**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**


_______________





**FORM
      10-K**


**(Mark
      One)**


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


**For
      the fiscal year ended December 31, 2007**





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: ****  **None**


Securities
      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 o No þ





Indicate
      by check mark whether the registrant is required to file reports pursuant to
      Section 13 or Section 15(d) of the Act. Yes þ No 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 þ No 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 þ




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





As
      of
      March 5, 2008, the aggregate market value of the voting stock held by
      non-affiliates of the Registrant was approximately $32.3 million based on a
      split-adjusted closing price of $5.00 per share of common stock as reported
      on
      the Over-the-Counter Bulletin Board on such date. On December 31, 2007, we
      had
      21,136,391 shares of our common stock issued and outstanding.




DOCUMENTS
      INCORPORATED BY REFERENCE: None.













**ENERGROUP
      HOLDINGS CORPORATION**


**FORM
      10-K**


**For
      the Year Ended December 31, 2007**





**TABLE
      OF CONTENTS**





**Page****PART
                I**Item
                1.
            
            Business
            
            3Item
                1A.
            
            Risk
                Factors
            
            25Item
                1B.
            
            Unresolved
                Staff Comments
            
            42Item
                2.
            
            Properties
            
            42Item
                3.
            
            Legal
                Proceedings
            
            43Item
                4.
            
            Submission
                of Matters to a Vote of Security Holders
            
            43**PART
                II**Item
                5.
            
            Market
                for Registrant’s Common Equity and Related Stockholder
                Matters
            
            44Item
                6.
            
            Selected
                Financial Data
            
            46Item
                7.
            
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            
            47Item
                7A.
            
            Quantitative
                and Qualitative Disclosures about Market Risk
            
            62Item
                8.
            
            Financial
                Statements and Supplementary Data
            
            63Item
                9.
            
            Changes
                in and Disagreements With Accountants on Accounting and Financial
                Disclosure
            
            64Item
                9A.
            
            Controls
                and Procedures
            
            64**PART
                III**Item
                10.
            
            Directors,
                Executive Officers and Corporate Governance
            
            68Item
                11.
            
            Executive
                Compensation
            
            71Item
                12.
            
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            
            75Item
                13.
            
            Certain
                Relationships and Related Transactions, and Director
                Independence
            
            77Item
                14.
            
            Principal
                Accounting Fees and Services
            
            79**PART
                IV**Item15.
            
            Exhibits,
                Financial Statement Schedules
            
            80Signatures
            
            83




2




**PART
      I**





**Item
      1. BUSINESS**





This
      document contains certain statements of a forward-looking nature. Such
      forward-looking statements, including but not limited to growth and strategies,
      future operating and financial results, financial expectations and current
      business indicators are based upon current information and expectations and
      are
      subject to change based on factors beyond our control. Forward-looking
      statements typically are identified by the use of terms such as “look,” “may,”
“will,” “should,” “might,” “believe,” “plan,” “expect,” “anticipate,” “estimate”
and similar words, although some forward-looking statements are expressed
      differently. The accuracy of such statements may be impacted by a number of
      business risks and uncertainties that could cause actual results to differ
      materially from those projected or anticipated, including but not limited
      to:





·
            our
                ability to timely and accurately complete orders products;




·
            our
                dependence on a limited number of major
                customers;




·
            political
                and economic conditions within the
                PRC;




·
            our
                ability to expand and grow our distribution channels;




·
            general
                economic conditions which affect consumer demand for our
                products;




·
            the
                effect of terrorist acts, or the threat thereof, on consumer confidence
                and spending;




·
            acceptance
                in the marketplace of our new products and changes in consumer
                preferences;




·
            foreign
                currency exchange rate
                fluctuations;




·
            our
                ability to identify and successfully execute cost control
                initiatives;




·
            other
                risks outlined above and in our other public
                filings.




You
      are
      cautioned not to place undue reliance on these forward-looking statements,
      which
      speak only as of the date of this document. We undertake no obligation to update
      this forward-looking information.




While
      our
      management fully intends to make concerted efforts to manage these risks, we
      cannot assure you that we will be able to do so successfully. See “Risk Factors”
beginning on page 25 of this report.





3





**Our
      Business**




We
      produce, pack, sell, market and distribute fresh and processed meat products
      to
      customers in the People’s Republic of China (“China” or the “PRC”). Our current
      corporate structure is shown below. We own three PRC operating subsidiaries
      (collectively, the “Chuming Operating Subsidiaries”):





1.
            Dalian
                Chuming Slaughter and Packaging Pork Company Ltd., whose primary
                business
                activity is acquiring, slaughtering and packaging of pork and
                cattle;




2.
            Dalian
                Chuming Processed Foods Company Ltd., whose primary business activity
                is
                the processing of raw and cooked meat products;
                and




3.
            Dalian
                Chuming Sales Company Ltd., which is responsible for our sales, marketing
                and distribution activities.







4




Our
      three
      operating subsidiaries are spun off constituents of a former parent company,
      Dalian Chuming Group Co., Ltd. (the “Group”). Our company is separate and
      independent from the Group, which operates a different business and has
      different operations from ours. We took over ownership and control of the three
      Chuming Operating Subsidiaries from the Group in September 2007 following our
      corporate reorganization (See subsection entitled “Corporate Reorganization” on
      page 6 of this report). We are headquartered in the City of Dalian, Liaoning
      Province of China. Throughout this report, Energroup Holdings Corporation,
      Precious Sheen Investments Limited, Chuming WOFE and the Chuming Operating
      Subsidiaries are sometimes collectively referred to as “Chuming.”





**Company
      Overview and History**




Our
      business originated from the founding in 1999 of Dalian Chuming Group
      Co., Ltd. the former parent of the Chuming Operating Subsidiaries.  The
      Group began as a processor and supplier of fresh and frozen meat and meat
      products. Among industrialized farming corporations in northeastern China,
      the Group pursued distinction in the Chinese food industry by maintaining high
      quality management standards and international safety
      certifications.





