UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549










FORM
10-K/A


(Amendment
No. 1)







(Mark
One)




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




For
the fiscal year ended December 31, 2008





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




For
the transition period from ______ to ______





Commission
File Number 0-28806





ENERGROUP
HOLDINGS CORPORATION


(Exact
name of registrant as specified in its charter)





Nevada
            
            87-0420774(State
      of Incorporation)
            
            (I.R.S.
      Employer Identification No.)No.
      9, Xin Yi Street, Ganjingzi District
            
            +86
      411 867 166 96Dalian
      City, Liaoning Province, PRC 116039
            
            (Registrant’s telephone number, including area code)(Address of principal executive offices, including zip code)




Securities
      registered pursuant to Section 12(b) of the Act:
            
            NoneSecurities
      registered pursuant to Section 12(g) of the Act:
            
            Common Stock, par value $0.001
      per share(Title of
      Class)




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





Indicate
by check mark whether the registrant is required to file reports pursuant to
Section 13 or Section 15(d) of the Act.


Yes xNo o





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 xNo o





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained to the best of
the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. o








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





Large
      Accelerated Filer o
            
            Accelerated
      Filer oNon-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 Act). Yes oNo x





As of
March 11, 2009, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $25.84 million based on a
closing price of $4.00 per share of common stock as reported on the Over-the
Counter Bulletin Board on such date.  On December 31, 2008, we had
21,136,391 shares of our common stock issued and outstanding.




DOCUMENTS
INCORPORATED BY REFERENCE: None.


2


EXPLANATORY
NOTE





This
Annual Report on Form 10-K/A is being filed as Amendment No. 1 to our
Annual Report on Form 10-K for the year ended December 31, 2008, which was
originally filed with the Securities and Exchange Commission on March 31, 2009.
We are amending Part II, Item 8 Financial Statements and Supplementary Data:





·
            to
      revise the disclosure in Note 2 to our financial statements with respect
      to our showcase store arrangements;
and


·
            to
      revise the disclosure in Note 15 to our financial statements to include
      the measures of profit or loss for the segments that are evaluated by our
      chief operating decision maker.





Except as
specifically referenced herein, this Amendment No. 1 to Annual Report on Form
10-K/A does not reflect any event occurring subsequent to March 31, 2009, the
filing date of the original report.







3





ENERGROUP
HOLDINGS CORPORATION




FORM
10-K/A


For
the Year Ended December 31, 2008





TABLE
OF CONTENTS





PART
      IIItem
      8.
            
            Financial
      Statements and Supplementary DataSignatures




4


ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





Energroup
Holdings Corporation





Audited
Consolidated Financial Statements





December
31, 2008, 2007 and 2006





(Stated
in U.S. Dollars)




Energroup
Holdings Corporation





Contents
                PagesReport
      of Registered Public Accounting Firm
                F-1Consolidated
      Balance Sheets
                F-2—F-3Consolidated
      Statements of Operations
                F-4Consolidated
      Statements of Changes in Stockholders’ Equity
                F-5Consolidated
      Statements of Cash Flows
                F-6
      — F-7Notes
      to Consolidated Financial Statements
                F-8
      — F-31




5


Board of
Directors and Stockholders


Energroup
Holdings Corporation





Report of Registered
Independent Public Accounting Firm








We have
audited the accompanying consolidated balance sheets of Energroup Holdings
Corporation as of December 31, 2008, 2007, and 2006 and the related consolidated
statements of operations, changes in stockholders' equity and cash flows for the
years then ended. 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.





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





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Energroup Holdings
Corporation as of December 31, 2008, 2007, and 2006, and the results of its
operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of
America.





South
      San Francisco, California
            Samuel
      H. Wong & Co., LLPJanuary
      23, 2009
            Certified
      Public Accountants




F-1
  Energroup
Holdings Corporation
 Consolidated
Balance Sheets
 At
December 31, 2008, 2007, and 2006
 (Stated
in US Dollars)
 
 Notes
                                        
                                        
                                        At
                                        
                                        
                                        At
                                        
                                        
                                        AtDecember 31,
                                        
                                        
                                        December 31,
                                        
                                        
                                        December 31,ASSETS
                                        
                                        
                                        
                                        
                                        2008
                                        
                                        
                                        2007
                                        
                                        
                                        2006Current
      AssetsCash
                                        
                                        
                                        2(D)
                                        
                                        $
                                        5,695,798
                                        
                                        
                                        $
                                        14,031,851
                                        
                                        
                                        $
                                        3,075,787Restricted
      Cash
                                        
                                        
                                        3
                                        
                                        
                                        
                                        2,177,091
                                        
                                        
                                        
                                        4,250,000
                                        
                                        
                                        
                                        -Accounts
      Receivable
                                        
                                        
                                        2(E),4
                                        
                                        
                                        18,661,065
                                        
                                        
                                        
                                        622,433
                                        
                                        
                                        
                                        1,798,397Other
      Receivable
                                        
                                        
                                        
                                        
                                        
                                        
                                        2,162,412
                                        
                                        
                                        
                                        1,068,939
                                        
                                        
                                        
                                        679,019Related
      Party Receivable
                                        
                                        
                                        5
                                        
                                        
                                        
                                        10,919,777
                                        
                                        
                                        
                                        3,964,357
                                        
                                        
                                        
                                        13,148,788Inventory
                                        
                                        
                                        2(F),6
                                        
                                        
                                        6,051,109
                                        
                                        
                                        
                                        2,916,016
                                        
                                        
                                        
                                        2,385,447Advance
      to Suppliers
                                        
                                        
                                        2(G)
                                        
                                        
                                        1,453,861
                                        
                                        
                                        
                                        267,807
                                        
                                        
                                        
                                        1,110,449Prepaid
      Expenses
                                        
                                        
                                        
                                        
                                        
                                        
                                        62,734
                                        
                                        
                                        
                                        46,401
                                        
                                        
                                        
                                        90,913Prepaid
      Taxes
                                        
                                        
                                        
                                        
                                        
                                        
                                        334,413
                                        
                                        
                                        
                                        185,319
                                        
                                        
                                        
                                        -Deferred
      Tax Asset
                                        
                                        
                                        2(Q)
                                        
                                        
                                        643,609
                                        
                                        
                                        
                                        613,844
                                        
                                        
                                        
                                        574,316Total
      Current Assets
                                        
                                        
                                        
                                        
                                        
                                        
                                        48,161,869
                                        
                                        
                                        
                                        27,966,967
                                        
                                        
                                        
                                        22,863,116Non-Current
      AssetsProperty,
      Plant & Equipment, net
                                        
                                        
                                        2(H),7
                                        
                                        
                                        25,794,151
                                        
                                        
                                        
                                        24,836,496
                                        
                                        
                                        
                                        20,875,462Land
      Use Rights, net
                                        
                                        
                                        2(I),8
                                        
                                        
                                        13,430,435
                                        
                                        
                                        
                                        12,855,980
                                        
                                        
                                        
                                        8,911,119Construction
      in Progress
                                        
                                        
                                        2(J)
                                        
                                        
                                        3,262,146
                                        
                                        
                                        
                                        927,866
                                        
                                        
                                        
                                        4,165,407Other
      Assets
                                        
                                        
                                        
                                        
                                        
                                        
                                        34,807
                                        
                                        
                                        
                                        32,619
                                        
                                        
                                        
                                        30,519Total
      Assets
                                        
                                        
                                        
                                        
                                        
                                        $
                                        90,683,408
                                        
                                        
                                        $
                                        66,619,928
                                        
                                        
                                        $
                                        56,845,623LIABILITIES
      & STOCKHOLDERS' EQUITYCurrent
      LiabilitiesBank
      Loans
                                        
                                        
                                        9(A)
                                        
                                        $
                                        6,419,422
                                        
                                        
                                        $
                                        7,383,095
                                        
                                        
                                        $
                                        6,971,538Accounts
      Payable
                                        
                                        
                                        
                                        
                                        
                                        
                                        7,695,208
                                        
                                        
                                        
                                        3,779,274
                                        
                                        
                                        
                                        4,207,992Taxes
      Payable
                                        
                                        
                                        
                                        
                                        
                                        
                                        2,341,971
                                        
                                        
                                        
                                        1,677,194
                                        
                                        
                                        
                                        2,259,465Other
      Payable
                                        
                                        
                                        
                                        
                                        
                                        
                                        2,318,142
                                        
                                        
                                        
                                        1,471,381
                                        
                                        
                                        
                                        1,362,607Accrued
      Liabilities
                                        
                                        
                                        
                                        
                                        
                                        
                                        1,724,266
                                        
                                        
                                        
                                        3,347,013
                                        
                                        
                                        
                                        912,707Customer
      Deposits
                                        
                                        
                                        2(L)
                                        
                                        
                                        3,258,752
                                        
                                        
                                        
                                        24,161
                                        
                                        
                                        
                                        1,049,212Related
      Party Payable
                                        
                                        
                                        
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Total
      Current Liabilities
                                        
                                        
                                        
                                        
                                        
                                        
                                        23,757,761
                                        
                                        
                                        
                                        17,682,118
                                        
                                        
                                        
                                        16,763,521Long
      Term LiabilitiesBank
      Loans
                                        
                                        
                                        9(B)
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        17,908,539Total
      Liabilities
                                        
                                        
                                        
                                        
                                        
                                        $
                                        23,757,761
                                        
                                        
                                        $
                                        17,682,118
                                        
                                        
                                        $
                                        34,672,060
 
 See Notes
to Financial Statements and Accountant’s Report
  
  F-2
  
 Energroup
Holdings Corporation
 Consolidated
Balance Sheets
 At
December 31, 2008, 2007, and 2006
 (Stated
in US Dollars)
 
 At
                        
                        
                        At
                        
                        
                        AtNotes
                        
                        December 31,
                        
                        
                        December 31,
                        
                        
                        December 31,Stockholders' Equity
                        
                        
                        2008
                        
                        
                        2007
                        
                        
                        2006Preferred
      Stock - $0.001 Par Value 10,000,000 Shares Authorized; 0 Shares Issued
      & Outstanding at December 31, 2008, 2007, and 2006,
      respectively.
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -Common
      Stock - $0.001 Par Value 21,739,130 Shares Authorized; 21,136,392 Shares
      Issued & Outstanding at December 31, 2008 and 2007, and 17,272,756
      Shares Issued & Outstanding at December 31, 2006.
                        10
                        
                        
                        21,137
                        
                        
                        
                        21,137
                        
                        
                        
                        17,273Additional
      Paid in Capital
                        
                        
                        
                        26,062,337
                        
                        
                        
                        15,440,043
                        
                        
                        
                        2,396,079Statutory
      Reserve
                        2(M),11
                        
                        
                        2,077,488
                        
                        
                        
                        751,444
                        
                        
                        
                        751,444Retained
      Earnings
                        
                        
                        
                        35,275,457
                        
                        
                        
                        29,764,236
                        
                        
                        
                        18,112,089Accumulated
      Other Comprehensive Income
                        2(N)
                        
                        
                        3,489,228
                        
                        
                        
                        2,960,951
                        
                        
                        
                        896,679Total
      Stockholders' Equity
                        
                        
                        
                        66,925,647
                        
                        
                        
                        48,937,811
                        
                        
                        
                        22,173,564Total
      Liabilities & Stockholders' Equity
                        
                        
                        $
                        90,683,408
                        
                        
                        $
                        66,619,928
                        
                        
                        $
                        56,845,623
 
 See Notes
to Financial Statements and Accountant’s Report
  F-3
  
 Energroup
Holdings Corporation
 Consolidated
Statements of Operations
 For
the years ended December 31, 2008, 2007, and 2006
 (Stated
in US Dollars)
 
 For the
                                  
                                  
                                  For the
                                  
                                  
                                  For theyear ended
                                  
                                  
                                  year ended
                                  
                                  
                                  year endedNote
                                  
                                  December 31,
                                  
                                  
                                  December 31,
                                  
                                  
                                  December 31,2008
                                  
                                  
                                  2007
                                  
                                  
                                  2006Sales
                                  2(O)
                                  
                                  $
                                  176,360,013
                                  
                                  
                                  $
                                  124,696,036
                                  
                                  
                                  $
                                  70,396,439Cost
      of Sales
                                  2(P)
                                  
                                  
                                  149,794,249
                                  
                                  
                                  
                                  104,378,909
                                  
                                  
                                  
                                  57,794,853Gross
      Profit
                                  
                                  
                                  
                                  26,565,764
                                  
                                  
                                  
                                  20,317,127
                                  
                                  
                                  
                                  12,601,586Operating ExpensesSelling
      Expenses
                                  2(Q)
                                  
                                  
                                  5,147,366
                                  
                                  
                                  
                                  4,672,862
                                  
                                  
                                  
                                  1,556,805General
      & Administrative Expenses
                                  2(R)
                                  
                                  
                                  2,675,661
                                  
                                  
                                  
                                  1,572,836
                                  
                                  
                                  
                                  1,334,866Total
      Operating Expense
                                  
                                  
                                  
                                  7,823,027
                                  
                                  
                                  
                                  6,245,698
                                  
                                  
                                  
                                  2,891,671Operating
      Income/(Loss)
                                  
                                  
                                  
                                  18,742,737
                                  
                                  
                                  
                                  14,071,429
                                  
                                  
                                  
                                  9,709,915Other Income (Expenses)Other
      Income
                                  
                                  
                                  
                                  5,780
                                  
                                  
                                  
