UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________

FORM 10-Q

_______________

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

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

For the transition period from ______to______.

Southern China Livestock, Inc.

(Exact name of registrant as specified in Charter)

Delaware		000-52866		N/A
(State or other jurisdiction of incorporation or organization)		(Commission File No.)		(IRS Employee Identification No.)

88 Guihuayuan, Guanjingcheng

Yujiang, Yingtan City, Jiangxi Province

People’s Republic of China

(Address of Principal Executive Offices)

_______________

+86 (701) 568-0890

(Issuer’s telephone number)

_______________

(Former Name or Former Address if Changed Since Last Report)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

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

Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer o Smaller Reporting Company x

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

State the number of shares outstanding of each of the issuer’s classes of common equity, as of May 10, 2011: 7,144,071 shares of common stock.

SOUTHERN CHINA LIVESTOCK, INC.

FORM 10-Q

March 31, 2011

INDEX

PART I-- FINANCIAL INFORMATION

Item 1.	Financial Statements	1
	Consolidated balance sheets at March 31, 2011 (unaudited) and September 30, 2010	2
	Consolidated statements of income and comprehensive income for the six and three months ended March 31, 2011 and 2010 (unaudited)	3
	Consolidated statements of cash flows for the six and three months ended March 31, 2011 and 2010 (unaudited)	4
	Notes to condensed consolidated financial statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Result of Operations	10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18
Item 4.	Controls and Procedures	18

PART II-- OTHER INFORMATION

Item 6.

Exhibits

SIGNATURE

Part I

Item 1. Financial Statements

SOUTHERN CHINA LIVESTOCK, INC.

Consolidated Balance Sheets

(Expressed In U.S. Dollars)


	March 31, 2011 (Unaudited)		September 30, 2010 (Restated-see note2)

ASSETS
Current Assets:
Cash	$	1,235,967	$	2,417,302
Accounts receivables, net		-		253,996
Prepaid expense and other receivables		176,565		164,035
Due from related parties		-		164,642
Advance for asset purchase (note 4)		765,000		765,000
Inventories (note 5)		6,333,049		4,650,041

Total current assets		8,510,581		8,415,016

Property and equipment, net		13,707,661		13,076,480
Construction in progress		6,688,941		3,846,439
Biological assets, net		1,612,489		1,665,572

Total assets		30,519,672		27,003,507

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Other payables		-		1,656,577
Accounts payable and accrued liabilities		340,986		62,932
Due to related parties (note 8)		223,484		367,947

Total current liabilities		564,470		2,087,456



Commitments and contingencies (note 7)
Concentration risk (note 9)

Equity:
Common stock ($.001 par value; 7,144,071shares issued authorized
and outstanding as of March 31, 2011 and
September 30, 2010)		7,144		7,144
Warrants		2,418,619		2,418,619
Additional paid in capital		5,969,226		5,969,226
Retained earnings reserves		3,360,940		3,360,940
Accumulated other comprehensive income		3,140,503		2,568,315
Noncontrolling interest		327,481		284,497
Retained earnings		14,731,289		10,307,310

Total stockholders’ equity		29,955,202		24,916,051

Total liabilities and stockholders’ equity	$	30,519,672	$	27,003,507

See accompanying condensed notes to consolidated financial statements.

SOUTHERN CHINA LIVESTOCK, INC.

Consolidated Statements of Income and Comprehensive Income

(Expressed In U.S. Dollars)

(Unaudited)

	Three months ended March 31,						Six months ended March 31,
	2011			2010			2011			2010

Sales	$	11,134,119			8,019,056		$	21,795,835			19,396,780
Cost of sales		8,235,920			6,881,663			16,291,372			16,350,349

Gross profit		2,898,199			1,137,393			5,504,463			3,046,431

Operating expenses:
Selling expenses		-			(755	)		-			(6,520	)
General and administrative expenses		(457,610	)		(98,316	)		(1,057,611	)		(200,782	)

Income from operations		2,440,589			1,038,322			4,446,852			2,839,129

Government subsidies		-			118,490			-			382,117
Other income		19,663			862			20,121			60,819

Income before income taxes		2,460,252			1,157,674			4,466,973			3,282,065

Income taxes (note 6)		-			-			-			-

Net income		2,460,252			1,157,674			4,466,973			3,282,065
Less: net income attributable to the noncontrolling interest		22,445			23,457			42,994			66,271
Net income attributable to common stockholders		2,437,807			1,134,217			4,423,979			3,215,794

Other comprehensive income(loss)		278,478			3,888			572,188			5,129

Total comprehensive income	$	2,738,730			1,138,105		$	5,039,161			3,220,923

Earnings per share attributable to common stockholders:
Basic	$	0.34	0.20	0.62	0.57
Diluted	$	0.34	0.20	0.62	0.57

Weighted average common stock outstanding
Basic	7,144,071	5,657,561	7,144,071	5,640,383
Diluted	7,144,071	5,657,561	7,144,071	5,640,383

See accompanying notes to condensed consolidated financial statements

SOUTHERN CHINA LIVESTOCK, INC.

Consolidated Statements of Cash Flows

(Expressed In U.S. Dollars)

(Unaudited)

	Six months ended March 31,
	2011			2010

Cash flows from operating activities:
Net income	$	4,466,973			3,282,065
Adjustments for
Depreciation and amortization		1,022,715			632,587
Gain/(loss) on disposal of biological assets		(17,777	)		(96,049	)
Changes in operating assets and liabilities:
Accounts receivable		255,441			44,911
Prepaid and other receivables		(9,699	)		-
Inventories		(1,566,273	)		950,823
Other payables		(1,665,999	)		(295,384	)
Accounts payable and accrued liabilities		276,985			3,981

Net cash provided by operating activities		2,762,366			4,522,934

Cash flows from investing activities:
Purchase of property and equipment		(3,792,810	)		(92,389	)
Purchase of biological assets		(271,041	)		(476,716	)
Proceeds from disposal of biological assets		63,854			120,225

Net cash used in investing activities		(3,999,997	)		(448,800	)

Cash flows from financing activities:
Proceeds from issue common shares		-			3,469,016
Repayment of loans from stockholders		-			(3,406,648	)
Proceeds from loans from stockholders		13,862			200,000

Net cash provided by financing activities		13,862			262,368

Net increase (decrease) in cash		(1,223,769	)		4,336,422
Effect of foreign exchange rate changes		42,434			452

Cash, beginning of period		2,417,302			1,201,160

Cash, end of period	$	1,235,967			5,538,034

Supplementary cash flow disclosure:
Interest paid	-	-
Taxes paid	-	-

See accompanying notes to condensed consolidated financial statements

SOUTHERN CHINA LIVESTOCK, INC.