In
      2004,
      the Group established the Chuming Operating Subsidiaries, which now form
      the core of our business, and these companies began producing and supplying
      fresh and processed meats under the Chuming brand name. Since then we have
      rapidly become a significant producer and supplier in China’s meat industry, and
      have achieved consistent profitability and growth since inception. In the first
      three years of operation, our sales have grown at an average rate of 42% per
      annum. We sell our products to consumers in northeastern China, which has a
      population of approximately 108 million. In particular, our current customers
      are concentrated in the Liaoning Province (which has a population of
      approximately 42 million), and we are the largest pork producer in Dalian City,
      which has a population of approximately 3 million, or 6 million including the
      greater metropolitan area. At present, all of our sales are within China,
      which is the largest pork-consuming nation in the world, with a total of 54
      million metric tons consumed in 2006. Due to the rapid development of the
      Chinese economy, urbanization and strong income growth, we have observed that
      pork consumption patterns are changing and consumption levels are continuing
      to
      increase.




Our
      major
      products are:





·
            Fresh
                meat – pork that is processed in a controlled environmental chamber with
                closely monitored temperatures to ensure quality and safety standards
                during processing right up to the time of delivery to the
                consumer.





·
            Frozen
                fresh meat – butchered pigs that are processed and immediately frozen,
                which includes such products as smoked pork, ham and
                roasts.





·
            Frozen
                fresh byproducts – pork byproducts including pig’s liver, stomach,
                intestine, head and hoof.





We
      are
      part of an established pork production cycle that culminates in sales of
      fresh and frozen pork. This cycle includes feedstuff production, pig breeding,
      slaughtering, processing, packaging and distribution. We are involved in
      the slaughtering, processing, packaging and distribution aspects of the pork
      production cycle.




5





We
      are
      the first pork producer in China to receive “Green Food” certification from
      China’s Ministry of Agriculture. Green Food is an innovative certification
      program unique to China that is awarded to food processors who produce using
      environmentally sustainable methods and meet certain high technical standards
      of
      quality control, safety, and product quality, and generate low levels of
      pollution. Under strict supervision, control and regulation in production,
      processing, packing, storage and transportation, Green Food-certified companies
      must apply these quality control standards from field to customer and regulate
      the application of inputs, including pesticide, fertilizer, veterinary drug
      and
      additives to minimize environmental pollution and prevent toxic and harmful
      substances from entering the food supply chain. The Green Food certification
      is
      based on standards defined by the Codex Alimentarius Commission (“CAC”), a joint
      body of the United Nations Food and Agriculture Organization and the World
      Health Organization.





*Corporate
      Reorganization Prior to Going Public*




PRC
      law
      currently limits foreign ownership of certain companies based in the PRC. In
      order for us to raise equity capital from investors outside of China, we
      established an offshore holding company by the name of Precious Sheen
      Investments Limited (“PSI”) in the British Virgin Islands in May 2007. On
      September 26, 2007, Chuming WOFE entered into share transfer agreements with
      Dalian Chuming Group Co., Ltd., under which Dalian Chuming Group Co., Ltd.
      agreed to transfer ownership of the Chuming Operating Subsidiaries to Chuming
      WOFE. On October 23, 2007, Chuming WOFE 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 WOFE to
      PSI, and upon this transfer, Chuming WOFE became a wholly foreign owned
      enterprise, with PSI as the 100% owner of Chuming WOFE (including its
      subsidiaries). On December 13, 2007, the PRC government authorities issued
      Chuming WOFE a business license formally recognizing it as a wholly foreign
      owned enterprise, of which PSI is the sole shareholder.





Following
      this corporate restructuring, PSI became the 100% owner and parent company
      of
      Dalian Precious Sheen Investments Consulting Co., Ltd. (“Chuming WOFE”), which
      in turn owns 100% of the Chuming Operating Subsidiaries: the Meat Company,
      the
      Food Company and the Sales Company.




*Share
      Exchange Transaction*




In
      December 2007, we completed a reverse take-over transaction in the form of
      a
      share exchange, which resulted in our current corporate structure. On December
      31, 2007, we 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 then-issued
      and outstanding common stock (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 Chuming.




Prior
      to
      the share exchange transaction, Energroup was a public reporting “shell” company
      with nominal assets whose sole business was to identify, evaluate and
      investigate various companies with the intent that, if such investigation
      warrants, a reverse merger transaction be negotiated and completed pursuant
      to
      which Energroup would acquire a target company with an operating business with
      the intent of continuing the acquired company’s business as a publicly held
      entity.





As
      a
      result of the share exchange transaction, PSI (and its subsidiaries) became
      the
      100% owned subsidiary of Energroup Holdings Corporation, and we acquired the
      business and operations of Chuming.




6




*$17
      Million Financing*





On
      December 3, 2007, we completed a $17 million private placement in which we
      sold
      and issued 3,863,635 shares
      of
      our common stock to fifteen accredited investors for $4.40 per share. After
      giving to the both the Exchange Transaction and the Financing, we had a total
      of
      approximately 21,136,392 shares of our common stock issued and outstanding,
      and
      the PSI Shareholders held 16,850,000 of these shares, constituting approximately
      79.7% of our issued and outstanding common stock. For additional details
      concerning this financing, please see Note 18 in the footnotes to our financial
      statements included in this report.




**Industry
      Overview**




The
      following overview in certain instances cites to materials that are publicly
      available without charge. If no citation is provided with respect to certain
      information presented in this “Industry Overview” section, that information is
      attributed to our own research regarding the world pork market and China’s pork
      industry.





***World
      Pork Market***





According
      to a November 2007 report of the United States Department of Agriculture (USDA),
      China is the largest pork producer and consumer in the world. China is the
      leading producer among other countries in the world by a wide margin, and
      produces and consumes more than half of the world’s pork. Preliminary numbers
      for 2007 worldwide production of pork was 94.7 million metric tons (MMT, carcass
      weight equivalent) and consumption was 93.8 MMT. The USDA forecast for 2008
      is
      that both the production and the consumption in China are expected to expand
      by
      more than 2% over 2007 levels.




