ~~delayed~~regularly ~~payment~~intervenes ~~and~~in ~~Solar Sun has obtained~~ the ~~approval from local~~ foreign exchange ~~administrative~~market ~~department~~to ~~for~~prevent ~~the~~significant ~~remittance~~short-term offluctuations ~~such~~in ~~payment into~~ the ~~PRC and~~exchange ~~made such payment~~rate, ~~based on its experience, in practice,~~ the ~~chance~~RMB ~~that~~may ~~such~~appreciate ~~delayed payment being challenged by PRC regulatory agencies is minimal. If the CSRC~~ or ~~another~~depreciate ~~PRC~~significantly ~~governmental~~in ~~agency~~value ~~subsequently~~against ~~determines that we must obtain CSRC~~the ~~approval~~U.S. ~~prior~~dollar toin the ~~completion~~medium ofto ~~the~~long ~~reverse~~term. ~~acquisition or challenges the delayed payment by Solar Sun~~Moreover, ~~the~~it ~~reverse~~is ~~acquisition~~possible ~~may~~that bein ~~unwound and we may face regulatory actions or other sanctions from~~ the future ~~CSRC or other~~ PRC ~~regulatory~~authorities ~~agencies. These regulatory agencies~~ may ~~impose~~lift ~~fines~~restrictions ~~and penalties~~ on ~~our~~fluctuations ~~operations~~ in ~~China~~the ~~and~~RMB ~~limit our operating privileges in China, or take other actions that could have a material adverse effect on our business, financial condition, results of~~exchange ~~operations,~~rate ~~reputation~~ and ~~prospects,~~lessen asintervention ~~well~~in as the ~~trading~~foreign ~~price~~exchange ~~of our shares~~market.

Very limited hedging transactions are available in China to ~~The~~reduce ~~M&A~~our ~~Rule~~exposure ~~establishes~~to ~~more~~exchange ~~complex~~rate ~~procedures~~fluctuations. ~~for~~To ~~some~~date, ~~acquisitions~~we ofhave ~~Chinese~~not ~~companies~~entered into byany ~~foreign~~hedging ~~investors~~transactions. While we may enter into hedging transactions in the future, ~~which~~the ~~could~~availability ~~make~~and iteffectiveness ~~more~~of ~~difficult~~these ~~for~~transactions usmay be limited, and we may not be able to ~~pursue~~successfully ~~growth~~hedge ~~through~~our ~~acquisitions~~exposure inat ~~China~~all. In addition, our foreign currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currencies.

~~The~~Restrictions ~~M&A~~under ~~Rule~~PRC ~~establishes~~law ~~additional~~on ~~procedures~~our ~~and~~PRC ~~requirements~~subsidiaries’ ability ~~that~~to ~~could~~ make ~~some~~dividends ~~acquisitions~~and ofother ~~Chinese~~distributions ~~companies~~could bymaterially ~~foreign investors more time-consuming~~ and ~~complex, including requirements in some instances that MOFCOM be notified in~~adversely ~~advance~~affect ofour ~~any~~ability ~~change-of-control~~to ~~transaction and in some situations~~grow, ~~require~~make ~~approval~~investments ofor ~~MOFCOM~~acquisitions ~~when~~that acould ~~foreign investor takes control of a Chinese domestic enterprise. In the future, we may grow~~ benefit our business ~~in part by acquiring complementary businesses~~, ~~although~~pay wedividends ~~do not have any plans~~ to do so at this time. The M&A Rule also requires MOFCOM anti-trust review of any change-of-control transactions involving certain types of foreign acquirers. Complying with the requirements of the M&A Rule to complete such transactions could be time-consumingyou, and ~~any~~otherwise ~~required~~fund ~~approval~~and ~~processes,~~conduct ~~including obtaining approval from MOFCOM, may delay or inhibit~~ our ~~ability to complete such transactions, which could affect our ability to~~ ~~expand our business or maintain our market share~~businesses.

Substantially all of our revenues are earned by our PRC Wesubsidiaries. ~~face~~However, ~~uncertainty~~PRC ~~from~~regulations restrict the ~~Circular~~ability onof ~~Strengthening~~our ~~the~~PRC subsidiaries ~~Administration~~to make dividends and other payments to their offshore parent companies. PRC legal restrictions permit payments of ~~Enterprise~~dividend ~~Income~~by ~~Tax~~our onPRC ~~Non~~subsidiaries only out of their accumulated after-~~resident~~tax ~~Enterprises’~~profits, ~~Share~~if ~~Transfer~~any, ~~(“Circular~~determined ~~698”)~~in ~~released~~accordance with PRC accounting standards and regulations. Our PRC subsidiaries are also required under PRC laws and regulations to allocate at least 10% of their respective annual after-tax profits determined in ~~December~~accordance ~~2009~~with byPRC ~~China's~~GAAP ~~State~~to ~~Administration~~a statutory general reserve fund until the amounts in said fund reaches 50% of their ~~Taxation~~respective ~~(SAT)~~registered capital. Allocations to these statutory reserve funds can only be used for specific purposes and are not transferable to us in the form of loans, ~~effective~~advances asor cash dividends. Any limitations on the ability of ~~January~~our 1PRC subsidiaries to transfer funds to us could materially and adversely limit our ability to grow, ~~2008.~~make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.

Where a foreign investor indirectly transfers equity interests in a Chinese resident enterprise by selling the shares in an offshore holding company, and the latter is located in a country (jurisdiction) where the effective tax burden is less than 12.5% or where the offshore income of her residents is not taxable, the foreign investor shall provide the tax authority in charge of that Chinese resident enterprise with the relevant information within 30 days of the transfers. 21

Failure to comply with PRC regulations relating to the 22establishment of offshore special purpose companies by PRC residents may subject our PRC resident stockholders to personal liability, limit our ability to acquire PRC companies or to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to distribute profits to us or otherwise materially adversely affect us.

Our ability to conduct foreign-exchange activities in the PRC ~~Where~~is subject to uncertainties surrounding the interpretation of SAFE regulations, one of which is Circular 75. Under the Notice on Relevant Issues in the Foreign Exchange Control over Financing and Return Investment Through Special Purpose Companies by Residents Inside China (as amended and supplemented, “Circular 75”), PRC residents must register with a ~~foreign~~local ~~investor~~branch ~~indirectly~~of ~~transfers~~SAFE (1) before they establish or gain control of an overseas special purpose vehicle, or SPV, for the purpose of overseas equity financing (including convertible debt financing); (2) when they contribute their assets or equity interests in a ~~Chinese~~domestic enterprise ~~resident~~to ~~enterprise~~an ~~through~~SPV ~~the~~or ~~abuse~~engage ofin ~~form~~overseas offinancing ~~organization~~after contributing assets or equity interests to an SPV; and ~~there~~(3) ~~are~~when notheir ~~reasonable~~SPV ~~commercial~~undergoes ~~purposes~~a material change outside of China, such ~~that~~as ~~the~~a ~~corporate~~change ~~income~~in ~~tax~~share ~~liability~~capital isor ~~avoided,~~merger ~~the~~or ~~tax~~acquisition. ~~authority~~If ~~shall~~any ~~have~~PRC ~~the~~resident ~~power~~who holds stock in an SPV fails to ~~re-assess~~make the required ~~nature~~SAFE registration and make any amended registration, the onshore PRC subsidiaries of that offshore company may be prohibited from distributing their profits and the ~~equity~~proceeds ~~transfer~~from any reduction in ~~accordance~~capital, ~~with~~share transfer or liquidation to the ~~“substance-over-form”~~offshore ~~principle~~SPV. ~~and~~Failure ~~deny~~to comply with the ~~existence~~SAFE ofregistration and ~~the~~amendment ~~offshore~~registration ~~holding~~requirements ~~company~~described ~~that~~above iscould ~~used~~result in liability for ~~tax~~evading ~~planning~~PRC ~~purposes~~laws applicable to foreign exchange restrictions.

We have advised our shareholders who are PRC residents, as ~~“Income~~defined ~~derived~~in ~~from~~Circular ~~equity~~75, ~~transfers”~~to register with the relevant branch of SAFE, as currently ~~mentioned~~required, in ~~this~~connection ~~circular~~with ~~refers~~their equity interests in us and our acquisitions of equity interests in our PRC subsidiaries. However, we cannot provide any assurances that their existing registrations have fully complied with, and they have made all necessary amendments to ~~income~~their ~~derived~~registration to fully comply with, all applicable registrations or approvals required by ~~non~~Circular 75. Moreover, because of uncertainty over how Circular 75 will be interpreted and implemented, and how or whether SAFE will apply it to us, we cannot predict how it will affect our business operations or future strategies. For example, our present and prospective PRC subsidiaries’ ability to conduct foreign exchange activities, such as the remittance of dividends and foreign currency-denominated borrowings, may be subject to compliance with Circular 75 by our PRC resident beneficial ~~enterprises~~holders. ~~from~~In addition, such PRC residents may not always be able to complete the necessary registration procedures required by Circular 75. We also have little control over either our present or prospective direct or indirect shareholders ~~transfers~~or the outcome of ~~equity~~such ~~interest~~registration inprocedures. ~~China~~A failure by our PRC resident ~~enterprises,~~beneficial ~~excluding~~holders ~~share~~or infuture ~~Chinese~~PRC resident shareholders to comply with Circular 75, if SAFE requires it, could subject these PRC resident beneficial ~~enterprises~~holders ~~that~~to ~~are~~fines ~~bought~~or ~~and~~legal ~~sold~~sanctions, ~~openly~~restrict onour ~~the~~overseas ~~stock~~or cross-border ~~exchange.~~investment activities, limit our subsidiaries’ ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects.

~~While~~The ~~the~~M&A ~~term~~Rule ~~"indirectly~~establishes ~~transfer"~~more iscomplex ~~not~~procedures ~~defined, we understand that the relevant PRC tax authorities have jurisdiction regarding requests~~ for ~~information over a wide range of foreign entities having no direct contact with China. The relevant~~ ~~authority~~some ~~has~~acquisitions ~~not yet promulgated any formal provisions or formally declared or stated how to calculate the effective tax in the very country (jurisdiction) and to what extent and the process~~ of ~~the disclosure to the tax authority in charge of that~~ Chinese ~~resident~~companies ~~enterprise.~~by ~~Meanwhile,~~foreign ~~there are not any formal declarations with regard to how to decide “abuse of form of organization” and “reasonable commercial purpose~~investors,” which ~~can~~could bemake ~~utilized~~it more bydifficult for us to ~~balance~~pursue ifgrowth ~~our~~through ~~company complies~~acquisitions ~~with the Circular 698~~in China.

On August 8, 2006, six PRC regulatory agencies, including the ~~Under~~CSRC, promulgated the ~~Enterprise~~Provisions ~~Income~~Regarding ~~Tax~~Mergers ~~Law~~and Acquisitions of Domestic Enterprises by Foreign Investors, weor ~~may~~the “M&A Rule”, which became effective on September 8, 2006 and was amended on June 22, 2009. The M&A Rule establishes additional procedures and requirements that could make some acquisitions of Chinese companies by foreign investors more time-consuming and complex, including requirements in some instances that MOFCOM be ~~classified~~notified asin advance of any change-of-control transaction and in some situations, require approval of MOFCOM when a ~~“resident~~foreign ~~enterprise”~~investor takes control of ~~China~~a Chinese domestic enterprise. ~~Such~~In ~~classification~~the ~~will~~future, ~~likely~~we ~~result~~may grow our business in ~~unfavorable~~part ~~tax~~by ~~consequences~~acquiring complementary businesses, although we do not have any plans to usdo so at this time. The M&A Rule also requires MOFCOM antitrust review of any change-of-control transactions involving certain types of foreign acquirers. Complying with the requirements of the M&A Rule to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from MOFCOM, may delay or inhibit our ~~non-PRC~~ability ~~stockholders~~to complete such transactions, which could affect our ability to expand our business or maintain our market share.

China passed a new Enterprise Income Tax Law, or the EIT Law, and its implementing rules, both of which became effective on January 1, 2008. Under the EIT Law, an enterprise established outside of China with “de facto management bodies” within China is considered a “resident enterprise,” meaning that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules of the EIT Law define de facto management as “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise. 22

OnWe ~~April~~face ~~22,~~uncertainty ~~2009,~~from the ~~State~~Circular ~~Administration~~on of Taxation issued the Notice Concerning Relevant Issues Regarding Cognizance of Chinese Investment Controlled Enterprises Incorporated Offshore as Resident Enterprises pursuant to Criteria of de factoStrengthening ~~Management Bodies, or~~ the ~~Notice,~~Administration ~~further interpreting the application~~ of ~~the~~Enterprise ~~EIT~~Income ~~Law~~Tax ~~and~~on ~~its implementation non~~Non-~~Chinese~~resident ~~enterprise~~Enterprises’ ~~or group controlled offshore entities. Pursuant to the Notice, an enterprise incorporated in an offshore jurisdiction~~Share ~~and~~Transfer ~~controlled by a Chinese enterprise or group will be classified as a~~ (“~~non-domestically~~Circular ~~incorporated resident enterprise~~698” ~~if (i~~) ~~its~~released ~~senior management~~ in ~~charge~~December of2009 ~~daily~~by ~~operations reside or perform their duties mainly in~~ China;'s ~~(ii) its~~State ~~financial~~Administration orof ~~personnel~~Taxation ~~decisions are made or approved by bodies or persons in China;~~ (~~iii~~SAT) ~~its substantial assets and properties~~, ~~accounting~~effective books, corporate chops, board and shareholder minutes are kept in China; and (iv) at least half of its directors with voting rights or senior management often resident in China. A resident enterprise would be subject to an enterprise income tax rate of 25% on its worldwide income and must pay a withholding tax at a rate of 10% when paying dividends to its non-PRC stockholders. However, it remains unclear as ~~to whether the Notice is applicable to an offshore enterprise incorporated by a Chinese natural person. Nor are detailed measures on imposition~~ of ~~tax~~January ~~from non-domestically incorporated resident enterprises are available. Therefore~~1, ~~it is unclear how tax authorities will determine tax residency based on the facts of each case~~2008.

WeWhere ~~may be deemed to be~~ a ~~resident~~foreign ~~enterprise~~investor byindirectly ~~Chinese~~transfers ~~tax~~equity ~~authorities.~~interests in ~~If the PRC tax authorities determine that we are~~ a “Chinese resident enterprise” ~~for~~by ~~PRC~~selling ~~enterprise~~the ~~income~~shares ~~tax~~in ~~purposes,~~an aoffshore ~~number of unfavorable PRC tax consequences could~~holding ~~follow. First~~company, weand ~~may be subject to~~ the ~~enterprise~~latter ~~income~~is ~~tax~~located atin a ~~rate~~country of(jurisdiction) ~~25%~~where ~~on our worldwide taxable income as well as PRC enterprise income tax reporting obligations. In our case, this would mean that income such as interest on financing~~the ~~proceeds~~effective ~~and non-China source income would be subject to PRC enterprise income~~ tax atburden ais ~~rate~~less ofthan ~~25%~~12.5% ~~Second,~~or ~~although~~where ~~under~~ the ~~EIT~~offshore ~~Law~~income ~~and~~of its ~~implementing rules dividends paid to us from our PRC subsidiary would qualify as “tax-exempt~~ ~~income,”~~residents weis ~~cannot guarantee that such dividends will~~ not ~~be subject to a 10% withholding tax~~taxable, as the ~~PRC~~ foreign ~~exchange~~investor ~~control~~must ~~authorities,~~provide ~~which enforce~~ the ~~withholding~~PRC tax, authority ~~have~~in ~~not~~charge ~~yet issued guidance with respect to the processing~~ of ~~outbound~~ ~~remittances to entities~~ that ~~are~~Chinese ~~treated as~~ resident ~~enterprises for PRC~~ enterprise ~~income tax purposes. Finally, it is possible that future guidance issued~~ with ~~respect to~~ the ~~new “resident enterprise” classification could result~~relevant ininformation awithin ~~situation~~30 indays which a 10% withholding tax is imposed on dividends we pay to our non-PRC stockholders and with respect to gains derived by our non-PRC stockholders from transferring our shares. We are actively monitoring the possibility of ~~“resident~~ ~~enterprise” treatment for~~ the ~~2010 tax year and are evaluating appropriate organizational changes to avoid this treatment, to the extent possible~~transfer.

Where a foreign investor indirectly transfers equity interests 23in a Chinese resident enterprise through the “abuse of form of organization” and there are no reasonable commercial purposes for such form with the result that the corporate income tax liability is avoided, the PRC tax authorities shall have the power to reassess the nature of the equity transfer in accordance with the “substance-over-form” principle and deny the existence of an offshore holding company that is used for tax planning purposes.

If“Income wederived ~~were~~from ~~treated~~equity transfers” as amentioned ~~“resident~~in ~~enterprise”~~this circular byrefers ~~PRC~~to ~~tax~~income ~~authorities,~~derived weby ~~would~~nonresident beenterprises ~~subject~~from todirect ~~taxation~~or indirect intransfers ~~both~~of ~~the~~equity ~~U.S.~~interest ~~and~~in China resident enterprises, ~~and~~excluding shares ~~our~~in ~~PRC~~Chinese ~~tax~~resident ~~may~~enterprises ~~not~~that beare ~~creditable~~bought ~~against~~and ~~our~~sold ~~U.S.~~openly ~~tax.~~on the stock exchange.

While the term “indirectly transfer” is not defined, we ~~RISKS~~understand ~~RELATED~~that TOthe ~~THE~~relevant ~~MARKET~~PRC ~~FOR~~tax ~~OUR~~authorities ~~STOCK~~have ~~GENERALLY~~ jurisdiction regarding requests for information over a wide range of foreign entities having no direct contact with China. The relevant PRC tax authorities have not yet promulgated any formal provisions or formally declared or stated how to calculate the effective tax in the offshore country (jurisdiction) and to what extent and the process of the disclosure to the PRC tax authority in charge of that Chinese resident enterprise. Meanwhile, there are not any formal declarations with regard to how to decide “abuse of form of organization” and “reasonable commercial purpose,” which can be utilized by us to determine if our company complies with the Circular 698.

~~The~~Under ~~market~~the ~~price~~Enterprise ofIncome ~~our~~Tax ~~common~~Law, ~~stock~~we ismay ~~volatile,~~be ~~leading~~classified as toa ~~the~~“resident ~~possibility~~enterprise” of ~~its~~China. ~~value~~Such ~~being~~classification ~~depressed~~will atlikely aresult ~~time~~in unfavorable ~~when~~tax ~~you~~consequences ~~may~~to ~~want~~us toand ~~sell~~our ~~your~~non-PRC ~~holdings~~stockholders.

~~The~~China ~~market~~passed ~~price~~a ofnew ~~our~~Enterprise ~~common~~Income ~~stock~~Tax ~~is volatile~~Law, ~~and~~or ~~this~~the ~~volatility~~EIT ~~may~~Law, and ~~continue.~~its ~~Numerous~~implementing ~~factors~~rules, ~~many~~both of which ~~are~~became ~~beyond~~effective ~~our~~on ~~control~~January 1, ~~may~~2008. Under ~~cause~~ the ~~market~~EIT ~~price~~Law, ofan ~~our~~enterprise ~~common~~established ~~stock~~outside toof ~~fluctuate~~China ~~significantly.~~with In“de ~~addition to market and industry~~facto ~~factors,~~management ~~the~~bodies” ~~price~~within ~~and~~China ~~trading~~is ~~volume~~considered ~~for~~a ~~our~~“resident ~~common~~enterprise,” ~~stock~~meaning that ~~may~~it can be ~~highly~~treated ~~volatile~~in ~~for~~a ~~specific~~manner ~~business~~similar ~~reasons.~~to ~~Factors~~a ~~such~~Chinese asenterprise ~~variations~~for enterprise inincome ~~our~~tax ~~revenues,~~purposes. ~~earnings~~The ~~and~~implementing ~~cash~~rules ~~flow, announcements~~ of ~~new~~the ~~investments,~~EIT ~~cooperation~~Law ~~arrangements~~define orde ~~acquisitions,~~facto ~~and~~management ~~fluctuations~~as in“substantial ~~market~~and ~~prices~~overall ~~for~~management ~~our~~and ~~products~~control ~~could~~over ~~cause~~ the production ~~market~~and ~~price~~operations, ~~for~~personnel, ~~our~~accounting, ~~shares~~and toproperties” ~~change~~of ~~substantially~~the enterprise.

On April 22, 2009, the State Administration of Taxation issued ~~Securities~~the ~~class~~Notice ~~action~~Concerning ~~litigation~~Relevant isIssues ~~often~~Regarding ~~instituted~~Cognizance ~~against~~of ~~companies~~Chinese ~~following~~Investment Controlled ~~periods~~Enterprises Incorporated Offshore as Resident Enterprises pursuant to Criteria of ~~volatility~~de infacto ~~their~~Management ~~stock~~Bodies, ~~price~~or the Notice, further interpreting the application of the EIT Law and its implementation non-Chinese enterprise or group controlled offshore entities. ~~This~~Pursuant ~~type~~to the Notice, an enterprise incorporated in an offshore jurisdiction and controlled by a Chinese enterprise or group will be classified as a “non-domestically incorporated resident enterprise” if (i) its senior management in charge of ~~litigation~~daily ~~could~~operations ~~result~~reside or perform their duties mainly in China; (ii) its financial or personnel decisions are made or approved by bodies or persons in China; (iii) its substantial ~~costs~~assets and toproperties, usaccounting books, corporate chops, board and ~~divert~~shareholder ~~our~~minutes are kept in China; and (iv) at least half of its directors with voting rights or senior management’s ~~attention~~often resident in China. A resident enterprise would be subject to an enterprise income tax rate of 25% on its worldwide income and ~~resources~~must pay a withholding tax at a rate of 10% when paying dividends to its non-PRC stockholders. However, detailed measures on imposition of tax from non-domestically incorporated resident enterprises are still unavailable. Therefore, it is unclear how tax authorities will determine tax residency based on the facts of each case.

~~Moreover,~~We ~~the~~may ~~trading~~be ~~market~~deemed ~~for~~to ~~our~~be ~~common~~a ~~stock~~resident ~~will~~enterprise ~~be influenced~~ by ~~research~~Chinese ~~or reports that industry or securities analysts publish about us or our business~~tax authorities. If ~~one or more analysts who cover us downgrade our common stock,~~ the ~~market~~PRC ~~price~~tax ~~for our~~authorities ~~common~~determine ~~stock~~that ~~would likely decline. If one or more of these analysts cease coverage of us or fail to regularly publish reports on us,~~ we ~~could~~are ~~lose~~a ~~visibility~~“resident enterprise” infor ~~the~~PRC ~~financial~~enterprise ~~markets,~~income ~~which,~~tax ~~in turn~~purposes, ~~could~~a ~~cause~~number ~~the~~of ~~market~~unfavorable ~~price for our common~~PRC ~~stock~~tax orconsequences ~~trading~~could ~~volume to decline~~follow.

Furthermore, securities markets may from time to time experience significant price and volume fluctuations for reasons unrelated to operating performance of particular companies. These market fluctuations may adversely affect the price of our common stock and other interests in our company at a time when you want to sell your interest in us. 23

WeFirst, we may be subject to ~~penny~~the ~~stock~~enterprise ~~regulations~~income tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise income tax reporting obligations. In our case, this would mean that income such as interest on financing proceeds and ~~restrictions~~non-China source income would be subject to PRC enterprise income tax at a rate of 25%. Second, although under the EIT Law and its ~~you~~implementing ~~may~~rules dividends paid to us from our PRC subsidiary would qualify as “tax-exempt income,” we cannot guarantee that such dividends will not be subject to a 10% withholding tax, as the PRC foreign exchange control authorities, which enforce the withholding tax, have ~~difficulty~~not ~~selling~~yet issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income tax purposes. Finally, it is possible that future guidance issued with respect to the new “resident enterprise” classification could result in a situation in which a 10% withholding tax is imposed on dividends we pay to our non-PRC stockholders and with respect to gains derived by our non-PRC stockholders from transferring our shares. We are actively monitoring the possibility of “resident enterprise” treatment and are evaluating appropriate organizational changes to avoid this treatment, to the extent reasonably possible. If we were treated as a “resident enterprise” by PRC tax authorities, we would be subject to taxation in both the U.S. and China, and our ~~common~~PRC ~~stock~~tax may not be creditable against our U. S. tax.

~~The~~RISKS ~~SEC~~RELATED ~~has~~TO ~~adopted~~THE ~~regulations~~MARKET ~~which~~FOR ~~generally~~OUR ~~define~~STOCK so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. If our common stock becomes a “penny stock”, we may become subject to Rule 15g-9 under the Exchange Act, or the “Penny Stock Rule”. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and “accredited investors” (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market. GENERALLY

~~For~~The ~~any~~market ~~transaction~~price ~~involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in penny stock,~~ of aour ~~disclosure~~common ~~schedule prepared by the SEC relating to the penny~~ stock ~~market. Disclosure~~ is ~~also~~volatile, ~~required to be made~~leading ~~about sales commissions payable~~ to ~~both~~ the ~~broker-dealer~~possibility ~~and~~of ~~the~~its ~~registered~~value ~~representative~~being ~~and~~depressed ~~current~~at ~~quotations~~a ~~for~~time ~~the~~when ~~securities.~~you ~~Finally,~~may ~~monthly~~want ~~statements are required~~ to ~~be sent disclosing recent price information for the penny stock held~~ insell ~~the~~your ~~account and information on the limited market in penny stock~~holdings.

~~There~~The ~~can~~market beprice noof ~~assurance that~~ our common stock ~~will~~is ~~qualify~~volatile, ~~for~~and ~~exemption~~this volatility ~~from~~may ~~the~~continue. ~~Penny~~Numerous ~~Stock~~factors, ~~Rule.~~many Inof ~~any~~which ~~event~~are beyond our control, may ~~even~~cause ifthe market price of our common stock ~~were~~to ~~exempt~~fluctuate ~~from~~significantly. ~~the~~In addition ~~Penny~~to ~~Stock~~market ~~Rule~~and industry factors, wethe ~~would~~price ~~remain~~and ~~subject~~trading tovolume ~~Section~~for ~~15(b)(6)~~our common ofstock ~~the~~may ~~Exchange~~be ~~Act, which~~highly ~~gives~~volatile ~~the~~for ~~SEC~~specific ~~the~~business ~~authority~~reasons. toFactors ~~restrict~~such as ~~any~~variations ~~person~~in ~~from~~our ~~participating~~revenues, inearnings aand ~~distribution~~cash offlow, ~~penny~~announcements ~~stock~~of new investments, ifcooperation ~~the~~arrangements ~~SEC~~or ~~finds~~acquisitions, ~~that~~and ~~such~~fluctuations ain market ~~restriction~~prices ~~would~~for beour inproducts could cause the ~~public~~market ~~interest~~price for our shares to change substantially.

Securities class action litigation is often instituted against 24companies following periods of volatility in their stock price. This type of litigation could result in substantial costs to us and divert our management’s attention and resources.

~~Certain~~Moreover, ~~provisions~~the oftrading market for our ~~Articles~~common ofstock ~~Incorporation~~will ~~may~~be influenced ~~make~~by itresearch or reports that industry or securities analysts publish about us or our business. If one or more ~~difficult~~analysts who cover us downgrade our common stock, the market price for aour ~~third~~common ~~party~~stock towould ~~effect~~likely adecline. ~~change-~~If one or more of~~-control~~ these analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which, in turn, could cause the market price for our common stock or trading volume to decline.