                                  114,496
                                  
                                  
                                  
                                  -Interest
      Income
                                  
                                  
                                  
                                  284,774
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  147Other
      Expenses
                                  
                                  
                                  
                                  (100,183
                                  )
                                  
                                  
                                  (90,508
                                  )
                                  
                                  
                                  (126,098
                                  )Interest
      Expense
                                  
                                  
                                  
                                  (953,460
                                  )
                                  
                                  
                                  (1,475,730
                                  )
                                  
                                  
                                  (1,457,204
                                  )Release
      of Escrowed Make Good Shares
                                  
                                  
                                  
                                  (10,622,294
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Total
      Other Income (Loss) and Expense
                                  
                                  
                                  
                                  (11,385,383
                                  )
                                  
                                  
                                  (1,451,742
                                  )
                                  
                                  
                                  (1,583,155
                                  )Earnings
      before Tax
                                  
                                  
                                  
                                  7,357,354
                                  
                                  
                                  
                                  12,619,687
                                  
                                  
                                  
                                  8,126,760(Income
      Tax Expense)/Deferred Tax Benefit
                                  2(V),13
                                  
                                  
                                  (520,089
                                  )
                                  
                                  
                                  (967,540
                                  )
                                  
                                  
                                  1,611Net
      Income
                                  
                                  
                                  $
                                  6,837,265
                                  
                                  
                                  $
                                  11,652,147
                                  
                                  
                                  $
                                  8,128,371Earnings
      Per Share
                                  2(Z),16-   Basic
                                  
                                  
                                  $
                                  0.40
                                  
                                  
                                  $
                                  0.87
                                  
                                  
                                  $
                                  0.61-   Diluted
                                  
                                  
                                  $
                                  0.32
                                  
                                  
                                  $
                                  0.67
                                  
                                  
                                  $
                                  0.47Weighted
      Average Shares Outstanding-    Basic
                                  
                                  
                                  
                                  17,272,756
                                  
                                  
                                  
                                  13,409,120
                                  
                                  
                                  
                                  13,409,120-    Diluted
                                  
                                  
                                  
                                  21,182,756
                                  
                                  
                                  
                                  17,272,756
                                  
                                  
                                  
                                  17,272,756
  For the
                        
                        
                        For the
                        
                        
                        For theyear ended
                        
                        
                        year ended
                        
                        
                        year endedDecember 31,
                        
                        
                        December 31,
                        
                        
                        December 31,
                        
                        
                        AccumulatedComprehensive Income
                        
                        2008
                        
                        
                        2007
                        
                        
                        2006
                        
                        
                        TotalsNet
      Income
                        
                        $
                        6,837,265
                        
                        
                        $
                        11,652,147
                        
                        
                        $
                        8,128,371
                        
                        
                        
                        26,617,783Other
      Comprehensive Income:Foreign
      Currency Translation Adjustment
                        
                        
                        528,277
                        
                        
                        
                        2,064,272
                        
                        
                        
                        610,696
                        
                        
                        
                        3,203,245$
                        7,365,542
                        
                        
                        $
                        13,716,419
                        
                        
                        $
                        8,739,067
                        
                        
                        $
                        29,821,028
  See Notes
to Financial Statements and Accountant’s Report
 
  F-4
   Energroup
Holdings Corporation
 Consolidated
Statements of Changes in Stockholders’ Equity
 For
the years ended December 31, 2008, 2007, and 2006
 (Stated
in US Dollars)
 
 AccumulatedCommon
                            
                            
                            Additional
                            
                            
                            
                            
                            
                            
                            
                            
                            ComprehensiveShares
                            
                            
                            
                            
                            
                            Paid in
                            
                            
                            Statutory
                            
                            
                            Retained
                            
                            
                            OtherOutstanding
                            
                            
                            Amount
                            
                            
                            Capital
                            
                            
                            Reserve
                            
                            
                            Earnings
                            
                            
                            Income
                            
                            
                            TotalBalance,
      January 1, 2006
                            
                            
                            17,272,756
                            
                            
                            $
                            17,273
                            
                            
                            $
                            2,396,079
                            
                            
                            $
                            72,508
                            
                            
                            $
                            10,662,654
                            
                            
                            $
                            285,983
                            
                            
                            $
                            13,434,497Net
      Income
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            8,128,371
                            
                            
                            
                            
                            
                            
                            
                            8,128,371Appropriations
      of Retained Earnings
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            678,936
                            
                            
                            
                            (678,936
                            )
                            
                            
                            
                            
                            
                            
                            -Foreign
      Currency Translation Adjustment
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            610,696
                            
                            
                            
                            610,696Balance,
      December 31, 2006
                            
                            
                            17,272,756
                            
                            
                            $
                            17,273
                            
                            
                            $
                            2,396,079
                            
                            
                            $
                            751,444
                            
                            
                            $
                            18,112,089
                            
                            
                            $
                            896,679
                            
                            
                            $
                            22,173,564Balance,
      January 1, 2007
                            
                            
                            17,272,756
                            
                            
                            $
                            17,273
                            
                            
                            $
                            2,396,079
                            
                            
                            $
                            751,444
                            
                            
                            $
                            18,112,089
                            
                            
                            $
                            896,679
                            
                            
                            $
                            22,173,564Issuance
      of Common Stock & Warrants
                            
                            
                            3,863,636
                            
                            
                            
                            3,864
                            
                            
                            
                            13,043,964
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            13,047,828Net
      Income
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            11,652,147
                            
                            
                            
                            
                            
                            
                            
                            11,652,147Appropriations
      of Retained Earnings
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            
                            
                            
                            
                            -Foreign
      Currency Translation Adjustment
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            2,064,272
                            
                            
                            
                            2,064,272Balance,
      December 31, 2007
                            
                            
                            21,136,392
                            
                            
                            $
                            21,137
                            
                            
                            $
                            15,440,043
                            
                            
                            $
                            751,444
                            
                            
                            $
                            29,764,236
                            
                            
                            $
                            2,960,951
                            
                            
                            $
                            48,937,811Balance,
      January 1, 2008
                            
                            
                            21,136,392
                            
                            
                            $
                            21,137
                            
                            
                            $
                            15,440,043
                            
                            
                            $
                            751,444
                            
                            
                            $
                            29,764,236
                            
                            
                            $
                            2,960,951
                            
                            
                            $
                            48,937,811Release
      of Shares Placed in Escrow
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            10,622,294
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            10,622,294Net
      Income
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            6,837,265
                            
                            
                            
                            
                            
                            
                            
                            6,837,265Appropriations
      of Retained Earnings
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            1,326,044
                            
                            
                            
                            (1,326,044
                            )
                            
                            
                            
                            
                            
                            
                            -Foreign
      Currency Translation Adjustment
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            528,277
                            
                            
                            
                            528,277Balance,
      December 31, 2008
                            
                            
                            21,136,392
                            
                            
                            $
                            21,137
                            
                            
                            $
                            26,062,337
                            
                            
                            $
                            2,077,488
                            
                            
                            $
                            35,275,457
                            
                            
                            $
                            3,489,228
                            
                            
                            $
                            66,925,647
  See Notes
to Financial Statements and Accountant’s Report
   F-5
   Energroup
Holdings Corporation
 Consolidated
Statements of Cash Flows
 For
the years ended December 31, 2008, 2007, and 2006
 (Stated
in US Dollars)
 
 For the
                                  
                                  
                                  For the
                                  
                                  
                                  For theyear ended
                                  
                                  
                                  year ended
                                  
                                  
                                  year endedDecember 31,
                                  
                                  
                                  December 31,
                                  
                                  
                                  December 31,2008
                                  
                                  
                                  2007
                                  
                                  
                                  2006Cash
      Flow from Operating ActivitiesCash
      Received from Customers
                                  
                                  $
                                  153,507,080
                                  
                                  
                                  $
                                  112,741,680
                                  
                                  
                                  $
                                  59,979,793Cash
      Paid to Suppliers & Employees
                                  
                                  
                                  (155,266,953
                                  )
                                  
                                  
                                  (108,527,656
                                  )
                                  
                                  
                                  (65,116,627
                                  )Interest
      Received
                                  
                                  
                                  284,774
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  147Interest
      Paid (net of amount capitalized)
                                  
                                  
                                  (1,763,404
                                  )
                                  
                                  
                                  (1,247,575
                                  )
                                  
                                  
                                  (1,580,310
                                  )Income
      Tax Paid
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (1,007,067
                                  )
                                  
                                  
                                  (400,065
                                  )Miscellaneous
      Receipts
                                  
                                  
                                  5,780
                                  
                                  
                                  
                                  9,182
                                  
                                  
                                  
                                  -Cash
      Sourced/(Used) in Operating Activities
                                  
                                  
                                  (3,232,723
                                  )
                                  
                                  
                                  1,968,564
                                  
                                  
                                  
                                  (7,117,062
                                  )Cash
      Flows from Investing ActivitiesEscrowed
      Funds from Private Placement Placed in Restricted Cash
                                  
                                  
                                  2,072,909
                                  
                                  
                                  
                                  (4,250,000
                                  )
                                  
                                  
                                  -Payments
      for Purchases of Equipment & Construction of Plant
                                  
                                  
                                  (5,832,731
                                  )
                                  
                                  
                                  (2,882,433
                                  )
                                  
                                  
                                  (1,655,077
                                  )Payments
      for Purchases of Land Use Rights
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (4,198,178
                                  )
                                  
                                  
                                  (265,509
                                  )Payments
      for Deposits
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (2,100
                                  )
                                  
                                  
                                  -Cash
      Sourced/(Used) in Investing Activities
                                  
                                  
                                  (3,759,822
                                  )
                                  
                                  
                                  (11,333,712
                                  )
                                  
                                  
                                  (1,920,586
                                  )Cash
      Flows from Financing ActivitiesFinancing
      Transaction - Proceeds Allocated to Accrued Liabilities for Liquidated
      Damages
                                  
                                  
                                  -
                                  
                                  
                                  
                                  1,700,000
                                  
                                  
                                  
                                  -Financing
      Transaction - Proceeds of Issuance
      of      Common Stock &
      Warrants
                                  
                                  
                                  -
                                  
                                  
                                  
                                  13,047,828
                                  
                                  
                                  
                                  -Proceeds
      from Bank Borrowings
                                  
                                  
                                  9,264,246
                                  
                                  
                                  
                                  5,725,377
                                  
                                  
                                  
                                  1,753,971Repayment
      of Bank Loans
                                  
                                  
                                  (10,700,664
                                  )
                                  
                                  
                                  (2,217,265
                                  )
                                  
                                  
                                  -Cash
      Sourced/(Used) in Financing Activities
                                  
                                  
                                  (1,436,417
                                  )
                                  
                                  
                                  18,255,939
                                  
                                  
                                  
                                  1,753,971Net
      Increase/(Decrease) in Cash & Cash Equivalents for the
      Year
                                  
                                  
                                  (8,428,962
                                  )
                                  
                                  
                                  8,891,791
                                  
                                  
                                  
                                  (7,283,677
                                  )Effect
      of Currency Translation
                                  
                                  
                                  92,910
                                  
                                  
                                  
                                  2,064,273
                                  
                                  
                                  
                                  180,050Cash
      & Cash Equivalents at Beginning of Year
                                  
                                  
                                  14,031,851
                                  
                                  
                                  
                                  3,075,787
                                  
                                  
                                  
                                  10,179,414Cash
      & Cash Equivalents at End of Year
                                  
                                  $
                                  5,695,798
                                  
                                  
                                  $
                                  14,031,851
                                  
                                  
                                  $
                                  3,075,787Non-Cash
      Financing Activity:Extinguishment
      of Debt by Setoff Against Related Party Receivables
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  21,005,094
                                  
                                  
                                  $
                                  -Release
      of shares held in escrow
                                  
                                  $
                                  10,622,294
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
  See Notes
to Financial Statements and Accountant’s Report
  F-6
  
 Energroup
Holdings Corporation
 Reconciliation
of Net Income to Cash Provided/(Used) in Operating Activities
 For
the years ended December 31, 2008, 2007, and 2006
 (Stated
in US Dollars)
 
 For the
                          
                          
                          For the
                          
                          
                          For theyear ended
                          
                          
                          year ended
                          
                          
                          year endedDecember 31,
                          
                          
                          December 31,
                          
                          
                          December 31,2008
                          
                          
                          2007
                          
                          
                          2006Net
      Income
                          
                          $
                          6,837,265
                          
                          
                          $
                          11,652,147
                          
                          
                          $
                          8,128,371Adjustments
      to Reconcile Net Income to Net Cash Provided by Cash
      Activities:Non
      Cash Expense Recorded for the Release of Escrowed Shares
                          
                          
                          10,622,294
                          
                          
                          
                          -
                          
                          
                          
                          -Extinguishment
      of Debt by Setting Off Against Related Party Receivable
                          
                          
                          -
                          
                          
                          
                          (21,005,094
                          )
                          
                          
                          -Liquidated
      Damages Included in Accrued Liabilities
                          
                          
                          -
                          
                          
                          
                          (1,700,000
                          )
                          
                          
                          -Amortization
                          
                          
                          331,468
                          
                          
                          
                          253,317
                          
                          
                          
                          160,782Depreciation
                          
                          
                          2,540,797
                          
                          
                          
                          2,158,940
                          
                          
                          
                          1,651,055Provision
      for Bad Debt
                          
                          
                          103,773
                          
                          
                          
                          5,456
                          
                          
                          