**Pork
      Production (1,000 Metric Tons, Carcass Weight Equivalent), 2003-2008
      (Estimated)**


2003
                
                2004
                
                2005
                
                2006
                
                2007
                
                2008Nov.China
                
                
                45,186
                
                
                47,016
                
                
                50,106
                
                
                51,972
                
                
                47,000
                
                
                48,000EU-27
                
                
                21,712
                
                
                21,753
                
                
                21,676
                
                
                21,677
                
                
                22,040
                
                
                21,910United
                    States
                
                
                9,056
                
                
                9,312
                
                
                9,392
                
                
                9,559
                
                
                9,877
                
                
                10,108Brazil
                
                
                2,560
                
                
                2,600
                
                
                2,710
                
                
                2,830
                
                
                2,980
                
                
                3,095Russian
                    Federation
                
                
                1,710
                
                
                1,725
                
                
                1,735
                
                
                1,805
                
                
                1,880
                
                
                2,000Canada
                
                
                1,882
                
                
                1,936
                
                
                1,920
                
                
                1,898
                
                
                1,850
                
                
                1,790Japan
                
                
                1,260
                
                
                1,272
                
                
                1,245
                
                
                1,247
                
                
                1,260
                
                
                1,255Mexico
                
                
                1,100
                
                
                1,150
                
                
                1,195
                
                
                1,200
                
                
                1,200
                
                
                1,250Korea,
                    Republic of
                
                
                1,149
                
                
                1,100
                
                
                1,036
                
                
                1,000
                
                
                1,065
                
                
                1,095Taiwan
                
                
                893
                
                
                898
                
                
                911
                
                
                905
                
                
                910
                
                
                910Ukraine
                
                
                630
                
                
                558
                
                
                493
                
                
                485
                
                
                530
                
                
                540Others
                
                
                3,350
                
                
                3,481
                
                
                3,720
                
                
                3,926
                
                
                4,086
                
                
                1,039Total
                
                
                90,488
                
                
                92,801
                
                
                96,136
                
                
                98,504
                
                
                94,678
                
                
                92,992




**Sources:** USDA
      report, *Livestock
      and Poultry: World Markets and Trade,* November
      2007. **


**Note:** 2007
      data is preliminary and 2008 is forecast.




7





**Pork
      Consumption (1,000 Metric Tons, Carcass Weight Equivalent), 2003-2007
      (Estimated)**


2003
              
              2004
              
              2005
              
              2006
              
              2007
              
              2008NovemberChina
              
              
              45,054
              
              
              46,648
              
              
              49,703
              
              
              51,467
              
              
              46,690
              
              
              47,700EU-27
              
              
              20,683
              
              
              20,528
              
              
              20,632
              
              
              20,518
              
              
              20,790
              
              
              20,800United
                  States
              
              
              8,816
              
              
              8,817
              
              
              8,670
              
              
              8,640
              
              
              8,939
              
              
              9,129Russian
                  Federation
              
              
              2,417
              
              
              2,338
              
              
              2,486
              
              
              2,639
              
              
              2,734
              
              
              2,874Japan
              
              
              2,331
              
              
              2,529
              
              
              2,482
              
              
              2,458
              
              
              2,500
              
              
              2,490Brazil
              
              
              1,957
              
              
              1,979
              
              
              1,949
              
              
              2,191
              
              
              2,265
              
              
              2,320Mexico
              
              
              1,423
              
              
              1,556
              
              
              1,556
              
              
              1,580
              
              
              1,565
              
              
              1,580Korea,
                  Republic of
              
              
              1,286
              
              
              1,336
              
              
              1,311
              
              
              1,420
              
              
              1,518
              
              
              1,550Canada
              
              
              1,003
              
              
              1,068
              
              
              967
              
              
              971
              
              
              970
              
              
              930Taiwan
              
              
              934
              
              
              948
              
              
              944
              
              
              928
              
              
              927
              
              
              928Ukraine
              
              
              623
              
              
              606
              
              
              544
              
              
              544
              
              
              609
              
              
              619Others
              
              
              3,621
              
              
              3,697
              
              
              3,906
              
              
              4,158
              
              
              4,332
              
              
              1,24990,148
              
              
              92,050
              
              
              95,150
              
              
              97,514
              
              
              93,839
              
              
              92,169




**Sources:** USDA
      report, *Livestock
      and Poultry: World Markets and Trade,* November
      2007. **


**Note:** 2007
      data is preliminary and 2008 is forecast.




***China’s
      Pork Industry***




According
      to China’s National Bureau of Statistics, China’s US$176 billion animal
      husbandry sector is the second largest in the country’s basket of agricultural
      related industries including farming, forestry and fishery. The present size
      of
      the pork and processed meat market in China is an estimated US$32
      billion.




Our
      research indicates that China’s per capita meat consumption was just over 55
      kilograms by 2000, which is significantly smaller than the consumption level
      of
      over 100 kg per year by western standards. Based on what is known about Chinese
      culinary culture and habits, however, our management believes that the Chinese
      population is expected to consume more meat as their disposable income
      increases. For example, our research indicates that Hong Kong residents, who
      have a significantly higher per capita income, consumed on average 124 kg of
      meat in 2000.




The
      manner in which meat sales are conducted has changed as a result of new hygiene
      and food safety regulations that were introduced by the Chinese government
      in
      1995. Historically, the great majority of meat sales in China had taken place
      in
      open-air markets or on streets, i.e. in free wet markets. These markets provided
      a location through which the consumer could buy live poultry or freshly
      slaughtered meat produced direct from local farmers. As a result of the new
      regulations however, governmental agencies recently have encouraged the
      replacement of open-air markets by supermarkets and convenience stores, and
      the
      market share of open-air markets has continued to decline. Even with these
      new
      regulations, however, the open-air markets still currently represent 80% of
      the
      overall meat-processing sector in China.





8




The
      meat
      industry in China is characterized by fragmentation, sanitation and hygiene
      issues, as well as social demographic trends. Supply is extremely localized
      with
      limited distribution capability. China’s vast geography and ‘in-development’
transport infrastructure have made it difficult to create national or even
      regional level competition in the industry. Our management believes that the
      trend towards greater sales through formal supermarkets and chain stores,
      coupled with the expansion of our sales and distribution network, will continue
      to favorably impact our business.