~~Our Articles of Incorporation authorizes the board of directors to issue up to 5~~Furthermore,~~000,000~~ ~~shares~~securities ofmarkets ~~preferred stock. The preferred stock~~ may befrom ~~issued in one or more series, the terms of which may be determined at the~~ time ofto ~~issuance by the board of~~time ~~directors~~experience ~~without~~significant ~~further~~price ~~action~~and byvolume ~~the~~fluctuations ~~stockholders.~~for ~~These~~reasons ~~terms~~unrelated ~~may include preferences as~~ to operating ~~dividends~~performance ~~and~~of ~~liquidation,~~particular ~~conversion rights, redemption rights and sinking fund provisions~~companies. ~~The~~These ~~issuance~~market offluctuations ~~any~~may adversely ~~preferred~~affect ~~stock could diminish~~ the ~~rights~~ ofprice ~~holders~~ of our common stock, and ~~therefore~~other ~~could~~interests ~~reduce~~in ~~the value of such common stock. In addition, specific rights granted to future holders of preferred stock could be used to restrict~~ our company ~~ability~~at ~~to merge with, or sell assets to,~~ a ~~third~~ ~~party.~~time ~~The~~when ~~ability~~you ofwant ~~the board of directors~~ to ~~issue~~sell ~~preferred~~your ~~stock~~interest ~~could make it more difficult, delay, discourage, prevent or make it more costly to acquire or effect a change-~~in~~-control,~~ ~~which in turn could prevent our stockholders from recognizing a gain in the event that a favorable offer is extended and could materially and negatively affect the market price of our common stock~~us.

The market price of our stock may be affected by low volume.

Although our common stock is traded on the NYSE Amex, the trading volume of our common stock has generally been low. Reported average daily trading volume in our common stock for the three month period ended June 20, 2011 was approximately 20,633 shares. Limited trading volume will subject our shares of common stock to greater price volatility and may make it difficult for our stockholders to sell their shares of common stock at a price that is attractive to them.

Certain provisions of our Articles of Incorporation may make it more difficult for a third party to effect a change-of-control.

Our Articles of Incorporation authorizes the board of directors to issue up to 5,000,000 shares of preferred stock. The preferred stock may be issued in one or more series, the terms of which may be determined at the time of issuance by the board of directors without further action by the stockholders. These terms may include preferences as to dividends and liquidation, conversion rights, redemption rights and sinking fund provisions. The issuance of any preferred stock could diminish the rights of holders of our common stock, and therefore could reduce the value of such common stock. In addition, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell assets to, a third party. The ability of the board of directors to issue preferred stock could make it more difficult, delay, discourage, prevent or make it more costly to acquire or effect a change-in-control, which in turn could prevent our stockholders from recognizing a gain in the event that a favorable offer is extended and could materially and negatively affect the market price of our common stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not Applicable.

ITEM 2. PROPERTIES.

There is no private land ownership in China. Individuals and ~~PROPERTIES~~companies are permitted to acquire land use rights for specific purposes. We were granted land use rights from the PRC government for approximately 24,217 and 37,309 square meters of land located at No. 3, Xin Fa Street, Daqing Hi-tech Industrial Development Zone, Daqing City and Bei Dian Village, Wu Lin Town, Lin Kou County, Mudangjiang City, respectively. The land use rights of these two parcels of land will expire on May 19, 2055 and February 28, 2058, respectively.

~~There~~We isrecently noacquired ~~private~~the land ~~ownership~~use inright ~~China.~~for ~~Individuals~~approximately 41,000 ~~and~~square ~~companies~~meters ~~are~~of ~~permitted~~land located in Daqing to ~~acquire~~build ~~land~~our ~~use~~new ~~rights~~fruit ~~for~~and vegetable ~~specific~~powder ~~purposes~~manufacturing facility. WeThe ~~were~~new ~~granted~~facility ~~land~~is ~~use~~expected ~~rights~~to ~~from~~begin production ~~the~~in ~~PRC~~July ~~government~~2011 ~~for~~and ~~24,217~~will ~~and~~produce 37tomato,~~309~~ ~~square~~pumpkin ~~meters~~and ofother ~~land~~popular ~~located at No.~~fruit 3,and ~~Xin~~vegetable Fapowders ~~Street,~~that ~~Daqing~~can ~~Hi-tech~~be ~~Industrial~~used ~~Development~~as ~~Zone,~~ingredients ~~Daqing~~in ~~City~~a ~~and~~variety ~~Bei~~of ~~Dian Village~~products, including Wubaby ~~Lin~~food, ~~Town~~ready-to-drink mixes, ~~Lin~~instant ~~Kou~~soup ~~County~~mixes, ~~Mudangjiang~~snacks ~~City,~~and ~~respectively~~other confectionery items. The land use ~~rights~~right ~~of both land~~ will expire onin ~~May 19, 2055 and February 28, 2058, respectively~~2061.

We ~~are~~believe ~~currently~~that inall ~~the process of acquiring the land use right for 40,000 square meters of land located in Daqing to build~~ our ~~new~~properties ~~fruit~~have ~~and~~been ~~vegetable powder manufacturing facility with an annual production capacity of 10~~adequately maintained,~~000~~ ~~tons.~~are ~~The~~generally ~~new facility is expected to begin production~~ in ~~September~~good ~~2010 and will produce tomato~~condition, ~~pumpkin~~ and ~~other~~are ~~popular~~suitable ~~fruit~~ and ~~vegetable~~adequate ~~powders that can be used as ingredients in a variety of products, including baby food, ready-to-drink mixes, instant soup mixes,~~for ~~snacks~~our ~~and other confectionery items~~business.

WeITEM ~~believe~~3. ~~that~~LEGAL ~~all our properties have been adequately maintained, are generally in good condition, and are suitable and adequate for our business~~PROCEEDINGS.

~~ITEM~~From 3time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse affect on our business, financial condition or operating results.

~~LEGAL~~ITEM ~~PROCEEDINGS~~4. (REMOVED AND RESERVED).

~~From~~PART time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse affect on our business, financial condition or operating results. II

~~(REMOVED~~Market ~~AND RESERVED).~~ Information

Our common stock is quoted on the NYSE Amex and trades under ~~PART~~the IIsymbol “CNGL.” The following table sets forth, for the periods indicated, the high and low closing prices of our common stock. These prices reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.

ITEM 5.

		Closing Bid Prices⁽¹⁾
		High		Low
*Year Ended March 31, 2011*
1^stQuarter	$	3.67	$	3.05
2^ndQuarter		3.24		2.60
3^rdQuarter		3.15		2.70
4^thQuarter		3.60		2.65

*Year Ended March 31, 2010*
1^stQuarter	$	4.00	$	2.69

~~MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.~~ 25

Market Information

	Closing Bid Prices⁽¹⁾
	High	Low
2^ndQuarter	4.50	3.27
3^rdQuarter	4.26	3.00
4^thQuarter	4.67	3.63

~~Our~~________________________________(1) ~~common stock is quoted on the NYSE Amex and trades under the symbol “CNGL.”~~ The ~~following~~above table sets forth, ~~for~~ the ~~periods~~range ~~indicated,~~of ~~the~~ high and low closing prices per share of our common stock. ~~These~~as reported ~~prices~~by ~~reflect~~www.finance.yahoo.com ~~inter-dealer~~for ~~prices,~~the ~~without~~periods ~~retail mark-up, mark-down or commission, and may not represent actual transactions~~indicated.

25Approximate Number of Holders of Our Common Stock

		Closing Bid Prices(1)
		High		Low
Year Ended March 31, 2010
1st Quarter	$	4.00	$	2.69
2nd Quarter		4.50		3.27
3rd Quarter		4.26		3.00
4th Quarter		4.67		3.63
Year Ended March 31, 2009
1st Quarter	$	3.00	$	0.50
2nd Quarter		3.00		3.00
3rd Quarter		5.00		1.00
4th Quarter		4.10		2.50

As of June 20, 2011, there were approximately 473 holders of record of our common stock. This number excludes the shares of our common stock owned by stockholders holding stock under nominee security position listings.

~~_________________________________________ (1)~~Dividends ~~The above table sets forth the range of high and low closing prices per share of our common stock as reported by www.finance.yahoo.com for the periods indicated.~~

~~Approximate~~Other ~~Number~~than ofdividends ~~Holders~~paid by our subsidiary Longheda to its shareholders before our acquisition of Fezdale, we have never declared dividends or paid cash dividends. Our ~~Common~~board ~~Stock~~of directors will make any future decisions regarding dividends. We currently intend to retain and use any future earnings for the development and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.

AsOur board of ~~June~~directors ~~25,~~has ~~2010,~~complete ~~there~~discretion ~~were~~on ~~approximately~~whether ~~486~~to pay ~~holders~~dividends. ~~of record~~Even ofif our ~~common~~board ~~stock.~~of ~~This~~directors ~~number~~decides ~~excludes~~to pay dividends, the form, ~~shares~~frequency ofand amount will depend upon our ~~common~~future ~~stock~~operations and earnings, ~~owned~~capital byrequirements ~~stockholders~~and ~~holding~~surplus, ~~stock~~general ~~under~~financial ~~nominee~~condition, ~~security~~contractual restrictions ~~position~~and ~~listings~~other factors that the board of directors may deem relevant.

~~Dividends~~Securities Authorized for Issuance Under Equity Compensation Plans

~~Other~~On ~~than~~October ~~dividends~~19, ~~paid~~2010, by our ~~subsidiary~~board ~~Longheda~~of todirectors ~~its~~approved the China ~~shareholders~~Nutrifruit ~~before~~Group ~~our~~Limited ~~reverse~~2010 ~~acquisition~~Equity ofIncentive ~~Fezdale~~Plan, wewhich ~~have~~was ~~never~~amended ~~declared~~on ~~dividends~~December or10, ~~paid~~2010. ~~cash~~On ~~dividends.~~January ~~Our~~12, ~~board~~2011, ofour ~~directors~~shareholders ~~will~~approved ~~make~~the ~~any~~plan ~~future~~at ~~decisions~~the ~~regarding~~Company’s ~~dividends.~~annual Wemeeting ~~currently~~of ~~intend~~shareholders. toAs ~~retain~~of ~~and use any future earnings for~~ the ~~development~~date ~~and expansion~~ of ~~our~~this ~~business~~report, ~~and~~the Company dohas not ~~anticipate paying~~issued any ~~cash~~securities ~~dividends~~under insuch ~~the foreseeable future~~plan.

~~Our~~Recent ~~board~~Sales of ~~directors~~Unregistered ~~has~~Securities complete discretion on whether to pay dividends. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.

~~Securities~~We ~~Authorized~~have ~~for~~not ~~Issuance~~sold ~~Under~~any ~~Equity~~equity ~~Compensation~~securities during the fiscal year ~~Plans~~ended March 31, 2011 that were not previously disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K that was filed during the 2011 fiscal year.

WePurchases ~~presently do not have any equity based or other long-term incentive programs. In the future, we may adopt and establish an equity-based or other long-term incentive plan if it is in the best interest~~ of ~~the~~Equity ~~Company~~Securities ~~and our stockholders to do so.~~

~~Recent~~No ~~Sales~~repurchases of ~~Unregistered~~our ~~Securities~~common stock were made during the fourth quarter of 2011.

WeITEM ~~have~~6. ~~not~~SELECTED ~~sold~~FINANCIAL any equity securities during the fiscal year ended March 31, 2010 that were not previously disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K that was filed during the 2010 fiscal yearDATA.

~~Purchases~~Not ~~of Equity Securities~~Applicable.

~~No repurchases of our common stock were made during the fourth quarter of 2010.~~26

ITEM 67. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

~~SELECTED~~The following management’s discussion and analysis should be ~~FINANCIAL~~read ~~DATA~~in conjunction with our financial statements and the notes thereto and the other financial information appearing elsewhere in this report. In addition to historical information, the following discussion contains certain forward-looking information. See “Special Note Regarding Forward Looking Statements” above for certain information concerning those forward looking statements.

~~Not Applicable.~~Overview

26We are a leading producer of premium specialty fruit based products in China. We are primarily engaged, through our indirect Chinese subsidiaries, in developing, processing, marketing and distributing a variety of food products processed primarily from premium specialty fruits grown in Northeast China, mainly including golden berry, crab apple, blueberry, raspberry, blackcurrant and seabuckthorn. Our primary product offering includes concentrate juice, nectar, glazed fruits, concentrate pulp as well as fresh fruits.

~~ITEM~~We 7sell our products through an extensive nationwide sales and distribution network covering 18 provinces in China. As of March 31, 2011, this network was comprised of approximately 44 distributors. Our processed fruit products are mainly sold to food producers for further processing into fruit juice and other fruit related foods, and our fresh fruits are mainly sold to fruit supermarkets.

~~MANAGEMENT’S~~Our ~~DISCUSSION~~manufacturing ~~AND~~facilities ~~ANALYSIS~~are OFlocated in Daqing City and ~~FINANCIAL~~Mudanjiang ~~CONDITION~~City, ~~AND~~Heilongjiang ~~RESULTS~~Province, OFChina ~~OPERATIONS~~where an abundant supply of various premium specialty fruits is readily available. We currently have five fruit processing lines with an aggregate capacity of 17,160 tons.

~~The~~Principal ~~following~~Factors ~~management’s~~Affecting ~~discussion~~Our ~~and analysis should be~~Financial read in conjunction with our financial statements and the notes thereto and the other financial information appearing elsewhere in this report. In addition to historical information, the following discussion contains certain forward-looking information. See “Special Note Regarding Forward Looking Statements” above for certain information concerning those forward looking statements. Performance

~~Overview~~Our operating results are primarily affected by the following factors:

WeGrowth ~~are~~of aChina’s ~~holding~~fruit ~~company~~processing ~~and~~industry. ~~conduct~~We ~~all~~believe ofthat the ~~our~~recent ~~operations through~~growth ~~our~~in ~~indirect,~~processed ~~wholly-owned~~fruit ~~subsidiary,~~product ~~Longheda,~~consumption ~~which~~in China is ~~a leading~~largely ~~producer~~ attributable ofthe ~~premium~~increased ~~specialty~~affordability of processed fruit~~-based~~ products and increased health and wellness consciousness in China. We ~~develop,~~expect these factors ~~process,~~ to ~~market~~continue ~~and~~to ~~distribute~~drive aindustry ~~variety~~growth, ofespecially ~~food~~in ~~products~~our ~~processed~~primary ~~primarily from~~markets – premium specialty ~~fruits~~processed ~~grown~~fruit inproducts. ~~Northeast~~Such ~~China,~~growth ~~including~~will ~~golden berries,~~not ~~crab~~only ~~apple,~~increase the ~~blueberries~~overall ~~and~~market ~~raspberries.~~size ~~Our~~for ~~current~~processed ~~products include~~ fruit ~~concentrate~~products, ~~nectar~~but ~~and~~will ~~glazed~~also ~~fruits~~benefit companies asthat are well aspositioned ~~fresh~~to ~~fruits~~sell in these markets.
WeProduct ~~sell~~Offering ~~our~~and Pricing. Processed fruit products including ~~through~~concentrate anjuice, ~~extensive~~glazed ~~nationwide~~fruit, ~~sales~~nectar and concentrate pulp have ~~distribution~~ been, ~~network~~and ~~covering~~are 20expected ~~provinces~~to ~~and~~remain, 47our ~~cities~~primary inproduct ~~China~~offering. AsOur processed fruit products accounted for approximately 97.4% and 92.8% of ~~March~~our total net sales for fiscal years ended March 31, 2011 and 2010, ~~this~~respectively. ~~network~~The ~~was~~gross margin ~~comprised~~for ofour 75processed ~~distributors~~fruit products was approximately 47.0% ~~Our~~for ~~processed~~the ~~fruit~~fiscal ~~products~~ year ~~are~~ended ~~mainly~~March ~~sold~~31, 2011. We plan to ~~food~~continue ~~producers~~to ~~for~~focus ~~further~~on ~~processing~~our ~~into~~higher ~~fruit~~margin ~~juice~~ processed fruit products and ~~other~~further ~~fruit~~expand ~~related~~our ~~foods~~product portfolio in the future. Because we have strong bargaining power on golden berry products, ~~and~~we generally ~~our~~closely ~~fresh~~tie ~~fruits~~the ~~are~~pricing ~~mainly~~of ~~sold~~gold berry products to the raw material ~~fruit~~ prices ~~supermarkets~~to ensure a stable profit margin. We price our other products with reference to the prevailing market price.
~~Our~~Fluctuations ~~manufacturing~~in ~~facility~~Raw Material Supply and Prices. The per unit cost of producing our products is ~~located~~subject into ~~Daqing~~the ~~City~~supply and Muprice ~~Dan~~volatility ~~Jiang~~ of ~~City~~raw materials, ~~Heilongjiang~~especially ~~Province,~~fresh ~~China~~fruits ~~where~~which ~~abundant~~are ~~supply~~affected ofby ~~various~~factors such ~~premium~~ as ~~specialty~~weather, growing conditions and pests that are beyond our control. Fresh fruits isaccounted ~~readily~~for ~~available~~approximately 79% of our total cost of sales in fiscal year 2011. WeHistorically, we have ~~five~~been able to meet our fresh fruit supply needs by building our processing facilities in close proximity to orchards and ~~lines~~ by collaborating with local government and establishing an ~~aggregate~~effective ~~capacity~~group of vendors. ~~17,160~~Increases ~~tons~~in the price of fresh fruits would negatively impact our gross margins if we are not able to offset such price increases through increases in our selling price or change in product mix.
~~Principal~~PRC ~~Factors~~Government ~~Affecting~~Policy ~~Our~~Promoting ~~Financial~~the Development of the Fruit ~~Performance~~ Processing Industry. In the PRC central government’s eleventh five-year guideline, the central government emphasized its determination to solve the problems of farmers, boost modern agriculture and increase rural affluence. After the onset of the economic crisis in late 2008, the Ministry of Agriculture also stated its objective to promote fruit processing and fruit commercialization. We believe that our business model is structured within the framework of these Ministry of Agriculture initiatives and that government policies will continue to have a positive impact on the sale of our products.

~~Our operating results are primarily affected by the following factors:~~27

~~Growth~~Expansion of ~~China's~~our ~~fruit~~production ~~processing industry~~capacity. ~~BBIC~~We ~~projects that~~believe ~~the~~expansion ~~total sales and net income~~ of ~~processed fruit products in China will~~ ~~reach~~our ~~$37.2~~capacity ~~billion~~is ~~and~~needed ~~$2.5~~to ~~billion~~satisfy inincreased ~~2010,~~demand ~~representing~~for ~~growth~~our ~~of 42~~products.~~52% and~~ ~~66.67%, respectively, since 2007. We believe that the recent growth in~~The ~~processed~~average ~~fruit~~utilization ~~product~~rate ~~consumption~~for inour ~~China~~five ~~is largely attributable the increased affordability of processed~~ fruit ~~products~~processing ~~and~~production ~~increased~~lines ~~health and~~was ~~wellness~~approximately ~~consciousness~~94.5% in ~~China.~~fiscal Weyear ~~expect~~2011. ~~these~~In ~~factors~~order to ~~continue~~increase toour ~~drive~~production ~~industry growth~~capacity, ~~especially~~we inplan ~~our~~to ~~primary~~make ~~markets~~capital –investments ~~premium~~to ~~specialty~~build additional production ~~processed~~lines ~~fruit~~to ~~products.~~satisfy ~~Such growth will not only increase~~ the ~~overall market~~projected ~~size~~demand for ~~processed~~our ~~fruit~~ products~~, but will also benefit companies that are well positioned to sell in these markets~~.

~~Product~~Results Offering and Pricing. Processed fruit products including fruit concentrate, glazed fruit and nectar have been, and are expected to remain, our primary product offering. Our processed fruit products accounted for approximately 75.3% and 79.9% of ~~our~~Operations total net sales for fiscal years ended March 31, 2009 and 2010, respectively. The gross margin for our processed fruit products was approximately 49.0% for the fiscal year ended March 31, 2010 as compared to 32.2% for our beverage and other products. We plan to continue to focus on our higher margin processed fruit products in the future. Because we have a strong bargaining power on golden berry products, we generally closely tie the pricing of gold berry products to the raw material prices to ensure stable profit margin. We price our other products with reference to the prevailing market price.

~~Fluctuations~~Year inEnded ~~Raw~~March ~~Material~~31, ~~Supply~~2011 ~~and~~Compared ~~Prices. The per unit cost of producing our products is subject~~ to ~~the~~Year ~~supply~~Ended ~~and price volatility~~March ~~of raw materials~~31, especially fresh fruits which are affected by factors such as weather, growing condition and pests that are beyond our control. Fresh fruits accounted for approximately 74% of our total cost of sales in fiscal year 2010. Historically, we have been able to meet our fresh fruit supply needs by building our processing facilities in close proximity to orchards and by collaborating with local government and establishing an effective group of vendors. Increases in the price of fresh fruits would negatively impact our gross margins if we are not able to offset such price increases through increases in our selling price or change in product mix.

27The following table sets forth key components of our results of operations for the periods indicated, both in dollars and as a percentage of our net sales.

~~PRC~~(All ~~Government Policy Promoting the Development of the Fruit Processing Industry. In the PRC central government’s eleventh five-year guideline~~amounts, ~~the~~other ~~central~~than ~~government~~percentages ~~emphasized its determination to solve the problems of farmers, boost modern agriculture~~ and ~~increase~~per ~~rural affluence.~~share ~~After the onset of the economic crisis in late 2008~~number, ~~the Ministry~~in ofthousands ~~Agriculture also stated its objective to promote the fruit processing and fruit commercialization. We believe that our business model is structured within the framework~~ of ~~these Ministry of Agriculture initiatives and that government policies will continue to have a positive impact on the sale of our products~~U. S. dollars)

Expansion of our production capacity. Expansion of our capacity is needed to satisfy increased demand for our products. The average utilization rate for our five fruit processing production lines was approximately 94.7% in fiscal year 2010. In order to increase our production capacity, we must make capital investment to build additional production lines to satisfy the projected demand of our products.

		Fiscal Year Ended			Fiscal Year Ended
		March 31, 2011			March 31, 2010
		In	As a		In	As a
		Thousands	Percentage		Thousands	Percentage
		(audited)	of Net Sales		(audited)	of Net Sales
Net sales	$	86,954	100.0%	$	72,917	100.0%
Costs of sales		46,137	53.1%		39,656	54.4%
Gross profit		40,817	46.9%		33,261	45.6%
Selling expenses		3,100	3.6%		3,547	4.9%
General and administrative expenses		4,354	5.0%		3,977	5.5%
Interest expenses		5	-		-	-
Other income		85	0.1%		70	0.1%
Gain on disposal of property and equipment		-	-		290	0.4%
Income before income taxes		33,444	38.5%		26,098	35.8%
Income taxes		8,700	10.0%		6,849	9.4%
Net income		24,743	28.5%		19,249	26.4%
Earnings per share:
Basic	$	0.66		$	0.52
Diluted	$	0.62		$	0.51

~~Results~~The functional currency of ~~Operations~~the Company is RMB, however, our financial information is expressed in USD. The results of operations reported in the table above is based on an exchange rate of RMB6.73 to $1 for the fiscal year ended March 31, 2011 and the rate of RMB6.84 to $1 for the fiscal year ended March 31, 2010.

~~Year~~Net ~~Ended March 31, 2010 Compared to Year Ended March 31, 2009~~ Sales

Net sales increased $14.0 million, or 19.3%, to $86.9 million in fiscal year 2011 from $72.9 million in fiscal year 2010. The ~~following~~increase ~~table~~was mainly ~~sets~~attributable ~~forth~~to ~~key~~the ~~components~~increased sales volume of our ~~results~~products, ofespecially ~~operations~~our glazed fruit and concentrate pulp products. Market demand for our products remained strong in fiscal year 2011, due in part to growth in the ~~periods~~health conscious ~~indicated~~urban population and a rise in per capita disposable income in China. Sales of glazed fruit and concentrate pulp grew significantly from $16.6 million and $9.4 million, ~~both~~respectively, in ~~dollars~~fiscal year 2010 to $22.3 million and $13.5 million, respectively, in fiscal year 2011. Our new glazed fruit production line started operation in December 2009 and we produced more glazed fruit products in fiscal year 2011 as acompared ~~percentage~~to last fiscal year. In addition, sales of concentrate juice products increased from $34.7 million in fiscal year 2010 to $41.7 million in fiscal year 2011, primarily due to the increased per unit sales price resulting from the increased cost of our source fruits crab apple, blueberry and raspberry. We continuously monitor our pricing policies and have generally been able to pass the increased raw material costs to our customers. We also benefited from our new products, blackcurrant and seabuckthorn glazed fruit and concentrate juice which were launched during fiscal year 2011 and were well received by the market. In fiscal year 2011, we generated approximately $4.3 million of net sales from our new blackcurrant and seabuckthorn glazed fruit products and $2.8 million of net sales from our blackcurrant and seabuckthorn concentrate juice products, respectively.

~~(All amounts, other than percentages and per share number, in thousands of U.S. dollars)~~28

		Fiscal Year Ended			Fiscal Year Ended
		March 31, 2010			March 31, 2009
		In	As a		In	As a
		Thousands	Percentage		Thousands	Percentage
		(audited)	of Net Sales		(audited)	of Net Sales
Net Sales	$	72,917	100.0%	$	56,419	100.0%
Costs of Sales		39,656	54.4%		31,778	56.3%
Gross profit		33,261	45.6%		24,641	43.7%
Selling expenses		3,547	4.9%		2,930	5.2%
General and administrative expenses		3,977	5.5%		12,409	22.0%
Interest expenses		-	-		480	0.9%
Other income		361	0.5%		32	0.1%
Income before noncontrolling interests and income taxes		26,098	35.8%		8,854	15.7%
Income taxes		6,849	9.4%		4,128	7.3%
Noncontrolling interests		-	-		209	0.4%
Net income		19,249	26.4%		4,517	8.0%
Earnings per share:
Basic	$	0.5451		$	0.1351
Diluted	$	0.5059		$	0.1350

The following table sets forth percentage of net sales generated by each product for the fiscal years ended March 31, 2011 and 2010:

~~The~~(All ~~functional~~amounts, ~~currency~~other ofthan ~~the Company is RMB~~percentages, ~~however, our financial information is expressed~~ in ~~USD.~~thousands ~~The results~~ of ~~operations reported in the table above is based on the exchange rate of RMB6~~U.~~84 to $1 for the fiscal year ended March 31, 2010 and the rate of RMB6~~S.~~88 to $1 for the fiscal year~~ ~~ended~~dollars) ~~March 31, 2009.~~

Net Sales

		Fiscal Year Ended			Fiscal Year Ended
		March 31, 2011			March 31, 2010
			As a			As a
		In	Percentage		In	Percentage
Product		Thousands	of Net Sales		Thousands	of Net Sales
Fresh fruit	$	2,243	2.6%	$	2,221	3.0%
Glazed fruit		22,289	25.6%		16,622	22.8%
Nectar		7,231	8.3%		6,961	9.5%
Concentrate juice		41,707	48.0%		34,671	47.6%
Concentrate pulp		13,484	15.5%		9,377	12.9%
Beverage		-	-		3,065	4.2%
Total	$	86,954	100.0%	$	72,917	100.0%

~~Net~~Cost ~~sales increased $16.5 million, or 29.2%, to $72.9 million in fiscal year 2010 from $56.4 million in fiscal year 2009. The increase was mainly attributable to the increased sales volume~~ of ~~our products, especially our glazed fruit, concentrated juice and concentrated pulp products.~~ Sales of glazed fruit grew significantly from $6.2 million in fiscal year 2009 to $16.6 million in fiscal year 2010, sales of concentrate juice and concentrate pulp grew from $28.9 million to $34.7 million and from $6.9 million to $9.4 million during those periods, respectively. Market demand for our products was strong in the fiscal year 2010, due, in part, to the Chinese government’s economic stimulus program, growth in a health conscious urban population and a rise in per capita disposable income in China. We launched new glazed blueberry products in September 2009, which were well received by our customers and our new glazed fruit production line started production in December 2009, both of which increased our glazed fruit production and sales in fiscal year 2010.