Notes To Condensed Consolidated Financial Statements

(Expressed In U.S. Dollars)

(Unaudited)

NOTE 1 ---ORGANIZATION AND PRINCIPAL ACTIVITIES

Southern China Livestock, Inc. (the “Company”) was incorporated in the state of Delaware on September 27, 2007 under the name Expedite 4, Inc. with the objective of acquiring an operating company under a reverse merger on an agreement. The Company’s corporate name was changed to Southern China Livestock, Inc. on July 9, 2010. Since March 29, 2010, the Company has been in the business of breeding and raising commercial hogs in the People’s Republic of China (“China” or the “PRC”).

On June 9, 2010, the Company incorporated Jiangxi Southern China Livestock Technology Limited as a wholly foreign-owned enterprise under the laws of the PRC.

On March 29, 2010, the Company acquired all the stock of Southern China Livestock International Inc. (“SCLI”), a Nevada corporation incorporated on July 28, 2009, pursuant to a share exchange agreement dated March 29, 2010. On March 29, 2010, pursuant to the share exchange agreement, the Company issued 5,623,578 shares of common stock in exchange for all of the 10,000,000 outstanding shares of SCLI.

Upon the completion of the transaction, the Company owned 100% of the stock of SCLI which owns the operating entities in China. Under generally accepted accounting principles, the acquisition by the Company of SCLI and its subsidiaries is equivalent to the acquisition by SCLI of the Company, then known as Expedite 4, Inc., with the issuance of stock by SCLI for the net monetary assets of the Company. This transaction is reflected as a recapitalization, and is accounted for as a change in capital structure. Accordingly, the accounting for the acquisition is identical to that resulting from a reverse acquisition. Under reverse acquisition accounting, the comparative historical financial statements of the Company, as the legal acquirer, are those of the accounting acquirer, SCLI. The accompanying financial statements reflect the recapitalization of the stockholders’ equity as if the transactions occurred as of the beginning of the first period presented. Thus, only the 5,623,578 shares of common stock issued to the former SCLI stockholders are deemed to be outstanding for all periods reported prior to the date of the reverse acquisition. As a result of the reverse acquisition effected by the share exchange agreement, the Company’s business has become the business of the SCLI. The 1,500 shares of common stock that were outstanding on March 29, 2010, net of the 98,500 shares that were cancelled for no consideration pursuant to the share exchange agreement, are treated as if they were issued on March 29, 2010, as part of a recapitalization.

Details of the Company’s subsidiaries as of March 31, 2011 were as follows:

		Date of	Beneficial
	Place of	incorporation or	ownership
Company name	incorporation	establishment	interest

Southern China Livestock International Inc.	U.S.	July 28,2009	100%
Mayson International Services Limited	BVI	July 25,2008	100%
Mayson Enterprises Services Limited	BVI	July 25,2008	100%
Mayson Holdings Limited	Hong Kong	July 14, 2008	100%
Beijing Huaxin Tianying Livestock Technology Co., Ltd	PRC	September 9, 2008	100%
Jiangxi Yingtan Huaxin Livestock Co., Ltd	PRC	April 8, 2005	100%
Yujiang Fengyuan Livestock Co., Ltd	PRC	August 4, 2003	99%
Yingtan Yujiang Zhongtong Swine Co., Ltd	PRC	October 27, 2003	99%
Yujiang Xianyue Livestock Feeds Co., Ltd	PRC	August 16, 2001	99%
Jiangxi Yingtan Fuxin Development and Trade Co., Ltd	PRC	March 31, 1999	99%
Yingtan Livestock Feeds Development Co., Ltd	PRC	December 29, 1995	99%
Yujiang Xiangying Swine Co., Ltd	PRC	January 11, 2001	99%
Yujiang Decheng Livestock Co., Ltd	PRC	October 27, 2003	99%
Jiangxi Southern China Livestock Technology Limited	PRC	June 9, 2010	100%

On July 25, 2008, Mayson International Services Limited (“Mayson International”) was incorporated in the British Virgin Islands (“BVI”) as a wholly-owned subsidiary of SCLI. On the same day Mayson Enterprises Services Limited (“Mayson Enterprises”) was incorporated in the BVI as a wholly owned subsidiary of Mayson International.

SOUTHERN CHINA LIVESTOCK, INC.

Notes To Condensed Consolidated Financial Statements

(Expressed In U.S. Dollars)

(Unaudited)

Mayson Holdings Limited (“Mayson Holdings”) was incorporated on July 14, 2008 under the laws of Hong Kong Special Administrative Region of the PRC as the wholly-owned subsidiary of Mayson Enterprises. Beijing Huaxin Tianying Livestock Technology Co., Ltd (“Beijing Huaxin”) was incorporated on September 9, 2008 as a limited liability company under the PRC laws. Beijing Huaxin is a wholly foreign-owned enterprise under the PRC laws, with its 100% equity interests being held by Mayson Holdings.

On August 26, 2008, Beijing Huaxin acquired 99% of the equity interest of Jiangxi Yingtan Huaxin Livestock Co., Ltd (“Jiangxi Huaxin”) which owned 99% of the equity interest of Yujiang Fengyuan Livestock Co., Ltd, Yingtan Yujiang Zhongtong Swine Co., Ltd, Yujiang Xianyue Livestock Feeds Co., Ltd, Jiangxi Yingtan Fuxin Development and Trade Co., Ltd, Yingtan Livestock Feeds Development Co., Ltd, Yujiang Xiangying Swine Co., Ltd and Yujiang Decheng Livestock Co., Ltd. (collectively, the “Seven Subsidiaries”) which are the Company’s main operating entities.

NOTE 2 --- BASIS OF PRESENTATION

The accompanying consolidated financial statements have been presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) applicable to interim financial statements and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the interim financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results for the interim periods presented.

The consolidated financial statements include the financial statements of SCLI and all its subsidiaries. All transactions and balances between the SCLI and its subsidiaries have been eliminated upon consolidation. As all of the above entities are under common control, they have been consolidated based on their carrying values for the periods presented.

Operating results for the interim periods are not necessarily indicative of the results that may be expected for the year ended September 30, 2011. Interim unaudited consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended September 30, 2010.

Subsequent to the issuance of the Company’s financial statements, management determined that balances due to/from related parties were not accurately reflected in the consolidated financial statements. Management has adjusted the amounts previously reported to correctly reflect the balances outstanding as at September 30, 2010. This correction does not affect prior years.

The consolidated balance sheet at September 30, 2010, has been restated. The effect of the restatement is summarized as follows:

	9/30/10 As previously reported		9/30/10 As restated
Current assets:
Due from related parties	$	-	$	164,642
Total current assets		8,250,374		8,415,016
Total assets		26,838,865		27,003,507

Current liabilities:
Other payables		-		1,656,577
Due to related parties		1,859,882		367,947
Total current liabilities		1,922,814		2,087,456
Total liabilities and stockholders’ equity		26,838,865		27,003,507

SOUTHERN CHINA LIVESTOCK, INC.

Notes To Condensed Consolidated Financial Statements

(Expressed In U.S. Dollars)

(Unaudited)

NOTE 3 --- USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant accounting estimates reflected in the Company’s financial statements include collectability of account receivable, value of live hogs, useful lives and impairment of property and equipment. Actual results when ultimately realized could differ from those estimates and the differences could be material.