Pork
      is
      China’s most important source of meat and is consumed at a much higher rate than
      other categories of meat. The following 2007 USDA Report shows that pork is
      consumed in China with five times greater volume than poultry or “broiler meat”
and almost seven times more than beef:




Kg Per Person
            
            Relative %Beef
            
            
            5.6
            
            
            11
            %Broiler
                Meat
            
            
            7.9
            
            
            15
            %Pork
            
            
            39.4
            
            
            74
            %Total:
            
            
            52.9
            
            
            100
            %




**Sources:** USDA
      report, *Livestock
      and Poultry: World Markets and Trade,* April
      2007. **




In
      addition to a general preference for pork, urbanization and rapid income growth
      are working in parallel to create more demand for pork and processed pork
      products. An emerging middle class of relatively high-income consumers is
      forming in certain Chinese cities. As household incomes rise, these high-income
      residents consume more of most foods on a per capita basis. According to the *Urban
      Household Survey* conducted in 2000 by China’s National Bureau of Statistics, pork consumption by
      low-income residents was 13.4 kg whereas it was 19.6 kg for high-income
      residents. These residents not only demand a greater quantity of food, but
      also
      higher quality (e.g. better cuts of meat, foods that are safer or healthier)
      and
      convenience (processed foods). Reports of food poisoning and dangerous chemical
      residues have given rise to strong demand for “green” foods for which we are
      certified. We believe that affluent consumers would be willing to pay premium
      prices for foods which have safety-related certifications, foods with purported
      health benefits or foods with other desirable attributes. We offer a wide range
      of food products that appeal to demands for safety, convenience, quality and
      health attributes demanded by high-income urban consumers.




Our
      management expects China’s meat industry, which includes the meat processing
      business, to grow due to key driving forces including food safety concerns
      that
      we believe will accelerate the transition from the traditional wet market to
      the
      modern dry market; rising modern retail channels; government mandates and
      supports of agricultural and meat processing companies; and consolidating
      forces.




*Transition
      from “wet-market” to “dry-market”*





We
      believe that food safety is a top concern of Chinese consumers who purchase
      meat
      products, and that this will eventually compel modernization of China’s meat
      processing industry. Consumer surveys showed that food safety, nutritional
      value
      and taste are the top three concerns of consumers, while price was ranked
      fourth. Furthermore, surveys showed that 60% of the consumers have a low degree
      of confidence in meat products in general. There are a number of food safety
      concerns facing the Chinese pork industry, including swine streptococcus and
      Foot and Mouth Disease, the use of antibiotics and illegal feed additives such
      as Clenbutero, pork injected with water and illegal slaughterhouses. China’s
      meat industry traditionally has been dominated by small and family-operated
      butcher shops that would slaughter the livestock in the open-air marketplaces
      and without the necessary safety and sterilized equipment. These unsanitary
      operations create what is commonly known as the “wet market,” which currently
      represents 80% of the overall meat-processing sector. However, the industry
      is
      changing rapidly. Along with the prevalent use of refrigerators in urban
      households, health conscious consumers are demanding more sanitary quality
      meat
      products which can only be processed and delivered in a temperature controlled
      cold chain environment. This presents significant opportunities to meat
      processors with advanced processing plants and refrigerated transportation
      capabilities.




9




*Government
      quality control*





Frequent
      occurrences of food safety scares have hastened the Chinese government’s effort
      in regulating food safety and quality. For example, in 2006 pork containing
      Clenbutero were found to be sold in several wet markets in Shanghai that
      resulted in over 330 people being poisoned, and an outbreak of swine
      Streptococcus in Sichuan Province led to the death of 17 people. A number of
      Chinese organizations are involved in an effort to bring the Chinese meat
      industry’s safety, hygiene and sanitation standards to an international level,
      including the Ministry of Agriculture, Ministry of Health, State Administration
      of Quality Supervision, Inspection, and Quarantine, State Food and Drug
      Administration, and the Ministry of Commerce. Tougher quality standards set
      for
      the meat processing industry represent barriers to newcomers while forcing
      operationally inadequate and financially unsound companies to shut down. Our
      management anticipates that companies such as ours, with quality meat processing
      and modern logistics systems, will benefit as they capture market share and
      build consumer brand loyalty.





*Government’s
      strong support of meat processing industry*





The
      main
      theme of China’s 11 th Five
      Year Plan is the development of China’s rural economy. With the widening wealth
      gap between the rich and poor or between urban and rural regions, China’s
      central government has shifted its focus from urban industrial growth to rural
      agricultural development aimed at improving the standard of living in the poorer
      regions. Many preferential policies were enacted to help the farming communities
      including subsidized livestock insurance and interest free loans. Scaled meat
      processors are considered active agents in galvanizing the rural economies
      by
      providing jobs, injecting capital, and introducing new technology and management
      expertise to the local economies. The Five Year Plans are a series of economic
      development initiatives promulgated by the Chinese government, however, they
      do
      not constitute binding or substantive policies or regulations. The Chinese
      economy has been shaped primarily by through the plenary sessions of the Central
      Committee and National Congresses. The Five Year Plan serves, in part, as a
      mapping strategy for economic development, setting growth targets, and launching
      reforms. The plan usually includes detailed economic development guidelines
      for
      all its regions and the nation as a whole. As China has transited from a
      centrally-planned economy to market economy, the name for the 11th Five-Year
      Plan has been characterized as a “guideline” rather than a strict “plan”. The
      11 th Five-Year Plan covers the period from 2006 to 2011.




*National
      retailers provide platform for growth*





The
      increasingly widespread use of refrigerators in urban Chinese households has
      attracted many retailers to carry more frozen food products, making available
      a
      wide variety of frozen products to consumers. Major domestic retailers,
      including LianHua have made an impact in introducing more brands of frozen
      food
      products in their retail stores. Even more significantly going forward will
      be
      the rapid expansion of international hypermarkets in China, including France’s
      Carrefour, the U.S.’s Wal-mart, and Germany’s Metro. These retailers with
      national reach will significantly change the retail industry landscape as they
      provide the platform for the large branded food companies to efficiently and
      rapidly distribute their products to large and untapped markets. These
      international retail chains can also provide excellent export opportunities
      to
      scaled, quality meat processing companies.