                          -Decrease/(Increase)
      in Accounts Receivable
                          
                          
                          (18,142,404
                          )
                          
                          
                          1,170,508
                          
                          
                          
                          1,523,176Decrease/(Increase)
      in Other Receivable
                          
                          
                          (1,093,473
                          )
                          
                          
                          (389,920
                          )
                          
                          
                          353,046Decrease/(Increase)
      in Related Party Receivable
                          
                          
                          (6,955,420
                          )
                          
                          
                          9,184,432
                          
                          
                          
                          (12,877,984
                          )Decrease/(Increase)
      in Inventory
                          
                          
                          (3,135,093
                          )
                          
                          
                          (530,569
                          )
                          
                          
                          546,573Decrease/(Increase)
      in Advance to Suppliers
                          
                          
                          (1,186,054
                          )
                          
                          
                          842,641
                          
                          
                          
                          (374,793
                          )Decrease/(Increase)
      in Prepaid Taxes
                          
                          
                          (149,096
                          )
                          
                          
                          (185,317
                          )
                          
                          
                          -Decrease/(Increase)
      in Prepaid Expenses
                          
                          
                          (16,333
                          )
                          
                          
                          44,512
                          
                          
                          
                          (40,297
                          )Decrease/(Increase)
      in Deferred Tax Benefit
                          
                          
                          (29,764
                          )
                          
                          
                          (39,528
                          )
                          
                          
                          (401,674
                          )Increase/(Decrease)
      in Accounts Payable
                          
                          
                          3,915,934
                          
                          
                          
                          (428,718
                          )
                          
                          
                          (3,611,921
                          )Increase/(Decrease)
      in Taxes Payable
                          
                          
                          664,777
                          
                          
                          
                          (582,271
                          )
                          
                          
                          1,371,696Increase/(Decrease)
      in Other Payable
                          
                          
                          846,762
                          
                          
                          
                          108,773
                          
                          
                          
                          482,075Increase/(Decrease)
      in Related Party Payable
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (4,506,002
                          )Increase/(Decrease)
      in Accrued Liabilities
                          
                          
                          (1,622,747
                          )
                          
                          
                          2,434,306
                          
                          
                          
                          (106,278
                          )Increase/(Decrease)
      in Customer Advances
                          
                          
                          3,234,591
                          
                          
                          
                          (1,025,051
                          )
                          
                          
                          585,113Total
      of all adjustments
                          
                          
                          (10,069,987
                          )
                          
                          
                          (9,683,583
                          )
                          
                          
                          (15,245,431
                          )Net
      Cash Provided by/(Used in) Operating Activities
                          
                          $
                          (3,232,723
                          )
                          
                          $
                          1,968,564
                          
                          
                          $
                          (7,117,062
                          )
  See Notes
to Financial Statements and Accountant’s Report
   F-7
  Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and
2006
 
 1.           The Company and Principal
Business Activities
 
 Energroup
Holdings Corporation (the “Company”) (OTCBB: ENHD) is a holding company
incorporated in the state of Nevada in the United States of America whose
primary business operations are conducted through its three operating
subsidiaries: (1) Dalian Chuming Processed Foods Company Ltd., (“Food Company”)
(2) Dalian Chuming Slaughter and Packaging Pork Company Ltd. (“Meat Company”),
and (3) Dalian Chuming Sales Company Ltd. (“Sales Company”), which are
incorporated in the People’s Republic of China (“PRC”).   The
Company is headquartered in the City of Dalian, Liaoning Province of
China.
 
 The three
operating subsidiaries were spun-off constituents of the former parent company,
Dalian Chuming Group Co. Ltd (“Group”).  The Company indirectly holds
the three operating subsidiary companies through its wholly owned intermediary
subsidiaries: (A) Precious Sheen Investments Limited (“PSI”), a British Virgin
Islands corporation, and (B) Dalian Chuming Precious Sheen Investments
Consulting Co., Ltd., (“Chuming”), a wholly foreign owned enterprise
incorporated in the PRC.
 
 The
Company’s primary business activities are the production and packing of fresh
pork and also production of processed meat products for distribution and sale to
clients throughout the PRC and Russia.
 
 Corporate
Reorganization
 
 PRC law
currently has limits on foreign ownership of certain companies.  To
enable Chuming to raise equity capital from investors outside of China, it
established an offshore holding company by incorporating Precious Sheen
Investments Limited in the British Virgin Islands in May 2007.  On
September 26, 2007, Chuming entered into share transfer agreements with Dalian
Chuming Group Co., Ltd., under which Dalian Chuming Group Co., Ltd. agreed to
transfer ownership of three operating subsidiaries (collectively known as
“Chuming Operating Subsidiaries”) to Chuming.  On October 23, 2007,
Chuming completed all required registrations to complete the share transfer, and
became the 100% owner of the Chuming Operating Subsidiaries.  On
November 14, 2007 the Dalian Commerce Bureau approved the transfer of Dalian
Chuming Group Co., Ltd’s 68% interest in Chuming to PSI, and upon this transfer,
Chuming became a wholly foreign owned enterprise, with PSI as the 100% owner of
Chuming (including its subsidiaries). On December 13, 2007, the PRC government
authorities issued Chuming a business license formally recognizing it as a
wholly foreign owned enterprise, of which PSI is the sole
shareholder.
 
 The
following is a description of the Chuming Operating Subsidiaries:
 
 A. Dalian
Chuming Slaughter and Packaging Pork Company Ltd., whose primary business
activity is acquiring, slaughtering, and packaging of pork and
cattle;
 
 B. Dalian
Chuming Processed Foods Company Ltd., whose primary business activity is the
processing of raw and cooked meat products; and
 
 C. Dalian
Chuming Sales Company Ltd., which is responsible for Chuming’s sales, marketing,
and distribution operations.
 
 Share
Exchange Transaction
 
 On
December 31, 2007, the Company acquired all of the outstanding shares of PSI in
exchange for the issuance of 16,850,000 restricted shares of our common stock to
the shareholders of PSI, which represented approximately 97.55% of the
then-issued and outstanding common stock of the Company (excluding the shares
issued in the Financing). As a result of that transaction, PSI became our wholly
owned subsidiary and we acquired the business and operations of the three
operation subsidiaries.
  
 F-8
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 The share
exchange transaction has been accounted for as a recapitalization of PSI where
the Company (the legal acquirer) is considered the accounting acquiree and PSI
(the legal acquiree) is considered the accounting acquirer.  As a
result of this transaction, the Company is deemed to be a continuation of the
business of PSI.
 
 Accordingly,
the financial data included in the accompanying consolidated financial
statements for all periods prior to December 31, 2007 is that of the accounting
acquirer (PSI).  The historical stockholders’ equity of the accounting
acquirer prior to the share exchange has been retroactively restated as if the
share exchange transaction occurred as of the beginning of the first period
presented.
 
 2.            
Summary of Significant
Accounting Policies
 
 (A)
              Method
      of Accounting
 
 The
Company maintains its general ledger and journals with the accrual method
accounting for financial reporting purposes.  The financial statements
and notes are representations of management.  Accounting policies
adopted by the Company conform to generally accepted accounting principles in
the United States of America and have been consistently applied in the
presentation of financial statements, which are compiled on the accrual basis of
accounting.
 
 (B)
              Principles
      of Consolidation
 
 The
consolidated financial statements, which include the Company and its
subsidiaries, are compiled in accordance with generally accepted accounting
principles in the United States of America.  All significant
inter-company accounts and transactions have been eliminated.  The
consolidated financial statements include 100% of assets, liabilities, and net
income or loss of those wholly-owned subsidiaries.
 
 The
Company owned the three operating subsidiaries since its
inception.  The Company also owns two intermediary holdings
companies.   As of December 31, 2008, the detailed identities of
the consolidating subsidiaries are as follows:
 
 Name of Company
                        
                        Place
                          of
                          Incorporation
                        
                        Attributable
                          Equity
                          Interest
                        
                        Registered
                          CapitalPrecious
      Sheen Investments Limited
                        
                        BVI
                        
                        100%
                        
                        USD
      10,000Dalian
      Chuming Precious Sheen Investment Consulting Co., Ltd.
                        
                        PRC
                        
                        100%
                        
                        RMB
      29,400,682Dalian
      Chuming Slaughtering & Pork Packaging  Co.
    Ltd.
                        
                        PRC
                        
                        100%
                        
                        RMB
      10,000,000Dalian
      Chuming Processed Foods Co. Ltd.
                        
                        PRC
                        
                        100%
                        
                        RMB
      5,000,000Dalian
      Chuming Sales Co. Ltd.
                        
                        PRC
                        
                        100%
                        
                        RMB
      5,000,000
 
 The
consolidation of these operating subsidiaries into a newly formed holding
company i.e. “the Company” is permitted by United States GAAP: ARB51 paragraph
22 and 23.
 
 
 F-9
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 
 (C)
              Use
      of Estimates
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Management makes these estimates using the best information
available at the time the estimates are made; however, actual results could
differ materially from these estimates.
 
 (D)
              Cash
      Equivalents
 
 For
purposes of the statement of cash flows, the Company considers all highly liquid
equity or debt instruments purchased with a maturity of three months or less to
be cash equivalents.
 
 (E)
              Accounts
      Receivable
 
 The
Company extends unsecured, non-interest bearing credit to its customers;
accordingly, the Company carries an allowance for doubtful accounts, which is an
estimate, made by management.  Management makes its estimate based on
prior experience rates and assessment of specific outstanding customer
balances.  Management may extend credit to new customers who have met
the criteria of the Company’s credit policy.
 
 (F)
              Inventory
      Carrying Value
 
 Inventory,
consisting of raw materials in the form of livestock, work in progress, and
finished products, is stated at the lower of cost or market
value.  Finished products are comprised of direct materials, direct
labor and an appropriate proportion of overhead.  Periodic evaluation
is made by management to identify if inventory needs to be written down because
of damage, or spoilage.  Cost is computed using the weighted average
method.
 
 (G)
              Purchase
      Deposit
 
 Purchase
deposit represents the cash paid in advance for purchasing raw
materials.  The purchase deposit is interest free and
unsecured.
 
 (H)
              Property,
      Plant, and Equipment
 
 Property,
Plant, and Equipment are stated at cost.  Repairs and maintenance to
these assets are charged to expense as incurred; major improvements enhancing
the function and/or useful life are capitalized.  When items are sold
or retired, the related cost and accumulated depreciation are removed from the
accounts and any gains or losses arising from such transactions are
recognized.
 
 Property
and equipment are depreciated using the straight-line method over their
estimated useful life with a 5% salvage value.  Their useful lives are
as follows:
 
 
 F-10
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 
 Fixed Asset Classification
                    
                    Useful LifeLand
      Improvements
                    
                    10
      yearsBuildings
                    
                    20
      yearsBuilding
      Improvements
                    
                    10
      yearsManufacturing
      Machinery & Equipment
                    
                    10
      yearsOffice
      Equipment
                    
                    5
      yearsFurniture
      & Fixtures
                    
                    5
      yearsVehicles
                    
                    5
      years
  (I)
              Land
      Use Rights
 
 Land Use
Rights are stated at cost less accumulated amortization.  Amortization
is provided over its useful life, using the straight-line method.  The
useful life of the land use right is 50 years.
 
 (J)
              Construction
      in Progress
 
 Construction
in progress represents the direct costs of design, acquisition, and construction
of buildings, building improvements, and land improvements.  These
costs are capitalized in the Construction-in-Progress account until
substantially all activities necessary to prepare the assets for their intended
use are completed.  At such point, the Construction-in-Progress
account is closed and the capitalized costs are transferred to their appropriate
asset classification.  No depreciation is provided until the assets
are completed and ready for their intended use.
 
 (K)
              Accounting
      for Impairment of Assets
 
 The
Company reviews the recoverability of its long-lived assets, such as property
and equipment, when events or changes in circumstances occur that indicate the
carrying value of the asset group may not be recoverable.  The
assessment of possible impairment is based on the Company’s ability to recover
the carrying value of the asset from the expected future cash flows,
undiscounted and without interest charges, of the related
operations.  If these cash flows are less than the carrying value of
such assets, an impairment loss is recognized for the difference between
estimated fair value and carrying value.  The measurement of
impairment requires management to estimate future cash flows and the fair value
of long-lived assets.
 
 (L)
              Customer
      Deposits
 
 Customer
Deposits represents money the Company has received in advance for purchases of
pork and pork products.  The Company considers customer deposits as a
liability until products have been shipped and revenue is earned.
 
 The
Company collects a damage deposit (as a deterrent) recorded in Other Payable
from showcase store operators as a means of enforcing proper use of the
Company’s trademarks.  These are not fees, but deposits that are
carried as current liabilities until and unless an operator violates the
Company’s policies (e.g. misuse of Company brand names, or sale of substandard
or counterfeit products, or unacceptably poor customer service), or if the
proprietor ceases to operate the showcase store.  If no violations
have been committed by the showcase store operator, the deposit is returned to
the operator.  The Company carries the amount of these deposits as a
current liability because the Company will return the deposit immediately to the
operator when the Company ceases to conduct business with the
operator.
 
 F-11
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 (M)
              Statutory
      Reserve
 
 Statutory
reserve refer to the amount appropriated from the net income in accordance with
laws or regulations, which can be used to recover losses and increase capital,
as approved, and, are to be used to expand production or
operations.  PRC laws prescribe that an enterprise operating at a
profit, must appropriate, on an annual basis, from its earnings, an amount to
the statutory reserve to be used for future company development.  Such
an appropriation is made until the reserve reaches a maximum equaling 50% of the
enterprise’s capital.
 