NOTE 4 --- ADVANCE FOR ASSET PURCHASE

On August 13, 2010, the Company, through one of its subsidiaries, entered into two agreements with a company that produces and markets feed for pig farms. Pursuant to these agreements, the Company agreed to acquire equipment and other assets for $900,000, of which $459,000, was paid and $441,000 was due by June 30, 2011, and a land use right for $600,000, of which $306,000 was paid and $294,000 was due by June 30, 2011. These agreements contemplated the transfer of the equipment and other assets and the land use rights (subject to registration with the applicable government authority) at or about the time of the agreement. The seller did not transfer the equipment and other assets or take any steps to transfer the land use right to the Company, and the seller continued to use the assets, equipment and land use right for its own account. On November 19, 2010, the seller and the Company entered into a restated agreement pursuant to which the assets and land use right would be transferred contemporaneously with the payment of the outstanding balance of $735,000. Accordingly, at March 31, 2011 and September 30, 2010, the $765,000 paid by the Company with respect to these purchases is reflected as an advance.

NOTE 5 --- INVENTORY

Inventories are stated at the lower of cost and net realizable value. Cost is calculated on the weighted average basis and includes all costs to acquire and other costs incurred in bringing the inventories to their present location and condition. The Company evaluates the net realizable value of its inventories on a regular basis and records a provision for loss to reduce the computed weighted average cost if it exceeds the net realizable value.

Inventories on March 31, 2011 and September 30, 2010 consisted of the following:

	March31, 2011		September 30, 2010


Raw materials	$	288,263	$	211,324
Live hogs		6,044,786		4,438,717

	$	6,333,049	$	4,650,041

The raw materials that are included in inventory are fodder for the pigs.

NOTE 6 --- INCOME TAXES

The Company is incorporated in United States of America. The Company’s subsidiaries are incorporated in the BVI, Hong Kong and the PRC. The management and control of the Company is in PRC, and the Company’s business is conducted in the PRC. The Company’s PRC subsidiaries pay no income tax in the PRC pursuant to an exemption from taxes under the current tax laws of the PRC which are applicable to agriculture companies. For the three months ended March 31, 2010 and 2009, the Company was not subject to any income tax either in the United States, the BVI, Hong Kong or the PRC. As such no current or future income tax asset or liabilities are recorded in its financial statements for such years.

SOUTHERN CHINA LIVESTOCK, INC.

Notes To Condensed Consolidated Financial Statements

(Expressed In U.S. Dollars)

(Unaudited)

NOTE 7 --- COMMITMENTS AND CONTINGENCIES

CAPITAL COMMITMENTS

As of March 31, 2011, there were capital commitments amounting to $3,782,564, which were mainly related the construction of pig housing, workers’ dormitory buildings and other work relating to the Company’s new pig farms. In addition, the Company has an agreement to purchase assets and land use rights relating to a feed company pursuant to which it has paid $765,000 as an advance and the balance of $735,000 is due by June 30, 2011. See Note 4.

LEASE COMMITMENTS

The Company leases land (in which the company’s building are located) office space, employee living space, and pigsties under non-cancellable operating leases. Future minimum rental commitments for the next five years are as follows:


2011	$	17,961
2012		23,948
2013		16,321
2014		16,321
2015		16,321
2016 and thereafter		317,919

Total	$	408,861

CONTINGENT LIABILITY

Seven of the Company’s subsidiaries declared and they or the Company paid dividends to the then stockholders of these subsidiaries in the amount of $13,064,075 and $8,897,167 for the years ended September 30, 2009 and 2008, respectively. According to the Income Tax Laws in the PRC, the Company is required to withhold income tax of 20% on the dividends paid to stockholders, which the Company failed to do. In the event that these taxes cannot be collected from the stockholders, the Company may be liable to pay the unpaid amount of approximate $4.4 million and late payment penalty may be levied in an amount ranging from 50% to maximum of five times the taxes owing. The Company believes that the likelihood of the taxes and penalties being levied against the Company is remote as of the date hereof. In the event that the taxing authorities assesses the Company for these taxes, they will be recorded as appropriate, depending on whether the amounts can be recovered from the stockholders or not.

LIQUIDATED DAMAGES

During the year ended September 30, 2010, the Company sold to a group of investors a total of a total of 759,496.5 units at a purchase price of $10.00 per unit, resulting in gross proceeds of $7,594,965 and net proceeds of $5,567,293. Each unit consisting of two shares of common stock and four-year warrants to purchase one common share of the Company, at an exercise price of $5.50 per share, for a total of 1,518,993 shares of common stock and warrants to purchase 759,497 shares of common stock.

In connection with the private placement, the Company agreed to file a registration statement under the Securities Act covering the shares of common stock that were (i) included as part of the units and (ii) issuable upon exercise of the warrants included as part of the units within 45 days after the final closing and to use its best efforts to have the registration statement declared effective within 180 days after the final closing of the private placement. The final closing was on May 6, 2010. The registration statement was filed within the required time period.

SOUTHERN CHINA LIVESTOCK, INC.

Notes To Condensed Consolidated Financial Statements

(Expressed In U.S. Dollars)

(Unaudited)

NOTE 7 --- COMMITMENTS AND CONTINGENCIES (CONTINUED)

The registration statement was required to be declared effective by November 2, 2010. Since the registration statement was not declared effective by the required date, the Company is to pay to investors, liquidated damages of 1% of the purchase price for each calendar month (pro-rated for a fractional month) during the period of such failure, up to a maximum of 5% of the purchase price. On March 31, 2011, recorded liquidated damages amount $379,750, which was 5% of the purchase price for the six months ended March 31, 2011, of which $75,950 had been paid and $303,800 is reflected as a current liability.

NOTE 8—RELATED PARTY TRANSACTIONS

During the year ended September 30, 2010, the Company purchased sows, hogs and other assets from five non-affiliated parties for a total purchase price of $5,930,000, of which $2,837,723 was paid at the time of the contract and the balance of $3,092,277 was due in installments that were due by December 31, 2010 and February 28, 2011. Pursuant to agreements among the Company, its chairman, who is also a director, and the sellers, the chairman assumed and paid the Company’s obligations to these sellers in the amount of $1,435,700 during the month of September 2010 and the remaining $1,656,577 during the month of December 2010. The balance due to the chairman from the Company with respect to these payments is included in “Due to related parties.” The amount due to related parties was $367,947 at September 30, 2010 and $223,484 at March 31, 2011.

At September 30, 2010, there was a balance due from related parties in the amount of $164,642, which was paid in October 2010.

NOTE 9 —CONCENTRATION RISK

The Company’s three largest customers accounted for approximately 91% of its sales for the six months ended March 31, 2011 and approximately 94% of its sales for the six months ended March 31, 2010. The largest customer in both period accounted for approximately 63% of sales for the six months ended March 31, 2011 and approximately 70% of sales for the six months ended March 31, 2010.