28Cost of sales increased $6.5 million, or 16.3%, to $46.1 million in fiscal year 2011 from $39.7 million in fiscal year 2010. This increase was primarily due to, and consistent with, the increase in our sales volume. As a percentage of net sales, our cost of sales decreased to 53.1% in fiscal year 2011 from 54.4% in fiscal year 2010. The percentage decrease was mainly due to the change in product mix. We sold a higher percentage of glazed fruit products in fiscal year 2011, which generally had a lower per unit cost as compared to our concentrate juice and concentrated pulp products.

~~The~~Gross ~~following~~Profit ~~table sets forth percentage of net sales generated by each product for the fiscal years ended March 31, 2010~~ and ~~2009:~~ Gross Margin

~~(All~~Gross ~~amounts,~~profit ~~other~~increased ~~than~~$7.5 ~~percentages,~~million to $40.8 million in ~~thousands~~fiscal year 2011 from $33.3 million in fiscal year 2010. Gross profit as a percentage of Unet sales was 46.S9% and 45.6% for fiscal years 2011 and 2010, respectively. ~~dollars)~~The modest increase in gross margin was mainly due to the change in product mix. In fiscal year 2011, a bigger percentage of our net sales was generated from sales of higher margin glazed fruit products.

		Fiscal Year Ended			Fiscal Year Ended
		March 31, 2010			March 31, 2009
			As a			As a
		In	Percentage		In	Percentage
Product		Thousands	of Net Sales		Thousands	of Net Sales
Fresh fruit	$	2,221	3.0%	$	2,441	4.3%
Glazed fruit		16,622	22.8%		6,168	10.9%
Nectar		6,961	9.6%		7,430	13.2%
Concentrate juice		34,671	47.5%		28,906	51.2%
Concentrate pulp		9,377	12.9%		6,857	12.2%
Beverage		3,065	4.2%		4,617	8.2%
Total	$	72,917	100.0%	$	56,419	100.0%

The gross margins for concentrate juice, glazed fruit, nectar and concentrate pulp products for fiscal year 2011 were 42.8%, 54.0%, 67.5% and 37.1%, as compared to 43.4%, 52.6%, 68.3% and 31.8% for the same period last year, respectively. The average gross margin of our concentrate juice products decreased slightly as compared to fiscal year 2010 mainly because of the slightly lower average sales price of the blueberry concentrate juice products in fiscal year 2011. The gross margin for our glazed fruit products increased in fiscal year 2011 mainly because both of our glazed fruit production lines ran in full capacity during our harvest season in fiscal year 2011 and we were able to produce more glazed fruit products using fresh fruits which are generally cheaper than frozen fresh fruit. In contrast, in fiscal year 2010, we used more frozen fresh fruit for the production of glazed fruit products because our new glazed fruit production line started operation during the non-harvest season. We used frozen fresh fruit during the non-harvest season in order to maximize the utilization rate of our glazed fruit production line and increase sales volume. The gross margin for concentrate pulp products increased in fiscal year 2011 mainly because the sales price for pear concentrate pulp in the China market increased significantly during the 2011 fiscal year as compared to last fiscal year.

~~Cost~~Selling ofand ~~Sales~~General and Administrative Expenses

~~Cost~~Selling ofand ~~sales~~general ~~increased~~and ~~$7.9~~administrative ~~million~~expenses decreased $69,774, or 240.89%, to $~~39.~~7 .5 million in fiscal year ~~2010~~2011 from $317.85 million in fiscal year ~~2009.~~2010 ~~This increase~~mainly ~~was primarily~~ due to, ~~and consistent with,~~ the ~~increase~~decrease ~~in our sales volume. In fiscal year 2010, we sold a higher percentage~~ of ~~glazed~~selling ~~fruit products,~~expenses ~~which generally have a lower per unit cost~~ as ~~compared to fruit~~discussed ~~concentrate juice and concentrated pulp products~~below. ~~Therefore, the overall percentage increase in cost of sales is lower than the overall percentage increase in sales.~~

~~Gross Profit and Gross Margin~~29

~~Gross~~Selling ~~profit~~expenses ~~increased~~decreased $8447,152, or 12.6%, ~~million~~ to $~~33.~~3.1 million in fiscal year ~~2010~~2011 from $243.65 million in fiscal year ~~2009~~2010. ~~Gross~~As ~~profit as~~ a percentage of of net ~~revenues~~sales, ~~was~~our 45selling expenses decreased to 3.6% ~~and~~in 43fiscal year 2011 from 4.79% in ~~for~~ fiscal ~~years~~year 2010. ~~and~~Due ~~2009,~~to well established relationships with our existing ~~respectively.~~customers, ~~The~~we ~~modest~~received ~~increase~~repeat inorders ~~gross~~with ~~margin~~higher ~~was~~volume ~~mainly~~from ~~due~~our existing clients, which led to ~~the~~lower ~~change in~~sales ~~product~~related ~~mix.~~expenses Infor fiscal year ~~2010~~2011. In addition, awe ~~bigger~~incurred ~~percentage~~less ofselling ~~our~~expenses ~~net~~due ~~sales~~to ~~were~~the cessation of the ~~generated~~production ~~from~~and ~~sales~~sale of ~~higher~~beverage ~~margin,~~products ~~glazed~~in ~~fruit~~fiscal ~~products~~year 2011.

~~The~~General ~~gross~~and ~~margins~~administrative ~~for~~expenses ~~fruit~~increased ~~concentrate~~$377, ~~glazed fruit~~378, ~~nectar~~or ~~and concentrate pulp products for fiscal year 2010 were 43~~9.45%, ~~52.6%,~~to 68$4.3%4 ~~and 31.8%,~~million asin ~~compared~~fiscal toyear ~~36.0%,~~2011 ~~64.9%,~~from 69$4.0% ~~and~~million ~~37.9%~~in ~~for~~fiscal ~~the same period last~~ year, ~~respectively~~2010. As Wea ~~were~~percentage ~~able~~of tonet ~~increase~~sales, ~~the~~general ~~gross~~and ~~margin~~administrative ~~for~~expenses ~~fruit~~decreased to ~~concentrate~~5.0% ~~products~~in ~~during the 2010~~ fiscal year ~~because~~2011, ~~the average sales price of raspberry concentrate products increased approximately 100%~~ as compared to ~~last~~ ~~fiscal year~~5.5% ~~The gross margin for glazed fruit dropped~~ in fiscal year 2010 ~~because we used frozen fresh fruit to process glazed golden berries and glazed blueberries during the non-harvest season~~. The ~~cost of frozen fresh fruit is~~slight ~~usually~~dollar ~~higher~~increase ~~than~~in ~~fresh~~general ~~fruit.~~and Weadministrative ~~used~~expenses ~~frozen~~was ~~fresh~~mainly ~~fruit during the~~attributable ~~non-harvest season in order~~ to ~~maximize~~ the ~~utilization~~increase ~~rate~~in ofstaff ~~our~~salary ~~glazed~~and ~~fruit production~~benefits, ~~line~~ and ~~increase~~depreciation ~~sales~~expenses ~~volume. The gross margin for concentrate pulp~~incurred ~~products decreased~~ in ~~fiscal~~connection ~~year~~with ~~2010,~~our ~~mainly~~new ~~because~~glazed ~~sales~~fruit ~~price~~production ~~for~~line ~~apple concentrate~~which ~~pulp~~became operational in ~~the~~December ~~international~~2009. ~~market~~The ~~decreased~~percentage ~~significantly~~decrease ~~during~~was ~~the 2010~~mainly ~~fiscal~~attributable ~~year as compared~~ to ~~last~~economy ~~fiscal year due to the general economic~~of ~~climate.~~scales ~~However,~~and ~~the~~effective ~~price~~cost ofcontrol ~~apple,~~over ~~the~~our ~~main~~general ~~raw~~and ~~material~~administrative ~~for apple~~expenses ~~concentrate~~during ~~pulp, in~~ the ~~international market was stable, increased moderately~~year.

~~Selling~~Interest ~~and General and Administrative~~ Expenses

~~Selling~~We ~~and~~incurred ~~general and administrative expenses decreased~~ $~~7.8 million~~4,912 orof ~~50.9%,~~interest toexpense ~~$7.5~~for ~~million~~the in fiscal year ended ~~2010~~March ~~from~~31, ~~$15~~2011.3 ~~million~~We ~~in fiscal~~had ~~year~~no ~~2009~~interest ~~mainly~~expense ~~due~~in tofiscal ~~the~~year ~~decrease of general and administration expenses as discussed below~~2010.

~~Selling~~Income ~~expenses~~before ~~increased~~Income $617,355, or 21.1%, to $3.5 million in fiscal year 2010 from $2.9 million in fiscal year 2009. As a percentage of net sales, our selling expenses slightly decreased to 4.9% in fiscal year 2010 from 5.2% in fiscal year 2009. The increase in our selling expenses was generally in line with the increase in sales volume. Taxes

29Income before income taxes increased $7.3 million, or 28.1%, to $33.4 million in fiscal year 2011 from $26.1 million in fiscal year 2010. Income before income taxes as a percentage of net sales increased from 35.8% in fiscal year 2010 to 38.5% in fiscal year 2011. The percentage increase was primarily attributed to the increase in sales volume and gross margin.

~~General~~Provision and administrative expenses decreased $8.4 million, or 68.0%, to $4.0 million in fiscal year 2010 from $12.4 million in fiscal year 2009. As a percentage of net sales, general and administrative expenses decreased to 5.5% in fiscal year 2010, as compared to 22.0% in fiscal year 2009. The dollar and percentage decrease was mainly attributable to a $9.5 million non-cash compensation expense resulting from the release of certain escrow shares to our shareholder Yiu Fai Kung as discussed below. In connection with the Company’s private placement on August 14, 2008, the Company entered into two make good escrow agreements, under which a total of 5,599,598 shares of the Company’s common stock held by Yiu Fai Kung, the Company’s major shareholder, were placed in escrow. For each of 2009 and 2010, 2,799,799 shares will be transferred to investors and other parties or returned to Mr. Kung, depending on whether the specified earnings targets were achieved. The specified earnings targets for ~~fiscal~~Income years 2009 and 2010 were net income of $13,919,707 and $18,495,315, respectively. We met the fiscal year 2009 earnings target and recorded a non-cash charge to compensation cost of $9.5 million in the fourth quarter of fiscal year 2009 related to the release from escrow to Mr. Kung of 2,799,799 shares as Mr. Kung was a director of Fezdale. Although we met the fiscal year 2010 earnings target, because Mr. Kung resigned from his position as Fezdale’s director in July 2009 and the release of the escrowed shares are not contingent on his continuing employment with the Company, in accordance with FASB ASC 718-10-S99-2 2010, the Company did not recognize any compensation expense relating to the release of make good shares for the fiscal year ended March 31, 2010. Taxes

~~Other~~Our ~~than~~provision ~~the~~for ~~non-cash~~income ~~compensation~~taxes ~~expenses~~was ~~incurred~~$8.7 inmillion ~~fiscal~~and ~~year~~$6.9 million ~~2009~~for inthe ~~connection~~fiscal ~~with~~years ~~the~~ended ~~make~~March ~~good arrangement~~31, ~~our~~2011 ~~general~~ and ~~administrative~~2010, ~~expenses~~respectively. ~~increased~~The increase ~~$1.1~~was ~~million,~~mainly ordue ~~37.6%~~to an increase in ~~fiscal~~net ~~year~~income ~~2010~~before income tax. As a percentage of net sales, ~~our~~ ~~general~~provision ~~and~~for ~~administrative~~income ~~expenses~~taxes increased ~~slightly~~ from 59.14% for the 2010 fiscal year ~~2009~~ to 510.50% for ~~fiscal year 2010. The modest increase was mainly attributable to costs associated with~~ the ~~transfer~~2011 ~~from~~fiscal ~~the Over-the-Counter Bulletin Board to the NYSE AMEX in August 2009~~year.

We file separate tax returns in the United States and China. ~~Interest~~Income ~~Expenses~~taxes of our PRC subsidiary are calculated in accordance with taxation principles currently effective in the PRC. For China Nutrifruit Group Limited, applicable U.S. tax laws are followed. The applicable tax rate for Longheda is 25%.

All our business operations are done through our PRC Wesubsidiaries ~~did~~and ~~not~~we ~~have~~may ~~any~~rely ~~interest~~on ~~expenses~~dividends from our PRC operating subsidiaries. The EIT Law and its implementing rules generally provide that a 10% withholding tax applies to China-sourced income derived by non-resident enterprises for ~~the~~PRC enterprise ~~fiscal~~income ~~year~~tax ~~ended~~purposes. ~~March~~We ~~31,~~expect ~~2010~~that ~~because~~such we10% ~~repaid~~withholding ~~all~~tax ~~outstanding~~will apply ~~bank~~to ~~loans~~dividends paid to us by our PRC subsidiaries, but this treatment will depend on ~~March~~our 26status as a non-resident enterprise. For a detailed discussion of PRC tax issues related to resident enterprise status, ~~2009~~see Item 1A, “Risk factors—Risks Related to Doing Business in China— Under the Enterprise Income Tax Law, we may be classified as a ‘resident enterprise’ of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC stockholders.”

~~Income~~Net ~~before Noncontrolling Interests and~~ Income ~~Taxes~~

~~Income~~Net ~~before noncontrolling interests and~~ income ~~taxes~~ increased $175.25 million, or ~~194~~28.85%, to $2624.17 million in ~~fiscal~~2011 ~~year 2010~~ from $819.93 million in ~~fiscal~~2010, ~~year 2009. Income before noncontrolling interests and income taxes~~ as a ~~percentage~~ ofcumulative ~~net~~effect ~~sales~~of ~~increased~~all ~~from~~of ~~15.7% in fiscal year 2009 to 35.8% in fiscal year 2010. The percentage increase was primarily attributed to~~ the ~~increase in sales volume and gross margin and decrease in general and administrative expenses as~~factors discussed above.

~~Provision~~Liquidity ~~for~~and ~~Income~~Capital ~~Taxes~~ Resources

~~Our~~As ~~provision~~of ~~for income taxes was $6.9 million and $4.1 million during the fiscal years ended~~ March 31, ~~2010 and 2009~~2011, ~~respectively.~~we ~~The~~had ~~increase~~cash ~~was~~and ~~mainly~~cash ~~due~~equivalents ~~to increase in net income before income tax. As a percentage~~ of ~~net sales,~~ ~~provision~~approximately for income taxes increased from 7.3% for the 2009 fiscal year to 9.4% for the 2010 fiscal year. We had a lower percentage of provision for income tax to net sales for fiscal year 2009 mainly because of the deferred tax of $043.5 million ~~arising~~. ~~from~~The ~~the~~following ~~temporary~~table ~~difference~~provides ~~recognized~~detailed ~~from~~information about ~~the~~our ~~25%~~net ofcash ~~equity~~flow ~~interest~~for ofall ~~Longheda~~financial ~~acquired~~statement byperiods ~~Solar~~presented ~~Sun~~ in ~~May 2008~~this report.

We file separate tax returns in the United States and China. Income taxes of our PRC subsidiary are calculated in accordance with taxation principles currently effective in the PRC. For China Nutrifruit Group Limited, applicable U.S. tax laws are followed. The applicable tax rate for Longheda is 25%. 30

~~Substantially~~Cash ~~all~~Flow(All ofamounts our income was derived from dividends we receive from our PRC operating subsidiary. The EIT Law and its implementing rules generally provide that a 10% withholding tax applies to China-sourced income derived by non-resident enterprises for PRC enterprise income tax purposes. We expect that such 10% withholding tax will apply to dividends paid to us by our PRC subsidiary, but this treatment will depend on our status as a non-resident enterprise. For detailed discussion of PRC tax issues related to resident enterprise status, see Item 1A, “Risk factors—Risks Related to Doing Business in ~~China—~~thousands ~~Under the Enterprise Income Tax Law, we may be classified as a ‘resident enterprise’~~ of ~~China~~U. ~~Such classification will likely result in unfavorable tax consequences to us and our non-PRC stockholders~~S.” dollars)

		Fiscal Year Ended March 31,
		2011			2010
Net cash provided by operating activities	$	25,790		$	21,667
Net cash used in investing activities		(20,686	)		(1,701	)
Net cash provided by financing activities		1,066			11,283
Effect of exchange rate on cash and cash equivalents		1,378			(24	)
Cash and cash equivalents at beginning of the period		35,994			4,769
Cash and cash equivalents at end of period		43,542			35,994

~~Net~~Operating ~~Income~~Activities

Net ~~income~~cash ~~increased~~provided ~~$14.8~~by ~~million,~~operating oractivities ~~326.1%,~~was to $1925.38 million in ~~2010 from $4.5 million~~ in ~~2009. Other than the non-cash compensation charge~~ ~~of $9.5 million in~~ fiscal year ~~2009 due to the make good arrangement~~2011, ~~our~~an ~~net income~~increase ~~increased~~of $54.31 million, or 3719.10%, tofrom $1921.37 million innet cash ~~fiscal~~provided ~~year~~by ~~2010 from~~operating ~~$14.0~~activities ~~million~~ in fiscal year ~~2009~~2010. ~~The~~Net ~~increase~~cash ~~was~~provided ~~mainly~~by operating aactivities ~~result~~for of the ~~increase~~ in2011 ~~sales~~fiscal ~~revenue~~year aswas ~~discussed~~mainly ~~above~~attributable to our net income of $24.7 million.

~~Liquidity~~Investing ~~and Capital Resources~~Activities

AsNet ofcash ~~March~~used ~~31,~~in ~~2010~~investing activities was $20.7 million in fiscal year 2011, weas ~~had~~compared ~~cash~~to ~~and~~$1.7 ~~cash~~million ~~equivalents~~in offiscal year 2010. In fiscal year 2011, we spent approximately $365.09 million and $10.6 ~~The~~million ~~following~~in ~~table~~the construction ~~provides~~of ~~detailed~~the ~~information about~~new ~~our~~fruit ~~net~~and ~~cash~~vegetable ~~flow~~powder factory and as advance payment for ~~all~~assembling ~~financial~~the ~~statements~~fruit ~~periods~~and ~~presented~~vegetable powder production line, respectively. In addition, we spent approximately $4.3 million in ~~this~~upgrading our ~~report~~concentrate juice production line in the first quarter of fiscal year 2011.

Cash Flow
(All amounts in thousands of U.S. dollars)
		Fiscal Year Ended March 31,
		2009			2008
Net cash provided by operating activities	$	21,667		$	6,301
Net cash used in investing activities		(1,701	)		(19,956	)
Net cash provided by financing activities		11,283			11,748
Effect of exchange rate on cash and cash equivalents		(24	)		(429	)
Cash and cash equivalents at beginning of the period		4,769			7,105
Cash and cash equivalents at end of period		35,994			4,769

Our cash used in investing activities during fiscal year 2010 was primarily for the purchase of a new glazed fruit production line in December 2009 for approximately $2.7 million, which was partially offset by the proceeds from disposal of the beverage production line of approximately $1.0 million.

~~Operating~~Financing Activities

Net cash provided by ~~operating~~financing activities was approximately $211.71 million in fiscal year ~~2010~~2011, anas ~~increase~~compared ofto $1511.43 million, orin ~~243~~fiscal year 2010.9% ~~from~~In ~~$6.3~~September ~~million~~2010, ~~net cash~~we ~~provided~~made bya ~~operating~~dividend ~~activities~~payment in ~~fiscal~~the ~~year~~aggregate ~~2009.~~amount ~~Net~~of $809,550 ~~cash~~to ~~provided~~holders byof our Series A Convertible Preferred Stock in accordance ~~operating~~with ~~activities~~its ~~for~~terms and received a return of $931,630 from the ~~2010~~dividend ~~fiscal~~holdback escrow ~~year~~account ~~was~~established ~~mainly~~in ~~attributable~~connection towith the ~~net earning~~private placement of ~~$19~~the Series A Convertible Preferred Stock.3 ~~million~~We also received an approximately $0.9 million advance from a director for the operating working capital for Daqing Senyang.

~~Investing~~Net ~~Activities~~cash provided by financing activities in fiscal year 2010 was mainly attributable to the receipt of $12.2 million in net proceeds from a private placement financing transaction which closed in October 2009. On October 8, 2009, we completed a private placement of Series A Convertible Preferred stock and warrants and issued 403,418 units at a purchase price of $33.00 per unit for gross proceeds of $13,309,000. Each unit consists of one share of our newly-designated Series A Convertible Preferred Stock, par value $0.001 per share, and one warrant to purchase 2.5 shares of our common stock. The warrants are immediately exercisable at a per share price of $3.30 (subject to customary adjustments) and have a term of four years.

~~Net~~Capital cash used in investing activities was $1.7 million in fiscal year 2010, as compared to $20.0 million in fiscal year 2009. Our cash used in investing activities during fiscal year 2010 was primarily for the purchase of a new glazed fruit production line in December 2009 for approximately $2.7 million which was partially offset by the proceeds from disposal of the beverage production line of approximately $1.0 million. Our cash used in investing activities during fiscal year 2009 primarily related to our acquisition of the 25% of minority interest in Longheda for $6.8 million and the purchase of property, plant and equipment for the new concentrated fruit juice production line in Mu Dan Jiang for $13 million. Expenditures

~~Financing~~Our ~~Activities~~capital expenditures were $20.7 million and $2.7 million for the fiscal years ended March 31, 2011 and 2010, respectively. Our capital expenditures were mainly used to upgrade and expand our production capacity. Our planned capital expenditures for the fiscal year ending March 31, 2012 will be for upgrading existing production lines and expanding production capacity. However, our actual capital expenditure may differ depending on our cash flow status.

~~Net~~On ~~cash~~February ~~provided~~23, ~~by financing activities was $11.3 million in fiscal year~~ 2010, aswe ~~compared~~entered tointo a $110.896 million ~~in fiscal year 2009. During the~~revolving ~~2010~~credit ~~fiscal~~facility ~~year,~~with the ~~cash~~Heilongjiang ~~provided~~Rural byCredit ~~financing~~Union ~~activities~~with ~~was~~a ~~mainly attributable~~term ~~to the receipt~~ of ~~$12.2 million in net proceeds from a private~~three ~~placement financing transaction closed in October 2009~~years. ~~The~~This ~~net~~facility ~~cash~~is ~~provided~~secured by ~~financing~~ ~~activities~~our inland ~~fiscal~~and ~~year~~buildings ~~2009~~located ~~was~~in ~~primarily attributable to $7.3~~Daqing ~~million~~City. ~~proceeds~~On ~~from~~February ~~a private placement financing~~25, ~~loans from shareholders of $7.4 million~~2010, ~~and proceeds from bank borrowing of $7.3 million which was partially offset by the repayment of bank loans of $10.2 million.~~

On October 8, 2009, we completed a private placement and issued 403,418 units at a purchase price of $33.00 per unit for gross proceeds of $13,309,000. Each unit consists of one share of our newly-designated Series A Convertible Preferred Stock, par value $0.001 per share, and one warrant to purchase 2.5 shares of our common stock. The warrants are immediately exercisable at a per share price of $3.30 (subject to customary adjustments) and have a term of four years. The total net proceeds from the private placement were approximately $12.2 million. 31

we entered into another $1.31 million revolving credit facility with the Longjiang Bank with a term of two years. This facility was secured by our land and buildings in Mudanjiang City. Both facilities are for our working capital needs during our production season. As of the date of this report, we did not draw down on either facility and did not have any outstanding bank loan.

~~Capital~~We ~~Expenditures Our~~believe that our currently available working capital, ~~expenditures~~after receiving ~~were~~the ~~$2.7~~aggregate ~~million~~proceeds ~~and~~of ~~$13.1~~our ~~million~~capital ~~for~~raising ~~the~~activities ~~fiscal~~and ~~years~~credit facilities ~~ended~~referred ~~March~~to 31above, ~~2010~~should ~~and~~be ~~2009,~~adequate ~~respectively~~to sustain our operations at our current levels through at least the next twelve months. ~~Our~~We ~~capital~~may ~~expenditures~~require additional ~~were~~cash ~~mainly~~resources ~~used~~due to changing business conditions, implementation of our strategy to expand our production capacity or other investments or acquisitions we may decide to pursue. ~~Our~~If ~~most~~our ~~material~~own financial resources are insufficient to satisfy our capital ~~expenditure~~requirements, we may seek to sell additional ~~for~~equity ~~fiscal~~or ~~year~~debt ~~2010~~securities ~~was~~or ~~the~~obtain ~~purchase~~additional credit facilities. The sale of additional aequity ~~glazed~~securities ~~fruit~~could ~~production~~result ~~line~~in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.

OnCritical ~~February~~Accounting ~~23,~~Policies ~~2010, we entered into a $1.17 million revolving credit facility with the Heilongjiang Rural Credit Union with a term of three years. This facility is secured by our land~~ and buildings located in Daqing City. On February 25, 2010, we entered into another $1.59 million revolving credit facility with the Longjiang Bank with a term of two years. This facility was secured by our land and buildings in Mu Dan Jiang City. Both facilities are for the working capital need during our production season. As of the date of this report, we did not draw down on either of the facilities and did not have any outstanding bank loan. Estimates

WeThe ~~believe~~preparation ~~that our currently available working capital, after receiving the aggregate proceeds~~ of ~~our~~financial ~~capital~~statements ~~raising~~in ~~activities~~conformity ~~and~~with accounting ~~credit~~principles ~~facilities~~generally ~~referred~~accepted toin ~~above,~~the ~~should~~United beStates ~~adequate~~requires ~~to sustain~~ our ~~operations at our current levels through at~~ ~~least~~management ~~the next twelve months. We may require additional cash resources due~~ to ~~changed~~make ~~business conditions~~assumptions, ~~implementation~~estimates ofand ~~our~~judgments ~~strategy~~that toaffect ~~expand~~the ~~our~~amounts reported ~~production~~in ~~capacity~~the ~~or other investments or acquisitions we may decide to pursue. If our own~~ financial ~~resources~~statements, ~~are~~including ~~insufficient~~the tonotes ~~satisfy our capital requirements~~thereto, weand ~~may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities could result in dilution to our~~related ~~stockholders.~~disclosures ~~The incurrence~~ of ~~indebtedness~~commitments ~~would result in increased debt service obligations~~ and ~~could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us~~contingencies, if ~~at all~~any. ~~Any~~We ~~failure~~consider byour uscritical accounting topolicies ~~raise additional funds on terms favorable~~ to ~~us,~~be orthose atthat ~~all,~~require ~~could~~the ~~limit~~more ~~our~~significant ~~ability~~judgments ~~to expand our business operations~~ and estimates ~~could~~in ~~harm~~the ~~our~~preparation ~~overall~~of ~~business~~financial ~~prospects.~~statements, including the following:

~~Critical~~Use ~~Accounting~~of ~~Policies and Estimates~~ estimates

The preparation of the consolidated financial statements in conformity with ~~accounting~~US ~~principles~~GAAP ~~generally accepted in the United States~~ requires ~~our~~ management to make ~~assumptions,~~ estimates and ~~judgments~~ assumptions that affect the ~~amounts~~ reported inamounts ~~the financial statements, including the notes thereto, and related disclosures~~ of ~~commitments~~assets and ~~contingencies~~liabilities, ifthe ~~any.~~disclosure Weof contingent ~~consider~~liabilities ~~our~~at ~~critical~~the ~~accounting~~date ~~policies~~of tothe befinancial ~~those~~statements, ~~that~~and ~~require~~ the ~~more~~reported amounts ~~significant~~of ~~judgments~~revenue and ~~estimates~~expenses induring the ~~preparation~~reporting ofperiod. Actual results ~~financial~~could ~~statements,~~differ ~~including~~from ~~the~~these ~~following:~~estimates.