10




*Industry
      consolidation benefits scaled players*





In
      the
      more mature US meat market, the top three producers represent about 50% of
      the
      meat industry there. But in China the meat-processing industry is very
      fragmented with over 3,000 meat-processors most of which are small operators.
      The top three producers represent less than 5% of the overall market. Pig farms
      in China are also very fragmented with over 90% of the farms possessing fewer
      than 10 pigs. As smaller players experience pressure from margin compression
      and
      stricter government regulations, we believe scaled meat processors will make
      attractive acquisitions in order to capture market share, gain scale, secure
      raw
      material, and move closer to clients. The combination of stricter hygiene
      regulations, increasing competition from well-financed players, struggling
      meat
      suppliers, and increasing international competition from companies like Hormel
      will induce major industry shakeout and consolidation in the coming
      years.




***Macro
      and Demographic Trends***





It
      is
      widely believed that a middle class is rapidly emerging in China. China’s GDP
      has been growing at over 9% per year for the past 10 years and has created
      millions of new consumers. Management believes that these trends will translate
      into higher demand for pork products.





·
            Incomes
                in urban China increased by 10% in the first nine months of 2006.
                China’s
                middle class - citizens making at least 50,000 Yuan (US$6,250) -
                are
                expected to double by 2010 to 25% of the country’s population, fueling
                domestic consumption.





·
            While
                overall income grew rapidly, urban per capita disposable income grew
                even
                faster at 39.6% between 2002 and 2005, compared to 34.7% for per
                capita
                rural income during the same period. Urban per capita consumption
                of meat
                is twice that of the national
                average.





·
            Due
                to the increasing rural migration to urban cities, China expects
                to double
                its major cities by 2010 creating new waves of Chinese urban meat
                consumers. The number of Chinese cities with over 1 million people
                is
                projected to reach 125 by 2010 according to the Chinese Academy of
                Sciences, and cities with over 2 million people are projected to
                reach 300
                by 2020.





·
            Domestic
                demand for meat products in China is expected to grow to a projected
                100
                million metric tons in 2010 from an actual 72.4 million metric tons
                in
                2004 according to Access Asia, an independent research firm. Total
                production value of meat products are expected to increase to a projected
                US$120 billion from an actual US$84 billion and per capita meat
                consumption is expected to increase from an actual 49 kg to a projected
                75
                kg during the same period. Pork represents the bulk of meat products
                consumed in China.




With
      higher standards of living and more a demanding working lifestyle, urban Chinese
      consumers are purchasing more processed meat products and spending more on
      dining on meat products outside of the home. Our research indicates
      that:





·
            Currently
                less than an estimated 10% of the meat consumed in China is processed.
                Meat consumption out of the home has surpassed in-home meat consumption
                in
                11 Chinese provinces, especially in more economically developed regional
                markets such as Shanghai, Beijing, and Shenzhen, according to the
                National
                Bureau of Statistics.




11




·
            Chinese
                consumers have become more conscious of food safety and quality,
                fueling
                demand for branded foods. This has become more evident after the
                occurrence of a series of disease outbreaks across Asia including
                SARS and
                the avian flu. With changing lifestyles and food quality awareness,
                Chinese consumers are seeking more name brands to ensure the quality
                in
                processed meat that they purchase.





·
            The
                new health-conscious consumer group has become more educated and
                concerned
                with the freshness and nutritional value of various meat products.
                For
                example, LTMP (low temperature meat product) pork has become more
                popular
                recently as urban consumers become aware that LTMP has better nutritional
                value and fresher taste than the longer-shelf-life HTMP (high temperature
                meat product) pork products.




***Processing
      of Meat Products in China***




In
      the
      PRC, regulations relating to the processing of meat products are set forth
      in
      the PRC Law of Food Hygiene and the Administrative Measures for the Hygiene
      of
      Meat and Meat Products. A PRC food processing company is required to obtain
      a
      hygiene permit from the Hygiene Bureau of the relevant districts before it
      is
      permitted to apply to the Ministry of Industry and Commerce for a business
      license.




A
      food
      processing company may not purchase or use meat that has not been inspected
      and
      approved by the Animal Supervision Authority. Even if the meat has been so
      inspected, it must still satisfy other hygiene requirements. Each food
      processing company must have facilities to conduct regular laboratory testing
      of
      its products to ensure food safety requirements are met. For instance, sometimes
      traceable levels of contaminants and radioactive substances are found in meat
      products, and these must not exceed certain established national
      standards.




Food
      processing companies are required to possess hygienic cold storage facilities,
      and proper management of such cold storage facilities must be set out. All
      storage equipment and packing materials must also comply with hygienic
      standards. All meat products which are packed must be labeled, specifying
      requisite information such as name of the product, place of manufacture,
      manufacture date, lot number or code, final consumption date and ingredients.
      Any meat product to be exported shall be inspected by the Animal and Plant
      Quarantine Authority when passing through customs. Only meat products which
      have
      passed such inspections may be exported.




**Business**




We
      are
      principally engaged in the production, processing, sale and distribution of
      fresh and prepared meat products in China. Our products are classified as fresh
      and frozen pork, and prepared foods, which includes prepared pork, seafood
      and
      by-products.




Our
      production facilities are located in Dalian, a coastal city with a population
      of
      3 million (6 million including the greater metropolitan area). Referred to
      as
      the “Boston of China” due to its Northeast proximity and port orientation,
      Dalian is the most affluent city in the Liaoning Province, with a population
      of
      42 million. Dalian serves as a finance and export trade center of Northeast
      China, and is also the center of the “Buo Sea Economical Zone” (“BSEZ”).
      According to China’s National Bureau of Statistics, the BSEZ covers 12% of the
      territory and 20% of the population in China, and is the most important economic
      center in Northern China. The National Bureau of Statistics also projects that
      these two areas may generate a more rapid growth rate than the overall GDP
      growth of China in next 10 years. Our facilities include 5 production lines
      with
      the slaughtering capacity of 123,318 metric tons and prepared food capacity
      of
      16,000 metric tons. Our prepared food facilities are the largest in Liaoning
      Province.