The Company relies on a single supplier of feed, which accounted for approximately 84% of its purchases for the six months ended March 31, 2011 and approximately 83% of its purchases for the six months ended March 31, 2010.

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

The following discussion and analysis of the results of operations and financial condition at March 31, 2011 and for the six and three months ended March 31, 2011 and 2010, and, should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this report.

This quarterly report contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this report. Additionally, statements concerning future matters are forward-looking statements. Although forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the headings “Risks Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K, which we filed with the SEC on December 23, 2010 as amended by a Form 10-K/A which we filed with the SEC on February 7, 2011, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q and in other reports and registration statements that we file with the SEC. You are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. The forward-looking statements include, among other things, statements relating to:

·	our expectations regarding the market for our products;

·	our expectations regarding the continued growth of the hog breeding industry in the PRC;

·	our ability to retain our existing customers and develop a new customer base for our hogs;

·	our ability to implement and operate profitably our proposed fertilizer business;

·	our ability to price our pigs competitively and obtain feed at a price which enables us to sell our pigs profitably;

·	our ability to expand our inventory of sows and hogs; and

·	the absence of any epidemics or material diseases affecting our pigs or the pig industry in general.

Forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we refer to in this report, or that we filed as with the SEC with the understanding that our actual future results may be materially different from what we expect.

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

OVERVIEW

Through our subsidiaries, we breed and raise commercial hogs for sale in the PRC. We own and operate 24 breeding farms with a current annual production capacity of approximately 220,000 live hogs. Our annual production capacity is the number of hogs that we can deliver to the market annually, assuming the pigs stay healthy, the sows’ breeding pattern is consistent with our past experience, we can provide the necessary feed and epidemic prevention and we can efficiently and timely deliver the hogs to market. Our hog breeding farms are located throughout Yujiang County in Jiangxi Province in China.

According to the US Department of Agriculture report entitled “2010 Trade Forecast Revision: Pork Higher; Beef and Broiler Meat Stable,” China is the world’s largest pork producer, accounting for nearly half of the world’s total production. For 2010, China produced approximately 50 million metric tons of pork out of a projected estimated world production of approximately 109 million metric tons.

Our business is primarily affected by the cost of feed and the market for and the selling price of live hogs. Our largest expense is feed for our pigs. We rely on a single supplier of feed, which accounted for approximately 84% of our purchases for the six months ended March 31, 2011, and approximately 82% of our purchases for each of the years ended September 30, 2010 and 2009. If we are not able to purchase from our supplier, we may have difficulty in purchasing feed from other suppliers at a reasonable cost. Since our sales prices are based on market price, we may not be able to increase our price for pigs to cover any increase in the cost of feed.

Our three largest customers accounted for approximately 91% of our sales for the six months ended March 31, 2011, 94% of our sales for the year ended September 30, 2010 and 98% of our sales for the year ended September 30, 2009. Our largest customer, Shenzhen Dexing, accounted for approximately 63% of our sales in the six months ended March 31, 2011, approximately 70% of our sales for the year ended September 30, 2010, and approximately 75% of our sales for the year ended September 30, 2009. We sell hogs to this customer pursuant to contracts, one of which provides for us to sell 50,000 hogs per month, for a total of 600,000 hogs per year, and the other of which provides for us to sell the customer 500,000 hogs for the year commencing September 1, 2010. The agreements provide for the shipment date and quantity to be subject to future agreement. We do not believe that our present inability to deliver 1,100,000 hogs per year will impair our ability to sell a substantial percentage of our production to this customer. However, the loss or significant reduction in orders from this customer would have a significant impact on our ability to remain profitable. We plan to significantly increase our inventory of hogs as well as breeding sows in anticipation of being able to significantly increase our sales.

Our sales of hogs are primarily cash sales which are handled by employees of our farms, none of whom are our officers. In addition, these employees are also responsible for purchases of feed and supplies and other consumables, which they generally purchase with cash. They are responsible for weighing the pigs, determining and collecting the purchase price and making payments on behalf of the subsidiary. The funds are maintained in bank accounts known as savings cards, which are in the name of the employee. Cash from the sale of hogs, net of any funds used to make purchases on behalf of the Company, is deposited in these savings cards and cash is withdrawn to make purchases. At a corporate level, we have little, if any, control over the activities of these employees. As a result, in addition to the difficulty in developing and maintaining internal controls, we are subject to the risks of any business in which payments are received and disbursed in cash, including theft and fraud.

Although the government of the PRC has broad powers to adopt price controls, as of the date of this report, it has not sought to apply price controls to either the sale of hogs or the sale of corn or other feed grains. If price controls are adopted, our sales would be affected, and, if price controls are placed on the sale of hogs and not the sale of feed, we would not be able to increase our sales prices to cover increases in the cost of feed. If price controls are imposed on both the sale of pigs and the sale of feed, the government could effectively determine our gross margin.

The market price for hogs is subject to fluctuation, and future market prices cannot be predicted with any degree of accuracy. Following a decrease in the market price during 2009, the market price for hogs increased during 2010 and reached relatively high levels in November and December. We normally seek to sell our hogs when they reach the target weight of approximately 105 to 110 kilograms. Hogs generally reach this weight at about five months. However, we may sell younger hogs in order to protect ourselves against a decline in the price of hogs. To the extent that we sell hogs that are younger than five months in any quarter, it may result in a decline in the number of hogs sold in a subsequent quarter. Furthermore, since the typical breeding cycle is approximately five months, and a breeding sow can give birth 2.2 times a year on average, the number of hogs that reach the target selling weight can vary significantly from quarter to quarter. These factors can result in a significant change in sales and net income from quarter to quarter, and they affected our sales for the three months ended December 31, 2010. The total number of hogs sold for six months ended March 31, 2011 was approximately 92,000 head, which is at the low end o of our normal production. This number reflected a number of factors, including the following. Because we sold hogs at a lower weight in order to take advantage of a relatively high market price during the quarter ended September 30, 2010 and because of the normal breeding cycle of the sows in the quarter ended September 30, 2010, we had a lower inventory of hogs at the target weight which resulted in a decline in number of hogs sold from the six months ended March 31, 2010, to the six months ended March 31, 2011. We replaced older sows with younger sows, which resulted in a decline in production. It typically takes a young sow more than a year before we can generate revenue from her pigs – four months before the sow is at a weight suitable for bearing piglets, five months of pregnancy and five months for the piglets to grow to a market weight. The increase in the price for live hogs offset the decline in the number of pigs which were ready for sale.