~~Use~~Trade ofaccounts ~~estimates~~ receivable

~~The~~In ~~preparation of~~ the ~~consolidated~~normal ~~financial~~course ~~statements~~of inbusiness ~~conformity~~the ~~with~~Company USextends ~~GAAP~~credit ~~requires~~to customers. ~~management~~Trade toaccounts ~~make~~receivable, ~~estimates~~less ~~and~~allowance ~~assumptions~~for ~~that~~doubtful ~~affect~~accounts, reflects the ~~reported~~net ~~amounts~~realizable value of ~~assets~~receivables, and ~~liabilities~~their approximate fair value. On a regular basis, the ~~disclosure~~Company ofevaluates ~~contingent~~its ~~liabilities~~trade ataccounts ~~the~~receivable ~~date~~and establishes an allowance for doubtful accounts based on a combination of specific ~~the~~customer ~~financial~~circumstances, ~~statements~~credit conditions, and ~~the~~payment ~~reported~~history. ~~amounts~~A receivable ofis ~~revenue~~considered ~~and~~past ~~expenses~~due ~~during~~if payments have not been received within the agreed ~~reporting~~upon ~~period~~invoice terms. ~~Actual~~No ~~results~~allowance ~~could~~for ~~differ~~doubtful ~~from~~accounts ~~these~~at ~~estimates~~March 31, 2011 (2010: nil) was recorded.

~~Trade accounts receivable~~ Inventories

InThe ~~the~~cost ~~normal course~~ of ~~business~~finished ~~the~~products ~~Group~~inventories ~~extends~~includes ~~credit to customers. Trade accounts receivable~~raw materials, ~~less~~direct ~~allowance~~labor ~~for doubtful accounts, reflects the net realizable value of receivables,~~ and ~~their~~indirect ~~approximate~~production ~~fair value~~costs. OnInventories aare ~~regular~~stated ~~basis, the~~at ~~Group~~the ~~evaluates~~lower ~~its~~of ~~trade~~cost ~~accounts~~or ~~receivable~~market. ~~and~~The ~~establishes~~Company anuses ~~allowance for doubtful accounts based on a combination of specific customer circumstances~~first-in, ~~credit~~first-out ~~conditions,~~methods ~~and~~to value ~~payment~~its ~~history~~inventories. ADuring ~~receivable~~the isidle ~~considered~~production ~~past~~period, ~~due~~overhead ifcosts ~~payments have~~include ~~not~~depreciation ~~been~~are ~~received~~treated ~~within~~as ~~the~~current-period ~~agreed~~charges, ~~upon~~which ~~invoice~~are ~~terms.~~expensed Noto general ~~allowance~~and ~~for~~administrative ~~doubtful~~expense ~~accounts~~instead atof ~~March~~cost ~~31,~~of ~~2010 (2009: nil) was recorded~~sales.

~~Inventories~~ Property and equipment, net

~~The~~Property and equipment are recorded at cost ofand ~~finished~~are ~~products~~depreciated on ~~inventories~~a ~~includes~~straight-line ~~raw~~basis ~~materials,~~over ~~direct~~the ~~labor~~estimated useful lives of the assets. Maintenance and ~~indirect~~repairs ~~production~~are ~~costs~~expensed as incurred. ~~Inventories~~The principal estimated useful lives generally are: ~~stated~~buildings at–20 ~~the~~years; ~~lower~~leasehold ofimprovements ~~cost~~– or10 ~~market~~years; machinery – 10 years; furniture, fixtures and office equipment – 5 years; motor vehicles – 5 years. ~~The~~Depreciation ~~Group~~of ~~uses~~property ~~first-in~~and equipment was $2,372,023 ~~first-out~~and $1,590,023 ~~methods~~for tothe ~~value~~years ~~its~~ended ~~inventories~~March 31, 2011 and 2010, respectively. During the ~~idle~~ ~~production~~idle period, ~~overhead~~of ~~costs~~the ~~include~~plant, depreciation ~~are~~is treated as current-period charges, which ~~are~~charge ~~expensed~~directly to general and administrative expense ~~instead of cost of sales~~.

~~Property,~~Revenue plant and equipment, net Property, plant and equipment are recorded at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets. Maintenance and repairs are expensed as incurred. The principal estimated useful lives generally are: buildings – 20 years; leasehold improvements – 10 years; machinery – 10 years; furniture, fixtures and office equipment – 5 years; motor vehicles – 5 years. During the idle period of the plant, depreciation is treated as current-period charges, which charge directly to general and administrative expense. recognition

We recognize revenue from sales of products, where persuasive ~~Revenue~~evidence ~~recognition~~of an arrangement exists, delivery has occurred, the seller’s price is fixed or determinable and collectibility is reasonably assured. This generally occurs when the customer receives the product or at the time title passes to the customer. Customers generally do not have the right to return product unless damaged or defective. Net sales are comprised of gross sales reduced by customer returns, trade promotions and discounts.

WeImpairment ~~recognize revenue from sales~~ of ~~products,~~long-lived where persuasive evidence of an arrangement exists, delivery has occurred, the seller’s price is fixed or determinable and collectibility is reasonably assured. This generally occurs when the customer receives the product or at the time title passes to the customer. Customers generally do not have the right to return product unless damaged or defective. Net sales are comprised of gross sales reduced by customer returns, trade promotions and discounts. assets

~~Impairment~~Long-lived ofassets, ~~long~~except indefinite-lived intangible assets, are reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future net cash flows estimated by the Company to be generated by such assets. If such assets are considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of by sale are recorded as held for sale at the lower of carrying value or estimated net realizable value.

~~Long-lived~~All ~~assets,~~land ~~except~~in ~~indefinite-lived~~the ~~intangible~~PRC ~~assets,~~is ~~are~~owned ~~reviewed~~by ~~for~~the ~~impairment~~PRC ~~when~~government. ~~circumstances~~The government ~~indicate~~in the ~~carrying~~PRC, ~~value~~according ofto anthe ~~asset~~relevant ~~may~~PRC ~~not~~law, bemay ~~recoverable.~~sell ~~Recoverability~~the ofright ~~assets~~ to use bethe ~~held~~land ~~and~~for ~~used is measured by~~ a ~~comparison~~specific period of ~~the~~ ~~carrying~~time. ~~amount~~Thus, all of the ~~assets~~Company’s toland located ~~future~~in ~~net cash flows estimated by~~ the ~~Group~~PRC tois ~~be generated by such assets. If such assets are~~ considered to be ~~impaired,~~leasehold ~~the~~land ~~impairment~~and ~~to be recognized~~ is ~~the~~stated ~~amount~~at bycost ~~which the carrying amount of the assets~~less ~~exceeds~~accumulated ~~the~~amortization ~~fair~~and ~~value~~any ofrecognized ~~the~~impairment ~~assets~~loss. ~~Assets~~Amortization tois provided beover ~~disposed~~the term of ~~by sale are recorded as held for sale at~~ the ~~lower~~land ofuse ~~carrying~~agreements ~~value~~on ora ~~estimated~~straight-line ~~net~~basis, which ~~realizable~~is ~~value~~50 years.

~~All~~Recent ~~land~~Accounting inPronouncements the PRC is owned by the PRC government. The government in the PRC, according to the relevant PRC law, may sell the right to use the land for a specific period of time. Thus, all of the Group’s land located in the PRC is considered to be leasehold land and is stated at cost less accumulated amortization and any recognized impairment loss. Amortization is provided over the term of the land use agreements on a straight-line basis, which is 50 years and will expire in 2055.

~~Recent~~In April 2011, the FASB issued Accounting ~~Pronouncements~~Standards Update (“ASU”) 2011-02 – Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring. This update to Receivables (Topic 310) ~~Recent~~clarifies ~~accounting~~the ~~pronouncement~~guidance ~~Adopted~~for a creditor’s evaluation of whether a restructuring constitutes a troubled debt restructuring. This update clarifies, when evaluating a restructuring as a troubled debt restructuring, whether a creditor has granted a concession to a debtor and whether the debtor is experiencing financial difficulties. The objective of this amendment is to promote greater consistency in the application of US GAAP for debt restructurings from the creditor’s perspective. The effective date of this update is for the first interim period beginning after June 15, 2011, and should be applied retrospectively to the beginning of the current year. The Company is currently evaluating the impact of this standard, but would not expect it to have a material impact on the Company’s consolidated results of operations or financial condition.

InManagement ~~June~~believes 2009, the 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~~recent ~~literature not included in the ASC is considered non-authoritative. New~~ accounting ~~standards~~ pronouncements issued ~~subsequent to June 30, 2009 are communicated~~ by the FASB ~~through~~and ~~Accounting Standards Updates (“ASUs”). For~~ the ~~Company,~~SEC ~~the~~do ~~ASC was effective July 1, 2009. This standard did~~ not have ana material impact on the Company’s present ~~consolidated results of operations~~ or ~~financial~~future ~~condition. However, throughout the notes to the consolidated~~ financial statements ~~references that were previously made to various former authoritative U~~.~~S. GAAP pronouncements were changed to coincide with the appropriate section of the ASC.~~

InEffects September 2006, the FASB issued an accounting standard codified in ASC 820, which provides guidance about how to measure assets and liabilities that use fair value. ASC 820 apply whenever another US GAAP standard requires (or permits) assets or liabilities to be measured at fair value but does not expand the use of fair value to any new circumstances. This standard also requires additional disclosures in both annual and quarterly reports. ASC 820 is effective for financial statements issued for fiscal years beginning after November 15, 2007. In February 2008, the FASB issued amendments which state that ASC 820 does not address fair value measurements for purposes of lease classification or measurement and delay the effective date for non-financial assets and non-financial liabilities to fiscal years beginning after November 15, 2008, except for items that are measured at fair value in the financial statements on a recurring basis (at least annually). The Company adopted the provisions of ASC 820 for its financial assets and liabilities and those items for which it has measured on a recurring basis effective January 1, 2008, and the adoption did not have a material impact on its financial position and results of operations. The Company adopted ASC 820 for certain of its non-financial assets and liabilities on April 1, 2009 and the adoption did not have a material impact on its financial position, cash flows and results of operations. Inflation

Inflation and changing prices have not had a material effect on 33our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor price changes and continually maintain effective cost control in operations.

InOff ~~December~~Balance ~~2007,~~Sheet the FASB issued a new business combinations standard codified within ASC 805 Business Combinations (“ASC 805”). ASC 805 establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. ASC 805 also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. The Company adopted ASC 805 on April 1, 2009 and the adoption did not have a material impact on its financial position, cash flows and results of operations. Arrangements

InWe ~~December~~do ~~2007,~~not ~~the~~have ~~FASB~~any ~~issued~~off abalance ~~new~~sheet ~~standard~~arrangements ~~which~~that ~~established~~have ~~the accounting for and reporting of noncontrolling interests in partially owned consolidated subsidiaries and the loss of control of subsidiaries codified within ASC 810~~or ~~Consolidation~~are ~~(“ASC~~reasonably ~~810”).~~likely ~~ASC~~to ~~810~~have ~~establishes~~a ~~accounting~~current ~~and~~or ~~reporting~~future ~~standards~~effect ~~for~~on ~~ownership~~our ~~interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the~~financial ~~noncontrolling interest~~condition, changes in afinancial ~~parent’s ownership interest~~condition, ~~and~~revenues ~~the~~or valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. ASC 810 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. Upon adoption of ASC 810 on April 1expenses, ~~2009,~~results ~~the Company reclassified its noncontrolling interest from minority interest to equity in the accompanying~~of ~~March 31~~operations, ~~2010~~liquidity ~~and~~or ~~March~~capital ~~31,~~expenditures ~~2009~~or ~~consolidated~~capital ~~balance~~resources ~~sheets.~~that ~~The Company expects the adoption did not have a~~ is material ~~impact~~to onan ~~its~~investor ~~financial~~in ~~position,~~our ~~cash flows and results of operations~~securities.

InSeasonality March 2008, the FASB issued an accounting standard related to disclosures about derivative instruments and hedging activities, codified in ASC 815 Derivatives and Hedging (“ASC 815”). ASC 815 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. ASC 815 achieves these improvements by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also provides more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk-related. Finally, it requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. The Company adopted ASC 815 on April 1, 2009 and the adoption did not have a material impact on its financial position, cash flows and results of operations.

InThe ~~April~~harvest ~~2009,~~season ~~the FASB issued an accounting standard which provides guidelines~~ for ~~making~~our ~~fair~~source ~~value~~fruits ~~measurements~~is ~~more~~generally ~~consistent~~from mid-July ~~with~~to ~~the~~mid-November ~~principles~~every ~~presented in ASC 820~~year. ~~The~~As ~~standard~~fruits ~~provides~~collected ~~additional~~cannot ~~authoritative~~be ~~guidance~~stored ~~in determining~~at ~~whether~~room atemperature ~~market~~for ~~is active or inactive, and whether~~ a ~~transaction~~long ~~is distressed~~time, isthey ~~applicable~~must tobe ~~all~~processed ~~assets~~as ~~and~~soon ~~liabilities~~as (ithey are harvested.~~e.,~~ ~~financial~~Our ~~and~~fruit ~~nonfinancial)~~processing ~~and~~production ~~will~~is ~~require~~generally ~~enhanced~~busiest ~~disclosures.~~from ~~The~~mid-July ~~Company adopted the standard during the~~to ~~interim~~mid-November ~~period~~every ~~ended June 30, 2009 and the adoption did not have a material impact on its financial position, cash flows and results of operations~~year.

In May 2009, the FASB issued a new accounting standard regarding subsequent events codified in ASC 855 Subsequent Events (“ASC 855”). ASC 855 is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It requires disclosure of the date through which an entity has evaluated subsequent events and the basis for selecting that date, that is, whether that date represents the date the financial statements were issued or were available to be issued. ASC 855 was effective for the Company’s first quarter ended June 30, 2009. 33

InWe ~~January~~will ~~2010,~~generally experience higher sales in the ~~FASB~~second, ~~issued~~third and ~~Accounting~~fourth ~~Standards~~fiscal ~~Update~~quarters ~~2010-05~~mainly ~~(ASU~~due ~~2010-05~~to distributors’ (i), ~~Compensation~~efforts –to ~~Stock~~obtain adequate ~~Compensation~~supply ~~(Topic~~of ~~718~~our fruit processing products before the fruit supply diminishes after production ceases in November; and (ii). ~~This~~anticipation ~~standard~~of ~~codifies~~higher demand ~~EITF~~for ~~Topic~~processed ~~D-110~~fruit ~~Escrowed~~products ~~Share~~as ~~Arrangements~~a result of festive seasons, such as the Middle Autumn festival, Christmas and the ~~Presumption~~Chinese New Year which were in the second, third and fourth quarter of ~~Compensation.~~our fiscal year.

~~(b)~~ITEM ~~Recent~~7A. ~~accounting~~QUANTITATIVE ~~pronouncements~~AND ~~not~~QUALITATIVE ~~yet~~DISCLOSURES ~~effective~~ ABOUT MARKET RISK.

InNot ~~August 2009, the FASB issued ASU No~~Applicable. 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, an 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 measurements. For the Company, this ASU is effective October 1, 2009. The Company is currently evaluating the impact of this standard, but would not expect it to have a material impact on the Company’s consolidated results of operations or financial condition.

34ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

In September 2009, the FASB issued ASU No. 2009-12, Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), that amends ASC 820 to provide guidance on measuring the fair value of certain alternative investments such as hedge funds, private equity funds and venture capital funds. The ~~ASU~~full ~~indicates~~text ~~that, under certain circumstances, the fair value~~ of ~~such~~our ~~investments~~audited ~~may~~consolidated befinancial ~~determined using net asset value (NAV)~~ statements as ~~a practical expedient, unless it is probable the investment will be sold at something other than NAV. In those situations, the practical expedient cannot be used and disclosure~~ of ~~the~~March ~~remaining actions necessary to complete the sale is required. The ASU also requires additional disclosures of the attributes of all investments within the scope of the new guidance~~31, ~~regardless~~2011 of whether an entity used the practical expedient to measure the fair value of any of its investments. The disclosure provisions of this ASU are not applicable to an employer’s disclosures about pension and ~~other~~2010 ~~postretirement~~begins ~~benefit~~on ~~plan~~page ~~assets. For the Company, this ASU was effective October~~ F-1, ~~2009. The Company is currently evaluating the impact~~ of this ~~standard,~~annual ~~but would not expect it to have a material impact on the Company’s consolidated results of operations or financial condition~~report.

InITEM ~~October 2009, the FASB issued ASU No~~9. ~~2009-13,~~CHANGES ~~Multiple-Deliverable~~IN ~~Revenue~~AND ~~Arrangements—a~~DISAGREEMENTS ~~consensus~~WITH ofACCOUNTANTS ~~the~~ON ~~FASB~~ACCOUNTING ~~Emerging~~AND ~~Issues~~FINANCIAL ~~Task Force, that provides amendments to the criteria for separating consideration in multiple-deliverable arrangements~~DISCLOSURE. 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. For the Company, ASU No. 2009-13 is effective beginning April 1, 2011. The Company may elect to adopt the provisions prospectively to new or materially modified arrangements beginning on the effective date or retrospectively for all periods presented. The Company is currently evaluating the impact of this standard, but would not expect it to have a material impact on the Company’s consolidated results of operations or financial condition.

~~In January 2010, the FASB issued ASU No~~None. 2010-6, Improving Disclosures About Fair Value Measurements, that amends existing disclosure requirements under ASC 820 by adding required disclosures about items transferring into and out of levels 1 and 2 in the fair value hierarchy; adding separate disclosures about purchase, sales, issuances, and settlements relative to level 3 measurements; and clarifying, among other things, the existing fair value disclosures about the level of disaggregation. For the Company, this ASU is effective for the first quarter of 2010, except for the requirement to provide level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which is effective beginning the first quarter of 2011. Since this standard impacts disclosure requirements only, its adoption will not have a material impact on the Company’s consolidated results of operations or financial condition.

~~Management~~ITEM ~~believes~~9A. ~~other~~CONTROLS ~~recent~~AND ~~accounting pronouncements issued by the FASB and the SEC do not have a material impact on the Company’s present or future financial statements~~PROCEDURES.

~~Effects~~Evaluation of ~~Inflation~~ Disclosure Controls and Procedures

~~Inflation~~We ~~and~~maintain ~~changing~~disclosure ~~prices~~controls ~~have~~and ~~not~~procedures ~~had~~(as adefined ~~material~~in Rule ~~effect~~13a-15(e) onunder ~~our~~the ~~business~~Exchange ~~and~~Act) wethat doare ~~not~~designed ~~expect~~to ensure that information ~~inflation~~that orwould ~~changing~~be ~~prices~~required ~~will~~to ~~materially~~be ~~affect~~disclosed ~~our~~in ~~business~~Exchange inAct reports is recorded, processed, summarized and reported within the ~~foreseeable~~time ~~future.~~period ~~However~~specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, ~~will~~including ~~closely~~to ~~monitor~~our ~~the~~Chief ~~price change~~Executive Officer and Chief ~~continually~~Financial ~~maintain~~Officer, ~~effective~~as ~~cost~~appropriate, ~~control~~to inallow ~~operations.~~timely decisions regarding required disclosure.

As required by Rule 13a-15 under the Exchange Act, our 35management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2011. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2011, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, our disclosure controls and procedures were effective to satisfy the objectives for which they are intended.

~~Off~~Management’s ~~Balance~~Annual ~~Sheet~~Report ~~Arrangements~~on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining Weadequate dointernal ~~not~~control ~~have~~over ~~any~~financial ~~off~~reporting ~~balance~~as ~~sheet~~defined ~~arrangements~~in ~~that~~Rules ~~have~~13a-15(f) and or15d-15(f) ~~are~~under ~~reasonably~~the ~~likely~~Exchange toAct. ~~have~~The Exchange Act defines internal control over financial reporting as a ~~current~~process designed by, or ~~future~~under ~~effect~~the onsupervision of, our ~~financial~~principal ~~condition,~~executive ~~changes~~and inprincipal financial ~~condition~~officers and effected by our board of directors, ~~revenues~~management orand ~~expenses~~other personnel, ~~results~~to provide reasonable assurance regarding the reliability of ~~operations,~~financial ~~liquidity~~reporting orand ~~capital~~the preparation ~~expenditures~~of orfinancial ~~capital~~statements ~~resources~~for ~~that~~external ispurposes ~~material~~in toaccordance anwith ~~investor~~accounting principles generally accepted in ~~our~~the ~~securities.~~ United States of America and includes those policies and procedures that:

Pertain to the maintenance of records that in reasonable detail accurately ~~Seasonality~~ and fairly reflect the transactions and dispositions of the assets of the Company;
~~The~~Provide ~~harvest~~reasonable ~~season~~assurance ~~for~~that ~~our~~transactions ~~source~~are ~~fruits~~recorded isas ~~generally~~necessary ~~from mid July~~ to permit ~~mid~~preparation ~~November~~of ~~every~~financial ~~year.~~statements Asin ~~fruits~~accordance ~~collected~~with ~~cannot~~accounting principles begenerally ~~stored~~accepted atin ~~room~~the ~~temperature~~United ~~for~~States aof ~~long time~~America, ~~they~~and ~~must~~that beour receipts ~~processed~~and asexpenditures ~~soon~~are asbeing ~~they~~made ~~are~~only ~~harvested.~~in ~~Our~~accordance ~~fruit processing~~with ~~production~~ authorizations isof ~~generally~~our ~~busiest~~management ~~from~~and ~~mid-July~~directors; toand ~~mid-November every year.~~
WeProvide ~~will~~reasonable ~~generally~~assurance ~~experience~~regarding ~~higher~~prevention ~~sales~~or intimely ~~the~~detection ~~second, third and forth fiscal quarters mainly due to distributors’ (i) efforts to obtain adequate supply~~ of ~~our fruit processing products before the fruit supply diminishes after production~~ ~~ceases~~ unauthorized inacquisition, ~~November;~~use ~~and~~or ~~(ii)~~disposition ~~anticipation~~ of ~~higher~~our ~~demand~~assets ~~for~~that ~~processed~~could ~~fruit~~have ~~products as~~ a material ~~result~~effect ofon ~~festive seasons, such as Middle Autumn festival, Christmas and the Chinese New Year which were in the second, third and forth quarter of~~ our ~~fiscal~~ ~~year~~financial statements.

~~ITEM 7A.~~34

All internal control systems, no matter how well designed, have ~~QUANTITATIVE~~inherent ~~AND~~limitations. ~~QUALITATIVE~~Therefore, ~~DISCLOSURES~~even ~~ABOUT~~those ~~MARKET~~systems ~~RISK~~determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control ~~Not~~over ~~Applicable~~financial reporting as of March 31, 2011. In making this assessment, management used the framework set forth in the report entitled Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring. Based on our assessment we determined that, as of March 31, 2011, our internal control over financial reporting was effective at the reasonable assurance level based on those criteria.

~~ITEM~~This 8annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.

~~FINANCIAL~~Changes ~~STATEMENTS~~in ~~AND~~Internal ~~SUPPLEMENTARY~~Control ~~DATA.~~Over Financial Reporting

~~The~~There ~~full~~have ~~text~~been ofno changes in our ~~audited~~internal ~~consolidated~~control over financial ~~statements~~reporting asduring the fourth quarter of ~~March~~fiscal 31year 2011 that have materially affected, ~~2010~~or ~~and~~are ~~2009~~reasonably ~~begins~~likely onto ~~page~~materially ~~F-1~~affect, ofour ~~this~~internal control ~~annual~~over ~~report~~financial reporting.

ITEM 99B. OTHER INFORMATION.

We have no information to disclose that was required to be ~~CHANGES~~disclosed INin ~~AND~~a ~~DISAGREEMENTS~~report ~~WITH~~on ~~ACCOUNTANTS~~Form ON8-K ~~ACCOUNTING~~during ~~AND~~fourth ~~FINANCIAL~~quarter of fiscal year 2011, but ~~DISCLOSURE.~~was not reported.

~~None.~~ PART III

ITEM 9A10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

~~CONTROLS~~Directors ~~AND~~and ~~PROCEDURES.~~Executive Officers

The following sets forth information about our directors and ~~Evaluation~~executive officers as of ~~Disclosure~~the ~~Controls~~date ~~and~~of ~~Procedures~~ this report:

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including to our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

NAME	AGE	POSITION
Changjun Yu	39	Chairman, Chief Executive Officer, President
Jingfu Li	68	Director
Chun Wai (Tony) Chan	39	Director
William Haus	48	Director
Jizeng Zhang	63	Director
Colman Cheng	43	Chief Financial Officer, Treasurer and Secretary
Aijun Wang	46	Vice President of Sales

AsChangjun ~~required~~Yu. byMr. ~~Rule~~Yu ~~13a-15~~is ~~under~~ the ~~Exchange~~founder ~~Act,~~of our ~~management,~~subsidiary Longheda ~~including~~and ~~our~~has ~~Chief~~served ~~Executive~~as ~~Officer~~the ~~and~~chairman ~~Chief~~of ~~Financial~~our ~~Officer,~~board ~~evaluated~~of ~~the~~directors ~~effectiveness~~since the completion of the ~~design~~reverse ~~and~~acquisition ~~operation~~ of ~~our~~Fezdale ~~disclosure~~on ~~controls~~August ~~and~~14, ~~procedures~~2008. asOn ofJuly ~~March 31~~3, 2010, Mr. ~~Based~~Yu onwas ~~that~~elected ~~evaluation,~~as our ~~Chief~~chief ~~Executive~~executive ~~Officer~~officer and ~~Chief~~president. ~~Financial~~Mr. ~~Officer~~Yu has ~~concluded~~been ~~that~~the aschairman of ~~March~~our ~~31,~~subsidiary ~~2010~~Longheda since its formation in 2004. From 2001 to 2003, Mr. Yu was the vice president of sales of Haerbin Shengjinlai Economic and Technology Development Co. Ltd. From 1997 to 2000, he served as the vice president of ~~the~~production ~~date~~and ~~that~~then ~~the~~vice ~~evaluation~~president of ~~the~~sales ~~effectiveness~~of Shandong Qingzhou Dajinxing Aviation Beverage Co. Ltd. Mr. Yu has over 15 years of experience ~~our~~in ~~disclosure~~the ~~controls~~food ~~and~~industry. ~~procedures~~Mr. Yu was ~~completed~~selected to serve as a director on the board in connection with his leadership, ~~our~~business management skills as well ~~disclosure~~as ~~controls~~vision and ~~procedures~~strategic ~~were~~experience, ~~effective~~which tohe ~~satisfy~~has ~~the~~acquired ~~objectives~~from ~~for~~his ~~which~~management roles ~~they~~in ~~are~~prior ~~intended~~years. Mr. Yu has not held any other public company directorship during the past five years.