 (N)
              Other
      Comprehensive Income
 
 Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners.  Among other
disclosures, all items that are required to be recognized under current
accounting standards as components of comprehensive income are required to be
reported in a financial statement that is presented with the same prominence as
other financial statements.  The Company’s current component of other
comprehensive income is the foreign currency translation
adjustment.
 
 (O)
              Recognition
      of Revenue
 
 Revenue
from the sale of pork products, etc., is recognized on the transfer of risks and
rewards of ownership, which generally coincides with the time when the goods are
delivered to customers and the title has passed.
 
 The
Company supplies pork products, equipment, uniforms, and technical support to
the proprietors of showcase stores, who are granted the right to use the
Company’s trademarks to sell pork products.  Start-up fees relating to
uniforms are immaterial and are charged to the showcase store operators merely
to recoup setup costs.  Any funds collected from store operators in
conjunction with initial startup and operation is minimal and
immaterial.  The Company does not charge any fees for providing
equipment to the showcase stores.  The Company provides equipment at
its own cost, and the Company owns all such equipment.  Considering
the foregoing, the Company takes the position that any amount it receives from
the store operators is not material in accordance with Rule 5-03.1 of Regulation
S-X.  In addition, since the Company does not receive any material
franchise fee revenue, SFAS 45 is not applicable.
 
 (P)
              Cost
      of Sales
 
 The
Company’s cost of sales is comprised of raw materials, factory worker salaries
and related benefits, machinery supplies, maintenance supplies, depreciation,
utilities, inbound freight, purchasing and receiving costs, inspection and
warehousing costs
 
 (Q)
              Selling
      Expense
 
 Selling
expenses are comprised of outbound freight, salary for the sales force, client
entertainment, commissions, depreciation, advertising, and travel and lodging
expenses.
 
 (R)
              General
      & Administrative
 
 General
and administrative costs include executive compensation, quality control, and
general overhead such as the finance department, administrative staff, and
depreciation and amortization expense.
 
 (S)
              Shipping
      and handling
 
 All
shipping and handling are expensed as incurred and are included as a component
of cost of sales.
 
 F-12
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 (T)
              Advertising
      Expense
 
 Costs
related to advertising and promotion expenditures are expensed as incurred
during the year.  Advertising costs are charged to selling
expense
 
 (U)
              Retirement
      Benefits
 
 Retirement
benefits in the form of contributions under defined contribution retirement
plans to the relevant authorities are charged to the statement of operations as
incurred.
 
 (V)
              Income
      Taxes
 
 The
Company uses the accrual method of accounting to determine and report its
taxable reduction of income taxes for the year in which they are available. The
Company has implemented Statement of Financial Accounting Standards (SFAS) No.
109, Accounting for Income Taxes. Income tax liabilities computed according to
the United States and People’s Republic of China (PRC) tax laws are provided for
the tax effects of transactions reported in the financial statements and
consists of taxes currently due plus deferred taxes related primarily to
differences between the basis of fixed assets and intangible assets for
financial and tax reporting. The deferred tax assets and liabilities represent
the future tax return consequences of those differences, which will be either
taxable or deductible when the assets and liabilities are recovered or settled.
Deferred taxes also are recognized for operating losses that are available to
offset future income taxes. A valuation allowance is created to evaluate
deferred tax assets if it is more likely than not that these items will either
expire before the Company is able to realize that tax benefit, or that future
realization is uncertain.
  In
respect of the Company’s subsidiaries domiciled and operated in
China:
 
 ·
              Chuming
      and Chuming Operating Subsidiaries are located in the PRC and PSI is
      located in the British Virgin Islands; all of these entities are subject
      to the relevant tax laws and regulations of the PRC and British Virgin
      Islands in which the related entity domiciled.  The maximum tax
      rates of the subsidiaries pursuant to the countries in which they domicile
      are: -
  Subsidiary
                    
                    Country of Domicile
                    
                    Income Tax RateChuming
      and Chuming Operating Subsidiaries
                    
                    PRC
                    
                    
                    25.00
                    %PSI
                    
                    British
      Virgin Islands
                    
                    
                    0.00
                    %
  ·
              Effective
      January 1, 2008, PRC government implements a new 25% tax rate across the
      board for all enterprises regardless of whether domestic or foreign
      enterprise without any tax holiday which is defined as "two-year exemption
      followed by three-year half exemption" hitherto enjoyed by tax payers. As
      a result of the new tax law of a standard 15% tax rate, tax holidays
      terminated as of December 31, 2007. However, PRC government has
      established a set of transition rules to allow enterprises already started
      tax holidays before January 1, 2008, to continue enjoying the tax holidays
      until being fully utilized.
 
 ·
              The
      Company is subject to United States Tax according to Internal Revenue Code
      Sections 951 and 957. Corporate income tax is imposed on progressive rates
      in the range of: -
 
 
 F-13
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 Taxable IncomeRate
                        
                        Over
                        
                        
                        But Not Over
                        
                        
                        Of Amount Over15%
                        
                        
                        0
                        
                        
                        
                        50,000
                        
                        
                        
                        025%
                        
                        
                        50,000
                        
                        
                        
                        75,000
                        
                        
                        
                        50,00034%
                        
                        
                        75,000
                        
                        
                        
                        100,000
                        
                        
                        
                        75,00039%
                        
                        
                        100,000
                        
                        
                        
                        335,000
                        
                        
                        
                        100,00034%
                        
                        
                        335,000
                        
                        
                        
                        10,000,000
                        
                        
                        
                        335,00035%
                        
                        
                        10,000,000
                        
                        
                        
                        15,000,000
                        
                        
                        
                        10,000,00038%
                        
                        
                        15,000,000
                        
                        
                        
                        18,333,333
                        
                        
                        
                        15,000,00035%
                        
                        
                        18,333,333
                        
                        
                        
                        -
                        
                        
                        
                        -
 
 Based on
the consolidated net income for the year ended December 31, 2008, the Company
shall not be subject to income tax.
 
 (W)
              Economic
      and Political Risks
 
 The
Company’s operations are conducted in the PRC. Accordingly, the Company’s
business, financial condition and results of operations may be influenced by the
political, economic and legal environment in the PRC, and by the general state
of the PRC economy.
 
 (X)
              Foreign
      Currency Translation
 
 The
Company maintains its financial statements in the functional
currency.  The functional currency of the Company is the Renminbi
(RMB).  Monetary assets and liabilities denominated in currencies
other than the functional currency are translated into the functional currency
at rates of exchange prevailing at the balance sheet
dates.  Transactions denominated in currencies other than the
functional currency are translated into the functional currency at the exchanges
rates prevailing at the dates of the transaction.  Exchange gains or
losses arising from foreign currency transactions are included in the
determination of net income for the respective periods.
 
 For
financial reporting purposes, the financial statements of the Company which are
prepared using the functional currency have been translated into United States
dollars.  Assets and liabilities are translated at the exchange rates
at the balance sheet dates and revenue and expenses are translated at the
average exchange rates and stockholders’ equity is translated at historical
exchange rates.  Any translation adjustments resulting are not
included in determining net income but are included in foreign exchange
adjustment to other comprehensive income, a component of stockholders’
equity.
 
 Exchange Rates
                      
                      12/31/2008
                      
                      
                      12/31/2007
                      
                      
                      12/31/2006Period
      end RMB : US$ exchange rate
                      
                      
                      6.85420
                      
                      
                      
                      7.3141
                      
                      
                      
                      7.8175Average
      period RMB : US$ exchange rate
                      
                      
                      6.96225
                      
                      
                      
                      7.6172
                      
                      
                      
                      7.9819
 
 RMB is
not freely convertible into foreign currency and all foreign exchange
transactions must take place through authorized institutions.  No
representation is made that the RMB amounts could have been, or could be,
converted into US$ at the rates used in translation.
 
 (Y)
              Earnings
      Per Share
 
 The
Company computes earnings per share (“EPS”) in accordance with Statement of
Financial Accounting Standards No. 128, “Earnings per share” (“SFAS No. 128”),
and SEC Staff Accounting Bulletin No. 98 (“SAB 98”). SFAS No. 128 requires
companies with complex capital structures to present basic and diluted EPS.
Basic EPS is measured as the income or loss available to common shareholders
divided by the weighted average common shares outstanding for the period.
Diluted EPS is similar to basic EPS but presents the dilutive effect on a per
share basis of potential common shares (e.g., contingent shares, convertible
securities, options, and warrants) as if they had been converted at the
beginning of the periods presented, or issuance date, if later. Potential common
shares that have an anti-dilutive effect (i.e., those that increase income per
share or decrease loss per share) are excluded from the calculation of diluted
EPS.
 
 F-14
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 (Z)
              Recent
      Accounting Pronouncements
 
 In March
2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133"
("SFAS 161"). SFAS 161 applies to all derivative instruments and
related hedged items accounted for under SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 161
requires entities to provide greater transparency about (a) how and why an
entity uses derivative instruments, (b) how derivative instruments and
related hedged items are accounted for under SFAS 133 and its related
interpretations, and (c) how derivative instruments and related hedged
items affect an entity's financial position, results of operations and cash
flows. SFAS 161 is effective for financial statements issued for fiscal
years and interim periods beginning after November 15, 2008.
 
 In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" ("SFAS 162"). SFAS 162 identifies the sources
of accounting principles and the framework for selecting the principles used in
the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (the
GAAP hierarchy). Statement 162 will become effective 60 days
following the SEC's approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, "The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles."
 
 In May
2008, the FASB issued FSP Accounting Principles Board ("APB") 14-1 "Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)" ("FSP APB 14-1"). FSP APB 14-1
requires the issuer of certain convertible debt instruments that may be settled
in cash (or other assets) on conversion to separately account for the liability
(debt) and equity (conversion option) components of the instrument in a manner
that reflects the issuer's non-convertible debt borrowing rate. FSP
APB 14-1 is effective for fiscal years beginning after December 15,
2008 on a retroactive basis.
 
 The
Company is currently evaluating the potential impact, if any, of the adoption of
the above recent accounting pronouncements on its consolidated results of
operations and financial condition.
 
 3.
                Restricted
Cash
 
 The
restricted cash reflects funds received from the financing transaction described
in Note 18 that are held in an escrow with US Bank in the United
States.  These funds are restricted until fulfilment of the following
criteria: (1) the hiring of a Chief Financial Officer that meets the approval of
the investors within 90 days of the closing (subsequently extended to 120 days),
at such point the Company will release $1.5 million from restriction, (2)
appointment of a Board of Directors that has majority of independent members, at
such point $2.0 million will be released from restriction, and (3) appoint a
successor auditor, at which point $500,000 will be released from
restriction.  There is $250,000 in the escrow account that has already
been earmarked for investor relations purposes.
 
 At
December 31, 2008, the Company has not fulfilled requirement (3), and did not
fulfill requirement (1).  The Company has requested bids for
consideration from auditing firms that were on an approved list submitted by,
Pinnacle Fund, whom was the lead investor in the Company’s financing transaction
in December 2007, detailed in Note 18 – Financing
Transaction.
  4.
                Accounts
  Receivable
 
 Accounts
Receivable at December 31, consisted of the following:
 F-15
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 At
                    
                    
                    At
                    
                    
                    AtDecember 31,
                    
                    
                    December 31,
                    
                    
                    December 31,2008
                    
                    
                    2007
                    
                    
                    2006Accounts
      Receivable – Trade
                    
                    
                    18,849,560
                    
                    
                    $
                    707,156
                    
                    
                    $
                    1,877,664Less: Allowance for
      Doubtful Accounts
                    
                    
                    (188,495
                    )
                    
                    
                    (84,723
                    )
                    
                    
                    (79,267
                    )Net
      Accounts Receivable
                    
                    
                    18,661,065
                    
                    
                    $
                    622,433
                    
                    
                    $
                    1,798,397
 
 At
                    
                    
                    At
                    
                    
                    AtDecember 31,
                    
                    
                    December 31,
                    
                    
                    December 31,Allowance for Bad Debts
                    
                    2008
                    
                    
                    2007
                    
                    
                    2006Beginning
      Balance
                    
                    $
                    (84,723
                    )
                    
                    $
                    (79,267
                    )
                    
                    $
                    (76,754
                    )Allowance
      Provided
                    
                    $
                    (103,772
                    )
                    
                    
                    (5,456
                    )
                    
                    
                    (2,513
                    )Charged
      Against Allowance
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Ending
      Balance
                    
                    $
                    (188,495
                    )
                    
                    $
                    (84,723
                    )
                    
                    $
                    (79,267
                    )
 
 During
the second quarter of the 2008 fiscal year, management revised the Company’s
credit policy.  Based on management’s review, the Company began
extending more favorable credit terms to its top tier
customers.  Those customers that qualified as top tier were extended
approximately 45 to 60 days of credit.  The Company previously
extended one to two days of credit.  As of December 31, 2008, the
Company has not had any receivables that were unrecoverable.
 