During 2009, pig farmers in China suffered from a reduced demand for pigs and pork products which resulted in a significant decline in the sales prices for pigs. Although government intervention helped to reduce the price drop, the government may not step in to prevent declines in the price of pigs in the future. The price of hogs increased during the six months ended March 31, 2011, as a result of several factors. Because of the decline in the price for hogs in the first half of 2010, breeders reduced their inventory and capacity to avoid future losses because of the low selling prices. In addition, pigs in certain areas were subject to disease during 2010. These factors led to a shortage in pigs which resulted in an increase in the selling price of live hogs. Because of the increased price of live hogs, breeders may increase the number of sows they own and increase their inventory. It takes approximately 14 months for breeders to increase their capacity. We anticipate that the higher prices will result in increased inventory for pig farmers generally, and that increased inventory is likely to have a negative effect on the price of live hogs possibly as early as the third quarter of calendar 2011. This increased overall inventory could result in a decline in the selling price of live pigs. The cost of fodder increased in both the six and three months ended March 31, 2011; however, this cost did not increase to the same extent as the selling price for pigs. We cannot assure you that an anticipated increase in the number of pigs available for sale in China resulting from steps taken by breeders to increase their production will not have a negative impact upon our gross margins in future periods, since it is possible that there may be a decrease in the selling price of pigs as more pigs come to market with no decrease and a possible increase in the cost of fodder.

In April 2010, we began to increase our pig inventory through the purchase of sows and hogs from local pig farmers. Through September 30, 2010, we entered into agreements with several pig farmers pursuant to which we purchased a total of approximately 2,400 breeding sows and approximately 21,000 hogs. Subsequent to September 30, 2010, we did not make any significant purchases of sows or hogs. These agreements typically provided for the payment of the purchase price in installments. The total purchase price for these pigs was $1.8 million. In connection with the purchase of the pigs for inventory, we also acquired certain other assets. The total purchase price for these other assets was $4.1 million. Of the total of $5.9 million, we paid $2.8 million at the closing, and $1.4 million in September 2010, leaving a balance of $1.7 million which was paid in December 2010. The September and December payments were advanced on our behalf by Mr. Dengfu Xu, our chairman and a director, and, as of March 31, 2011, we have reimbursed Mr. Xu with respect to substantially all of the money he advanced on our behalf. See Note 7 of Notes to Condensed Consolidated Financial Statements.

We plan to take advantage of our rural location and the fact that we are surrounded by rice and vegetable farms by processing our organic waste and selling it as organic fertilizer. With the anticipated increase in our pig inventory, and with our advantageous location in a southern province with many farmlands, we believe that we can develop a profitable fertilizer business. Organic fertilizers made from livestock manure are commonly used in China. They are environmentally friendly products, are fully exempt from VAT, and are exempt from EIT for the first three years. As of March 31, 2011, the types of organic fertilizer we plan to produce were sold in the range of $123 to $138 per ton, using the current currency exchange rate. If we complete a financing, we plan to allocate a portion of the proceeds to begin development of an organic fertilizer line of business. We plan to spend $2.3 million of any proceeds generated through a financing to build an organic fertilizer line. We will not commence our efforts with respect to the fertilizer business until we receive funding. Accordingly, if we do not receive sufficient funding, we may not seek to enter the organic fertilizer business. The organic fertilizer will be primarily made from pig waste. We anticipate that, if we receive adequate financing, it will take about six months to build such production line and that the production line would become operational within three months thereafter. We believe that we will be able to generate revenue from this business as soon as it becomes operational. However, we do not have experience in the fertilizer business, which is a business that is different from the raising and selling of hogs. Our cost and time estimate may not be accurate, and it may take longer to establish a production facility and the costs may be greater than the $2.3 million which we have allocated to the project. Further, since our management does not have experience in the fertilizer business, unless we are able to hire qualified personnel to manage the fertilizer business, we may not be able to generate a profit from this business.

In connection with our private placement of common stock and warrants during March through May 2010, we agreed to register the shares of common stock that were issued in the private placement and were issuable upon exercise of the warrants that were issued in the private placement and to have the registration statement declared effective by November 2, 2010. Since the registration statement was not effective on that date, liquidated damages accrue at the rate of 1% per month until the registration statement is declared effective, with a maximum of 5%. On March 31, 2011, accrued liquidated damages were $379,750, which was 5% of the purchase price and our maximum liability under the registration agreement, of which $75,950 had been paid and $303,800 is reflected as a current liability.

Reverse Acquisition

On March 29, 2010, we acquired all of the capital stock of Southern China Livestock International, Inc. (“SCLI”) in a reverse acquisition transaction, which was accompanied by a financing. Pursuant to a share exchange agreement, we issued 5,623,578 shares of common stock in exchange for all of the outstanding shares of SCLI. Upon the completion of the transaction, we owned 100% of the stock of SCLI which owns the operating entities in China. Under generally accepted accounting principles, our acquisition of SCLI and its subsidiaries is equivalent to the acquisition by SCLI of the Company, with the issuance of stock by SCLI for our net monetary assets. This transaction is reflected as a recapitalization, and is accounted for as a change in capital structure. Accordingly, the accounting for the acquisition is identical to that resulting from a reverse acquisition. Under reverse acquisition accounting, the comparative historical financial statements of the Company, as the legal acquirer, are those of the accounting acquirer, SCLI. Our financial statements reflect the recapitalization of the stockholders’ equity as if the transactions occurred as of the beginning of the first period presented. Thus, only the 5,623,578 shares of common stock issued to the former SCLI stockholders are deemed to be outstanding for all periods reported prior to the date of the reverse acquisition. The 1,500 shares of common stock that were outstanding on March 29, 2010, net of the 98,500 shares that were cancelled for no consideration pursuant to the share exchange agreement, are treated as if they were issued on March 29, 2010, as part of a recapitalization.

RESULTS OF OPERATIONS

General

Our sales are primarily generated from the sale of hogs which we breed. Our cost of sales consists primarily of the fodder expense, and we have limited influence on such cost. Cost of sales also includes depreciation of our breeding sows. We use grain fodder, and the price of fodder is determined solely by suppliers and generally reflects the price of grain. Our largest supplier, from whom we purchased feed, accounted for approximately 84% of our purchases in the six months ended March 31, 2011and 82% of our purchases in the fiscal year ended September 30, 2010, or fiscal 2010, and the fiscal year ended September 30, 2009, or fiscal 2009. We may not be able to get more beneficial pricing terms and may become more dependent upon a single supplier.

Operating expenses include selling expenses, which were not significant, and overhead expenses such as rent, management and staff salaries, general insurance and offices expenses, including expenses associated with our status as a public company. We did not incur public company expenses prior to the reverse acquisition in March 2010.

The government has recently provided subsidies during a period of depressed prices in the market for live hogs. As a result, we received government subsidies of approximately $1.3 million in the fiscal year ended September 30, 2010 and $1.1 million in the fiscal year ended September 30, 2009. We did not receive any subsidy for the six months ended March 31, 2011, and we do not know whether we will receive any subsidy for the balance of the current fiscal year.

Three Months Ended March 31, 2011 and 2010

The following table sets forth a summary of certain key components of our results of operations for three months ended March 31, 2011 (the “March 2011 quarter”) and March 31, 2010 (the “March 2010 quarter”) in dollars and as a percentage of sales (dollars in thousands).