~~Management’s Annual Report on Internal Control Over Financial Reporting~~ 35

~~Our~~Jingfu ~~management~~Li. isMr. ~~responsible~~Li ~~for~~has ~~establishing~~over ~~and~~40 ~~maintaining~~years ~~adequate~~of ~~internal~~teaching experience ~~control~~in ~~over~~the ~~financial~~subject ~~reporting~~of ashorticulture. ~~defined~~For inthe ~~Rules~~last ~~13a-15(f)~~18 years, Mr. Li has been working as a professor and ~~15d-15(f)~~doctoral ~~under~~advisor at the ~~Exchange~~Northeast ~~Act~~Agricultural University in China. ~~The~~He ~~Exchange~~has ~~Act~~also ~~defines~~served ~~internal~~key ~~control~~roles ~~over~~in ~~financial~~horticulture ~~reporting~~related organizations, such as achairman ~~process~~of ~~designed~~the ~~by,~~Horticultural orSociety ~~under~~of ~~the~~Heilongjiang Province, ~~supervision~~editor of Journal of Chinese Vegetables, ~~our~~member ~~principal~~of Crop Varieties Validation Committee in Heilongjiang Province, executive ~~and~~director ~~principal~~of ~~financial~~the Horticultural ~~officers~~Society of China, and ~~effected~~chairman byof ~~our~~Tomato ~~board~~Branch of ~~directors,~~the ~~management~~Society ~~and~~of Horticulture ~~other~~in ~~personnel,~~China. toMr. ~~provide~~Li ~~reasonable~~graduated ~~assurance~~from ~~regarding~~Northeast ~~the~~Agricultural ~~reliability~~University (formerly ofknown as Northeast Agricultural College) with a Bachelor’s in Science ~~financial~~degree ~~reporting~~in Horticulture. His outstanding contributions have been well recognized by the government and he has been awarded with governmental allowance by the State ~~preparation~~Council ofand ~~financial~~first ~~statements~~prize in Scientific Technology Advancement for “export-oriented ~~external~~vegetables, ~~purposes~~new varieties of hybrid technology and breeding” in Heilongjiang ~~accordance~~Province. Mr. Li was appointed as our independent director on June 11, 2009. Mr. Li was selected to serve as a director on our board in connection with ~~accounting~~his ~~principles~~knowledge ~~generally~~and ~~accepted~~extensive experience of over 40 years in the ~~United~~horticulture industry. ~~States~~Mr. ofLi ~~America~~has ~~and~~not ~~includes~~held ~~those~~any ~~policies~~other ~~and~~public ~~procedures~~company ~~that:~~directorship during the past five years.

~~Pertain~~Chun toWai ~~the~~(Tony) ~~maintenance~~Chan. ofMr. ~~records~~Chan ~~that~~has extensive experience in ~~reasonable~~general ~~detail~~assurance ~~accurately~~and business advisory services in both Hong Kong and ~~fairly~~China. Moreover, ~~reflect~~Mr. ~~the~~Chan ~~transactions~~has extensive experience in public listings in Hong Kong and Singapore, ~~dispositions~~mergers and acquisition as well as corporate finance. Mr. Chan is a Certified Public Accountant in Hong Kong, Australia and an International Associate of American Institute of CPAs. Since 2004, Mr. Chan has been working as a director of a CPA practice. He holds a Master’s degree in business administration. Mr. Chan is the ~~assets~~independent non-executive director of four public companies listed on the Hong Kong Stock Exchange: Hans Energy Company; Limited, Honbridge Holdings Limited, Oriental City Group Holdings Limited and Wai Chun Mining Industry Group Company Limited. Mr. Chan was appointed as our independent director on June 11, 2009 and is the chairman of our Audit and Governance and Nominating Committee. Mr. Chan was selected to serve as a director on our board in connection with his substantial experience in general assurance and business advisory and experience as directors of several public companies, which provided him with a unique perspective on accounting and financial reporting expertise. Other than noted above, Mr. Chan has not held any other public company directorship during the past five years.

William P. Haus, CFA. Mr. Haus has extensive experience 36in business and finance for public companies as well as China-based companies. From August 2008 to February 2010, Mr. Haus was the Chief Executive Officer and director of CS China Acquisition Corporation, a special purpose acquisition corporation which completed a business combination with a China-based private company. Over the past 28 years, Mr. Haus has worked in a variety of roles in analyzing companies and evaluating companies as potential investments. From September 2005 to May 2008, Mr. Haus was an Analyst for The Pinnacle Fund & The Pinnacle China Fund, both of which were funds focused on investment opportunities in the United States and China. From March 2000 to September 2005, Mr. Haus was the Senior Equity Research Analyst covering the Healthcare Information Technology and Pharmaceutical Outsourcing industries, for Advest, Inc. and Stanford Financial Group, both securities brokerage firms. Currently, Mr. Haus is manager of Haus Capital Management, LLC, a Texas-based company focused on making equity investments in growth companies. Mr. Haus graduated from the State University of New York College at Fredonia with a B.S. in business administration and a B.A. in economics and received a Master of Business Administration (MBA) from Boston University. He is a Chartered Financial Analyst (CFA) and member of the CFA Institute. Mr. Haus is also independent director of China Valves Technology, Inc. (NASDAQ: CVVT) and THT Heat Transfer Technology, Inc. (NASDAQ: THTI). Mr. Haus’ experiences in analyzing, investing, and consulting with China-based, U.S. listed companies and other skills allow him to contribute to our company as an independent director of our company. Mr. Haus was appointed as the Company’s director on June 11, 2009 and he is the chairman of the Company’s Compensation Committee. Other than noted above, Mr. Haus has not held any other public company directorship during the past five years.

~~Provide~~Jizeng ~~reasonable~~Zhang. ~~assurance~~Mr. ~~that~~Zhang ~~transactions~~joined ~~are~~our ~~recorded~~subsidiary Longheda in 2004 as ~~necessary~~ the administration supervisor and was subsequently promoted to ~~permit~~be ~~preparation~~the administrative officer in 2005. He is responsible for the Company’s daily administrative duties. Mr. Zhang has over 24 years of ~~financial~~experience ~~statements~~as a police officer in ~~accordance~~Inner ~~with~~Mongolia ~~accounting~~where his most recent position was the Head of Police ~~principles~~Department ~~generally~~at ~~accepted~~Da inYang Shu County, Inner Mongolia. From the ~~United~~experience ~~States~~of being the Head of ~~America~~Police Department, ~~and~~Mr. ~~that~~Zhang ~~our~~provided a very effective ~~receipts~~administrative ~~and~~control ~~expenditures~~to ~~are~~the ~~being~~Company. ~~made~~Mr. ~~only~~Zhang inhas ~~accordance~~not ~~with~~held any other public ~~authorizations~~company ofdirectorship ~~our~~during ~~management~~the ~~and~~past ~~directors;~~five ~~and~~ years.

~~Provide~~Sing ~~reasonable~~Kau ~~assurance~~(Colman) ~~regarding~~Cheng. ~~prevention~~Mr. orCheng ~~timely~~has ~~detection~~been ofour Chief ~~unauthorized~~Financial Officer, Treasurer and Secretary since the completion of the reverse acquisition of Fezdale on August 14, ~~use~~2008 orand ~~disposition~~the Chief Financial Officer of our subsidiary ~~assets~~Longheda ~~that~~since ~~could~~August ~~have~~2007. aFrom August 2006 to June 2007, he served ~~material~~as ~~effect~~an oninvestment ~~our~~manager of KAB Asia Limited. From October 2004 to August 2006, he was a financial ~~statements~~controller and company secretary of A&K Education Software Holdings Limited, a GEM listed company in Hong Kong. From February 2003 to October 2004, he was a senior auditor of CCIF CPA Limited.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 36

~~Management~~Mr. ~~assessed~~Cheng ~~the~~received ~~effectiveness~~a ofbachelor’s ~~our~~degree ~~internal~~in ~~control over~~Accounting ~~financial~~from ~~reporting as of March 31, 2010. In making this assessment,~~Edith ~~management~~Cowan ~~used~~University ~~the framework set forth~~ in ~~the~~Australia ~~report~~and ~~entitled~~is ~~Internal~~an ~~Control -~~associate ~~Integrated~~member ~~Framework issued by the Committee~~ of ~~Sponsoring~~both ~~Organizations of~~ the ~~Treadway~~Hong ~~Commission, or COSO. The COSO framework summarizes each of the~~Kong ~~components~~Institute of aCertified ~~company’s~~Public ~~internal~~Accountants ~~control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information~~ and ~~communication,~~CPA ~~and~~Australia. ~~(v) monitoring~~Mr. ~~Based~~Cheng onhas ~~our assessment we determined~~not ~~that,~~held asany ofpublic ~~March~~company ~~31,~~directorship ~~2010,~~during ~~our internal control over financial reporting is effective at~~ the ~~reasonable~~past ~~assurance~~five ~~level based on those criteria~~years.

~~This~~Aijun ~~annual~~Wang. ~~report~~Mr. ~~does~~Wang ~~not~~joined ~~include~~China anNutrifruit ~~attestation~~as ~~report~~a ofsales ~~our~~manager ~~registered~~in ~~public~~July ~~accounting~~2010 ~~firm~~and ~~regarding~~became ~~internal~~our ~~control~~vice ~~over~~president ~~financial reporting~~of sales in October 2010. Prior ~~Management’s~~to ~~report~~joining ~~was~~China ~~not~~Nutrifruit, ~~subject~~he toserved ~~attestation~~as bygeneral ~~our~~manager ~~registered~~of sales at ~~public~~Mudanjiang ~~accounting~~Jianxin ~~firm~~Cement ~~pursuant~~Limited. toMr. ~~temporary~~Wang ~~rules~~also ofworked ~~the~~at ~~SEC~~Mudanjiang ~~that~~Cement Lime ~~permit~~Mining ~~the~~for approximately 20 years, most recently as mine manager, ~~Company~~responsible tofor ~~provide~~operations. ~~only~~He ~~management~~holds a bachelor’s ~~report~~degree in ~~this~~economics ~~annual~~and management ~~report~~from the Chinese Central Communist Party University.

~~Changes~~There inare ~~Internal~~no ~~Control~~agreements ~~Over~~or ~~Financial~~understandings for any of our ~~Reporting~~executive officers or director to resign at the request of another person and no officer or director is acting on behalf of nor will any of them act at the direction of any other person.

~~There~~Directors ~~have~~are ~~been~~elected nountil ~~changes~~their insuccessors ~~our internal control over financial reporting during the fourth quarter of fiscal year 2010 that have materially affected, or~~ are ~~reasonably~~duly ~~likely to materially affect, our internal~~elected ~~control~~and ~~over financial reporting~~qualified.

~~ITEM~~Family ~~9B.~~Relationships

~~OTHER~~There is no family relationship among any of our officers or ~~INFORMATION~~directors.

WeInvolvement ~~have no information to disclose that was required to be disclosed~~ in aCertain ~~report~~Legal onProceedings ~~Form 8-K during fourth quarter of fiscal year 2010, but was not reported.~~

~~PART~~To ~~III~~the best of our knowledge, none of our directors or executive officers has, during the past ten years:

~~ITEM~~been ~~10.~~convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
~~DIRECTORS~~had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of ~~EXECUTIVE~~ which ~~OFFICERS~~he ~~AND~~was ~~CORPORATE~~a ~~GOVERNANCE.~~general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
~~Directors~~been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and ~~Executive~~loan, ~~Officers~~or insurance activities, or to be associated with persons engaged in any such activity;
~~The~~been ~~following~~found ~~sets~~by ~~forth~~a ~~information~~court ~~about~~of ~~our~~competent ~~directors~~jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission ~~executive~~ to ~~officers~~have asviolated ofa federal or state securities or commodities law, and the judgment ~~date~~has ofnot ~~this~~been ~~report:~~reversed, suspended, or vacated;

NAME	AGE	POSITION
Changjun Yu	37	Chairman
Jinglin Shi	36	Chief Executive Officer, President and Director
Jingfu Li	67	Director
Tony Chan	38	Director
William Haus	46	Director
Colman Cheng	41	Chief Financial Officer, Treasurer and Secretary
Manjiang Yu	38	Vice President of Sales

been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

~~Changjun~~been ~~Yu. Mr. Yu is~~ the ~~founder~~subject of, ~~our~~or ~~company~~a ~~and has~~party ~~served~~to, asany ~~the~~sanction ~~chairman~~or oforder, ~~our~~not ~~board of directors since the completion of the~~subsequently ~~reverse~~ reversed, ~~acquisition~~suspended ofor ~~Fezdale on August 14~~vacated, ~~2008.~~of ~~Mr.~~any Yuself-regulatory ~~has~~organization ~~been the chairman~~(as of defined ~~our subsidiary Longheda since its formation~~ in ~~2004.~~Section ~~From~~3(a)(26) ~~2001~~of ~~to 2003, Mr. Yu was~~ the ~~vice~~Exchange ~~president~~Act of(15 ~~sales of Haerbin Shengjinlai Economic and Technology Development Co~~U. ~~Ltd~~S.C. ~~From 1997 to 2000~~78c(a)(26))), Heany registered ~~served~~entity (as ~~the~~defined ~~vice~~in ~~president~~Section 1(a)(29) of ~~production~~the ~~and~~Commodity ~~then vice~~Exchange ~~president~~ Act of(7 ~~sales of Shandong Qingzhou Dajinxing Aviation Beverage Co~~U. ~~Ltd~~S. MrC. ~~Yu has over 13 years of experience in the food industry. Mr. Yu was selected to serve as~~ 1(a)(29))), ~~director~~or onany ~~our~~equivalent ~~board~~exchange, ~~in connection with his leadership~~association, ~~business~~entity ~~management~~or ~~skills~~ organization asthat ~~well as vision and strategic experience, which he~~ has ~~acquired~~disciplinary ~~from~~authority ~~his~~over ~~management~~its ~~roles~~members inor ~~prior~~persons associated ~~years.~~with ~~Mr.~~a ~~Yu has not held any other public company directorship during the past five years~~member.

~~Jinglin~~Board ~~Shi.~~Composition ~~Mr. Shi is one of our founders. He has been our Chief Executive Officer, President~~ and director since the completion of the reverse acquisition of Fezdale on August 14, 2008. Mr. Shi has served as the Chief Executive Officer of our subsidiary Longheda since its formation in 2004. From 2001 to 2003, Mr. Shi worked as the sales manager and then the vice president of sales of Daqing Yuehaitian Economic and Trade Co. Ltd. Mr. Shi was selected to serve as a director on our board in connection with his leadership, business management experience and knowledge of the fruit processing industry which he acquired as the management of Longheda, as well as his understanding of the Company’s vision and strategy. Mr. Shi has not held any other public company directorship during the past five years. Committees

~~Jingfu~~The ~~Li.~~Company ~~Mr.~~is Ligoverned ~~has~~by ~~over~~the 40board ~~years~~ of ~~teaching~~directors ~~experience~~that currently inconsists ~~the subject~~ of ~~horticulture.~~five ~~For~~members: ~~the~~Changjun ~~last~~Yu, 18Jizeng ~~years~~Zhang, ~~Mr.~~William LiHaus, Chun ~~has~~Wai ~~been~~(Tony) ~~working~~Chan asand aJingfu ~~professor~~Li. ~~and~~Since ~~doctoral~~June ~~advisor~~2009, at the ~~Northeast~~Board ~~Agricultural University in China. He~~ has ~~also~~established ~~served~~three ~~key~~Committees: ~~roles~~the inAudit ~~horticulture related organizations~~Committee, ~~such as chairman of~~ the ~~Horticultural~~Compensation ~~Society of Heilongjiang Province~~Committee, ~~editor~~and ofthe Corporate ~~Journal~~Governance ofand ~~Chinese~~Nominating ~~Vegetables,~~Committee. ~~member~~Each of ~~Crop~~the ~~Varieties~~Audit ~~Validation~~ Committee ~~in Heilongjiang Province~~, ~~executive~~Compensation ~~director~~Committee ofand ~~the~~Corporate ~~Horticultural~~Governance ~~Society of China,~~ and ~~chairman~~Nominating ofCommittee ~~Tomato~~are comprised ~~Branch~~entirely of ~~the~~independent ~~Society of Horticulture in China~~directors. ~~Mr.~~From Litime ~~graduated~~to ~~from~~time, ~~Northeast~~the ~~Agricultural~~Board ~~University (formerly known as Northeast Agricultural College) with a~~may ~~Bachelor’s~~establish inother ~~Science degree in Horticulture~~committees. ~~His~~The ~~outstanding~~Board ~~contributions have been well recognized by the government and he~~ has ~~been~~adopted ~~awarded~~a ~~with~~written ~~governmental~~charter ~~allowance~~for byeach of the ~~State~~Committees ~~Council~~which ~~and~~is ~~first~~available ~~prize~~on inthe ~~Scientific~~Company’s ~~Technology~~website ~~Advancement~~http://chinanutrifruit.com/CorporateGovernance.html. ~~for~~Printed ~~“export-oriented~~copies ~~vegetables, new varieties~~ of these ~~hybrid~~charters ~~technology~~may ~~and~~be ~~breeding”~~obtained, inwithout ~~Heilongjiang~~charge, ~~Province.~~by ~~Mr.~~contacting Lithe ~~was~~Corporate Secretary, ~~appointed~~China asNutrifruit ~~our~~Group ~~independent~~Limited, ~~director~~5th onFloor, ~~June~~Chuangye 11Building, Chuangye ~~2009.~~Plaza, ~~Mr.~~Industrial LiZone ~~was~~3, ~~selected~~Daqing toHi-Tech ~~serve~~Industrial asDevelopment ~~a director on our~~Zone, ~~board~~Daqing, inHeilongjiang, ~~connection~~People’s ~~with~~Republic ~~his knowledge and extensive experience~~ of ~~over~~China, ~~40 years in the horticulture industry~~163316. ~~Mr. Li has not held any other public company directorship during the past five years.~~

Chun Wai (Tony) Chan. Mr. Chan has extensive experience in general assurance and business advisory services in both Hong Kong and China. Moreover, Mr. Chan has over extensive experience in public listings in Hong Kong and Singapore, mergers and acquisition as well as corporate finance. Mr. Chan is a Certified Public Accountant in Hong Kong, Australia and an International Associate of American Institute of CPAs. Since 2004, Mr. Chan has been working as a director a CPA practice. He holds a Master’s degree in business administration. Mr. Chan is the independent non-executive director of four public companies listed on the Hong Kong Stock Exchange: Hans Energy Company Limited; Honbridge Holdings Limited, Oriental City Group Holdings Limited and Wai Chun Mining Industry Group Company Limited. Mr. Chan was appointed as our independent director on June 11, 2009 and he is the chairman of our Audit ~~and Governance and Nominating~~ Committee. Mr. Chan was selected to serve as a director on our board in connection with his substantial experience in general assurance and business advisory and experience as directors of several public companies, which provided him with a unique perspective on accounting and financial reporting expertise. Other than noted above, Mr. Chan has not held any other public company directorship during the past five years.

~~William~~Our P.Audit ~~Haus,~~Committee ~~CFA.~~consists ~~Mr.~~of ~~Haus~~Chun ~~has~~Wai ~~extensive~~(Tony) ~~experience in business and finance for public companies as well as China-based companies. From August 2008 to February 2010~~Chan, ~~Mr.~~ William Haus, ~~was the Chief Executive Officer~~ and ~~director~~Jingfu ~~of CS China Acquisition Corporation~~Li, aeach ~~special~~of ~~purpose~~whom ~~acquisition~~is ~~corporation~~“independent” ~~which~~as ~~completed~~that aterm ~~business~~is ~~combination~~defined ~~with~~under the aNYSE ~~China-based~~Amex ~~private~~Company ~~company~~Guide. ~~Over the past 28 years,~~ Mr. ~~Haus~~Chan ~~has~~serves ~~worked~~as inthe achairman ~~variety~~ of ~~roles~~our ~~in analyzing companies and evaluating~~Audit ~~companies as potential investments~~Committee. ~~From September 2005 to May 2008, Mr. Haus was an Analyst for~~ The ~~Pinnacle~~Audit ~~Fund~~Committee &oversees ~~The~~our ~~Pinnacle~~accounting ~~China Fund, both of which were funds focused on investment opportunities in the United States~~ and ~~China.~~financial ~~From March~~reporting ~~2000~~processes toand ~~September 2005, Mr. Haus was~~ the ~~Senior~~audits ~~Equity~~of ~~Research Analyst covering~~ the ~~Healthcare~~financial ~~Information~~statements ~~Technology~~of ~~and~~our ~~Pharmaceutical Outsourcing industries, for Advest, Inc~~company. ~~and~~Our ~~Stanford~~board of ~~Financial~~directors ~~Group,~~has ~~both~~determined ~~securities~~that ~~brokerage firms.~~ Mr. ~~Haus~~ ~~graduated~~Chan ~~from~~qualifies ~~the~~as ~~State~~an ~~University~~“audit ofcommittee financial ~~New~~expert” ~~York~~as ~~College~~defined ~~at Fredonia with a B.S.~~ in ~~business~~Item ~~administration and a B.A. in economics and received a Master of Business Administration~~ 407(~~MBA~~d) ~~from Boston University. He is a Chartered Financial Analyst~~ (~~CFA~~5) ~~and member~~ of ~~the~~Regulation ~~CFA~~S-K ~~Institute.~~promulgated ~~Mr. Haus is also independent director of China Valves Technology, Inc. (listed on~~ by the ~~NASDAQ)~~SEC and ~~THT~~that ~~Heat~~he ~~Transfer~~is ~~Technology,~~financially ~~Inc.~~literate ~~(listed on OTCBB). Mr. Haus’ experiences in analyzing, investing,~~ and ~~consulting with China-based, U.S. listed companies and other skills allow him to contribute to our company as an~~ independent ~~director~~in ofaccordance ~~our company. Mr. Haus was~~with ~~appointed as our independent director on June 11, 2009 and he is~~ the ~~chairman~~requirements of ~~our~~the ~~Compensation~~SEC ~~Committee.~~and ~~Other than noted above, Mr. Haus has not held any other public company directorship during~~ the ~~past~~NYSE ~~five years~~Amex.

The Audit Committee is responsible for, among other things: 38

~~Sing~~selecting ~~Kau (Colman) Cheng. Mr. Cheng has been~~ our ~~Chief~~independent ~~Financial~~auditors ~~Officer, Treasurer~~ and ~~Secretary~~pre-approving ~~since~~all ~~the~~auditing ~~completion of the reverse acquisition of Fezdale on August 14, 2008~~ and ~~the Chief Financial Officer of our subsidiary Longheda since~~ ~~August 2007. Mr. Cheng has extensive~~ non-auditing, ~~accounting~~services ~~and~~permitted ~~financial management experience in big four accounting firms and other sizable corporations. From August 2006~~ to ~~June~~be ~~2007,~~performed heby ~~served~~our asindependent ~~an investment manager of KAB Asia Limited. From~~auditors; October 2004 to August 2006, he was a financial controller and company secretary of A&K Education Software Holdings Limited, a GEM listed company in Hong Kong. From February 2003 to October 2004, he was a senior auditor of CCIF CPA Limited. Mr. Cheng received a bachelor’s degree in Accounting from Edith Cowan University in Australia and is an associate member of both the Hong Kong Institute of Certified Public Accountants and CPA Australia. Mr. Cheng has not held any other public company directorship during the past five years.
~~Manjiang~~reviewing ~~Yu.~~with ~~Mr. Yu has been~~ our ~~Vice~~independent ~~President~~auditors of Sales since the completion of the reverse acquisition of Fezdale on August 14, 2008. Mr. Yu worked as the assistant to the Chief Executive Officer, then the Chief Market Officer of our subsidiary Longheda since its formation in 2004. Before joining Longheda, he served as the president of Daqing High-tech Zone Ruinuo Economic & Trade Co. Ltd. from 2002 to 2004. Mr. Yu has not held any ~~other~~audit ~~public~~problems ~~company~~or ~~directorship during~~difficulties ~~the~~ and ~~past~~management’s ~~five~~response; ~~years.~~
~~There~~reviewing ~~are no agreements or understandings for any of our executive officers or director to resign at the request of another person~~ and noapproving ~~officer~~all orproposed ~~director~~related-party istransactions, ~~acting~~as ondefined in ~~behalf~~Item of404 ~~nor will any~~ of ~~them~~Regulation ~~act~~S-K atunder the ~~direction~~Securities ofAct; ~~any other person.~~
~~Directors~~discussing ~~are~~the ~~elected~~annual ~~until~~audited ~~their~~financial ~~successors~~statements ~~are~~with ~~duly~~management ~~elected~~ and ~~qualified.~~our independent auditors;
reviewing major issues as to the adequacy of our internal controls and any ~~Family~~ special ~~Relationships~~audit steps adopted in light of significant internal control deficiencies;
~~There~~meeting isseparately noand ~~family~~periodically ~~relationship~~with ~~among~~management ~~any~~and of our ~~officers~~internal orand independent ~~directors.~~auditors; and
~~Involvement~~such inother ~~Certain~~matters ~~Legal~~that ~~Proceedings~~are specifically delegated to our Audit Committee by our Board from time to time.

ToCompensation ~~the best of our knowledge, none of our directors or executive officers has, during the past ten years:~~Committee

~~been~~Our ~~convicted~~Compensation Committee consists of Chun Wai (Tony) Chan, William Haus and Jingfu Li, each of whom is “independent” as that term is defined under the NYSE Amex Company Guide. Mr. Haus serves as the chairman of our Compensation Committee. Our Compensation Committee assists the board in reviewing aand ~~criminal~~approving ~~proceeding~~the orcompensation ~~been~~structure ~~subject~~of toour adirectors ~~pending~~and executive ~~criminal~~officers, ~~proceeding~~including ~~(excluding~~all ~~traffic~~forms ~~violations~~of compensation to be provided to our directors and ~~other~~executive ~~minor~~officers. ~~offenses);~~Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The Compensation Committee is responsible for, among other things:

~~had~~approving ~~any~~and ~~bankruptcy~~overseeing ~~petition filed by or against~~ the ~~business~~compensation orpackage ~~property~~for ofour ~~the person, or of any partnership, corporation or business association of which he was a general partner or~~ executive ~~officer, either at the time of the bankruptcy filing or~~ ~~within two years prior to that time~~ officers;
~~been~~reviewing subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and ~~loan,~~making orrecommendations ~~insurance activities, or~~ to bethe ~~associated~~board with ~~persons~~respect ~~engaged~~to inthe compensation ~~any~~of ~~such~~our ~~activity~~directors;
~~been~~reviewing ~~found~~and byapproving acorporate ~~court~~goals ofand ~~competent~~objectives ~~jurisdiction~~relevant into athe compensation ~~civil~~of ~~action~~our orchief byexecutive ~~the~~officer, ~~Securities~~evaluating ~~and~~the ~~Exchange~~performance ~~Commission~~of orour chief ~~the~~executive ~~Commodity~~officer ~~Futures~~in ~~Trading~~light ~~Commission~~of tothose ~~have~~goals ~~violated~~and aobjectives, ~~federal~~and orsetting the ~~state~~compensation ~~securities~~level orof ~~commodities~~our ~~law,~~chief ~~and~~executive ~~the~~officer ~~judgment~~based ~~has~~on ~~not~~this ~~been~~ evaluation; ~~reversed,~~and ~~suspended, or vacated;~~
~~been~~reviewing ~~the~~periodically ~~subject~~and ~~of,~~making orrecommendations ~~a party~~ to, ~~any~~the ~~federal~~board ~~or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants),~~regarding ~~relating to an alleged violation of~~ any ~~federal~~long-term orincentive ~~state~~compensation ~~securities~~ or ~~commodities~~equity ~~law or regulation~~plans, ~~any~~programs ~~law~~ or ~~regulation respecting financial institutions or insurance companies including~~similar arrangements, ~~but~~annual ~~not limited to~~bonuses, aemployee ~~temporary~~pension ~~or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-~~and~~-desist~~ ~~order,~~welfare orbenefit ~~removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity;~~plans. or

3938

~~been~~The ~~the~~Compensation ~~subject~~Committee ofhas sole authority to retain and terminate outside counsel, orcompensation aconsultants ~~party~~retained to, ~~any~~assist ~~sanction~~the Compensation orCommittee ~~order,~~in ~~not~~determining ~~subsequently~~the ~~reversed,~~compensation ~~suspended~~of the Chief Executive Officer or ~~vacated~~senior executive officers, ofor ~~any~~other ~~self-regulatory~~experts ~~organization~~or (consultants, as ~~defined~~it deems inappropriate, ~~Section~~including ~~3(a)(26)~~sole ofauthority to approve the ~~Exchange~~firms’ ~~Act~~fees ~~(15~~and Uother retention terms.~~S.C.~~ ~~78c(a)(26))),~~The ~~any~~Compensation ~~registered~~Committee ~~entity~~may ~~(as~~also form and delegate authority ~~defined~~to insubcommittees ~~Section~~and ~~1(a)(29)~~may ofdelegate ~~the~~authority ~~Commodity~~to ~~Exchange~~one ~~Act~~or (7more Udesignated members of the Compensation Committee.~~S.C.~~ ~~1(a)(29))),~~The orCompensation ~~any~~Committee ~~equivalent~~may ~~exchange,~~from ~~association,~~time ~~entity~~to ortime seek ~~organization~~recommendations ~~that~~from ~~has~~the ~~disciplinary~~executive officers of the Company regarding matters under the purview of the Compensation Committee, though the authority ~~over~~to act ~~its~~on ~~members~~such orrecommendations ~~persons~~rests ~~associated~~solely with athe ~~member~~Compensation Committee.