12




Our
      production lines are imported from international manufacturing automation leader
      StorkTM of the Netherlands, with the state-of-the-art technology and specialized
      for their in-process testing and quality controls. Our production facilities
      are
      certified under ISO9001 and HACCP. Our pork products are qualified “Green Food”
by the National Green Food Development Center and qualified as one of 14
“National Safe Foods” by the National Slaughtering Authentication
      Center.




Our
      products are sold under the brand name of “ChumingTM.” We target consumers who
      desire high quality pork products. We distribute our products through dealers
      and agents to more than 100 supermarkets, including Carrefour, Wal-mart, Metro,
      New-mart, Hymall and others. We also distribute our products to over 500
      schools, hospitals, factory canteens and restaurants, and more than 500
“Chuming” franchise stores or specialty counters in wet markets. These franchise
      stores and specialty counters are resellers of our products with whom we have
      arrangements to sell our product under the Chuming brand name (the principal
      difference between franchise stores specialty counters being location within
      a
      supermarket for the former, and location in a wet market for the latter).




Our
      business activities are the slaughter, processing, packing and distribution
      of
      meat products for sale to clients throughout the PRC. We have a 250,000 square
      meter campus which houses an international standards-based meat processing
      plant
      located in the city of Dalian of the Liaoning Province in the PRC. We have
      a
      total of five production lines and an aggregate capacity to slaughter
      approximately 1.5 million pigs per year. We purchase hogs from more than 3,000
      farms in the Liaoning Province and nearby areas, in addition to having an
      exclusive contract with farms owned and operated by Dalian Chuming Group Co.,
      Ltd., to supply us with 600,000 live hogs in 2007, 750,000 in 2008, 800,000
      in
      2009, and 800,000 in 2010, at local market prices. Dalian Chuming Group Co.,
      Ltd. provides breeding pigs, animal feed, vaccination, veterinary services
      and
      technology support to our subcontractor pig farmers, resulting in more favorable
      relations with these small independent suppliers.




**Principal
      Products**




We
      produce, distribute and sell fresh meat and prepared food products under the
      brand name “ChumingTM,” through our dealership distribution network, our own
      sales force and franchise stores in the PRC.




We
      produce two main types of Processed Meat Products – High Temperature Meat
      Products (HTMPs) and Low Temperature Meat Products (LTMPs).




*High
      Temperature Meat Products.* HTMPs
      are
      cooked at a temperature of approximately 121°C and at approximately 2.5 times
      atmospheric pressure. These meat products can be stored at room temperature
      and
      have a shelf life of approximately six months from the date of production.
      However, the permitted shelf life of these products is 120 days from the date
      of
      production, even though the actual shelf life of these products is six months.
      HTMPs are generally priced lower than LTMP and do not require refrigeration.
      Therefore, they are affordable and accessible to the average PRC
      consumer.




*Low
      Temperature Meat Products.* LTMPs
      are
      cooked at lower temperatures ranging from 65 to 85°C, under 1 atmospheric
      pressure. These meat products have a shelf life of three months from the date
      of
      production if they are stored at a temperature of 0°C. In 2003, we introduced
      our LTMPs to the PRC market. The Group’s R&D studies have shown that LTMPs
      generally taste better than HTMPs because they are cooked at lower temperatures
      and thus are able to preserve the taste and nutrients found in the ingredients.
      The LTMPs generally cater to the taste of consumers in PRC cities who have
      higher purchasing power.




13




Currently,
      we have two main series of products for both HTMP and LTMP: the “Ham” series and
      the “Sausage” series. The Ham series has chunkier pieces of meat and thus has a
      meatier texture. It also has a corresponding higher percentage of meat content.
      The Sausage series has a lower percentage of meat content and has a smoother
      texture.




The
      range
      of products we offer includes more than 300 varieties of hams and sausages.
      The
      following is a summary of some of the types of Fresh and Processed Meat Products
      that we manufacture and how they are categorized:




***Fresh
      Pork***




Chinese
      people generally perceive that fresh meat retains a better flavor as compared
      with frozen meat. As such, the price of fresh pork meat is approximately 20%
      higher than frozen pork meat. The other producers of fresh pork meat in the
      PRC
      are generally farm-based suppliers, which supply the areas around the farms.
      The
      key difference between our fresh pork and that of farm-based suppliers is that
      our fresh pork is produced and packed in a highly controlled sanitized
      environment in our own facilities. Therefore, consumers have added assurance
      that our fresh pork meat is safe for consumption.




In
      order
      for the pork to remain fresh, at our facilities the pigs are slaughtered and
      then processed within 30 minutes. The meat is then cooled but not frozen at
      a
      temperature between 32° F (0° C) and 39.2° F (4° C) for about 20 hours.
      Following this cooling process, fresh pork is cut into various parts in a
      sterilized room with the constant temperature of 12° C. This reduces the risk of
      exposure to germs and bacterial contamination. Before delivery, the fresh pork
      is kept in our storage room at a controlled temperature of 0 to 4° C. The meat
      is stored in airtight rooms filled with ozone, which acts as a sterilizing
      agent, killing remaining germs and bacteria in the meat.




With
      our
      own temperature-controlled vans and trucks, we deliver the fresh pork to our
      customers including dealers, supermarkets and our franchise specialty stores.
      The entire process of cold production, cold storage and cold delivery is what
      we
      refer to as the “cold chain system.” This cold chain system ensures the
      freshness and quality of our product. Our fresh pork products have an average
      shelf life of 7 days from the date of production.