	For the Three Months Ended March 31,
	2011				2010				Change ($)		%
Sales	$	11,134	100.0	%	$	8,019	100.0	%	$	3,115	38.8	%
Cost of sales		8,236	74.0	%		6,882	85.8	%		1,354	19.7	%
Gross profit		2,898	26.0	%		1,137	14.2	%		1,761	154.9	%
Operating expenses		458	4.1	%		99	1.2	%		359	362.6	%
Income from operations		2,441	21.9	%		1,038	12.9	%		1,403	135.2	%
Government subsidies		-		%		118	14.7	%		(118)	(100	)%
Other income (expense)		20	0.2	%		1	0.01	%		19	1900	%
Income before income taxes		2,460	22.1	%		1,158	14.4	%		1,302	112.4	%
Net income before non-controlling interest1		2,460	22.1	%		1,158	14.4	%		1,302	112.4	)%
Net income attributable to common stockholders		2,438	21.9	%		1,134	14.1	%		1,304	115.0	)%

We are exempt from payment of enterprise income taxes since we are in the business of agricultural breeding of livestock. If we were required to pay income taxes at the statutory rate of 25%, our net income attributable to common stockholders would be $1,751,000, or $0.25 share (basic and diluted), for the March 2011 quarter and $849,000, or $0.15 per share (basic and diluted), for the March 2010 quarter.

Sales

For the March 2011 quarter, our sales increased approximately $3.1 million, or 38.8%, to approximately $11.1 million from approximately $8.0 million for the March 2010 quarter. During the March 2011 quarter, we sold hogs weighing approximately 4.8 million kilograms, representing an increase of 0.26 million kilograms from approximately 4.5 million kilograms for the March 2010 quarter. The average unit selling price in RMB increased 27.1% from approximately RMB12.11 per kilogram in the March 2010 quarter to approximately RMB 15.39 per kilogram in the March 2011 quarter. The average unit selling price, converted into dollars based on the average exchange rate during the quarter, also increased 33.1% from $1.78 per kilogram in the March 2010 quarter to $2.37 per kilogram in the March 2011 quarter. The average unit selling price during the March 2010 quarter reflected the effects of increased competition in the hog market resulting from a decline in demand and an oversupply of hogs. The price increased in fiscal 2010 reflecting an overall improvement in the market for hogs and a shortage in the supply of hogs. As a result, the selling price of hogs reached a 24-month high during the months of November and December 2010, and continued to increase during the first two quarters of the current fiscal year.

Cost of Sales; Gross Margin

Cost of sales includes, in addition to the cost of fodder, depreciation of our breeding sows. The cost of sales increased by 19.7%, from approximately $6.9 million in the March 2010 quarter to approximately $8.2 million in the March 2011 quarter, which was a lesser percentage increase than our sales, reflecting primarily a smaller increase in our cost of feed than the price at which we could sell our hogs. As a result, our gross profit increased by approximately by $1.8 million, or 154.9%, from approximately $1.1 million in the March 2010 quarter to approximately $2.9 million for the March 2011 quarter and our gross margin increased from 14.2% in the March 2010 quarter to 26% in the December 2010 quarter.

Operating Expenses

Operating expenses increased approximately $359,000, or 362%, from approximately $99,000 in the March 2010 quarter to approximately $458,000 in the March 2011 quarter, primarily reflecting the increase in professional fees and expenses which we began to incur when we became a public company March 2010, including increased remuneration for our personnel and legal and audit expenses. In addition, for the March 2011 quarter, our operating expenses include liquidated damages of $227,850 for failing to register under the Securities Act the shares of common stock issued in the 2010 private placement.

Government Subsidies

During fiscal 2010 and 2009, PRC government provided subsidies to pig farmers because of the decline in the market price for hogs. We did not receive any government subsidies during the March 2011 quarter. We do not know whether we will receive any government subsidies for the balance of the current fiscal year. For the March 2010 quarter we received government subsidies of approximately $118,000.

Income before income taxes

As a result of the foregoing, our income before income taxes increased approximately $1.3 million, or 112.4%, from approximately $1.16 million in the March 2010 quarter to approximately $2.46 million in the March 2011 quarter.

Income tax provision

Our business of agricultural breeding of livestock has been exempt from enterprise income tax since January 2007. Accordingly, we did not pay EIT for either the March 2011 or March 2010 quarter.

Net income attributable to non-controlling interest

Seven of our subsidiaries had a 1% minority interest during the March 2011 quarter and an approximately 2% minority interest during the March 2010 quarter. Accordingly, under GAAP, the interest of the non-controlling shareholders is deducted from net income in determining net income allocable to common shareholders. The minority interest was approximately $22,000 in the March 2011 quarter and approximately $24,000 in the March 2010 quarter.

Net Income Allocated to Common Stockholders

As a result of the foregoing, our net income attributable to common stockholders increased from approximately $1.13 million, or $0.20 per share (basic and diluted), for the March 2010 quarter, to approximately $2.44 million, or $0.34 per share (basic and diluted), for the March 2011 quarter.

Six Months Ended March 31, 2011 and 2010

The following table sets forth a summary of certain key components of our results of operations for six months ended March 31, 2011 (the “March 2011 period”) and March 31, 2010 (the “March 2010 period”) in dollars and as a percentage of sales (dollars in thousands).

	For the Six Months Ended March 31,
	2011				2010				Change ($)		%
Sales	$	21,795	100.0	%	$	19,397	100.0	%	$	2,398	12.4	%
Cost of sales		16,291	74.7	%		16,350	84.3	%		(59)	(0.4	)%
Gross profit		5,504	25.3	%		3,046	15.7	%		2,458	80.7	%
Operating expenses		1,058	4.9	%		207	1.1	%		851	412.1	%
Income from operations		4,447	20.4	%		2,839	14.6	%		1,608	56.6	%
Government subsidies		-		%		382	2.0	%		(382)	(100	)%
Other income (expense)		20	0.1	%		61	0.3	%		(41)	(67.2	)%
Income before income taxes		4,467	20.5	%		3,282	16.9	%		1,185	36.1	%
Net income before non-controlling interest1		4,467	20.5	%		3,282	16.9	%		1,185	36.1	%
Net income attributable to common stockholders		4,424	20.3	%		3,216	16.6	%		1,208	37.6	%

We are exempt from payment of enterprise income taxes since we are in the business of agricultural breeding of livestock. If we were required to pay income taxes at the statutory rate of 25%, our net income attributable to common stockholders would be $3,119,000, or $0.44 share (basic and diluted), for the March 2011 period and $2,414,000, or $0.43 per share (basic and diluted), for the March 2010 period.