 Accounts
Receivable Aging Analysis
 At
December 31, 2008
 0-30
      Days
                        
                        31-60
      Days
                        
                        
                        61-90
      Days
                        
                        
                        91-120
      Days
                        
                        
                        Total 
      Outstanding$
      10,478,579
                        
                        $
                        1,627,515
                        
                        
                        $
                        168,045
                        
                        
                        $
                        6,575,420
                        
                        
                        $
                        18,849,560
 
 5.
                  Related Party
  Receivable
 
 In the
normal course of business which includes the purchases of hogs and other raw
materials, sale of pork and pork products, the Company conducts transactions
with the following related parties: Dalian Chuming Group Co., Ltd (“Group”) and
the Group subsidiaries, that are not consolidated into Energroup Holdings or
Energroup’s subsidiary, Dalian Chuming Precious Sheen Investments Consulting Co.
Ltd. (Chuming): (1) Dalian Chuming Industrial Development Co., Ltd.,
(“Industrial Development Co.”) (2) Dalian Chuming Trading Co., Ltd, (“Trading
Co.”) (3) Dalian Mingxing Livestock Product Co. Ltd., (“Mingxing”) (4) Dalian
Chuming Stockbreeding Combo Development Co., Ltd., (“Combo Development Co.”) (5)
Dalian Chuming Fodder Co., Ltd. (“Fodder Co.”), and (6) Dalian Chuming
Biological Technology Co., Ltd., (“Biological Co.”) and (7) Dalian Huayu Seafood
Food Co., Ltd. (“Huayu”).  The Company and the aforementioned related
parties share common beneficial ownership.  All transactions with
related parties are generally performed at arm’s length.
 
 In the
event that the Company has both receivables from, and payables to the Group it
will, in accordance with FIN 39, setoff the balances in order to arrive at a
single balance that is either due from, or due to the Group.  The
Company’s net receivable balance of $10,919,777at December 31, 2008 is
shown in the following table.
 
 F-16
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 
 Ref.
                                  
                                  Subsidiary
                                    Due to:
                                  
                                  Nature of Balance
                                  
                                  Related Party
                                  
                                  Balance
                                  
                                  Description of
                                    TransactionA
                                  
                                  Food
      Company
                                  
                                  Sale
      of Products resulting in Trade Receivable from
                                  
                                  Dalian
      Huayu Seafood Food Co., Ltd.
                                  
                                  
                                  234,699
                                  
                                  Food
      Company sold cooked food to Huayu dating back to
1/2007.Subtotal
      of Related Party Sales
                                  
                                  $
                                  234,699B
                                  
                                  Food
      Company
                                  
                                  Loan
      Receivable from
                                  
                                  Dalian
      Huayu Seafood Co., Ltd.
                                  
                                  
                                  2,917,918
                                  
                                  Huayu
      borrowed loan from Food Company back to 11/2008C
                                  
                                  Food
      Company
                                  
                                  Loan
      Receivable from
                                  
                                  Dalian
      Mingxing Livestock Product Co. Ltd.,
                                  
                                  
                                  4,376,878
                                  
                                  Mingxing
      borrowed loan from Food Company back to 12/2008D
                                  
                                  Meat
      Company
                                  
                                  Loan
      Receivable from
                                  
                                  Dalian
      Chuming Fodder Co., Ltd.
                                  
                                  
                                  34,714
                                  
                                  Meat
      Companypaid utility fees for Fodder Co. dating back to
    7/2008.E
                                  
                                  Meat
      Company
                                  
                                  Loan
      Receivable from
                                  
                                  Dalian
      Chuming Stockbreeding Combo Development Co., Ltd.
                                  
                                  
                                  3,445,292
                                  
                                  Prepayment
      to Group for Purchase of hogs dating back to 7/2008.F
                                  
                                  Meat
      Company
                                  
                                  Loan
      Receivable from
                                  
                                  Dalian
      Chuming Group Co., Ltd.
                                  
                                  
                                  68,211
                                  
                                  Meat
      Company purchased office supplies on behalf of the Group dating back to
      11/2005G
                                  
                                  Food
      Company
                                  
                                  Loan
      Receivable from
                                  
                                  Dalian
      Chuming Group Co., Ltd.
                                  
                                  
                                  1,458,959
                                  
                                  Food
      Company paid bank loan principal and interest on behalf of Industrial Co.
      dating back to 1/2008H
                                  
                                  Sales
      Company
                                  
                                  Loan
      Receivable from
                                  
                                  Dalian
      Huayu Seafood Co., Ltd.
                                  
                                  
                                  1,562,263
                                  
                                  Sales
      Company paid Huayu to help it buy materials dating back to
      9/2008.I
                                  
                                  Sales
      Company
                                  
                                  Loan
      Receivable from
                                  
                                  Dalian
      Chuming Group Co., Ltd.
                                  
                                  
                                  5,212,167
                                  
                                  Sales
      Company paid the Group to help it buy materials dating back to
      7/2008.J
                                  
                                  Sales
      Company
                                  
                                  Loan
      Receivable from
                                  
                                  Dalian
      Chuming Stockbreeding Combo Development Co., Ltd.
                                  
                                  
                                  19,568,483
                                  
                                  Sales
      Company paid for Stockbreeding to buy hogs from farmer dating back
      7/2008K
                                  
                                  Sales
      Company
                                  
                                  Loan
      Receivable from
                                  
                                  Dalian
      Chuming Fodder Co., Ltd.
                                  
                                  
                                  2,509,410
                                  
                                  Sales
      Company paid for feeding materials on behalf of Fodder  dating
      back to 9/2008.Subtotal
      of Loans to Related Parties
                                  
                                  $
                                  41,154,295Gross
      Related Party Receivable
                                  
                                  $
                                  41,388,994
  
 
 F-17
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 Subsidiary
      Due from:
                          
                          Nature
      of Balance
                          
                          Related
      Party
                          
                          Balance
                          
                          Description
      of
                            TransactionL
                          
                          Meat
      Company
                          
                          Purchase
      of Raw Materials resulting in Trade Payable to
                          
                          Dalian
      Chuming Group Co., Ltd.
                          
                          
                          5,396,217
                          
                          Purchase
      of hogs from Group dating back to 12/1/2004.M
                          
                          Meat
      Company
                          
                          Purchase
      of Raw Materials resulting in Trade Payable to
                          
                          Dalian
      Chuming Group Co., Ltd.
                          
                          
                          7,365,945
                          
                          Purchase
      of hogs from Group dating back to 7/2008.N
                          
                          Food
      Company
                          
                          Purchase
      of Raw Materials resulting in Trade Payable to
                          
                          Dalian
      Huayu Seafood Food Co., Ltd
                          
                          
                          2,621,251
                          
                          Advance
      from Huayu for the purchase of product dating back to
    12/2007.Subtotal
      of Purchases from Related Parties
                          
                          $
                          15,383,413
 
 O
                      
                      Food
      Company
                      
                      Loan
      Payable to
                      
                      Dalian
      Chuming Group Co., Ltd.
                      
                      
                      950,134
                      
                      Group
      paid for salaries and other G&A expenses on behalf of Food dating back
      to 1/2004.P
                      
                      Meat
      Company
                      
                      Loan
      Payable to
                      
                      Dalian
      Chuming Stockbreeding Combo Development Co., Ltd.
                      
                      
                      123,210
                      
                      Meat
      Company collected bank loans for Stockbreeding Co. dating back to
      7/2008Q
                      
                      Meat
      Company
                      
                      Loan
      Payable to
                      
                      Dalian
      Chuming Industrial Development Co., Ltd.
                      
                      
                      6,477
                      
                      Industrial
      Development paid salaries on behalf of Meat Company dating back to
      1/2005.R
                      
                      Meat
      Company
                      
                      Loan
      Payable to
                      
                      Dalian
      Mingxing Livestock Product Co. Ltd.,
                      
                      
                      393,919
                      
                      Meat Company collected
      bank loans on behalf of Mingxing dating back to 8/2008S
                      
                      Meat
      Company
                      
                      Loan
      Payable to
                      
                      Dalian
      Huayu Seafood Food Co., Ltd
                      
                      
                      541,738
                      
                      Huayu
      lent funds to Meat Company for necessary operation activities dating
      12/2008T
                      
                      Sales
      Company
                      
                      Loan
      Payable to
                      
                      Dalian
      Mingxing Livestock Product Co. Ltd.,
                      
                      
                      986,256
                      
                      Sales
      Company borrowed funds from Mingxing for operations purpose dating back to
      12/2008U
                      
                      WFOE
                      
                      Loan
      Payable to
                      
                      Dalian
      Chuming Group Co.
                      
                      
                      12,084,070
                      
                      Group
      loaned funds to WFOE (incl. funds transferred from Meat for US
      RTO.Subtotal
      of Loans from Related Parties
                      
                      $
                      15,085,804Gross
      Related Party Payable
                      
                      $
                      30,469,217Setoff Related Party
      Receivable (Receivables have been setoff against
      payables)
                      
                      $
                      10,919,777
  
 
 
 F-18
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 A.
              The
      Food Company sold USD 235 thousand (RMB 1.6 million) worth of cooked food
      to Huayu on credit.  This transaction impacted the statement of
      income.  After applying a 17% valued added tax, the Food Company
      generated USD 200 thousand (RMB 1.4 million) in sales revenue from this
      transaction.
 
 B.
              Food
      Company loaned USD 2.9 million (RMB 20 million) to Huayu in November
      2008.
 
 C.
              Food
      Company loaned USD 4.4 million (RMB 30 million) to Mingxing in December
      2008.
 
 D.
              Meat
      Company paid USD 35 thousand (RMB 237 thousand) for utility fees on behalf
      of Fodder Co. in the 3rd quarter of 2008, which resulted in this
      receivable.
 
 E.
              The
      prepayment of USD 3.5 million (RMB 23.6 million) from Meat Company to the
      Group for hogs was increased by USD 96 thousand (RMB 0.6 million), USD
      0.15 million (RMB 1 million), and USD 4.1 million (RMB 28.3 million) in
      July, August, and September respectively.  Simultaneously, the
      Group paid down its balance in the amounts of USD 1.3 million (RMB 8.9
      million) and USD 230 thousand (RMB 1.54 million) to Meat
      Company.
 
 F.
              The
      balance of USD 68 thousand (RMB 467 thousand) for the purchase of office
      supplies by Meat Company for the Group, was still outstanding as of
      December 31, 2008.
 
 G.
              Food
      Company paid certain bank loan interest and principal on behalf of
      Industrial Co. prior to 2008.  This resulted in a receivable of
      USD 1.5 million (RMB 10 million) owed by Industrial Co. to the Food
      Company.  A balance of USD 1.5 million (RMB 10 million) remained
      outstanding as of December 31,
2008.
 
 H.
              The
      Sales Company advanced USD 1.6 million (RMB10.7 million) to Huayu for the
      purchase of raw materials, resulting in this
  receivable.
 
 I.
              The
      Sales Company paid for the purchase of certain materials for the Group,
      resulting in a balance of USD 5.2 million (RMB 35.7 million) receivable
      from Group to Sales Company.   This balance was increased
      by USD 5.8 million (RMB 39.6 million) and USD 3.9 million (RMB 20.6
      million) in the 3rd and 4th quarters of 2008, in connection with the
      purchase of additional materials by Sales Company.  The Group
      has paid down USD 4.5 million (RMB 20.3 million) of this balance,
      resulting in an ending balance of USD 5.2 million (RMB 35.7
      million).
  J.
              Sales
      Company paid USD 19.6 million (RMB 134.1 million) to local farmers for the
      purchase of hogs, on behalf of the Group, which gave rise to this
      receivable from the Group to Sales
Company.
 
 K.
              Sales
      Company purchase feed materials, paid construction fees, and utility costs
      for Fodder Co., resulting in a receivable of USD 2.5 million (RMB17.2
      million) due from Fodder Co. to Sales Company.  In 2008, the
      following transactions affected the balance of this
      receivable:  USD 0.8 million (RMB 5.4 million) was paid to buy
      feeding materials, USD 1.1 million (RMB 7.7 million) was paid for
      construction fees, and USD 0.6 million (RMB 4 million) for
      utilities.
 
 
 F-19
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 L.
              The
      Company acquired hogs from the Group, resulting in a balance payable from
      the Company to the Group of USD 5.4 million (RMB 36.9
      million).  In 2008, this balance was affected by the following
      transactions:  increases by USD 3.9 million (RMB 27.4 million),
      USD 5.5 million (RMB 37.7 million), USD 5.2 million (RMB 35.1 million),
      and USD 480 thousand (RMB 3.3 million) in July, August, September, and
      December respectively.  The Company paid USD 9.8 million (RMB
      67.4 million) to settle this balance in September 2008. The increase in
      the balance as result of the purchase hogs would impact the statements of
      income; however, the effect of the repayment is isolated to the Company’s
      balance sheet.
 
 M.
              The
      Group sold hogs to Meat Company on August 12, 2008 which were not
      immediately paid for, which resulted in a net payable from the Meat
      Company to Group in the amount of USD 7.4 million (RMB 50.5
      million).
 
 N.
              The
      USD 2.6 million (RMB 18 million) deposit owed to Huayu was still
      outstanding at December 31, 2008.
 
 O.
              The
      Group paid USD 954 thousand (RMB 6.5 million) in salaries and general
      administrative expense on behalf of Food Company, resulting in this
      payable.
  P.
              The
      outstanding balance of USD 123 thousand (RMB 84 thousand) due from Meat
      Company to Combo Development Co. resulted from the fact that Meat Company
      collected USD 52 thousand (RMB 0.4 million) hogs sales and USD 1.5 million
      (RMB 10.4 million) in proceeds from a bank loan on behalf of Combo
      Development Co. in August and September, 2008 respectively.
      Simultaneously, the Meat Company repaid USD 1.5 million (RMB 10 million)
      to Combo Development Co.
 