~~Board~~Governance ~~Composition~~ and ~~Committees~~ Nominating Committee

~~The~~Our ~~Company~~Governance isand ~~governed~~Nominating byCommittee ~~the Board that currently~~ consists of ~~five~~Chun ~~members:~~Wai (Tony) ~~Jinglin Shi~~Chan, ~~Changjun Yu,~~ William Haus, ~~Chun Wai Chan~~ and Jingfu Li~~. Since June 2009~~, ~~the~~each ~~Board~~of ~~has~~whom ~~established~~is ~~three~~“independent” ~~Committees:~~as ~~the~~that term ~~Audit~~is ~~Committee,~~defined under the ~~Compensation Committee,~~NYSE ~~and~~Amex ~~the~~Company ~~Corporate~~Guide. ~~Governance~~Mr. ~~and~~Chan ~~Nominating~~serves ~~Committee.~~as ~~Each~~the chairman of ~~the~~our ~~Audit~~Governance ~~Committee,~~and ~~Compensation~~Nominating Committee. ~~and~~The ~~Corporate~~ Governance and Nominating Committee ~~are~~assists ~~comprised~~the ~~entirely~~board of ~~independent~~ directors. ~~From~~in ~~time~~identifying ~~to time, the Board may~~individuals ~~establish~~qualified ~~other~~to ~~committees.~~become ~~The~~our ~~Board~~directors ~~has~~and ~~adopted~~in adetermining ~~written~~the ~~charter~~composition ~~for each~~ of the board ~~Committees~~and ~~which~~its ~~is available on the Company’s website http://chinanutrifruit~~committees.~~com/CorporateGovernance.html.~~ ~~Printed~~The ~~copies~~Governance ofand ~~these~~Nominating ~~charters~~Committee ~~may~~is beresponsible ~~obtained~~for, ~~without~~among ~~charge,~~other by contacting the Corporate Secretary, China Nutrifruit Group Limited, 5th Floor, Chuangye Building, Chuangye Plaza, Industrial Zone 3, Daqing Hi-Tech Industrial Development Zone, Daqing, Heilongjiang, People’s Republic of China, 163316. things:

~~Audit~~identifying ~~Committee~~and recommending to the board nominees for election or re-election to the board, or for appointment to fill any vacancy;
~~Our~~reviewing ~~Audit~~annually ~~Committee~~with ~~consists of our three independent directors, William Haus, Tony Chan and Jingfu Li. The Audit Committee oversees our accounting and financial reporting processes and~~ the ~~audits~~board of the ~~financial~~current ~~statements~~composition of ~~our~~the ~~company. Our~~ board ~~of directors has determined that Mr. Chan qualifies as an “audit committee financial expert” as defined~~ in light ~~Item 407(d)(5)~~ of ~~Regulation S-K promulgated by~~ the ~~SEC~~characteristics ~~and~~of ~~that~~independence, heage, isskills, ~~financially~~experience ~~literate~~ and ~~independent in accordance with~~ ~~the~~ availability ~~requirements~~ of ~~the~~service ~~SEC~~to ~~and~~us; ~~the NYSE Amex.~~
~~The~~identifying ~~Audit~~and ~~Committee~~recommending isto ~~responsible~~the ~~for,~~board ~~among~~the ~~other~~directors ~~things:~~to serve as members of the board’s committees; and
~~selecting~~monitoring ~~our~~compliance ~~independent~~with ~~auditors~~our ~~and~~code ~~pre-approving~~of ~~all~~business ~~auditing~~conduct and ~~non-auditing services permitted to be performed by our independent auditors;~~ethics.

~~reviewing~~Code ~~with~~of ~~our independent auditors any audit problems or difficulties and management’s response;~~Ethics

~~reviewing~~Our ~~and~~board ~~approving~~of directors has adopted a code of ethics that applies to all ~~proposed~~directors, ~~related-party~~officers ~~transactions~~and employees of the Company, asincluding principal ~~defined~~executive inofficer, ~~Item~~principal ~~404~~financial officer, principal accounting officer or controller, or persons performing similar functions. The code of ethics ~~Regulation~~addresses, ~~S-K~~among other things, ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure requirements under the ~~Securities~~federal ~~Act~~securities oflaws, ~~1933~~confidentiality, trading on inside information, and reporting of violations of the code. A copy of the code of ethics has been filed as ~~amended;~~Exhibit 14.1 to our Current Report on Form 10-K filed on June 15, 2009. The code of ethics is available on our website at http://www.chinanutrifruit.com/CorporateGovernance.html. During the fiscal year ended March 31, 2011, there were no waivers of our code of ethics.

~~discussing~~ITEM ~~the~~11. ~~annual~~EXECUTIVE ~~audited financial statements with management and our independent auditors;~~COMPENSATION.

~~reviewing~~Summary ~~major~~Compensation ~~issues~~Table as– to2011 ~~the adequacy of our internal controls~~ and ~~any special audit steps adopted in light of significant internal control deficiencies;~~2010

~~meeting~~The ~~separately~~following ~~and~~table ~~periodically~~sets ~~with~~forth ~~management~~information concerning all cash and ~~our~~non-cash ~~internal~~compensation ~~and~~awarded ~~independent~~to, ~~auditors;~~earned by or paid to the named persons for services rendered in all capacities during the noted periods. No other executive officer received total annual salary and bonus compensation in excess of $100,000.

such other matters that are specifically delegated to our Audit Committee by our Board from time to time.

Name and Principal Position	Fiscal Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	All Other Compensation ($)	Total ($)
Changjun Yu CEO and President	2011	116,449	-	-	-	-	116,449
Changjun Yu CEO and President	2010	87,741	-	-	-	-	87,741
Jinglin Shi, CEO and President*	2011	22,394	-	-	-	-	22,394
Jinglin Shi, CEO and President*	2010	83,586	-	-	-	-	83,586

~~Section~~* ~~16(A)~~Mr. ~~Beneficial~~Shi ~~Ownership~~resigned ~~Reporting~~from ~~Compliance~~ all positions he held with the Company on July 3, 2010 due to personal reasons and our chairman Changjun Yu replaced Mr. Shi as the new chief executive officer and president of the Company.

Under U.S. securities laws, directors, certain executive officers and persons holding more than 10% of our common stock must report their initial ownership of the common stock, and any changes in that ownership, to the SEC. The SEC has designated specific due dates for these reports. Based solely on our review of copies of such reports filed with the SEC by and written representations of our directors and executive offers, we believe that our directors and executive offers filed the required reports on time in the 2010 fiscal year. 39

~~Code~~Employment ofAgreements ~~Ethics~~

~~Our~~On ~~board~~July ~~of directors has adopted a code of ethics that applies to Chief Executive Officer~~3, ~~President~~2010, ~~Chief~~our ~~Financial~~subsidiary ~~Officer,~~Fezdale ~~Principal~~entered ~~Executive~~into ~~Officer, Principal Financial Officer, Principal Accounting Officer, Controller and persons performing similar functions. The code of ethics addresses,~~an ~~among~~employment ~~other~~agreement ~~things,~~with ~~ethical~~Changjun ~~conduct~~Yu, ~~conflicts~~our ofchairman ~~interest, compliance with laws, regulations~~ and ~~policies,~~newly ~~including~~appointed ~~disclosure requirements under the~~Chief ~~federal~~Executive ~~securities~~Officer ~~laws, confidentiality, trading on inside information,~~ and ~~reporting~~ ~~of violations of the code~~President. AUnder ~~copy of~~ the ~~code~~employment ofagreements, ~~ethics has been filed~~ as ~~Exhibit 14.1 to our Current Report on Form 10-K filed on June 15~~amended, ~~2009. The~~ ~~code of ethics is available on our website at http://www~~Mr.~~chinanutrifruit.com/CorporateGovernance.html. Thereafter,~~ ~~any~~Yu ~~amendments or waivers to the code of ethics~~ will bereceive ~~posted~~an ~~on our~~annual ~~website~~salary ~~within four business days~~ of ~~such~~RMB ~~amendment~~960,000. ~~or waiver~~Mr. ~~Until~~Yu ~~such time,~~is ~~however,~~subject ~~any amendments or waivers~~ to customary ~~our~~confidentiality ~~code~~and ofnon-competition ~~ethics~~covenants ~~will~~as beprovided ~~filed with~~in the employment ~~SEC in a Current Report on Form 8-K~~agreement.

On July 30, 2008, our subsidiary Fezdale entered into an 40employment agreement with Jinglin Shi, our former Chief Executive Officer and President. Under the employment agreement, Fezdale agreed to pay Mr. Shi an annual salary of RMB 600,000 and Mr. Shi agreed to be subject to customary confidentiality and non-competition covenants. On July 3, 2010, Mr. Shi resigned from all positions he held with the Company due to personal reasons and our chairman Changjun Yu replaced Mr. Shi as the new chief executive officer and president of the Company. Mr. Shi did not receive any severance payment in connection with his resignation.

~~ITEM~~We 11have not provided retirement benefits (other than a state pension scheme in which all of our employees in China participate) or severance or change of control benefits to our named executive officer.

~~EXECUTIVE~~Compensation ~~COMPENSATION.~~of Directors

~~Summary~~The table below sets forth the compensation of our directors ~~Compensation~~for ~~Table~~the –fiscal ~~2010~~year ~~and~~ended ~~2009~~March 31, 2011:

The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities during the noted periods. No executive officer received total annual salary and bonus compensation in excess of $100,000.

				Non-Equity
				Incentive Plan	All Other
	Fees Earned or	Stock	Option	Compensation	Compensation
Name	Paid in Cash ($)	Awards ($)	Awards ($)	($)	($)	Total ($)
Chun Wai (Tony) Chan	20,000	-	-	-	-	20,000
William Haus	24,000	-	-	-	-	24,000
Jingfu Li	8,958	-	-	-	-	8,958

				Stock	Option	All Other
		Salary	Bonus	Awards	Awards	Compensation	Total
Name and Principal Position	Year	($)	($)	($)	($)	($)	($)
Jinglin Shi,	2010	83,586	-	-	-	-	83,586
CEO and President (1)	2009	55,617	-	-	-	-	55,617

Chun Wai (Tony) Chan, William Haus and Jingfu Li were appointed as our directors effective as of June 11, 2009. We entered into separate indemnification agreements with each of them. Under the terms of the indemnification agreements, we agreed to indemnify the independent directors against expenses, judgments, fines, penalties or other amounts actually and reasonably incurred by the independent director in connection with any proceeding if the independent director acted in good faith and in our best interests. It is our practice to reimburse our directors for reasonable travel expenses related to attendance at board of directors and committee meetings.

~~(1)~~ On ~~August~~June 1411, ~~2008~~2009, we ~~acquired~~entered ~~Fezdale~~into inindependent adirector agreement ~~reverse~~with ~~acquisition~~each ~~transaction~~of ~~that~~Chun ~~was~~Wai ~~structured~~(Tony) asChan, aWilliam ~~share~~Haus ~~exchange~~ and inJingfu ~~connection with that transaction, Mr~~Li. ~~Shi~~Under the ~~became~~terms ~~our~~of ~~Chief~~the ~~Executive Officer~~agreements, ~~President~~the ~~and~~Company ~~director.~~agreed ~~Prior~~ to ~~the~~pay ~~effective~~Mr. ~~date~~Chan ofan ~~the~~annual ~~reverse~~fee ~~acquisition~~of $20,000, Mr. ~~Shi~~Haus ~~served~~an atannual ~~Fezdale’s~~fee ~~wholly~~of ~~owned~~$24,000 ~~subsidiary~~and ~~Longheda~~Mr. asLi ~~its~~an ~~chief~~annual ~~executive~~fee ~~officer.~~of ~~The annual~~RMB 60,000, as ~~long~~compensation ~~term~~for ~~and~~the ~~other~~services ~~compensation~~provided ~~shown~~by inthem ~~this~~as ~~table~~directors ~~include~~of the ~~amount Mr~~Company. The ~~Shi~~payment ~~received~~will ~~from~~be ~~Longheda~~made ~~prior~~on toa ~~the~~quarterly ~~consummation of the reverse acquisition~~basis.

~~Employment~~ITEM ~~Agreements~~12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

OnSecurity ~~July~~Ownership 30, 2008, our subsidiary Fezdale entered into an employment agreement with Jinglin Shi, our Chief Executive Officer and President. Under the employment agreements, Mr. Shi will receive an annual salary of ~~RMB~~Certain ~~600,000.~~Beneficial ~~Mr.~~Owners ~~Shi is subject to customary confidentiality~~ and ~~non-competition~~Management ~~covenants as provided in the employment agreement.~~

WeThe ~~have~~following ~~not~~table ~~provided~~sets ~~retirement~~forth ~~benefits~~information regarding beneficial ownership of our common stock as of June 20, 2011 (~~other~~i) by each person who is known by us to beneficially own more than a5% ~~state~~of our common stock; (ii) by each ~~pension~~of ~~scheme~~our inofficers ~~which~~and directors; and (iii) by all of our ~~employees~~officers and directors as a group. Unless otherwise specified, the address of each of the persons set forth below is in care of China ~~participate)~~Nutrifruit orGroup ~~severance~~Limited, 5th Floor, Chuangye orBuilding, ~~change~~Chuangye ofPlaza, ~~control~~Industrial ~~benefits~~Zone to3, ~~our~~Daqing ~~named~~Hi-Tech ~~executive~~Industrial Development ~~officer~~Zone, Daqing, Heilongjiang, China 163316.

~~Compensation of Directors~~40

The table below sets forth the compensation of our directors for the fiscal year ended March 31, 2010:

Name and Address of Beneficial Owner	Office, If Any	Title of Class	Amount and Nature of Beneficial Ownership⁽¹⁾	Percent of Class⁽²⁾
Officers and Directors
Changjun Yu	Chairman, CEO, and President	Common stock, $0.001 par value	0	*
Jizeng Zhang	Director	Common stock, $0.001 par value	0	*
Jingfu Li	Director	Common stock, $0.001 par value	0	*
Tony Chan	Director	Common stock, $0.001 par value	0	*
William Haus	Director	Common stock, $0.001 par value	30,000 ⁽³⁾	*
Colman Cheng	Chief Financial Officer, Treasure and Secretary	Common stock, $0.001 par value	0	*
Aijun Wang	Vice President of Sales	Common stock, $0.001 par value	0	*
All officers and directors as a group (7 persons named above)		Common stock, $0.001 par value	30,000 ⁽³⁾	*
5% Security Holders
Yiu Fai Kung ⁽⁴⁾		Common stock, $0.001 par value	21,116,815	57.2%
Honouryear Limited ⁽⁵⁾		Common stock, $0.001 par value	15,517,217	42.0%
Bestsucceed Limited ⁽⁶⁾		Common stock, $0.001 par value	7,892,063	21.4%

	Fees Earned or	Stock	Option	Non-Equity
	Paid in Cash	Awards	Awards	Incentive Plan	All Other	Total
				Compensation	Compensation
Name	($)	($)	($)	($)	($)	($)
Tony Chan	16,167	-	-	-	-	16,167
William Haus	19,350	117,000(1)	-	-	-	136,350
Jingfu Li	6,576	-	-	-	-	6,576

* Less than 1%

(1) On July 31, 2009, the Company granted 30,000 shares of common stock to William Haus. The shares will vest in full on July 31, 2010.

(1)	Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the ordinary shares.

(2)	A total of 36,915,762 shares of Common Stock as of June 20, 2011 are considered to be outstanding pursuant to SEC Rule 13d-3(d)(1). For each beneficial owner above, any options exercisable within 60 days have been included in the denominator.

(3)	Includes 30,000 shares that vested on July 31, 2010.

(4)	Includes 15,517,217 shares owned by Honouryear Limited of which Yiu Fai Kung is the director and sole owner and has voting and investment control over the securities held by it.

(5)	Yiu Fai Kung is the director and sole owner of Honouryear Limited and has voting and investment control over the securities held by it.

(6)	Kwan Mo Ng is the director and sole owner of Bestsucceed Limited and has voting and investment control over the securities held by it.

41Changes in Control

~~Tony~~There ~~Chan,~~are ~~William~~no ~~Haus~~arrangements ~~and~~known ~~Jingfu~~to ~~Li were appointed directors effective as of June 11~~us, ~~2009.~~including Weany ~~entered~~pledge ~~into separate indemnification~~by ~~agreements~~any ~~with~~person ~~each director. Under the terms~~ of ~~the~~our ~~indemnification agreements~~securities, ~~we agreed to indemnify~~ the ~~independent~~operation ~~directors~~of ~~against~~which ~~expenses, judgments,~~may ~~fines,~~at ~~penalties~~a orsubsequent ~~other amounts actually and reasonably incurred by~~date ~~the~~result ~~independent director~~ in ~~connection~~a ~~with~~change ~~any proceeding if the independent director acted~~ in ~~good~~control ~~faith and in our best interests. It is our practice to reimburse our directors for reasonable travel expenses related to attendance at board~~ of ~~directors~~the ~~and committee meetings~~Company.

On June 11, 2009, we entered into independent director agreement with each of Tony Chan, William Haus and Jingfu Li. Under the terms of the agreements, the Company agreed to pay Mr. Chan an annual fee of $20,000, Mr. Haus an annual fee of $24,000 and Mr. Li an annual fee of $8,721, as compensation for the services provided by them as directors of the Company. The payment will be made on a quarterly basis. 41

~~ITEM~~Securities ~~12.~~Authorized for Issuance Under Equity Compensation Plans

~~SECURITY~~Our ~~OWNERSHIP~~board OFof ~~CERTAIN~~directors ~~BENEFICIAL~~approved the China Nutrifruit Group ~~OWNERS~~Limited ~~AND~~2010 ~~MANAGEMENT~~Equity ~~AND~~Incentive ~~RELATED~~Plan ~~STOCKHOLDER~~on October 19, 2010 which was amended on ~~MATTERS~~December 10, 2010 and approved by our shareholders on January 12, 2011. We have not issued any securities under the plan as of the date of this report.

~~The~~Except ~~following~~as ~~table~~set ~~sets~~ forth ~~information~~below, ~~regarding~~since ~~beneficial ownership~~the beginning of ~~our~~the ~~common~~2010 fiscal ~~stock~~year, asthere ofhave ~~June~~not ~~25,~~been ~~2010~~any ~~(i)~~transaction, bynor ~~each~~is ~~person~~there ~~who~~any iscurrently ~~known~~proposed bytransaction, usin towhich ~~beneficially~~we ~~own~~were ~~more~~or ~~than~~are 5%to ofbe ~~our~~a ~~common~~participant ~~stock;~~and ~~(ii)~~the ~~by each~~amount ofinvolved ~~our~~exceeded ~~officers~~or ~~and~~exceeds ~~directors;~~the ~~and~~lesser ~~(iii) by all~~ of ~~our~~$120,000 ~~officers~~or ~~and~~one ~~directors~~percent asof the aaverage ~~group.~~of ~~Unless~~our ~~otherwise~~total ~~specified,~~assets ~~the~~at ~~address~~year-end offor ~~each of~~ the ~~persons~~last ~~set forth~~two ~~below~~completed isfiscal years, and in ~~care~~which ofany ~~China~~related ~~Nutrifruit~~person ~~Group~~had ~~Limited,~~or ~~5th~~will ~~Floor,~~have ~~Chuangye Building,~~a ~~Chuangye~~direct ~~Plaza,~~or ~~Industrial~~indirect ~~Zone~~material interest 3,(other ~~Daqing~~than ~~Hi-Tech~~compensation ~~Industrial Development~~described ~~Zone,~~under ~~Daqing,~~“Executive ~~Heilongjiang, China 163316~~Compensation”).

			Amount and
			Nature of
Name and Address of Beneficial			Beneficial	Percent of
Owner	Office, If Any	Title of Class	Ownership(1)	Class(2)
Officers and Directors
Changjun Yu	Chairman	Common stock,	0	*
		$0.001 par value
Jinglin Shi	CEO, President and	Common stock,	0	*
	Director	$0.001 par value
Jingfu Li	Director	Common stock,	0	*
		$0.001 par value
Tony Chan	Director	Common stock,	0	*
		$0.001 par value
William Haus	Director	Common stock,	30,000 (3)	*
		$0.001 par value
Colman Cheng	Chief Financial Officer	Common stock,	0	*
		$0.001 par value
Manjiang Yu	Vice President of Sales	Common stock,	0	*
		$0.001 par value
All officers and directors as a group		Common stock,	30,000 (3)	*
(7 persons named above)		$0.001 par value
5% Security Holders
Yiu Fai Kung (4)		Common stock,	21,116,815	57.5%
		$0.001 par value
Honouryear Limited (5)		Common stock,	15,517,217	42.3%
		$0.001 par value
Bestsucceed Limited (6)		Common stock,	7,892,063	21.5%
		$0.001 par value
* Less than 1%

On January 6 and 26, 2011, our chairman, CEO and president Changjun Yu loaned RMB 4,000,000 and RMB 2,200,000 (approximately $946,550 in total) to our subsidiary Daqing Senyang for working capital purpose, respectively. The loan is unsecured, interest free and payable on demand.

42Promoters and Certain Control Persons

(1)	Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the ordinary shares.
(2)	A total of 36,718,772 shares of Common Stock as of June 25, 2010 are considered to be outstanding pursuant to SEC Rule 13d-3(d)(1). For each beneficial owner above, any options exercisable within 60 days have been included in the denominator.
(3)	Includes 30,000 shares that will vest on July 31, 2010.
(4)	Includes 15,517,217 shares owned by Honouryear Limited of which Yiu Fai Kung is the director and sole owner and has voting and investment control over the securities held by it.
(5)	Yiu Fai Kung is the director and sole owner of Honouryear Limited and has voting and investment control over the securities held by it.
(6)	Kwan Mo Ng is the director and sole owner of Bestsucceed Limited and has voting and investment control over the securities held by it.

Since the beginning of the last fiscal year, there have not been any transaction, nor is there any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds $120,000, and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation”).

~~Changes~~Director inIndependence ~~Control~~

~~There~~Our ~~are~~board noof ~~arrangements~~directors ~~known~~is tocurrently uscomposed of 5 members, ~~including~~of which ~~any~~Chun ~~pledge~~Wai (Tony) Chan, Jingfu Li and William Haus are “independent” as that term is defined by ~~any~~the ~~person~~rules and regulations of ~~our~~the ~~securities,~~NYSE Amex. All actions of the ~~operation~~board of ~~which~~directors ~~may~~require atthe approval of a ~~subsequent~~majority ~~date~~of ~~result~~the directors in attendance at a ~~change~~meeting inat ~~control~~which ofa ~~the~~quorum ~~Company~~is present. Our directors have a duty to act in good faith in our interest.

~~Securities~~ITEM ~~Authorized~~14. ~~for~~PRINCIPAL ~~Issuance~~ACCOUNTING ~~Under~~FEES ~~Equity~~AND ~~Compensation Plans~~ SERVICES.

WeIndependent ~~presently~~Auditors’ do not have any equity based or other long-term incentive programs. In the future, we may adopt and establish an equity-based or other long-term incentive plan if it is in the best interest of the Company and our stockholders to do so. Fees

~~ITEM~~The ~~13.~~following is a summary of the fees billed to the Company by its principal accountants for professional services rendered for the fiscal years ended March 31, 2011 and 2010:

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

		Fiscal Year Ended March 31,
		2011		2010
Audit Fees	$	416,148	$	241,268
Audit-Related Fees		-		-
Tax Fees		-		-
All Other Fees		-		-
TOTAL	$	416,148	$	241,268

“Audit Fees” consisted of the aggregate fees billed for ~~Transactions~~professional services rendered for the audit of our annual financial statements and the reviews of the financial statements included in our Forms 10-Q and for any other services that were normally provided in connection with ~~Related~~our ~~Persons~~statutory and regulatory filings or engagements.

~~The~~“Audit ~~following~~Related ~~includes~~Fees” aconsisted ~~summary~~ of ~~transactions since~~ the ~~beginning~~aggregate offees ~~the~~billed ~~2009~~for professional ~~fiscal~~services ~~year,~~rendered orfor ~~any~~assurance ~~currently~~and ~~proposed~~related ~~transaction,~~services inthat ~~which we~~ were reasonably orrelated ~~are~~ to ~~be a participant and~~ the ~~amount~~performance ~~involved~~of ~~exceeded or exceeds~~ the ~~lesser~~audit ~~of $120,000~~ or ~~one~~review ~~percent~~ of ~~the average of~~ our ~~total~~financial statements ~~assets at year-end for the last two completed fiscal years,~~ and in which any related person had or will have a direct or indirect material interest (other than compensation described under Item 11, “Executive Compensation”). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were ~~comparable~~not tootherwise ~~terms~~included ~~available or the amounts that would be paid or received, as applicable,~~ in ~~arm’s-length~~Audit ~~transactions~~Fees.

On May 16, 2008, our Chairman Changjun Yu entered into a Trademark Transfer Agreement with our company pursuant to which Mr. Yu transferred his rights to the trademark “农珍之冠 ” to our company for a nominal consideration of RMB 1. In connection with the trademark transfer, Mr. Yu also entered into a Trademark License Agreement with our company pursuant to which Mr. Yu granted us the exclusive rights to use such trademark before the Trademark Office approves the transfer of such trademark. See Item 1, “Our Business – Intellectual Property.”42

On“Tax ~~April~~Fees” ~~28,~~consisted ~~2008,~~of ~~our subsidiary Longheda entered into a financial advisory agreement, or~~ the ~~Financial~~aggregate ~~Advisory~~fees ~~Agreement,~~billed ~~with HFG International, Limited. The Financial Advisory Agreement was amended on August 12, 2008. Under the Financial~~for ~~Advisory~~professional ~~Agreement,~~services asrendered ~~amended,~~for ~~HFG~~tax ~~International~~compliance, ~~Limited~~tax ~~agreed~~advice ~~to provide Longheda with financial advisory~~ and ~~consulting~~tax ~~services~~planning. Included in ~~facilitating~~such ~~Longheda’s~~Tax ~~going~~Fees ~~public~~were ~~transaction.~~fees ~~In consideration~~ for ~~these~~preparation ~~services, HFG International, Limited was entitled to $450,000 which was paid within 45 days after the closing~~ of our ~~reverse~~tax ~~acquisition~~returns ~~of Fezdale. HFG International, Limited is an affiliate of Halter Financial Investments, L.P., which was an~~and ~~87.5%~~consultancy ~~shareholder of our company before the closing of the reverse acquisition of Fezdale~~ and aadvice ~~6.96%~~on ~~shareholder~~other astax ofplanning ~~the date of this report~~matters.