Sales

For the March 2011 period, our sales increased approximately $2.4 million, or 12.4%, to approximately $21.8 million from approximately $19.4 million for the March 2010 period. During the March 2011 period, we sold hogs weighing approximately 9.6 million kilograms, representing a decrease of 1.4 million kilograms from approximately 11.0 million kilograms for the March 2010 period. The average unit selling price in RMB increased 24.8% from approximately RMB12.01 per kilogram in the March 2010 period to approximately RMB 14.99 per kilogram in the March 2011 period. The average unit selling price, converted into dollars based on the average exchange rate during the quarter, also increased 29.1% from $1.79 per kilogram in the March 2010 period to $2.31 per kilogram in the March 2011 period. The average unit selling price during the March 2010 period reflected the effects of increased competition in the hog market resulting from a decline in demand and an oversupply of hogs. The price increased in fiscal 2010 reflecting an overall improvement in the market for hogs and a shortage in the supply of hogs. As a result, the selling price of hogs reached a 24-month high during the months of November and December 2010, and continued to increase during the first two quarters of the current fiscal year.

Cost of Sales; Gross Margin

Cost of sales includes, in addition to the cost of fodder, depreciation of our breeding sows. The cost of sales decreased by 0.4%, from approximately $16.4 million in the March 2010 period to approximately $16.3 million in the March 2011 period, which was a lesser percentage increase than our sales, reflecting primarily a smaller increase in our cost of feed than the price at which we could sell our hogs. As a result, our gross profit increased approximately $2.5 million, or 80.7%, from approximately $3.0 million in the March 2010 period to approximately $5.5 million for the March 2011 period and our gross margin increased from 15.7% in the March 2010 period to 25.3% in the March 2011 period.

Operating Expenses

Operating expenses increased approximately $851,000, or 412.1%, from approximately $207,000 in the March 2010 period to approximately $1.1 million in the March 2011 period, primarily reflecting the increase in professional fees and expenses which we began to incur when we became a public company in March 2010, including increased remuneration for our personnel and legal and audit expenses. In addition, for the March 2011 period, our operating expenses include liquidated damages of $379,750 for failing to register under the Securities Act the shares of common stock issued in the 2010 private placement.

Government Subsidies

During fiscal 2010 and 2009, PRC government provided subsidies to pig farmers because of the decline in the market price for hogs. We did not receive any government subsidies during the March 2011 period. We do not know whether we will receive any government subsidies for the balance of the current fiscal year. For the March 2010 period we received government subsidies of approximately $382,000.

Income before income taxes

As a result of the foregoing, our income before income taxes increased approximately $1.6 million, or 56.6%, from approximately $2.8 million in the March 2010 period to approximately $4.4 million in the March 2011 period.

Income tax provision

Our business of agricultural breeding of livestock has been exempt from enterprise income tax since January 2007. Accordingly, we did not pay EIT for either the March 2011 or March 2010 period.

Net income attributable to non-controlling interest

Seven of our subsidiaries had a 1% minority interest during the March 2011 period and an approximately 2% minority interest during the March 2010 period. Accordingly, under GAAP, the interest of the non-controlling shareholders is deducted from net income in determining net income allocable to common shareholders. The minority interest was approximately $43,000 in the March 2011 period and approximately $66,000 in the March 2010 period.

Net Income Allocated to Common Stockholders

As a result of the foregoing, our net income attributable to common stockholders increased from approximately $3.2 million, or $0.57 per share (basic and diluted), for the March 2010 period, to approximately $4.42 million, or $0.62 per share (basic and diluted), for the March 2011 period.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2011, we had working capital of approximately $7.9 million, as compared with working capital of approximately $6.3 million at September 30, 2010. The increase in working capital reflects primarily cash flow from operations and the reduction in accounts payable which related to our purchase during fiscal 2010 of hogs, breeding sows and other assets.

The following table sets forth information as to the principal changes in the components of our working capital (dollars in thousands):

	March 31, 2011		September 30, 2010		Change		Percent Change
Current Assets:
Cash	$	1,236	$	2,417	(1,181	)	(48.9	)%
Accounts receivable, net		-		254	(254	)	(100	)%
Prepaid expense and other receivable		177		164	13		7.9	%
Due from related parties		-		165	(165	)	(100	)%
Advance for asset purchase		765		765	0		0
Inventories		6,333		4,650	1,683		36.2	%
Total current assets		8,511		8,415	96		1.1	%
Current Liabilities:
Accounts payable and accrued liabilities		340		63	277		439.7	%
Other payables		-		1,657	(1,657	)	(100	)%
Due to related parties		223		367	(144	)	(39.2	)%
Total current liabilities		317		2,087	(1,770	)	(84.8	)%
Working capital		7,946		6,328	1,618		25.6	%

* The percentage is not included since it would not provide meaningful information.

Our working capital increased approximately $1.6 million from September 30, 2010 to March 31, 2011, from approximately $6.3 million to approximately $7.9 million. This increase primarily reflects an a reduction in other payables of approximately $1.7 million, since current assets increased nominally from September 30, 2010 to March 31, 2011.

In the March 2011 period, we generated approximately $2.8 million from operations, reflecting primarily our net income of approximately $4.5 million, an increase in depreciation of approximately $1.0 million, a reduction in other payables of approximately $1.7 million, resulting from the payment of the balance due for our purchases of sows, hogs and other assets during fiscal 2010, a decrease in inventory of approximately $1.6. Our cash flow from investing in the March 2011 period of approximately $4.0 million reflected primarily the purchase of property and equipment (approximately $3.8 million) and the purchase of sows (approximately $271,000). Our cash flow from financing activities was nominal during the March 2011 period.

In the March 2010 period, we generated approximately $4.5 million cash flow from operations, reflecting primarily our net income of approximately $3.3 million, an increase of accounts payable of approximately $1.0 million and depreciation and amortization of $633,000. Cash flow from investing in the March 2011 period of approximately $449,000 reflected primarily the purchase of sows ($477,000). Cash flow from financing of $262,000, reflected proceeds from the sale of common stock of approximately $3.5 million, payment of loans to stockholders of approximately $3.4 million and the proceeds from loans from stockholders of $200,000.

As of March 31, 2011, our only significant capital commitments was a commitment for approximately $3.8 million, which is mainly related the construction of pig housing , workers’ dormitory buildings and other work relating to the Company’s new pig farms. We believe that we can pay these obligations from working capital, and we believe that our working capital is sufficient to cover our anticipated obligations for the following twelve months.

We are party to agreements relating to the purchase of assets and land use rights from a company that produces and markets feed for pig farms. Pursuant to these agreements, as amended, we paid the seller $765,000, and the balance of $735,000 is due by June 30, 2011. We intend to purchase these assets from the net proceeds of a financing. If we have not completed a financing by June 30, 2011, we will seek to obtain an extension. If we are not able to obtain an extension on reasonable terms, we will determine at that time whether to use our working capital for that purpose or seek to modify the agreement to reduce the scope of assets we would acquire or terminate the agreement and seek to recover our deposit. We cannot assure you that, if we terminate the agreement we will be able to recover our deposit in full, if at all.