 Q.
              The
      a balance of USD 6 thousand (RMB 44 thousand) owed by Industrial
      Development Co. to Meat Company was still outstanding at December 31,
      2008.
 
 R.
              Meat
      Company collected bank loans on behalf of Mingxing dating back to August
      2008.
 
 S.
              Meat
      Company borrowed USD 542 thousand (RMB 3.7 million) operating funds from
      Huayu in December 2008.
 
 T.
              Sales
      Company borrowed USD 986 thousand (RMB 6.7 million) from Mingxing in
      December 2008.
 
 U.
              The
      outstanding payable balance of USD 12.1 million (RMB 83.2 million) due to
      the Group has been transferred to the books of Chuming, i.e., WFOE owes
      Chuming the amount stated above.   This balance was
      increased by USD 250 thousand (RMB 1.7 million) in the fourth quarter of
      2008.
  The
related party receivable balance detailed above, and the related transactions
that comprise that balance were integral and material to the Company’s
operations.  The Company was reliant on transactions with the above
related parties in order to conduct its business normally.  The
Company acknowledges that it has the responsibility to comply with paragraph c
of SFAS 57 which calls for the dollar amounts of transactions for each of the
periods for which income statements are presented and the effects of any change
in the method of establishing the terms from that used in the preceding
period.  The Company’s accounting system in the past was manual and
accordingly is not able to, from a cost benefit perspective, summarize and
provide further detail on the related party transactions.  Also, the
Company’s current accounting department does not have sufficient staff in order
to perform an exercise to further detail the related party payables and
receivables beyond what has been provided above; however the Company is taking
steps to update its accounting systems and methods to provide fuller detail
regarding these transactions for future periods.  The Company does
represent that the balances disclosed above are both accurate and reliable
within acceptable thresholds of materiality.
 
 
 
 
 F-20
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 The
Company’s related party receivables and payables in the period presented were in
the form of either short-term loans bearing no interest, or trade payables and
receivables relating to the purchase of raw materials, supplies or products for
which payment was due within a short period of time.  Management
believes that the net receivables from related parties are fully
recoverable.
 
 Of the
$10,919,777 netreceivable owed by the
Group to the Company, the entire amount has been securitized by bank drafts
issued by the bank on behalf of subsidiaries of the Group to the
Company.  These notes are collateralized by deposits at the bank by
those particular subsidiaries of the Group.  The drafts can be
endorsed and discounted to the bank for cash; however the Company currently
intends to hold these drafts until maturity.  The following table
summarizes the amounts of each draft.
 
 Subsidiary
      of the Group
                              
                              AmountHuayu
                              
                              $
                              2,917,919Mingxing
                              
                              
                              4,376,878Combo
      Development
                              
                              
                              2,188,439Group
                              
                              
                              1,436,540$
                              10,919,777
 
 6.
                Inventory
 
 At
                    
                    
                    At
                    
                    
                    AtDecember 31,
                    
                    
                    December 31,
                    
                    
                    December 31,2008
                    
                    
                    2007
                    
                    
                    2006Raw
      Materials
                    
                    $
                    867,549
                    
                    
                    $
                    1,039,440
                    
                    
                    $
                    875,223Work
      in Progress
                    
                    
                    241,738
                    
                    
                    
                    547,889
                    
                    
                    
                    365,961Finished
      Goods
                    
                    
                    4,941,822
                    
                    
                    
                    1,328,688
                    
                    
                    
                    1,144,263$
                    6,051,109
                    
                    
                    $
                    2,916,016
                    
                    
                    $
                    2,385,447
 
 7.
                Property, Plant &
    Equipment
 
 At
                      
                      
                      
                      
                      AccumulatedDecember 31, 2008:
                      
                      Cost
                      
                      
                      Depreciation
                      
                      
                      NetBuildings
                      
                      $
                      21,604,325
                      
                      
                      $
                      (3,607,219
                      )
                      
                      $
                      17,997,105Manufacturing
      Equipment
                      
                      
                      10,061,608
                      
                      
                      
                      (3,132,725
                      )
                      
                      
                      6,928,883Office
      Equipment
                      
                      
                      195,577
                      
                      
                      
                      (150,670
                      )
                      
                      
                      44,907Vehicles
                      
                      
                      913,816
                      
                      
                      
                      (477,265
                      )
                      
                      
                      436,551Furniture
      & Fixture
                      
                      
                      524,020
                      
                      
                      
                      (137,317
                      )
                      
                      
                      386,704$
                      33,299,346
                      
                      
                      $
                      (7,505,196
                      )
                      
                      $
                      25,794,151
 
 At
                      
                      
                      
                      
                      AccumulatedDecember 31, 2007:
                      
                      Cost
                      
                      
                      Depreciation
                      
                      
                      NetBuildings
                      
                      $
                      19,910,391
                      
                      
                      $
                      (2,522,257
                      )
                      
                      $
                      17,388,134Manufacturing
      Equipment
                      
                      
                      9,066,948
                      
                      
                      
                      (2,041,694
                      )
                      
                      
                      7,025,254Office
      Equipment
                      
                      
                      122,124
                      
                      
                      
                      (60,298
                      )
                      
                      
                      61,826Vehicles
                      
                      
                      652,231
                      
                      
                      
                      (321,138
                      )
                      
                      
                      331,093Furniture
      & Fixture
                      
                      
                      49,204
                      
                      
                      
                      (19,015
                      )
                      
                      
                      30,189$
                      29,800,898
                      
                      
                      $
                      (4,964,402
                      )
                      
                      $
                      24,836,496
 
 
 F-21
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 At
                      
                      
                      
                      
                      AccumulatedDecember 31, 2006:
                      
                      Cost
                      
                      
                      Depreciation
                      
                      
                      NetBuildings
                      
                      $
                      14,663,106
                      
                      
                      $
                      (1,174,049
                      )
                      
                      $
                      13,489,057Manufacturing
      Equipment
                      
                      
                      8,346,776
                      
                      
                      
                      (1,403,176
                      )
                      
                      
                      6,943,600Office
      Equipment
                      
                      
                      68,198
                      
                      
                      
                      (14,165
                      )
                      
                      
                      54,033Vehicles
                      
                      
                      572,290
                      
                      
                      
                      (203,600
                      )
                      
                      
                      368,690Furniture
      & Fixture
                      
                      
                      30,550
                      
                      
                      
                      (10,468
                      )
                      
                      
                      20,082$
                      23,680,920
                      
                      
                      $
                      (2,805,458
                      )
                      
                      $
                      20,875,462
  8.
                Land Use
Right
 
 The
Company had the following intangible assets outstanding at December
31:
 
 At
                    
                    
                    At
                    
                    
                    AtDecember 31,
                    
                    
                    December 31,
                    
                    
                    December 31,2008
                    
                    
                    2007
                    
                    
                    2006Land
      Use Rights, at Cost
                    
                    $
                    14,407,503
                    
                    
                    $
                    13,501,580
                    
                    
                    $
                    9,303,402Less: Accumulated
      Amortization
                    
                    
                    (977,068
                    )
                    
                    
                    (645,600
                    )
                    
                    
                    (392,283
                    )$
                    13,430,435
                    
                    
                    $
                    12,855,980
                    
                    
                    $
                    8,911,119
 
 9.
                Bank
Loans
 
 (A)
              Short
      Term Bank Loans
 
 At
December 31, 2008 the Company had the following short term loans
outstanding:
 
 Bank
                          
                          Interest Rate
                          
                          Due Date
                          
                          AmountBank
      of China
                          
                          
                          6.1586
                          %
                          10/26/2009
                          
                          $
                          4,376,878Bank
      of China
                          
                          
                          7.3260
                          %
                          10/17/2009
                          
                          
                          2,042,543$
                          6,419,422
 
 The loan
provided by the Bank of China is secured by the Meat Company’s land use rights,
which have been appraised at a fair market value of $5,605,611 (RMB
41,000,000).  Also, the Shanghai Pudong Development Bank loan has been
guaranteed by the Dalian Chuming Group Co., Ltd.
 
 (B)
              Bank
      Loan through Group
 
 The
Company obtained a loan of $20,466,901 (RMB 160,000,000) from the Group;
which in turn, obtained these funds in a joint loan commitment from both China
Development Bank and Shenzhen Development Bank (“Banks”) via a collateralized
loan.  The Group collateralized the loan by purchasing a bond
from China Export and Credit Insurance Corporation (“Bond
Issuer”).  The bond guarantees to the Banks the entire principal and
accrued interest of the loan.  The cost of the bond is RMB 1,000,000
annually, or in USD: $120,668, 121,902, and 125,284 for the years 2004, 2005,
and 2006, respectively, which was paid by the Company.  The loan
carries a fixed interest of 5.76% per annum.  The Company pledged both
land use rights and buildings to the Bond Issuer.  The Company pursued
a loan from the Group as the financing solution of choice because the Company’s
tangible assets, at the time of origination, were insufficient to collateralize
the loan. Additionally, the Company lacked the favorable credit history to
directly establish credit facility with the bank.
 
 
 F-22
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 At
December 31, 2007, the Company repaid its debt, in its entirety to the Group by
setting off receivables owed by the Group to the Company.  The Company
repaid the loan in order to meet the requirements of the equity financing
transaction detailed in Note 18.  The balances are now owed by the
Group to the Banks, and liability for paying the bonding insurance annually lies
with the Group.  The pledged collateral of land use rights and
buildings made to the Bond Issuer still underlie the loan currently owed by the
Group, and as such, the Company’s assets, namely the buildings and land use
rights are at risk if the Group were to default on this loan.
  10.
                Capitalization
 
 As a
result of a reverse-acquisition on December 31, 2007 that was consummated via a
share exchange, and a concurrent equity financing, in the form of a private
placement by issuing common stock to ten accredited investors, the Company’s
capitalization is now reflected by the table shown below:
  Name of Shareholder
                      
                      Number of
                        Shares
                      
                      
                      Common
                        Stock
                        Capital
                      
                      
                      Additional
                        Paid in
                        Capital
                      
                      
                      Equity %Operating
      Companies Founders
                      
                      
                      14,688,948
                      
                      
                      $
                      14,689
                      
                      
                      $
                      2,396,079
                      
                      
                      
                      69.50
                      %Pre-RTO
      Shareholders
                      
                      
                      422,756
                      
                      
                      
                      423
                      
                      
                      
                      -
                      
                      
                      
                      2.00
                      %Advisors
      & Consultants
                      
                      
                      2,161,052
                      
                      
                      
                      2,161
                      
                      
                      
                      -
                      
                      
                      
                      10.22
                      %Private
      Investors
                      
                      
                      3,863,636
                      
                      
                      
                      3,864
                      
                      
                      
                      13,043,964
                      
                      
                      
                      18.28
                      %21,136,392
                      
                      
                      $
                      21,137
                      
                      
                      $
                      15,440,043
                      
                      
                      
                      100.00
                      %
  11.
                Commitments of Statutory
      Reserve
 
 In
compliance with PRC laws, the Company is required to appropriate a portion of
its net income to its statutory reserve up to a maximum of 50% of an
enterprise’s registered capital in the PRC.  The Company had future
unfunded commitments, as provided below.
 
 At
                    
                    
                    At
                    
                    
                    AtDecember 31,
                    
                    
                    December 31,
                    
                    
                    December 31,2008
                    
                    
                    2007
                    
                    
                    2006PRC
      Registered Capital
                    
                    
                    15,566,849
                    
                    
                    
                    3,642,866
                    
                    
                    
                    2,413,352-
      Statutory Reserve Ceiling based on 50% of Registered
      Capital
                    
                    
                    7,783,424
                    
                    
                    
                    1,821,433
                    
                    
                    
                    1,206,676Less: - Retained
      Earnings appropriated to Statutory Reserve
                    
                    
                    (2,077,488
                    )
                    
                    
                    (751,444
                    )
                    
                    
                    (751,444
                    )Reserve
      Commitment Outstanding
                    
                    $
                    5,705,936
                    
                    
                    $
                    1,069,989
                    
                    
                    $
                    455,232
  12.
                Advertising
Costs
 
 Advertising
expenses were $2,629,853, $3,611,666, and $869 for the years ended December 31,
2008, 2007, and 2006, respectively.
 
 F-23
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 13.
                Income
Taxes
 
 The
Company’s different operating subsidiaries are subject to different income tax
regulations under PRC law.
 
 The
operating subsidiary, Meat Company, has been given special tax-free status by
the PRC government because of the Company standing as leader in its industry in
Dalian; therefore, no provision for income tax in the PRC was made for years
2008, 2007, and 2006.
 
 The
Company’s operating subsidiary, Food Company, has provided provisions for income
taxes in years 2008, 2007, and 2006, of $508,844, $967,539, and
$400,605, respectively.
 
 The
Company’s operating subsidiary, Sales Company, has not provided provisions for
income taxes in years 2008, 2007, and 2006 as it has incurred operating losses
for those respective years.  The Company has determined that deferred
tax assets arising from net operating losses in prior years may not realized,
accordingly, the company has recognized a tax expense to the income statement in
the amount of $11,246.
 