“All Other Fees” consisted of the aggregate fees billed for 43products and services provided and not otherwise included in Audit Fees, Audit Related Fees or Tax Fees.

OnPre-Approval ~~August~~Policies ~~14, 2008, Mr. Kung, the former shareholder of Fezdale, entered into a make good escrow agreement with HFG International, Limited. Pursuant to the agreement, Mr. Kung established an escrow account~~ and ~~delivered~~Procedures to the escrow agent certificates evidencing 2,513,758 shares of our common stock beneficially owned by him, to be held for the benefit of HFG International, Limited. Mr. Kung agreed that if the after tax net income (after the exclusion of certain items from the calculation), or ATNI, for the Company’s 2009 fiscal year is less than $13,919,707 or the ATNI for the Company’s 2010 fiscal year is less than $18,495,315, then, in each case, Mr. Kung will transfer to HFG International, Limited 1,256,879 shares. If the ATNI for the Company’s 2009 fiscal year is no less than $13,919,707 or the ATNI for the Company’s 2010 fiscal year is no less than $18,495,315, then, in each case, 1,256,879 shares will be returned to Mr. Kung.

~~Except~~Under asthe ~~set~~Sarbanes-Oxley ~~forth~~Act inof 2002, all audit and non-audit services performed by our ~~discussion~~auditors ~~above,~~must ~~none~~be ofapproved in advance by our board of directors, ~~director~~to ~~nominees~~assure orthat ~~executive~~such ~~officers~~services ~~has~~do ~~been~~not ~~involved~~impair inthe ~~any~~auditors’ independence ~~transactions~~from us. In accordance with usits orpolicies ~~any~~and ofprocedures, our board of directors, pre-approved ~~executive~~the ~~officers,~~audit ~~affiliates~~service ~~or associates~~performed ~~which~~by ~~are~~HLB ~~required~~Hodgson toImpey beCheng, ~~disclosed~~Certified Public ~~pursuant~~Accountants tofor ~~the~~our ~~rules~~financial ~~and regulations~~statements as of and for the ~~SEC.~~year ended March 31, 2011.

~~Promoters~~ PART ~~and Certain Control Persons~~IV

WeITEM ~~did~~15. ~~not~~EXHIBITS, ~~have~~FINANCIAL ~~any~~STATEMENT ~~promoters~~SCHEDULES. atFinancial ~~any~~Statements ~~time~~and ~~during the past five fiscal years.~~Schedules

~~Director~~The ~~Independence~~consolidated financial statements filed as part of this report are located as set forth in the index on page F-1 of this report. Financial statement schedules have been omitted since they are either not required, not applicable, or the information is otherwise included.

~~Our~~Exhibit Board is currently composed of 5 members, of which Chun Wai Chan, Jingfu Li and William Haus are “independent” as that term is defined by the rules and regulations of the NYSE Amex. All actions of the board of directors require the approval of a majority of the directors in attendance at a meeting at which a quorum is present. Our directors have a duty to act in good faith in our interest. List

~~ITEM~~The 14list of exhibits in the Exhibit Index to this Report is incorporated herein by reference.

~~PRINCIPAL ACCOUNTING FEES AND SERVICES.~~ 43

~~Independent Auditors’ Fees~~SIGNATURES

~~The~~In ~~following~~accordance iswith asection ~~summary~~13 or 15(d) of the ~~fees~~Securities Exchange ~~billed~~Act toof 1934, the ~~Company~~Registrant ~~by its~~caused ~~principal~~this ~~accountants~~Report ~~for~~on ~~professional~~Form ~~services~~10-K ~~rendered~~to ~~for~~be signed ~~the~~on ~~fiscal years~~its ~~ended~~behalf ~~March~~by 31the undersigned, ~~2010~~thereto ~~and~~duly ~~2009:~~authorized individual.

		Fiscal Year Ended March 31,
		2010		2009
Audit Fees	$	241,268	$	476,754
Audit-Related Fees		-		-
Tax Fees		-		-
All Other Fees		-		-
TOTAL	$	241,268	$	476,754

Date: June 22, 2011

~~“Audit~~CHINA ~~Fees”~~NUTRIFRUIT ~~consisted~~GROUP ofLIMITED ~~the~~By: ~~aggregate~~/s/ ~~fees~~Changjun ~~billed~~Yu ~~for professional~~Changjun ~~services~~Yu ~~rendered~~Chief ~~for~~Executive ~~the~~Officer ~~audit of our annual financial statements~~ and ~~the~~President ~~reviews~~By: of/s/ ~~the~~Colman ~~financial~~Cheng ~~statements~~Colman ~~included~~Cheng inChief ~~our~~Financial ~~Forms 10-Q and for any other services that were normally provided in connection with our statutory and regulatory filings or engagements.~~ Officer

~~“Audit~~In ~~Related~~accordance ~~Fees”~~with ~~consisted of~~ the ~~aggregate~~Securities ~~fees~~Exchange ~~billed~~Act ~~for professional~~of ~~services~~1934, ~~rendered for assurance and related services that were~~this ~~reasonably~~report ~~related~~has tobeen ~~the~~signed ~~performance~~below ofby the ~~audit~~following orpersons ~~review~~on behalf of ~~our financial~~the ~~statements~~Registrant and ~~were~~in ~~not~~the ~~otherwise~~capacities ~~included~~and inon ~~Audit~~the ~~Fees.~~dates indicated.

~~“Tax~~Each ~~Fees”~~person ~~consisted~~whose ofsignature ~~the~~appears ~~aggregate~~below ~~fees~~hereby ~~billed for~~authorizes ~~professional~~Changjun ~~services~~Yu ~~rendered~~and ~~for~~Colman ~~tax compliance~~Cheng, ~~tax~~and ~~advice~~each ~~and~~or ~~tax~~any ~~planning. Included~~of them, as attorneys-in-fact ~~such~~to sign ~~Tax~~on ~~Fees~~his ~~were~~or ~~fees~~her ~~for~~behalf, ~~preparation~~individually, ofand ~~our~~in ~~tax~~each ~~returns~~capacity stated below, and ~~consultancy~~to file all amendments and/or ~~advice~~supplements onto ~~other~~this ~~tax~~annual ~~planning~~report ~~matters.~~on Form 10-K.

Signature	Title	Date

/s/ Changjun Yu	Chairman, Chief Executive Officer and President	June 22, 2011
Changjun Yu	(Principal Executive Officer)

/s/ Colman Cheng	Chief Financial Officer	June 22, 2011
Colman Cheng	(Principal Financial and Accounting Officer)

/s/Jizeng Zhang	Director	June 22, 2011
Jizeng Zhang

/s/ Chun Wai Chan	Director	June 22, 2011
Chun Wai Chan

/s/ William Haus	Director	June 22, 2011
William Haus

/s/ Jingfu Li	Director	June 22, 2011
Jingfu Li

~~“All Other Fees” consisted of the aggregate fees billed for products and services provided and not otherwise included in Audit Fees, Audit Related Fees or Tax Fees.~~ 44

~~Pre-Approval~~REPORT ~~Policies~~OF ~~and~~INDEPENDENT ~~Procedures~~ REGISTERED PUBLIC ACCOUNTING FIRM

~~Under~~The ~~the Sarbanes-Oxley Act of 2002, all audit and non-audit services performed by our auditors must be approved in advance by our~~ Board of Directors ~~to assure that such services do not impair the auditors’ independence from us. In accordance with its policies~~ and ~~procedures,~~Shareholders ~~our Board~~ of ~~Directors~~China ~~pre-approved~~Nutrifruit Group ~~the~~Limited ~~audit service performed by HLB Hodgson Impey Cheng, Certified Public Accountants for our financial statements as of and for the year ended March 31, 2011.~~

We have audited the accompanying consolidated balance sheets of ~~PART~~China IVNutrifruit Group Limited and subsidiaries (the “Company”) as of March 31, 2011 and 2010, and the related consolidated statements of income, shareholders’ equity and comprehensive income, cash flows for each of the years in the two-year period ended March 31, 2011. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

~~ITEM~~We 15conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred ~~EXHIBITS~~to above present fairly, ~~FINANCIAL~~in ~~STATEMENT~~all ~~SCHEDULES~~material respects, the financial position of the Company as of March 31, 2011 and 2010, and the results of their operations and their cash flows for each of the years in the two-year period ended March 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

~~Financial~~/s/ ~~Statements~~HLB ~~and~~Hodgson ~~Schedules~~Impey Cheng Chartered Accountants Certified Public Accountants

~~The~~Hong ~~financial~~Kong ~~statements~~June ~~are set forth under Item 8 of this annual report on Form 10-K. Financial statement schedules have been omitted since they are either not required~~22, ~~not~~2011 ~~applicable, or the information is otherwise included.~~

~~Exhibit List~~ F-1

~~The~~CHINA ~~list~~NUTRIFRUIT ofGROUP ~~exhibits~~LIMITED inAND ~~the~~SUBSIDIARIES ~~Exhibit~~CONSOLIDATED ~~Index~~BALANCE toSHEETS ~~this~~AS ~~Report~~OF isMARCH ~~incorporated herein by reference.~~31,

		2011		2010

ASSETS
Current assets:
Cash and equivalents	$	43,542,075	$	35,994,443
Proceeds from private placement held in escrow account		-		931,630
Trade receivables, net of allowance		12,476,652		11,047,846
Inventory, net		6,419,152		4,179,910
Prepayments and deposits		264,878		114,732
Other current assets		1,527		1,464
Total current assets		62,704,284		52,270,025
Non-current assets:
Property and equipment, net		20,312,005		17,066,907
Prepayments and deposits		10,983,404		-
Construction in progress		5,915,395		-
Deferred tax assets		909,879		1,068,878
Land use rights, net		188,199		185,686
TOTAL ASSETS	$	101,013,166	$	70,591,496

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Other payables and accrued expenses	$	3,312,525	$	2,379,246
Due to a director		946,550		-
Trade payables		130,276		87,954
Income taxes payable		3,351,631		2,296,513
Total current liabilities		7,740,982		4,763,713


Commitments and Contingencies

Shareholders’ equity:
Preferred stock		331		365
Common stock		36,916		36,573
Additional paid-in-capital		36,492,566		36,492,875
Statutory reserves – restricted		6,850,422		4,564,345
Accumulated other comprehensive income		3,951,431		440,714
Retained earnings		45,940,518		24,292,911
TOTAL SHAREHOLDERS’ EQUITY		93,272,184		65,827,783
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	101,013,166	$	70,591,496

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

~~In accordance with section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this Report on Form 10~~F-~~K to be signed on its behalf by the undersigned, thereto duly authorized individual.~~ 2

~~Date:~~CHINA ~~June~~NUTRIFRUIT ~~29,~~GROUP ~~2010~~LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME YEARS ENDED MARCH 31,

CHINA NUTRIFRUIT GROUP LIMITED

		2011			2010
Net sales	$	86,953,888		$	72,916,955
Cost of sales		(46,136,600	)		(39,655,534	)
Gross profit		40,817,288			33,261,421
Selling expenses		(3,100,084	)		(3,547,236	)
General and administrative expenses		(4,354,005	)		(3,976,627	)
Operating earnings		33,363,199			25,737,558
Other income (expenses)
Interest expense		(4,912	)		-
Other income		85,313			70,233
Gain on disposal of property and equipment		-			290,407
Total other income		80,401			360,640
Earnings before income taxes		33,443,600			26,098,198
Provision for income taxes		(8,700,366	)		(6,849,438	)
Net earnings		24,743,234			19,248,760
Other comprehensive income
Foreign currency translation		3,510,717			15,039
Total comprehensive income	$	28,253,951		$	19,263,799
Earnings per share
Basic	$	0.66		$	0.52
Diluted	$	0.62		$	0.51
Weighted average number of common stock outstanding
Basic		36,736,834			36,153,554
Diluted		40,056,599			38,051,749

~~By:~~The ~~/s/~~accompanying ~~Jinglin Shi Jinglin~~notes ~~Shi~~are ~~Chief~~an ~~Executive~~integral ~~Officer~~part ~~and~~of ~~President~~these consolidated financial statements.

~~By: /s/ Colman Cheng Colman Cheng Chief Financial Officer~~ F-3

InCHINA ~~accordance~~NUTRIFRUIT ~~with~~GROUP ~~the~~LIMITED ~~Securities~~AND ~~Exchange~~SUBSIDIARIES ~~Act~~CONSOLIDATED ofSTATEMENT ~~1934,~~OF ~~this report~~SHAREHOLDERS’ ~~has~~EQUITY ~~been~~AND ~~signed~~COMPREHENSIVE ~~below~~INCOME byYEARS ~~the~~ENDED ~~following~~MARCH ~~persons~~31, on2011 ~~behalf~~AND ~~of the Registrant and in the capacities and on the dates indicated.~~ 2010

Each person whose signature appears below hereby authorizes Jinglin Shi and Colman Cheng, and each or any of them, as attorneys-in-fact to sign on his or her behalf, individually, and in each capacity stated below, and to file all amendments and/or supplements to this annual report on Form 10-K.

	Preferred stock					Common stock
																		Accumulat
																		ed other
										Additional			Statutory					Comprehe		Total
										paid-in			reserves -		Retained			nsive		shareholders’
	Shares			Amount		Shares		Amount		capital			restricted		earnings			income		equity


Balance at April 1, 2009	-		$	-		36,125,754	$	36,126	$	16,746,971		$	2,873,880	$	6,734,616		$	425,675	$	26,817,268
Share-based payment	-			-		30,000		30		116,970			-		-			-		117,000
Capital contribution	-			-		-		-		7,414,995			-		-			-		7,414,995
Preferred stocks issued in private placement	403,418			403		-		-		12,006,243			-		-			-		12,006,646
Warrants issued in private placement	-			-		-		-		1,302,354			-		-			-		1,302,354
Cost of raising capital	-			-		-		-		(1,094,279	)		-		-			-		(1,094,279	)
Conversion of preferred shares	(38,309	)		(38	)	383,090		383		(345	)		-		-			-		-
Conversion of warrants	-			-		34,428		34		(34	)		-		-			-		-
Transfer to reserve	-			-		-		-		-			1,690,465		(1,690,465	)		-		-
Comprehensive income:
Net earnings	-			-		-		-		-			-		19,248,760			-		19,248,760
Translation adjustments	-			-		-		-		-			-		-			15,039		15,039
Balance at March 31, 2010 and 1 April 2010	365,109		$	365		36,573,272	$	36,573	$	36,492,875		$	4,564,345	$	24,292,911		$	440,714	$	65,827,783
Conversion of preferred shares	(34,249	)		(34	)	342,490		343		(309	)		-		-			-		-
Payment of preferred shares dividend	-			-		-		-		-			-		(809,550	)		-		(809,550	)
Transfer to reserve	-			-		-		-		-			2,286,077		(2,286,077	)		-		-
Comprehensive income:
Net earnings	-			-		-		-		-			-		24,743,234			-		24,743,234
Translation adjustments	-			-		-		-		-			-		-			3,510,717		3,510,717
Balance at March 31, 2011	330,860		$	331		36,915,762	$	36,916	$	36,492,566		$	6,850,422	$	45,940,518		$	3,951,431	$	93,272,184

Signature	Title	Date
/s/ Jinglin Shi	Chief Executive Officer and President	June 29, 2010
Jinglin Shi	(Principal Executive Officer)
/s/ Colman Cheng	Chief Financial Officer	June 29, 2010
Colman Cheng	(Principal Financial and Accounting Officer)
/s/ Changjun Yu	Chairman of the board	June 29, 2010
Changjun Yu
/s/ Chun Wai Chan	Director	June 29, 2010
Chun Wai Chan
/s/ William Haus	Director	June 29, 2010
William Haus
/s/ Jingfu Li	Director	June 29, 2010
Jingfu Li

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

46F-4

~~REPORT~~CHINA NUTRIFRUIT GROUP LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF ~~INDEPENDENT~~CASH ~~REGISTERED~~FLOWS ~~PUBLIC~~YEARS ~~ACCOUNTING~~ENDED ~~FIRM~~MARCH 31,

The Board of Directors and Shareholders of China Nutrifruit Group Limited

		2011			2010
Cash flows from operating activities:
Net earnings	$	24,743,234		$	19,248,760
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization		2,374,751			1,593,811
Gain on disposal of property and equipment		-			(290,407	)
Deferred income taxes		158,165			337,936
Share-based payments		-			117,000
Changes in operating assets and liabilities:
Trade receivables		(1,222,114	)		391,901
Inventories		(1,840,967	)		(481,732	)
Prepayments and deposits		(353,118	)		364,046
Other current assets		(15	)		1,463
Trade payables		32,580			(172,675	)
Other payables and accrued expenses		895,817			(319,909	)
Income taxes payable		1,001,321			877,429
Net cash provided by operating activities		25,789,654			21,667,623

Cash flows from investing activities:
Purchases of property and equipment		(4,333,519	)		(2,738,855	)
Addition of construction in progress		(5,808,400	)		-
Prepayment for purchase of land use right, property and equipment		(10,543,839	)		-
Proceeds from disposal of property and equipment		-			1,038,273
Net cash used in investing activities		(20,685,758	)		(1,700,582	)

Cash flows from financing activities:
Proceeds from private placement held in escrow account		-			(931,630	)
Proceeds from borrowings		15,217,689			-
Repayment of borrowings		(15,217,689	)		-
Amount due to a director		943,497			-
Proceeds from private placement		-			13,309,000
Release of proceeds from private placement held in escrow account		931,630			-
Dividend paid		(809,550	)		-
Cost of raising capital		-			(1,094,279	)
Net cash provided by financing activities		1,065,577			11,283,091

Increase in cash and equivalents		6,169,473			31,250,132

Effect of exchange rate on cash and equivalents		1,378,159			(24,231	)

Cash and equivalents at beginning of year		35,994,443			4,768,542

Cash and equivalents at end of year	$	43,542,075		$	35,994,443

Supplemental disclosure of cash flows information:
Cash paid for:
Interest	$	4,912		$	-
Income taxes	$	7,574,018		$	5,634,883

Supplemental disclosure of non-cash information:
Issuance of common stock by conversion of preferred stock	$	343		$	117,000
Issuance of warrant	$	-		$	367,155
Capital contribution	$	-		$	7,414,995

WeThe ~~have audited the~~ accompanying ~~consolidated~~notes ~~balance~~are ~~sheets~~an ~~of China~~integral ~~Nutrifruit~~part ~~Group Limited and subsidiaries (the “Company”) as~~ of ~~March 31,~~these ~~2010 and 2009, and the related~~ consolidated ~~statements of income, shareholders’ equity and comprehensive income, cash flows for each of the years in the two-year period ended March 31, 2010. These consolidated~~ financial statements ~~are the responsibility of the Company’s management~~. ~~Our responsibility is to express an opinion on these consolidated financial statements based on our audits.~~

WeF-5 conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

InCHINA ~~our~~NUTRIFRUIT ~~opinion,~~GROUP ~~the~~LIMITED ~~consolidated~~AND ~~financial~~SUBSIDIARIES ~~statements~~NOTES ~~referred to~~TO ~~above~~CONSOLIDATED ~~present~~FINANCIAL ~~fairly,~~STATEMENTS inMARCH ~~all material respects, the financial position of the Company as of March~~ 31, ~~2010~~2011 ~~and~~AND ~~2009, and the results of their operations and their cash flows for each of the years in the two-year period ended March 31,~~ 2010~~, in conformity with accounting principles generally accepted in the United States of America.~~

~~/s/~~NOTE ~~HLB~~1. ~~Hodgson~~NATURE ~~Impey~~OF ~~Cheng Chartered Accountants Certified Public Accountants~~ BUSINESS

~~Hong~~Nature ~~Kong~~of ~~June~~Business ~~29, 2010~~

~~F-1~~China Nutrifruit Group Limited (the “Company” or “CNGL”) was incorporated in the state of Utah on April 22, 1983 and changed its domicile from Utah to Nevada in April 1999. The Company was not engaged in any business and had no meaningful operations, income producing assets or significant operating capital since at least 1989 until it acquired Fezdale Investments Limited (“Fezdale”) on August 14, 2008.

~~CHINA~~On ~~NUTRIFRUIT~~August ~~GROUP~~14, ~~LIMITED~~2008, ~~AND~~the ~~SUBSIDIARIES~~Company ~~CONSOLIDATED~~acquired ~~BALANCE~~all ~~SHEETS~~of ASthe OFequity interests ~~MARCH~~of 31Fezdale, a British Virgin Islands (“BVI”) corporation, through a share exchange transaction (the “Share Exchange Transaction”), with the result that the shareholders of Fezdale became the beneficial owners of 83.5% of the Company’s common stock. As a result of such Share Exchange Transaction, Fezdale became a wholly-owned subsidiary of the Company and the former shareholders of Fezdale became the Company’s controlling shareholders. Accordingly, all references to shares of Fezdale’s ordinary shares were restated to reflect the equivalent numbers of the common stock of China Nutrifruit Group Limited.

		2010		2009
ASSETS
Current assets:
Cash and cash equivalents	$	35,994,443	$	4,768,542
Proceeds from private placement held in escrow account		931,630		-
Trade receivables, net of allowance		11,047,846		11,423,996
Inventory, net		4,179,910		3,692,892
Other current assets		116,196		481,679
Total current assets		52,270,025		20,367,109
Property and equipment, net		17,066,907		16,614,930
Deferred tax assets		1,068,878		1,406,814
Land use rights, net		185,686		189,303
TOTAL ASSETS	$	70,591,496	$	38,578,156
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Other payables and accrued expenses	$	2,379,246	$	2,675,983
Trade payables		87,954		260,322
Income taxes payable		2,296,513		1,416,835
Total current liabilities		4,763,713		4,353,140
Non-current liabilities:
Due to shareholders		-		7,407,748
TOTAL LIABILITIES		4,763,713		11,760,888
Commitments and Contingencies
Shareholders' equity
Preferred stock
Authorized: 5,000,000 shares, par value $0.001
Issued and outstanding: 365,109 shares at March 31, 2010 (Nil at March 31, 2009)		365		-
Common stock
Authorized: 120,000,000 shares, par value $0.001
Issued and outstanding: 36,573,272 shares at March 31, 2010;
(36,125,754 shares at March 31, 2009)		36,573		36,126
Additional paid-in-capital		36,492,875		16,746,971
Statutory reserves – restricted		4,564,345		2,873,880
Accumulated other comprehensive income		440,714		425,675
Retained earnings		24,292,911		6,734,616
TOTAL SHAREHOLDERS’ EQUITY		65,827,783		26,817,268
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	70,591,496	$	38,578,156

The Share Exchange Transaction resulted in Fezdale’s former shareholder obtaining a majority voting interest in the Company. Accounting principles generally accepted in the United States of America (“US GAAP”) require that a company whose shareholders retain the majority interest in a combined business be treated as the acquirer for accounting purposes. As a result, in the Share Exchange Transaction, Fezdale is treated as the accounting acquirer and China Nutrifruit Group Limited is treated as the acquired party. Accordingly, the Share Exchange Transaction was accounted for a recapitalization of the Company. The equity section of the accompanying financial statements was restated to reflect the recapitalization of the Company due to the Share Exchange Transaction as of the first day of the first period presented. The assets and liabilities acquired that, for accounting purposes, were deemed to have been acquired by Fezdale were not significant.

~~The~~Also, ~~accompanying~~on ~~notes~~August ~~are~~14, an2008, ~~integral~~the ~~part~~Company’s majority shareholder, Yiu Fai Kung (“Mr. Kung”), entered into escrow agreements with the private placement investors and HFG International, Limited (“HFG”) pursuant to which Mr. Kung agreed to deliver a certain number of ~~these~~shares of the Company’s common stock ~~consolidated~~owned ~~financial~~by ~~statements~~him to the investors and HFG pro-rata in accordance with their respective investment amount for no additional consideration if the after tax net income for the fiscal year ended March 31, 2009 was less than $13,919,707 and fiscal year ended March 31, 2010 was less than $18,495,315.

FFor fiscal year ended March 31, 2010, the return to Mr. Kung of any of the make good shares placed in escrow by him was considered to be a separate compensatory arrangement because Mr. Kung was a director of the Company’s subsidiary Fezdale. The net income target of $13,955,178 for fiscal year 2009 (before any charges related to the release of any shares from escrow) was met. Accordingly, the Company recorded a non-cash charge to compensation cost of $9,519,317 in the fourth quarter of 2009 related to the release from escrow to Mr. Kung of 2,799,799 shares.

~~CHINA~~For ~~NUTRIFRUIT~~the ~~GROUP~~year ~~LIMITED~~ended ~~AND~~March ~~SUBSIDIARIES~~31, ~~CONSOLIDATED~~2010, ~~STATEMENTS~~the OFnet ~~INCOME~~income ~~AND~~target ~~COMPREHENSIVE~~of $18,495,315 ~~INCOME~~was ~~FOR~~met. ~~THE~~Accordingly, ~~YEARS~~2,799,799 ~~ENDED~~shares ~~MARCH~~were released to Mr. Kung from escrow. As Mr. Kung resigned from his position as Fezdale’s director and the release of the escrowed shares was not contingent upon Mr. Kung’s continuing employment with the Company, the Company did not recognize any compensation expenses relating to the release of the escrow shares to Mr. Kung in fiscal year ended March 31, 2010.

		2010			2009
Net sales	$	72,916,955		$	56,418,837
Cost of sales		(39,655,534	)		(31,777,733	)
Gross profit		33,261,421			24,641,104
Selling expenses		(3,547,236	)		(2,929,881	)
General and administrative expenses (including non-cash stock compensation expense of $9,519,317 in fiscal 2009)		(3,976,627	)		(12,408,747	)
Operating earnings		25,737,558			9,302,476
Other income (expenses)
Interest expense		-			(480,201	)
Other income		70,233			31,730
Gain on disposal of property and equipment		290,407			-
Total other income (expenses)		360,640			(448,471	)
Earnings before noncontrolling interests and income
taxes		26,098,198			8,854,005
Provision for income taxes		(6,849,438	)		(4,127,577	)
Earnings before noncontrolling interests		19,248,760			4,726,428
Noncontrolling interests		-			(209,308	)
Net earnings		19,248,760			4,517,120
Other comprehensive income (loss)
Foreign currency translation		15,039			(386,637	)
Total comprehensive income	$	19,263,799		$	4,130,483
Earnings per share
Basic	$	0.5451		$	0.1351
Diluted	$	0.5059		$	0.1350
Weighted average number of common stock outstanding
Basic		36,153,554			33,431,434
Diluted		38,050,549			33,451,676

On September 4, 2009, the Company’s common stock started trading on the NYSE Amex.