Although we have filed a registration statement with respect to a public offering of our common stock, we believe that it is not likely that we will be able to complete this offering in the near future. We may consider alternatives to the public offering. We cannot assure you that we will be able to complete any public or private financing, and our failure to raise money could impair our ability to expand our production significantly.

OFF-BALANCE SHEET ARRANGEMENTS

There were no off-balance sheet arrangements at March 31, 2011 that have, or are reasonably likely to have, a current or future effect on our financial condition, sales or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our interests.

CRITICAL ACCOUNTING POLICIES, ESTIMATES AND ASSUMPTIONS

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments.

We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements.

Use of Estimates -- The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and expenses during the reporting period. Significant accounting estimates reflected in our financial statements include collectability of account receivable, value of live hogs, useful lives and impairment of property and equipment and the valuation of warrants. Actual results when ultimately realized could differ from those estimates and the differences could be material.

Inventories – Inventories are stated at the lower of cost and net realizable value. Cost is calculated on the weighted average basis and includes all costs to acquire and other costs incurred in bringing the inventories to their present location and condition. We evaluate the net realizable value of our inventories on a regular basis and record a provision for loss to reduce the computed weighted average cost if it exceeds the net realizable value.

Revenue Recognition –We recognize revenue upon transfer of ownership of the hogs to the customer. This occurs at the time the live hogs are weighed and the weight and price have been agreed upon between us and the customer, as evidenced by a signed transportation delivery note.

Impairment of Long-Lived Assets – We apply the provisions of ASC 360-10, which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. We periodically evaluates the carrying value of long-lived assets to be held and used in accordance with ASC 360, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. Based on our review, we believe that, as of September 30, 2010 and 2009, there were no significant impairments of our long-lived assets.

Income tax – We utilize ASC740, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Our business of agricultural breeding of livestock has been exempt from income tax since January 2007. Accordingly, we did not pay EIT for either fiscal 2010 or fiscal 2009.

Government Subsidies– We record as income government subsidies when received from local government authority which are not subject to future return or reimbursement.

Foreign Currency Translation – We follow ASC 830, “Foreign Currency Translation”, for both the translation and re-measurement of balance sheet and income statement items into U.S. dollars. Resulting translation adjustments are reported as a separate component of accumulated comprehensive income (loss) in stockholders’ equity.

Our functional currency is the United States dollars. Our subsidiaries maintain their books and accounting records in RMB, the PRC’s currency, being their functional currency. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date. Any translation gains (losses) are recorded in exchange reserve as a component of shareholders’ equity. Income and expenditures are translated at the average exchange rate of the year.

Fair Value of Financial Instruments – We apply the provisions of ASC Subtopic 820-10, Fair Value Measurements, for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements. ASC Subtopic 820-10 also establishes a framework for measuring fair value and expands disclosures about fair value measurements. These estimates can have significant impact on our financial statements based on the assumptions we use. We did not have any financial instruments that are measured at fair value on a recurring basis as of September 30, 2010 and 2009.

Recent Accounting Pronouncements

There are no recent accounting pronouncements that have a material effect upon our financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting companies.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act, our management, including Luping Pan, our chief executive officer and Wei (Wayne) He, our chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2011.

Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.

Management conducted its evaluation of disclosure controls and procedures under the supervision of our chief executive officer and our chief financial officer. Based on that evaluation we believe that our disclosure controls and procedures were not effective as of March 31, 2011.

Management’s Annual Report on Internal Control over Financial Reporting.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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 and procedures may deteriorate.

Our management, including our chief executive officer and our chief financial officer, is responsible for establishing and maintaining for us adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act. Our internal control system was designed to, in general, provide reasonable assurance to our management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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.

Our management is also required to assess and report on the effectiveness of our internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”). As previously reported in our Form 10-K annual report for the year ended September 30, 2010, our management, including our chief executive officer and our chief financial officer, assessed the effectiveness of our internal control over financial reporting as of September 30, 2010 and identified significant deficiencies related to (i) the U.S. GAAP expertise of our internal accounting staff, (ii) our internal audit functions, (iii) the ability of our internal accounting staff to record our transactions to which we are a party which necessitates our bringing in external consultants to supplement this function, and (vi) a lack of segregation of duties within accounting functions. Therefore, our internal controls over financial reporting were not effective as of September 30, 2010. However, management believes that these deficiencies do not amount to a material weakness.

We became a reporting company on March 29, 2010, with the completion of the reverse acquisition. We began to prepare to be in compliance with the internal control obligations, including Section 404, for our fiscal year ending September 30, 2010. Prior to March 29, 2010, our internal accounting staff was primarily engaged in ensuring compliance with PRC accounting and reporting requirements for our operating subsidiaries and was not required to meet or apply U.S. GAAP requirements. As a result, with the exception of certain additional persons who we hired subsequent to March 29, 2010 to address these deficiencies, our current internal accounting department responsible for our financial reporting is relatively new to U.S. GAAP and the related internal control procedures required of U.S. public companies.

In order to correct the foregoing deficiencies, we engaged consultants who are familiar with PRC GAAP and US GAAP to assist us in the preparation of financial statements in accordance with US GAAP, and, in October 2010, we hired a chief financial officer who was familiar with US GAAP. Under the direction of our chief financial officer we are taking steps to improve our internal audit staff so that the staff will become familiar with both US GAAP and the establishment of internal controls, including controls relating to the operations and cash control at our farms. We anticipate that, because of the need to hire and train qualified accounting personnel, we will continue to use an independent consultant to assist us in preparing our financial statements in accordance with US GAAP. In December 2010, established an audit committee comprised of three independent directors.

Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, we intend to implement procedures to assure that the initiation of transactions, the custody of assets and the recording of transactions will be performed by separate individuals.

We believe that the foregoing steps will remediate the significant deficiencies identified above, and we will continue to monitor the effectiveness of these steps and make any changes that our management deems appropriate.

A material weakness (within the meaning of PCAOB Auditing Standard No. 5) is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the company’s financial reporting.

Our management is not aware of any material weaknesses in our internal control over financial reporting, and nothing has come to the attention of management that causes them to believe that any material inaccuracies or errors exist in our financial statements as of March 31, 2011. The reportable conditions and other areas of our internal control over financial reporting identified by us as needing improvement have not resulted in a material restatement of our financial statements, and we are not aware of any instance where such reportable conditions or other identified areas of weakness have resulted in a material misstatement of omission in any report we have filed with or submitted to the Commission. However, because of the significant deficiencies described above, we believe that our financial controls were not effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting during the second quarter of the year ended September 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 6. Exhibits.

Exhibit No.		Description

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

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

32.1		Certification of Chief Executive and Financial Officers of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SOUTHERN CHINA LIVESTOCK, INC.

Date: May 16, 2011	By:	/s/ Luping Pan
		Luping Pan President and Chief Executive Officer


Date: May 16, 2011	By:	/s/ Wei He
		Wei He
		Chief Financial Officer

SOUTHERN CHINA LIVESTOCK, INC. 10-Q