 After
adjusting for special tax-free status and net operating loss, the consolidated
taxable earnings were determined, and the results were as follows:
-
 
 i.
                  2007
                  Tax
      expense
                  (520,089)ii.
                  2006
                  Tax
      expense
                  (967,539)iii.
                  2005
                  Tax
      benefit
                  1,609
 
 Beginning
December 31, 2007, the Company’s foreign subsidiaries became subject to U.S.
income tax liability; however, the tax is deferred until foreign source income
is repatriated to the Company and the Company has not currently determined when
foreign source income will be repatriated.  Accordingly, the company
has not made any provisions for U.S. income tax liability.
 
 On March
16, 2007, the PRC government passed new tax legislation that repealed
preferential tax treatment for foreign investment enterprises in the PRC and
enacted new tax regulations.  Under such regulations, with certain
exceptions, both domestic and foreign enterprises will be taxed at a standard
enterprise income tax rate of 25%.  The Company’s two operating
subsidiaries, Food Company, and Sales Company are subject to the 25% income
tax rate beginning January 1, 2008.  Based on current PRC legislation,
Meat Company should be expected to continue benefiting from a tax
holiday.
 
 14.
                Commitments
 
 It is
company policy to develop plant facilities based on availability of cash
resources without incurring capital commitments.  Therefore, the
Company did not have any capital commitments existing at December 31,
2008.
 
 On
December 19, 2007, the Company entered into a hog purchase agreement whereby the
Group will provide at fair market price a minimum number of hogs to the
Company.  At December 31, 2008, the Company expects minimum quantities
of hogs detailed in the following table:
 
 Year
                        
                        Hogs
                        
                        
                        Price Per Hog
                        
                        
                        Amount2009
                        
                        
                        800,000
                        
                        
                        $
                        187.13
                        
                        
                        $
                        149,704,3062010
                        
                        
                        800,000
                        
                        
                        $
                        205.84
                        
                        
                        
                        164,674,737$
                        314,379,043
 
 
 
 F-24
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 
 The
Company believes that the fair market price of the hogs will increase by 10%
each year.  The assumption of 10% reflects that Company expectations
in regards to inflation, and the rising costs of inputs in breeding
livestock.
 
 15.
                Operating
  Segments
 
 The
Company individually tracks the performance of its three operating subsidiaries
Meat Company, Food Company, and Sales Company.  Meat Company is
primarily engaged in the slaughter and processing of pork livestock for
wholesale and retail distribution.  Food Company is primarily engaged
in the production of pork-based food products, such as sausages and cured meats,
for retail distribution.  Sales Company is primarily engaged in the
sale and distribution of products produced by Food Company and Meat
Company.
 
 The chief
operating decision maker is the Chief Executive Officer of the
Company.  He evaluates each operating segment on the following
measures of profit or loss: gross profit, operating income, and earnings before
taxes, and net income.  When he makes decisions on the strategic plans
of each operating segment, he considers the foregoing measures of profit or loss
and their impact on the overall performance of the Company as a
whole.
 
 Below is
a presentation of the Company’s results of operations and financial position for
its operating subsidiaries at December 31, 2008, 2007, and 2006 and for the
years then ended.  The Company has also provided reconciling
adjustments with the Company and its intermediate holding companies Dalian
Chuming Precious Sheen Investments Consulting Ltd. (“Chuming WFOE”) and Precious
Sheen Investments Ltd (PSI).
  Results
      of Operations
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      Chuming
      WFOE,For
      the year ended
                      
                      Meat
                      
                      
                      Food
                      
                      
                      Sales
                      
                      
                      PSI,
      &December
      31, 2008
                      
                      Company
                      
                      
                      Company
                      
                      
                      Company
                      
                      
                      Eliminations
                      
                      
                      TotalSales
                      
                      $
                      165,540,800
                      
                      
                      $
                      20,275,953
                      
                      
                      $
                      82,629,122
                      
                      
                      $
                      (92,085,862
                      )
                      
                      $
                      176,360,013Cost
      of Sales
                      
                      
                      143,467,926
                      
                      
                      
                      17,018,115
                      
                      
                      
                      81,394,069
                      
                      
                      
                      (92,085,862
                      )
                      
                      
                      149,794,249Gross
      Profit
                      
                      
                      22,072,873
                      
                      
                      
                      3,257,837
                      
                      
                      
                      1,235,054
                      
                      
                      
                      -
                      
                      
                      
                      26,565,764Operating
      (Loss)/Profit
                      
                      
                      19,835,123
                      
                      
                      
                      2,038,279
                      
                      
                      
                      (2,475,995
                      )
                      
                      
                      (654,670
                      )
                      
                      
                      18,742,737Other
      Income (Expense)
                      
                      
                      (684,408
                      )
                      
                      
                      (95,144
                      )
                      
                      
                      (6,952
                      )
                      
                      
                      (10,598,879
                      )
                      
                      
                      (11,385,383
                      )Earnings/(Loss)
      before Tax
                      
                      
                      19,150,715
                      
                      
                      
                      1,943,135
                      
                      
                      
                      (2,482,947
                      )
                      
                      
                      (11,253,549
                      )
                      
                      
                      7,357,354(Income
      Tax Expense)
                      
                      
                      -
                      
                      
                      
                      (508,844
                      )
                      
                      
                      (11,246
                      )
                      
                      
                      -
                      
                      
                      
                      (520,089
                      )Net
      Income/(Loss)
                      
                      
                      19,150,715
                      
                      
                      
                      1,434,292
                      
                      
                      
                      (2,494,193
                      )
                      
                      
                      (11,253,549
                      )
                      
                      
                      6,837,265
  Eliminated Intercompany Sales of Products Sold duringYear ended December 31, 2008Sold
      From:
                        
                        Sold
      To:
                        
                        AmountFood
      Company
                        
                        Sales
      Company
                        
                        $
                        15,614,380Meat
      Company
                        
                        Sales
      Company
                        
                        
                        66,171,117Meat
      Company
                        
                        Food
      Company
                        
                        
                        10,300,365$
                        92,085,862
  
 F-25
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 
  Results
      of Operations
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      Chuming
      WFOE,For
      the year ended
                      
                      Meat
                      
                      
                      Food
                      
                      
                      Sales
                      
                      
                      PSI,
      &December
      31, 2007
                      
                      Company
                      
                      
                      Company
                      
                      
                      Company
                      
                      
                      Eliminations
                      
                      
                      TotalSales
                      
                      $
                      113,777,514
                      
                      
                      $
                      18,224,294
                      
                      
                      $
                      26,110,284
                      
                      
                      $
                      (33,416,057
                      )
                      
                      $
                      124,696,035Cost
      of Sales
                      
                      
                      99,779,158
                      
                      
                      
                      12,672,576
                      
                      
                      
                      25,343,231
                      
                      
                      
                      (33,416,057
                      )
                      
                      
                      104,378,908Gross
      Profit
                      
                      
                      13,998,356
                      
                      
                      
                      5,551,718
                      
                      
                      
                      767,053
                      
                      
                      
                      -
                      
                      
                      
                      20,317,127Operating
      (Loss)/Profit
                      
                      
                      10,842,549
                      
                      
                      
                      3,624,143
                      
                      
                      
                      (368,002
                      )
                      
                      
                      (27,261
                      )
                      
                      
                      14,071,429Other
      Income (Expense)
                      
                      
                      (691,006
                      )
                      
                      
                      (712,807
                      )
                      
                      
                      (47,929
                      )
                      
                      
                      -
                      
                      
                      
                      (1,451,742
                      )Earnings/(Loss)
      before Tax
                      
                      
                      10,151,543
                      
                      
                      
                      2,911,336
                      
                      
                      
                      (415,931
                      )
                      
                      
                      (27,261
                      )
                      
                      
                      12,619,687(Income
      Tax Expense)/Credit
                      
                      
                      -
                      
                      
                      
                      967,539
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      967,539Net
      Income/(Loss)
                      
                      $
                      10,151,543
                      
                      
                      $
                      1,943,797
                      
                      
                      $
                      (415,931
                      )
                      
                      $
                      (27,261
                      )
                      
                      $
                      11,652,147
  Eliminated
      Intercompany Sales of Products Sold duringYear
      ended December 31, 2007Sold
      From:
                            
                            Sold
      To:
                            
                            AmountFood
      Company
                            
                            Sales
      Company
                            
                            $
                            4,221,813Meat
      Company
                            
                            Sales
      Company
                            
                            
                            20,435,143Meat
      Company
                            
                            Food
      Company
                            
                            
                            8,759,101$
                            33,416,057
  Results
      of Operations
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      Chuming
      WFOE,For
      the year ended
                      
                      Meat
                      
                      
                      Food
                      
                      
                      Sales
                      
                      
                      PSI,
      &December
      31, 2006
                      
                      Company
                      
                      
                      Company
                      
                      
                      Company
                      
                      
                      Eliminations
                      
                      
                      TotalSales
                      
                      $
                      64,169,418
                      
                      
                      $
                      7,351,567
                      
                      
                      $
                      17,277,285
                      
                      
                      $
                      (18,401,830
                      )
                      
                      $
                      70,396,439Cost
      of Sales
                      
                      
                      54,146,375
                      
                      
                      
                      4,855,542
                      
                      
                      
                      16,923,680
                      
                      
                      
                      (18,130,743
                      )
                      
                      
                      57,794,853Gross
      Profit
                      
                      
                      10,023,044
                      
                      
                      
                      2,496,025
                      
                      
                      
                      353,605
                      
                      
                      
                      (271,087
                      )
                      
                      
                      12,601,586Operating
      (Loss)/Profit
                      
                      
                      9,253,704
                      
                      
                      
                      1,930,499
                      
                      
                      
                      (1,203,200
                      )
                      
                      
                      (271,087
                      )
                      
                      
                      9,709,916Other
      Income (Expense)
                      
                      
                      (849,450
                      )
                      
                      
                      (718,182
                      )
                      
                      
                      (15,522
                      )
                      
                      
                      -
                      
                      
                      
                      (1,583,154
                      )Earnings/(Loss)
      before Tax
                      
                      
                      8,404,254
                      
                      
                      
                      1,212,317
                      
                      
                      
                      (1,218,722
                      )
                      
                      
                      (271,087
                      )
                      
                      
                      8,126,762(Income
      Tax Expense)/Credit
                      
                      
                      -
                      
                      
                      
                      400,065
                      
                      
                      
                      (401,674
                      )
                      
                      
                      -
                      
                      
                      
                      (1,609
                      )Net
      Income/(Loss)
                      
                      $
                      8,404,254
                      
                      
                      $
                      812,252
                      
                      
                      $
                      (817,049
                      )
                      
                      $
                      (271,087
                      )
                      
                      $
                      8,128,371
  
 F-26
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 
 Eliminated
      Intercompany Sales of Products Sold duringYear
      ended December 31, 2006Sold
      From:
                        
                        Sold
      To:
                        
                        AmountFood
      Company
                        
                        Sales
      Company
                        
                        $
                        3,735,082Meat
      Company
                        
                        Sales
      Company
                        
                        
                        12,709,432Meat
      Company
                        
                        Food
      Company
                        
                        
                        1,686,229$
                        18,130,743
 
 Financial
      Position
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                Chuming
      WFOE,At
                                
                                Meat
                                
                                
                                Food
                                
                                
                                Sales
                                
                                
                                PSI,
      &December
      31, 2008
                                
                                Company
                                
                                
                                Company
                                
                                
                                Company
                                
                                
                                Eliminations
                                
                                
                                TotalCurrent
      Assets
                                
                                
                                74,713,237
                                
                                
                                
                                21,126,826
                                
                                
                                
                                41,826,291
                                
                                
                                
                                (89,504,485
                                )
                                
                                
                                48,161,868Non
      Current Assets
                                
                                
                                22,624,642
                                
                                
                                
                                19,570,329
                                
                                
                                
                                325,480
                                
                                
                                
                                1,088
                                
                                
                                
                                42,521,540Total
      Assets
                                
                                $
                                97,337,879
                                
                                
                                $
                                40,697,155
                                
                                
                                $
                                42,151,770
                                
                                
                                $
                                (89,503,397
                                )
                                
                                $
                                90,683,408Current
      Liabilities
                                
                                
                                42,293,137
                                
                                
                                
                                34,796,536
                                
                                
                                
                                45,747,946
                                
                                
                                
                                (99,079,857
                                )
                                
                                
                                23,757,761Total
      Liabilities
                                
                                
                                42,293,137
                                
                                
                                
                                34,796,536
                                
                                
                                
                                45,747,946
                                
                                
                                
                                (99,079,857
                                )
                                
                                
                                23,757,761Net
      Assets
                                
                                
                                55,044,742
                                
                                
                                
                                5,900,619
                                
                                
                                
                                (3,596,176
                                )
                                
                                
                                9,576,460
                                
                                
                                
                                66,925,647Total
      Liabilities
                                  &
      Net Assets
                                
                                $
                                97,337,879
                                
                                
                                $
                                40,697,155
                                
                                
                                $
                                42,151,770
                                
                                
                                $
                                (89,503,397
                                )
                                
                                $
                                90,683,408
 
 Financial
      Position
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                Chuming
      WFOE,At
                                
                                Meat
                                
                                
                                Food
                                
                                
                                Sales
                                
                                
                                PSI,
      &December
      31, 2007
                                
                                Company
                                
                                
                                Company
                                
                                
                                Company
                                
                                
                                Eliminations
                                
                                
                                TotalCurrent
      Assets
                                
                                $
                                36,387,010
                                
                                
                                $
                                19,361,784
                                
                                
                                $
                                24,500,857
                                
                                
                                $
                                (52,282,684
                                )
                                