~~The~~F-6 ~~accompanying notes are an integral part of these consolidated financial statements.~~

~~F-3~~CHINA NUTRIFRUIT GROUP LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2011 AND 2010

~~CHINA~~NOTE ~~NUTRIFRUIT~~1. ~~GROUP~~NATURE ~~LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENT~~ OF ~~SHAREHOLDERS’~~BUSINESS ~~EQUITY AND COMPREHENSIVE INCOME~~ (~~LOSS~~CONTINUED)

																Statutory					Accumulated
	Preferred stock					Common stock				Additional						Reserves					other			Total
										paid-in			Noncontrolling			-		Retained			comprehensive			shareholders’
	Shares			Amount		Shares		Amount		capital			interests			restricted		earnings			income			equity
Balance at April 1, 2008	-		$	-		30,166,878	$	30,167	$	(29,167	)	$	4,039,286		$	1,713,065	$	3,378,311		$	812,312		$	9,943,974
Effect of reverse acquisition -								-
Recapitalization	-			-		2,873,036		2,873		(24,378	)		-			-		-			-			(21,505	)
Share issued in private placement	-			-		3,085,840		3,086		8,575,620			-			-		-			-			8,578,706
Acquisition of subsidiary	-			-		-		-		-			(4,248,594	)		-		-			-			(4,248,594	)
Cost of raising capital	-			-		-		-		(1,294,421	)		-			-		-			-			(1,294,421	)
Stock compensation expenses related to Make Good Escrow Agreement	-			-		-		-		9,519,317			-			-		-			-			9,519,317
Transfer to reserve	-			-		-		-		-			-			1,160,815		(1,160,815	)		-			-
Comprehensive income:
Net earnings	-			-		-		-		-			209,308			-		4,517,120			-			4,726,428
Translation adjustments	-			-		-		-		-			-			-		-			(386,637	)		(386,637	)
Balance at March 31, 2009	-		$	-		36,125,754	$	36,126	$	16,746,971		$	-		$	2,873,880	$	6,734,616		$	425,675		$	26,817,268
Share-based payment	-			-		30,000		30		116,970			-			-		-			-			117,000
Capital contribution	-			-		-		-		7,414,995			-			-		-			-			7,414,995
Preferred stocks issued in private placement	403,418			403		-		-		12,006,243			-			-		-			-			12,006,646
Warrants issued in private placement	-			-		-		-		1,302,354			-			-		-			-			1,302,354
Cost of raising capital	-			-		-		-		(1,094,279	)		-			-		-			-			(1,094,279	)
Conversion of preferred shares	(38,309	)		(38	)	383,090		383		(345	)		-			-		-			-			-
Conversion of warrants	-			-		34,428		34		(34	)		-			-		-			-			-
Transfer to reserve	-			-		-		-		-			-			1,690,465		(1,690,465	)		-			-
Comprehensive income:
Net earnings	-			-		-		-		-			-			-		19,248,760			-			19,248,760
Translation adjustments	-			-		-		-		-			-			-		-			15,039			15,039
Balance at March 31, 2010	365,109		$	365		36,573,272	$	36,573	$	36,492,875		$	-		$	4,564,345	$	24,292,911		$	440,714		$	65,827,783

On September 30, 2009, the Company entered into a securities purchase agreement (the “Private Placement Transaction”) with certain accredited investors (“Investors”) and effected the initial closing of the purchase and sale of 359,502 units (the “Unit”) at $33.00 per Unit. Each Unit consists of one share of the Company’s newly-designated Series A Convertible Preferred Stock, par value $0.001 per share (“Series A Preferred Stock”) and one warrant (the “Warrant”) to purchase 2.5 shares of the Company’s common stock. The Series A Preferred Stock is convertible into ten shares of the Company’s common stock (subject to customary adjustments) and the Company is obligated to register the underlying shares of common stock within thirty days after the closing date. In connection with the initial closing of the offering, the Company raised approximately $11.86 million.

~~The~~On ~~accompanying~~October ~~notes~~8, ~~are~~2009, anthe ~~integral~~Company ~~part~~effected the second and final closing of ~~these~~the ~~consolidated~~Private ~~financial~~Placement ~~statements.~~Transaction and issued 43,916 additional Unit for gross proceeds of $1,449,000.

~~F-4~~On September 3, 2010, the Company paid dividends of $809,550 to the holders of Series A Preferred Stock.

~~CHINA~~Fezdale ~~NUTRIFRUIT~~Investments ~~GROUP~~Limited ~~LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MARCH 31,~~

		2010			2009
Cash flows from operating activities:
Net earnings	$	19,248,760		$	4,517,120
Adjustments to reconcile net earnings to net cash provided by operating activities
Noncontrolling interests		-			209,308
Depreciation and amortization		1,593,811			1,049,739
(Gain)/loss on disposal of property and equipment		(290,407	)		289
Deferred income taxes		337,936			(531,259	)
Share-based payments		117,000			-
Stock compensation cost		-			9,519,317
Changes in operating assets and liabilities:
Trade receivables		391,901			(9,404,994	)
Inventories		(481,732	)		(1,678,154	)
Other current assets		365,509			(364,374	)
Trade payables		(172,675	)		94,590
Amount due to an affiliate		-			(59,169	)
Other payables and accrued expenses		(319,909	)		2,159,113
Income taxes payable		877,429			789,452
Net cash provided by operating activities		21,667,623			6,300,978
Cash flows from investing activities:
Cash outflow from acquisition of subsidiaries		-			(6,836,284	)
Purchases of property and equipment		(2,738,855	)		(13,123,980	)
Proceeds from disposal of property and equipment		1,038,273			3,924
Net cash used in investing activities		(1,700,582	)		(19,956,340	)
Cash flows from financing activities:
Proceeds from private placement held in escrow account		(931,630	)		-
Proceeds from borrowings		-			7,266,893
Repayment of borrowings		-			(10,173,650	)
Amounts due to shareholders		-			7,370,153
Proceeds from private placement		13,309,000			8,578,706
Cost of raising capital		(1,094,279	)		(1,294,421	)
Net cash provided by (used in) financing activities		11,283,091			11,747,681
Effect of exchange rate on cash and cash equivalents		(24,231	)		(428,626	)
Increase (decrease) in cash and cash equivalents		31,225,901			(2,336,307	)
Cash and cash equivalents at beginning of year		4,768,542			7,104,849
Cash and cash equivalents at end of year	$	35,994,443		$	4,768,542
Supplemental disclosure of cash flows information:
Cash paid for:
Interest	$	-		$	450,236
Income taxes	$	5,634,883		$	3,893,159
Supplemental disclosure of non-cash information:
Issuance of common stock	$	117,000		$	-
Issuance of warrant	$	326,705		$	331,357
Capital contribution	$	7,414,995		$	-
Stock compensation	$	-		$	9,519,317

Fezdale is a private limited liability company incorporated in the BVI on August 22, 2007.

~~The~~In ~~accompanying~~November ~~notes~~2007, ~~are~~Solar anSun ~~integral~~Holdings ~~part~~Limited (“Solar Sun”), a subsidiary of ~~these~~Fezdale, entered in a share purchase agreement with six owners of ~~consolidated~~Daqing ~~financial~~Longheda ~~statements~~Food Company Limited (“Longheda”) under which the six owners of Longheda transferred 75% equity interests in Longheda to Solar Sun for RMB40,000,000 ($5.87 million). In May 2008, the six founders of Longheda transferred the remaining 25% equity interests in Longheda to Solar Sun. After the transfer, Longheda became a wholly owned subsidiary of Solar Sun.

~~F-5~~Solar Sun Holdings Limited

~~CHINA~~Solar ~~NUTRIFRUIT~~Sun ~~GROUP~~is ~~LIMITED~~a ~~AND~~private ~~SUBSIDIARIES~~limited ~~NOTES~~liability TOcompany ~~CONSOLIDATED~~(the ~~FINANCIAL~~“PLLC”) incorporated ~~STATEMENTS~~in ~~FOR~~Hong ~~THE~~Kong ~~YEARS~~on ~~ENDED~~September ~~MARCH 31~~12, ~~2010~~2007. ~~AND~~Solar ~~2009~~Sun is a holding company and has no assets or operations other than its ownership of Longheda.

~~NOTE~~Daqing 1.Longheda ~~NATURE~~Food OFCompany ~~BUSINESS~~Limited

~~Nature~~Longheda was incorporated in Heilongjiang province of ~~Business~~Peoples’ Republic of China (the “PRC”) in June 2004. Longheda is primarily engaged in developing, processing, marketing and distributing a variety of food products processed primarily from premium specialty fruits grown in Northeast China, mainly including golden berry, crab apple, blueberry, raspberry, blackcurrant and seabuckthorn. Its primary product offering includes concentrate juice, nectar, glazed fruits, concentrate pulp as well as fresh fruits. Longheda sells its products through an extensive sales and distribution network. The fresh fruits are mainly sold to fruit supermarkets and stores while the processed fruit products are mainly sold to manufacturers for further processing into fruit juice and other fruit related products.

~~China~~Jumbo ~~Nutrifruit~~Gloss ~~Group~~ Limited (the “Company”) was originally incorporated in the state of Utah on April 22, 1983 and changed its domicile from Utah to Nevada in April 1999. The Company was not engaged in any business activities and had no meaningful operations, income producing assets or significant operating capital since at least 1989 until it acquired Fezdale Investments Limited (“Fezdale”) on August 14, 2008.

OnJumbo ~~August~~Gloss ~~14,~~Limited ~~2008, the Company acquired all of the equity interests of Fezdale, a British Virgin Islands~~ (~~the~~ “~~BVI~~Jumbo Gloss”) ~~corporation,~~is ~~through~~ a ~~share~~PLLC ~~exchange~~incorporated ~~transaction~~in BVI ~~(the~~on ~~“Share~~October ~~Exchange Transaction”)~~13, ~~with the result that the shareholders of Fezdale became the beneficial owners of approximately 83~~2009.5% ofJumbo ~~the~~Gloss ~~Company’s~~is ~~common stock. As~~ a ~~result~~holding ofcompany ~~such Share Exchange Transaction, Fezdale became a wholly-owned subsidiary of the Company~~ and ~~the former~~has ~~shareholders~~no ofassets ~~Fezdale became the Company’s controlling shareholders.~~or ~~Accordingly,~~operations ~~all~~other ~~references~~than toits ~~shares~~ownership of ~~Fezdale’s~~Daqing ~~ordinary~~Senyang ~~shares~~Fruit ~~were~~and ~~restated~~Vegetable Food toTechnology ~~reflect~~Company ~~the equivalent numbers of the common stock of China Nutrifruit Group~~ Limited (“Senyang”).

~~The~~Daqing ~~share~~Senyang ~~exchange~~Fruit resulted in Fezdale’s former shareholder obtaining a majority voting interest in the Company. Accounting principles generally accepted in the United States of America (“US GAAP”) require that a company whose shareholders retain the majority interest in a combined business be treated as the acquirer for accounting purposes. As a result, in the Share Exchange Transaction, Fezdale is treated as the accounting acquirer and ~~China Nutrifruit~~Vegetable ~~Group~~Food ~~Limited~~Technology ~~is treated as the acquired party. Accordingly, the Share Exchange Transaction has been accounted for a recapitalization of the~~ Company~~. The equity section of the accompanying financial statements was~~ restated to reflect the recapitalization of the Company due to the Share Exchange Transaction as of the first day of the first period presented. The assets and liabilities acquired that, for accounting purposes, were deemed to have been acquired by Fezdale were not significant. Limited

~~Also,~~Senyang onwas ~~August~~incorporated ~~14,~~in ~~2008,~~PRC ~~the~~in ~~Company’s~~June ~~majority shareholder, Yiu Fai Kung (“Mr~~2010. ~~Kung”),~~Senyang ~~entered~~has ~~into escrow agreements with the private~~not ~~placement~~generated ~~investors~~any revenue and ~~HFG International, Limited (“HFG”). Mr. Kung~~ will ~~deliver~~ aengage ~~certain~~in ~~number~~operating ~~of shares of~~ the ~~Company’s~~new ~~common~~fruit ~~stock owned by him to the investors~~ and ~~HFG pro-rata in accordance with their respective investment~~vegetable ~~amount~~powder ~~for no additional consideration if:~~ production.

~~(i)~~F-7 ~~The after tax net income for the fiscal year ending on March 31, 2009 is less than $13,919,707 and fiscal year ending on March 31, 2010 is less than $18,495,315; and~~

~~The~~CHINA ~~return~~NUTRIFRUIT toGROUP ~~Mr.~~LIMITED ~~Kung~~AND ofSUBSIDIARIES ~~any~~NOTES ofTO ~~the~~CONSOLIDATED ~~make~~FINANCIAL ~~good~~STATEMENTS ~~shares~~MARCH ~~placed in escrow by him was considered to be a separate compensatory arrangement for the fiscal year ended March~~ 31, ~~2009~~2011 ~~because~~AND Mr. Kung was a director of the Company’s subsidiary Fezdale. For the year ended March 31, 2009, the earnings target for 2009 of net income of $13,955,178 (before any charges related to the release of any shares from escrow) was met. Accordingly, the Company has recorded a non-cash charge to compensation cost of $9,519,316.6 in the fourth quarter of 2009 related to the release from escrow to Mr. Kung of 2,799,799 shares. 2010

~~For~~NOTE ~~the year ended March 31, 2010, the earnings target for 2010 of net income of $18,495,315 was met. Accordingly,~~ 2~~,799,799 shares will be released to Mr~~. ~~Kung~~SUMMARY ~~from~~OF ~~escrow.~~PRINCIPAL AsACCOUNTING ~~Mr.~~POLICIES Kung resigned from his position as Fezdale’s director and the release of the escrowed shares was not contingent upon Mr. Kung’s continuing employment with the Company, the Company did not recognize any compensation expenses relating to the release of the escrow shares to Mr. Kung in fiscal year ended March 31, 2010.

OnBasis ~~September~~of 4,presentation ~~2009, the Company’s common stock was approved by the NYSE Amex for listing and registration.~~

F-The 6consolidated financial statements include the accounts of China Nutrifruit Group Limited and its subsidiaries (the “Group”). The consolidated financial statements were prepared in accordance with the US GAAP. The consolidated financial statements of the Group include the accounts of CNGL, Fezdale, Solar Sun, Jumbo Gloss, Longheda and Senyang. All significant intercompany transactions and balances were eliminated in consolidation.

OnUse September 30, 2009, the Company entered into a securities purchase agreement (the “Private Placement Transaction”) with certain accredited investors (“Investors”) and effected the initial closing of ~~the~~estimates purchase and sale of 359,502 units (the “Unit”) at $33.00 per Unit. Each Unit consists of one share of the Company’s newly-designated Series A Convertible Preferred Stock, par value $0.001 per share (“Series A Preferred Stock”) and one warrant (the “Warrant”) to purchase 2.5 shares of the Company’s common stock, par value $.001 per share. The Series A Preferred Stock is convertible into ten shares of the Company’s common stock (subject to customary adjustments) and the Company is obligated to register the underlying shares of common stock within thirty days of the closing date. In connection with the initial closing of the offering, the Company raised approximately $11.86 million.

OnThe ~~October~~preparation 8,of ~~2009,~~ the ~~Company~~consolidated ~~effected~~financial ~~the~~statements ~~second~~in conformity with US GAAP requires management to make estimates and ~~final~~assumptions ~~closing~~that ofaffect the ~~Financing~~reported ~~and~~amounts ~~issued~~of ~~43,916~~assets ~~units~~and (liabilities, the ~~“Unit”)~~disclosure of contingent liabilities at athe ~~purchase price~~date of ~~$33.00~~the ~~per~~financial ~~Unit~~statements, ~~for~~and ~~gross~~the ~~proceeds~~reported amounts of ~~$1,449,000~~revenue and expenses during the reporting period. Actual results could differ from these estimates.

~~Fezdale~~Segment ~~Investments~~information ~~Limited~~

~~Fezdale~~The Group identifies and classifies its operating segment based on the nature of the products with similar economic characteristics. No segment information is aprovided ~~private~~as ~~limited~~the ~~liability~~Group ~~company~~only ~~incorporated~~has inone business and geographical ~~BVI~~segment. onThe ~~August~~Group’s 22reportable segment is the manufacture and sell of food products, ~~2007~~which operations are located in the PRC and sales were predominately made to customers located in the PRC.

InEconomic ~~November~~and ~~2007,~~political ~~Solar~~risks Sun Holdings Limited (“Solar Sun”), a subsidiary of Fezdale, entered in a share purchase agreement with six owners of Daqing Longheda Food Company Limited (“Longheda”) under which the six owners of Longheda transferred 75% equity interests in Longheda to Solar Sun for RMB40,000,000 or $5.87 million. In May 2008, the six founders of Longheda transferred the remaining 25% equity interests in Longheda to Solar Sun. After the transfer, Longheda became a wholly owned subsidiary of Solar Sun.

~~Solar~~The ~~Sun~~Group’s ~~Holdings~~operations ~~Limited~~are conducted in the PRC. Accordingly the Group’s business, financial position may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC’s economy.

~~Solar~~The ~~Sun~~Group’s isoperations ain ~~private~~the ~~limited~~PRC ~~liability~~are ~~company~~subject ~~(the~~to ~~“PLLC”)~~special ~~incorporated~~considerations and significant risk not typically associated with companies in North ~~Hong~~America. ~~Kong~~These oninclude ~~September~~risks 12associated with, ~~2007~~among others, the political, economic and legal environmental and foreign currency exchange. ~~Solar~~The ~~Sun~~Group’s results ismay abe ~~holding~~adversely ~~company~~affected by changes in the political and social conditions in the PRC, and ~~has~~in nogovernmental ~~assets~~policies orwith ~~operations~~respect ~~other~~to ~~than~~laws ~~its~~and regulations, ~~ownership~~anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of ~~Longheda.~~taxation, among other things.

~~Daqing~~Earnings ~~Longheda~~per ~~Food Company Limited~~ share

~~Longheda~~Basic ~~was~~earnings ~~incorporated~~per inshare ~~Heilongjiang~~is ~~province~~computed ofby ~~Peoples’ Republic~~dividing ofnet ~~China (the “PRC”) in June 2004. Longheda manufactures and sells a~~operating ~~variety~~results offor ~~food~~the ~~products~~reporting ~~processed~~period ~~from~~attributable ~~specialty~~to ~~premium~~common ~~fruits~~shareholders ~~that~~by ~~grow in~~the ~~Northeast~~weighted ~~China.~~average ~~Currently,~~number ~~Longheda processes four types~~ of ~~premium~~common ~~specialty fruits,~~stocks ~~including~~outstanding ~~golden~~during ~~berry,~~the ~~crab apple, blueberry and raspberry, and sells fresh fruits~~period. ~~Longheda currently has five types of fruit based products,~~Diluted ~~including~~earnings ~~fruit~~per ~~concentrate,~~share ~~nectar,~~is ~~glazed~~calculated ~~fruits,~~by ~~concentrate~~dividing ~~pulp~~net ~~and~~operating ~~fruit beverage.~~results ~~Longheda~~for ~~sells its products through an extensive sales and~~the ~~distribution~~reporting ~~network~~period ~~covering~~attributable ~~20 provinces in China. The fresh fruits are mainly sold~~ to ~~fruit~~common ~~supermarkets~~shareholders ~~and~~by ~~stores while~~ the ~~processed~~weighted ~~fruit products are~~average ~~mainly~~number ~~sold~~of tocommon ~~manufacturers~~shares ~~for~~outstanding ~~further~~and ~~processing~~the ~~into~~dilutive ~~fruit~~effect ~~juice~~of ~~and~~common ~~other~~stock ~~fruit related products~~equivalents.

~~Jumbo~~Trade ~~Gloss~~accounts ~~Limited~~receivable

~~Jumbo~~In ~~Gloss~~the ~~Limited~~normal ~~(“Jumbo~~course ~~Gloss”)~~of isbusiness athe ~~PLLC~~Group ~~incorporated~~extends incredit to ~~BVI~~customers. onTrade ~~October~~accounts 13receivable, ~~2009~~less allowance for doubtful accounts, reflects the net realizable value of receivables, and their approximate fair value. ~~Jumbo~~On ~~Gloss~~a isregular basis, the Group evaluates its trade accounts receivable and establishes an allowance for doubtful accounts based on a ~~dormant~~combination ~~company~~of specific customer circumstances, credit conditions, and ~~has~~payment nohistory. ~~assets~~A receivable oris considered past due if payments have not been received within the ~~operations~~agreed upon invoice terms. No allowance for doubtful accounts at March 31, 2011 (2010: nil) was recorded.

~~NOTE~~Cash 2.and ~~SUMMARY OF PRINCIPAL ACCOUNTING POLICIES~~ equivalents

~~Basis~~The Group considers all highly liquid investments with an original maturity date of ~~presentation~~three months or less to be cash equivalents.

~~The~~F-8 consolidated financial statements include the accounts of China Nutrifruit Group Limited and its subsidiaries (the “Group”). The consolidated financial statements were prepared in accordance with the US GAAP. The consolidated financial statements of the Group include the accounts of China Nutrifruit Group Limited, Fezdale Investments Limited, Solar Sun Holdings Limited, Jumbo Gloss Limited and Daqing Longheda Food Company Limited. All significant intercompany transactions and balances were eliminated in consolidation.

~~Use~~CHINA ofNUTRIFRUIT ~~estimates~~GROUP LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2011 AND 2010

~~The~~NOTE preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period2. ~~Actual~~SUMMARY ~~results could~~OF ~~differ~~PRINCIPAL ~~from~~ACCOUNTING ~~these~~POLICIES ~~estimates.~~ (CONTINUED)

F-Inventories 7

~~Segment~~The ~~information~~cost of finished products inventories includes raw materials, direct labor and indirect production costs. Inventories are stated at the lower of cost or market. The Group uses first-in, first-out methods to value its inventories. During the idle production period, overhead costs include depreciation are treated as current-period charges, which are expensed to general and administrative expense instead of cost of sales.

~~The~~Fair ~~Group~~value ~~identifies and classifies its operating segment based on the nature~~ of ~~the~~financial ~~products~~instruments with similar economic characteristics. No segment information is provided as the Group only has one business and geographical segment. The Group’s reportable segment is the manufacture and sell of food products, which operations are located in the PRC and sales were predominately made to customers located in the PRC.

~~Economic~~The carrying amount of certain of the Group’s financial instruments, including cash and ~~political~~cash ~~risks~~equivalents, trade accounts receivable, accounts payable, other current assets, other payables and accrued expenses, approximates fair value due to their relatively short maturity.

~~The~~Property ~~Group’s operations are conducted in the PRC. Accordingly the Group’s business, financial position may be influenced by the political, economic~~ and ~~legal environment in the PRC~~equipment, ~~and by the general state of the PRC’s economy.~~ net

~~The~~Property ~~Group’s~~and ~~operations~~equipment inare ~~the~~recorded ~~PRC~~at ~~are~~cost ~~subject~~and toare ~~special~~depreciated ~~considerations~~on ~~and~~a ~~significant~~straight-line ~~risk~~basis ~~not~~over ~~typically~~the ~~associated~~estimated ~~with~~useful ~~companies~~lives ~~in North~~of ~~America~~the assets. Maintenance ~~These~~and ~~include~~repairs ~~risks~~are ~~associated~~expensed ~~with,~~as ~~among~~incurred. ~~others,~~The ~~the~~principal ~~political,~~estimated useful ~~economic~~lives ~~and~~generally ~~legal~~are: ~~environmental~~buildings ~~and~~– ~~foreign~~20 ~~currency~~years; ~~exchange.~~leasehold ~~The~~improvements ~~Group’s~~– 10 years; ~~results~~machinery ~~may~~– be10 ~~adversely~~years; ~~affected~~furniture, byfixtures ~~changes~~and inoffice ~~the~~equipment ~~political~~– ~~and~~5 ~~social~~years; motor ~~conditions~~vehicles in– ~~the~~5 ~~PRC,~~years. ~~and~~Depreciation inof ~~governmental~~property ~~policies~~and ~~with~~equipment ~~respect~~was to$2,372,023 ~~laws~~ and ~~regulations~~$1,590,023 ~~anti-inflationary~~for ~~measures,~~the ~~currency~~years ~~conversion,~~ended ~~remittances abroad~~March 31, 2011 and ~~rates~~2010 ~~and~~respectively. ~~methods~~During the idle period of ~~taxation~~the plant, ~~among~~depreciation ~~other~~is ~~things~~treated as current-period charges, which charge directly to general and administrative expense.

~~Earnings~~Negative ~~per share~~goodwill

~~Basic~~Negative ~~earnings~~goodwill ~~per~~represents ~~share~~the isexcess ~~computed~~fair byvalue ~~dividing~~of ~~net~~the ~~operating~~net ~~results~~tangible ~~for~~and ~~the~~identifiable ~~reporting~~intangible ~~period~~assets ~~attributable~~acquired toin ~~common~~a ~~shareholders~~business bycombination over the ~~weighted~~ ~~average~~purchase ~~number~~price. ofThe ~~common~~negative ~~stocks~~goodwill ~~outstanding~~is ~~during~~allocated ~~the~~as ~~period.~~a ~~Diluted~~pro rata ~~earnings~~reduction ~~per~~of ~~share~~the isamounts ~~calculated~~assigned byto ~~dividing~~the ~~net~~assets ~~operating~~acquired ~~results~~excluding ~~for the~~financial ~~reporting~~assets, ~~period~~deferred ~~attributable~~taxes toand ~~common~~other ~~shareholders~~current byassets. ~~the~~If ~~weighted~~negative ~~average~~goodwill exceeds ~~number~~the amount of ~~common~~those ~~shares~~assets, ~~outstanding~~the ~~and~~remaining excess shall be recognized as an extraordinary gain in the ~~dilutive~~period ~~effect~~which ofthe ~~common~~business ~~stock~~combination is ~~equivalents~~completed.

~~Trade~~Revenue ~~accounts~~recognition ~~receivable~~

InThe ~~the~~Group ~~normal~~recognizes ~~course~~revenue offrom ~~business~~sales ~~the~~of ~~Group~~products, ~~extends~~where persuasive ~~credit~~evidence ~~to customers.~~of ~~Trade~~an ~~accounts~~arrangement ~~receivable~~exists, ~~less~~delivery ~~allowance~~has ~~for doubtful accounts~~occurred, ~~reflects~~ the seller’s ~~net~~price ~~realizable~~is ~~value~~fixed ofor ~~receivables,~~determinable and ~~their~~collectibility ~~approximate~~is ~~fair~~reasonably ~~value~~assured. OnThis agenerally ~~regular~~occurs ~~basis,~~when the ~~Group~~customer ~~evaluates~~receives ~~its~~the ~~trade~~product ~~accounts~~or ~~receivable~~at ~~and~~the ~~establishes~~time antitle ~~allowance~~passes ~~for~~to ~~doubtful~~the ~~accounts based on a combination of specific~~ customer ~~circumstances, credit conditions, and payment history~~. ~~A receivable~~Customers isgenerally ~~considered~~do ~~past~~not ~~due if payments~~ have ~~not~~the ~~been~~right ~~received~~to return ~~within~~product ~~the agreed~~unless ~~upon~~damaged ~~invoice~~or ~~terms~~defective. NoNet ~~allowance~~sales ~~for~~are ~~doubtful~~comprised ~~accounts~~of atgross sales ~~March~~reduced 31by customer returns, ~~2010 (2009:~~trade ~~nil)~~promotions ~~was~~and ~~recorded~~discounts.

~~Cash~~Shipping and ~~cash~~handling ~~equivalents~~costs

~~The~~Shipping ~~Group~~and ~~considers~~handling ~~all~~costs ~~highly~~are ~~liquid~~included ~~investments~~in ~~with~~selling anexpenses. ~~original~~The ~~maturity~~shipping ~~date~~and ofhandling ~~three~~costs ~~months~~for orthe ~~less~~years toended beMarch ~~cash~~31, ~~equivalents~~2011 and 2010 were $2,301,126 and $2,872,277, respectively.

~~Inventories~~F-9

~~The~~CHINA ~~cost~~NUTRIFRUIT ofGROUP ~~finished~~LIMITED ~~products~~AND ~~inventories~~SUBSIDIARIES ~~includes~~NOTES ~~raw materials,~~TO ~~direct~~CONSOLIDATED ~~labor~~FINANCIAL ~~and~~STATEMENTS ~~indirect~~MARCH ~~production costs. Inventories are stated at the lower of cost or market. The Group uses first-in~~31, ~~first-out~~2011 ~~methods~~AND to value its inventories. During the idle production period, overhead costs include depreciation are treated as current-period charges, which are expensed to general and administrative expense instead of cost of sales. 2010

~~Fair~~NOTE ~~value~~2. ofSUMMARY ~~financial~~OF ~~instruments~~PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

Filing Compare · China Nutrifruit Group LTD