***Frozen
      Pork***




In
      the
      production of Chuming’s frozen pork, the meat is frozen at -31° F (-35° C) to
      -40° F (-40° C) for 48 hours. It is then stored or transported at a constant
      temperature of between -0.4° F (-18° C) to -13° F (-25° C). Since frozen pork
      can be preserved for longer periods of time, our frozen meat products are ideal
      for distribution across longer distances to the Northeast and North China as
      well as potentially to international markets such as Korea, Russia and Japan.
      These products have an average shelf life of 180 days from the date of
      production. We also sell our frozen pork to restaurants, supermarkets and fresh
      food markets.


***Prepared
        Food Products***
  Our
        prepared food products include prepared pork, seafood and pig by-products,
        which
        accounted for 10% of our 2006 revenues.




14




*Prepared
      Pork Products* .
      Our
      prepared pork products are mainly LTMPs, which are cooked at lower temperatures
      ranging from 65° C to 85° C and under atmospheric pressure. These meat products
      generally have a shelf life of 30 days from the date of production if they
      are
      stored at a temperature ranging from 0° C to 4° C. For LTMPs, we currently have
      four series and more than 300 products. These foods are all made from the fresh
      pork that we produce. The following is a description of the types of prepared
      pork products we offer:




Ham





·
            Chuming
                Cumin Ham


·
            Cooked
                Ham


·
            Roast
                Ham


·
            Premium
                Ham


·
            Sandwich
                Ham


·
            Square
                Ham


·
            Chunky
                Ham


·
            Baby
                Ham


·
            Salted
                Loin


·
            Smoked
                Ham





Sausage




·
            Diary
                Sausage


·
            Garlic
                Sausage


·
            Spicy
                Sausage


·
            Chinese
                Sausage


·
            Taiwan
                Sausage


·
            Baby
                Sausage








*Seafood
      Products* . ** Our
      prepared seafood products are made from fish, shrimp and other varieties of
      seafood. With our techniques of prepared food production, we prepare seafood
      products such as fish sausage and shellfish sausage. Seafood products have
      accounted for 5% of our revenue for the first six months of 2007. Due to the
      abundance of seafood in Dalian, located on the Northern coast of China, as
      well
      as relatively high profit margins for these products, we plan to expand our
      seafood output in the future. The following is a description of the varieties
      of
      seafood products we offer:




·
            Seafood
                sausage


·
            Baked
                Fish Sausage


·
            Barbequed
                Prawn Sausage


·
            Crab
                Sausage


·
            Scallop
                Sausage


·
            Squid
                Sausage





*Pig
      By-Products* .
      In
      China, virtually all parts of the pig are valued for consumption and are used
      in
      local cuisine. Pig “by-products” that are not typically used or sold in other
      parts of the world are prepared and sold in the Chinese market. This includes
      pig innards, pig skin, pig tails, lard and pig heads. Pig liver, stomach,
      intestine, head and hoofs are commonly used in Chinese cuisine and are sold
      to a
      ready market.




15




We
      produce our products through two of the Chuming Operating Subsidiaries: (i)
      Dalian Chuming Slaughter and Packaging Pork Company Ltd. in Wangfangdian, and
      (ii) Dalian Chuming Processed Foods Company Ltd. in Dalian.




Our
      fresh
      and frozen pork is produced by our subsidiary Meat Company. The Meat Company’s
      facilities cover 150,000 square meters and utilize state-of-art slaughtering
      and
      cutting lines imported from Stork Co. of the Netherlands. Meat Company has
      a
      slaughtering capacity of 250 pigs per hour, which is 1,500,000 pigs per year
      at
      full capacity. Our cutting line has a capacity of 30,132 metric tons per year.
      Our cold and freezing storage facilities can store up to 6,000 metric tons
      of
      fresh product. The fresh pork and frozen pork produced by Meat Company are
      typically sold either in whole carcass form or in cuts.




The
      prepared foods are produced by our subsidiary Food Company, located in the
      Ganjingzi District of Dalian. Food Company, which includes a 10,000 square
      meter
      processing facility. There are three prepared food production lines including
      one pork processing line with the capacity of 10,000 metric tons, one seafood
      sausage production line with the capacity of 4,500 metric tons and one deli
      by-product production line with the capacity of 1,500 metric tons. All of Food
      Company’s production line equipment is imported from Germany and features
      state-of-the-art technology. Based on our own market research on our
      competitors, Food Company is now the largest prepared food production plant
      in
      the Liaoning Province.




***Supply
      of Pigs***




We
      do not
      rear pigs, but instead purchase them from our former parent company, Dalian
      Chuming Group Co., Ltd., and from other suppliers who aggregate supply from
      local pig farms. We purchase live pigs from Dalian Chuming Group Co., Ltd.
      and
      third party suppliers on a cash-on-delivery basis.  While Dalian Chuming
      Group Co., Ltd.’s breeding operations are well developed and large scale, most
      of the pig farming in the PRC is generally not well commercialized. Our third
      party suppliers aggregate supplies from hundreds of small pig farms, which
      are
      typically operated by independent family-owned farms. One advantage of
      decentralized supply is that we obtain competitive market pricing for our supply
      of pigs. Another advantage is that any outbreak of livestock disease is likely
      to be confined to a one or more of these farms and would not affect our entire
      supply. Potential disadvantages from a decentralized supply of pigs include
      variations in quality of stock, and potential variation in quantity and timing
      of the supply of hogs to our plant for processing. However, because all pig
      famers who supply pigs to us are all located within the greater Dalian City
      metropolitan area (within a two hour radius by truck), the logistical issues
      have so far not interfered with our ability to secure a steady supply of hogs.
      Since we have around 6,000 local pig farmers who will supply hogs to us, we
      ordinarily are able to obtain a reasonably stable supply of hogs, even when
      some
      farms cannot meet our requests for any reason. Also, because our former parent
      company, Group, acquires pigs directly from independent farmers then sell pigs
      to us in lots (under our Hog Procurement Agreement), to some extent we have
      minimized the potential disadvantages discussed above.




Our
      pig
      suppliers supply us with regular quantities of pigs per based on the current
      prevailing market price of pigs on the day of delivery. We typically order
      a
      certain number of pigs per day from each of the farms that supply us pigs.
      For
      instance, if we expect to order 80,000 pigs per annum from a supplier, that
      supplier will supply somewhere between 240 and 260 pigs per day.