                                $
                                27,966,967Non
      Current Assets
                                
                                
                                22,256,798
                                
                                
                                
                                16,228,202
                                
                                
                                
                                167,961
                                
                                
                                
                                -
                                
                                
                                
                                38,652,961Total
      Assets
                                
                                $
                                58,643,808
                                
                                
                                $
                                35,589,986
                                
                                
                                $
                                24,668,818
                                
                                
                                $
                                (52,282,684
                                )
                                
                                $
                                66,619,928Current
      Liabilities
                                
                                $
                                25,289,655
                                
                                
                                $
                                31,425,683
                                
                                
                                $
                                25,664,664
                                
                                
                                $
                                (64,697,884
                                )
                                
                                $
                                17,682,118Total
      Liabilities
                                
                                
                                25,289,655
                                
                                
                                
                                31,425,683
                                
                                
                                
                                25,664,664
                                
                                
                                
                                (64,697,884
                                )
                                
                                
                                17,682,118Net
      Assets
                                
                                
                                33,354,152
                                
                                
                                
                                4,164,303
                                
                                
                                
                                (995,846
                                )
                                
                                
                                12,415,200
                                
                                
                                
                                48,937,810Total
      Liabilities
                                  &
      Net Assets
                                
                                $
                                58,643,808
                                
                                
                                $
                                35,589,986
                                
                                
                                $
                                24,668,818
                                
                                
                                $
                                (52,282,684
                                )
                                
                                $
                                66,619,928
 
 
 F-27
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 
 Financial
      Position
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                Chuming
      WFOE,At
                                
                                Meat
                                
                                
                                Food
                                
                                
                                Sales
                                
                                
                                PSI,
      &December
      31, 2006
                                
                                Company
                                
                                
                                Company
                                
                                
                                Company
                                
                                
                                Eliminations
                                
                                
                                TotalCurrent
      Assets
                                
                                $
                                27,676,447
                                
                                
                                $
                                18,497,318
                                
                                
                                $
                                27,870,908
                                
                                
                                $
                                (51,181,557
                                )
                                
                                $
                                22,863,116Non
      Current Assets
                                
                                
                                21,257,469
                                
                                
                                
                                12,561,441
                                
                                
                                
                                163,596
                                
                                
                                
                                -
                                
                                
                                
                                33,982,507Total
      Assets
                                
                                $
                                48,933,916
                                
                                
                                $
                                31,058,759
                                
                                
                                $
                                28,034,504
                                
                                
                                $
                                (51,181,557
                                )
                                
                                $
                                56,845,623Current
      Liabilities
                                
                                
                                16,426,173
                                
                                
                                
                                22,340,903
                                
                                
                                
                                28,560,949
                                
                                
                                
                                (50,564,504
                                )
                                
                                
                                16,763,521Total
      Liabilities
                                
                                
                                27,619,010
                                
                                
                                
                                29,056,605
                                
                                
                                
                                28,560,949
                                
                                
                                
                                (50,564,504
                                )
                                
                                
                                34,672,060Net
      Assets
                                
                                
                                21,314,906
                                
                                
                                
                                2,002,154
                                
                                
                                
                                (526,445
                                )
                                
                                
                                (617,053
                                )
                                
                                
                                22,173,564Total
      Liabilities
                                  &
      Net Assets
                                
                                $
                                48,933,916
                                
                                
                                $
                                31,058,759
                                
                                
                                $
                                28,034,504
                                
                                
                                $
                                (51,181,557
                                )
                                
                                $
                                56,845,623
 
 F-28
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 
 16.
                Earnings Per
  Share
 
 Components
of basic and diluted earnings per share were as follows: -
 
 For
      the
                  
                  
                  For
      the
                  
                  
                  For
      theyear
      ended
                  
                  
                  year
      ended
                  
                  
                  year
      endedDecember
      31,
                  
                  
                  December
      31,
                  
                  
                  December
      31,2008
                  
                  
                  2007
                  
                  
                  2006Net
      Income (A)
                  
                  $
                  6,837,265
                  
                  
                  $
                  11,652,147
                  
                  
                  $
                  8,128,371Basic
      Weighted Average Shares Outstanding (B)
                  
                  
                  17,272,756
                  
                  
                  
                  13,409,120
                  
                  
                  
                  13,409,120Dilutive
      Shares:-Addition
      to Common Stock from Exercise of Placement Warrants
                  
                  
                  46,364
                  
                  
                  
                  -
                  
                  
                  
                  --Addition
      to Common Stock from Contingent Shares Held in Escrow (Please refer to
      Note 18)
                  
                  
                  3,863,636
                  
                  
                  
                  3,863,636
                  
                  
                  
                  3,863,636Diluted
      Weighted Average Shares Outstanding: (C)
                  
                  
                  21,182,756
                  
                  
                  
                  17,272,756
                  
                  
                  
                  17,272,756Earnings
      Per Share:-Basic
      (A)/(B)
                  
                  $
                  0.40
                  
                  
                  $
                  .87
                  
                  
                  $
                  0.61-Diluted
      (A)/(C)
                  
                  $
                  0.32
                  
                  
                  $
                  .67
                  
                  
                  $
                  0.47Weighted
      Average Shares Outstanding:-Basic
                  
                  
                  17,272,756
                  
                  
                  
                  13,409,120
                  
                  
                  
                  13,409,120-Diluted
                  
                  
                  21,182,756
                  
                  
                  
                  17,272,756
                  
                  
                  
                  17,272,756
 
 17.
                Concentration of
  Risk
 
 (A)
              Demand
      risk
 
 The
Company had concentrations of risk in demand for its products because its sales
were made to a small number of customers.
  (B)
              Supply
      Risk
 
 The
Company is subject to concentration of supply shortage risk because it purchases
its materials for resale from a few select vendors. The Company’s availability
of supply is correlated with the few select vendors’ ability to meet the market
demand.  In 2007, the entire industry in the PRC faced a shortage in
the supply of hogs.
  18.
                  Financing
      Transaction
 On
December 31, 2007, the Company, a Nevada corporation (“Energroup” or the
“Company”), acquired Precious Sheen Investments Ltd. (“PSI”) in a reverse
take-over transaction, by executing a Share Exchange Agreement (“Exchange
Agreement”) by and among Energroup, PSI, and all of the shareholders of
PSI’s
 issued
and outstanding share capital (the “PSI Shareholders”). PSI owned 100% of the
equity in Chuming WFOE. Chuming WFOE is a holding company for the following
three operating subsidiaries: (i) Meat Company, (ii) Food Company, and (iii)
Sales Company, each of which is a limited liability company headquartered in,
and organized under the laws of, China (also referred to elsewhere as the
“Chuming Operating Subsidiaries”).
 
 
 F-29
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 As a
result of the reverse take-over transaction, PSI’s Shareholders became
Energroup’s controlling shareholders and PSI became Energroup’s wholly-owned
subsidiary. As a result of PSI becoming Energroup’s wholly-owned subsidiary,
Energroup acquired the business and operations of Chuming and the Chuming
Operating Subsidiaries.
 
 Under the
Exchange Agreement, Energroup completed the acquisition of all of the issued and
outstanding shares of PSI through the issuance of 16,850,000 restricted shares
of common stock of Energroup to PSI’s Shareholders. Immediately prior to the
Exchange Agreement transaction, the Company had 422,756 shares of common stock
issued and outstanding. Immediately after the issuance of the shares to PSI’s
Shareholders, the Company had 17,272,756 shares of common stock issued and
outstanding. The 422,756 shares of PSI were cancelled and 17,272,756 shares of
Energroup were issued to reflect this reverse take-over
transaction.
 
 Concurrently
with the Exchange Agreement, Energroup also entered into a Securities Purchase
Agreement (the “Purchase Agreement”) pursuant to which Energroup agreed to issue
and sell 3,863,635 shares of its common stock to ten accredited investors for an
aggregate purchase price of $17,000,000 or $4.40 per share (the “Financing”).
The closing of the Financing coincided with the Closing of the reverse take-over
transaction.
 
 In
connection with the sales of securities to accredited investors under the
securities purchase agreement, Hunter Wise Financial Group, LLC (the “Placement
Agent”), was compensated with a commission of $1,190,000 which is equal to 7.00%
of the aggregate purchase price and a warrant to purchase the 386,364 shares of
the Company’s common stock at an exercise price of $4.40 per share. At
December 31, 2007, the Company had adequate authorized capital to issue common
shares upon the exercise of the warrant.
 
 At
December 31, 2008, the total number of shares outstanding, on a fully diluted
basis, is shown in the following table:
 
 i.
                  Common
      shares outstanding prior to offering of securities
                  
                  
                  17,272,756ii.
                  Common
      shares issued under securities purchase agreement
                  
                  
                  3,863,636iii.
                  Common
      shares issuable upon exercise of placement agent warrants
                  
                  
                  386,36421,522,756
 
 Concurrent
with the Company’s financing transaction, the Company agreed to register for
resale the common shares that were sold under the securities purchase
agreement.  Pursuant to filing a Form S-1 registration statement with
the U.S. Securities and Exchange Commission, the Company entered into a
Registration Rights Agreement with the Investors.  The agreement calls
for liquidated damages to be paid by the Company, if in the event the
registration statement is not declared effective within 135 days of the closing
of the financing transaction.  The liquidated damages will be 1% of
the total financing amount in cash per month for each month after the 135
period.  The agreement states a maximum penalty of $1.70 million or
10% of the financing amount.  At December 31, 2007, the Company
accounted for the liability under the registration rights agreement in
accordance with FASB Staff Position No. EITF 00-19-2 Accounting for Registration Payment
Arrangements.  Under such accounting treatment, the liquidated
damages are accounted for as a reduction of the proceeds.  In
asserting the most conservative position, the Company has accrued the maximum
liability of $1.7 million and is carrying that balance in the accrued
liabilities account.  In the event that the registration becomes
effective in a timeframe that is earlier than February 15, 2009, the portion
that is not legally owed, or in the event that investors waive any liquidating
damages, the accrual will be reversed and the funds will be added back to the
Company’s additional paid in capital.
 
 F-30
 
 Energroup
Holdings Corporation
 Notes
to Consolidated Financial Statements
 As
of and for the years ended December 31, 2008, 2007, and 2006
 
 
 In
connection with a make good agreement related to the financing transaction on
December 31, 2007, the Company’s Chairman and CEO, Mr. Shi Huashan placed in
escrow 3,863,636 shares, which were beneficially owned by him.  These
shares are to be released back to him if the Company meets the following
earnings targets of $15.9 million, and $20.9 million in after-tax net income for
the years ended December 31, 2008, and 2009 respectively.  In the
event that the Company does not meet the aforementioned financial targets, the
escrowed shares will be released, on a pro-rata basis, to the investors in the
financing transaction.  In accordance with SFAS 128, Earnings Per Share, for the
sake of calculating the Company’s earnings per share, the Company has accounted
for the 3,863,636 escrowed shares as contingently issuable shares as such they
are not included in the weighted average basic shares outstanding but are
included in the weighted average diluted shares outstanding.  Please
refer to Note 16.
 
 In
accordance with Topic 5.T of the Staff Accounting Bulletins (SAB 79), the
Company expects to record a compensatory expense for the shares upon their
release from escrow.  Whether the shares are released to the
accredited investors or released to Mr. Shi the Company will record an expense
with a corresponding credit to the Company’s contributed paid in
capital.  The Company anticipates that compensatory expense to be
recognized in future operating periods could be in a range between $17.0 million
to $29.2 million.  The Company approximates this range based on the
per share offering price of $4.40 at December 31, 2007 and a potential future
stock price of $7.57 based on a $20.0 million net income (short of the target of
$20.9 million net income) with a price-to-earnings ratio of 8.0, which is
comparable to the valuation used in the offering at December 31,
2007.
 
 For the
year ended December 31, 2008, the Company recorded an expense for the expected
release of shares deposited in the escrow account.  The Company
expects that 1,931,818 shares will be released from escrow.  The
amount of expense recorded was $10,622,294.  The impact on earnings
per share, on a basic and diluted basis, was  $0.61 and $0.50,
respectively.
 
 19.
                Change of Chief Financial
      Officer
 
 The
Company filed an 8-K on December 29, 2008 in connection with the change of Chief
Financial Officer where Mr. Zhang Yizhao resigned his position and Ms. Wang Shu
was appointed to this position that she had previously held until September 28,
2008. Mr. Zhang Yizhao's total remuneration during his term of service at
the Company was approximately $71,000 (RMB 500,000).
 
 F-31
 
 
 
 SIGNATURES
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized on the 6th day of May,
2009.
 ENERGROUP
      HOLDINGS CORPORATIONBy:
                    /s/
      Shi HuashanShi
      HuashanPresident,
      Chief Executive Officer
                      and
      Chairman of the Board
  Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated:
  Signature
                                  
                                  Title
                                  
                                  Date/s/
      Shi Huashan
                                  
                                  Chief
      Executive Officer,
                                  
                                  May
      6, 2009Shi
      Huashan
                                  
                                  President,
      and Director
                                    (Principal
      Executive Officer)/s/
      Wang ShuWang
      Shu
                                  
                                  Chief
      Financial Officer and Director
                                    (Principal
      Financial and Accounting Officer)
                                  
                                  May
      6, 2009/s/
      Wang Shuying
                                  
                                  Director
                                  
                                  May
      6, 2009Wang
      Shuying/s/
      Ma Fengqin
                                  
                                  Director
                                  
                                  May
      6, 2009Ma
      Fengqin