In
      order
      to ensure a consistent supply of fresh pork to our customers, we have made
      agreements with over 6,000 pig farms in the Dalian, to supplement our usual
      supply of live pigs. These pig farms have agreed to guarantee us a supply of
      approximately 400,000 pigs in 2007. Our suppliers have an aggregate capacity
      to
      supply us with approximately 1,100 pigs per day.




16




We
      normally pay a higher than average price per pig, which is typically RMB 1.25
      per kg above the average market price for live pigs, in order to acquire what
      we
      believe to be a higher quality supply of pigs. Although we pay a premium for
      our
      supply of pigs from such guaranteed sources, our management believes that the
      benefits of this strategy outweigh the costs because of the goodwill that
      results from providing a consistently high-quality product to our
      customers.




Under
      our
      Long-Term Hog Procurement Agreement between Dalian Chuming Group Co., Ltd.
      and
      Dalian Chuming Slaughter and Packaging Pork Company, Ltd., Dalian Chuming Group
      Co., Ltd. agreed to supply no less than 750,000 live hogs to us in 2008, 800,000
      in 2009, and 800,000 in 2010, and the price for the hogs is set at the fair
      market price at the time of delivery.




Due
        to a
        severe supply shortage of hogs in 2007 that was unanticipated, we processed
        approximately 791,440 pigs through December 31, 2007, which is 208,560 short
        of
        our 1,000,000 pig target for 2007 that was established in the early part
        of
        2007. According to China Livestock and Products Annual Report 2007 dated
        on
        September 25, 2007 by the USDA Foreign Agricultural Service, the severe supply
        shortage of hogs in 2007 was because of a series of outbreaks of Porcine
        Reproductive and Respiratory Syndrome (PRRS), also known as Blue Ear Disease,
        in
        China from May 2006. Blue Ear Disease is an infectious disease that affects
        swine, characterized by reproductive disorders, premature delivery, miscarriage,
        and stillbirth—as well as abnormal breathing in piglets. According to the
        report, shortages and a sharp pork price increase occurred as a result of
        Blue
        Ear Disease. The average pork price increased by 48 percent from January
        to
        August 2007 over the same period in 2006, while prices in July and August
        2007
        increased by 86 and 87 percent, respectively, from the same months in
        2006.




We
      participate in a breeding program with local farmers – under this program, after
      a careful selection process, every participating breeder must have a pig farmer
      provide a guarantee of supply, who must be responsible for making up any
      differences between the agreed amount and actual number of pigs supplied to
      us.
      This program has been in existence since 1998, and has been very successful
      so
      far with the farmers. Because our breeding programs increase farmer income,
      and
      therefore tax revenue in our region, our local government has welcomed these
      programs.





Among
      our
      suppliers, Zheng Baojiang, Wang Fujie, Zhang Jihuan, Sun Siyuan, and Ge Hongqi
      are the most successful pig farmers in our supply chain, and they supplied
      an
      aggregate of 12,000, 10,000, 8,000, 8,000 and 6,000 hogs respectively through
      each of the 12 months of 2007, contributing to 4.4% of our total
      supply.




In
      addition to the quality of our suppliers’ stock, and their health and safety
      controls, we have a quality control system of our own to ensure that pigs
      supplied to us are healthy and fit for human consumption. We require that pigs
      supplied to us be accompanied by required health certificates, and each must
      weigh at least between 90kg and 100kg. If the pigs meet the above criteria,
      we
      are then obligated to accept delivery of the pigs. (A pig that weighs between
      90
      and 100 kg, has more saleable meat per kilogram. If it is below this weight
      range, the ratio of meat to innards would be lower, resulting in less saleable
      meat per kilogram).







**Customers
      and Distribution Methods of the Products**




***Customers***




We
      have
      three primary types of customers for our products, which are (1) city and town
      households, (2) canteens and restaurants, and (3) food processing
      companies.




17




Chinese
      households prefer fresh pork to frozen pork. Consumers typically buy fresh
      pork
      in small quantities, in frequent visits to markets where it is sold. Households
      usually choose the supermarkets, the wet market, or ChumingTM franchise stores to
      buy the fresh pork based on convenience. This type of customer accounted for
      90%
      of our revenues in 2006.




Canteens
      include the cafeterias of government agencies, schools, factories and hospitals.
      These customers, including restaurants, often purchase our pork from ChumingTM
franchise stores or directly from agents or wholesalers of the company. This
      customer segment accounted for 4% of our revenues in 2006.




In
      addition to the above two types of customers, we also provide branded food
      processing companies with fresh and frozen pork. However, this customer segment
      accounted for less than 5% of our revenue in 2006. Since our sourced pigs are
      of
      good breed and have strict quality control in the production process, these
      food
      processors regularly rely on our pork as an ingredient in their products. Our
      clients in this segment include Taiwan Dachan, a feed supplier and food
      processor in Taiwan. These food processing companies typically get access to
      our
      products from Chuming agents or wholesalers.




Our
      largest customer accounted for approximately 19% and 26% respectively of our
      total turnover for the years ended December 31, 2005 and 2006. Our top five
      customers accounted for approximately 61% and 71% of our total turnover for
      the
      years ended December 31, 2005 and 2006, respectively. None of the directors,
      their associates or any shareholder of Chuming has any interest in any of our
      five largest customers.




***Distribution
      Network***




Our
      distribution network is organized and divided by geographic markets and sales
      regions, including: Dalian Metropolitan, Eastern Liaoning, Western Liaoning,
      Jilin, Heilongjiang and Hebei markets. In each market, we have a team led by
      a
      sales officer whose objective is to expand the Chuming sales network by
      developing potential dealers, agents and wholesalers, and maintaining the
      existing network by assisting our sellers. Our Sales Company works with dealers,
      agents and wholesalers, who then submit orders directly to us.




**Sales
      by Region for the Year Ended December 31, 2007**




Dalian
            
            
            74
            %Shenyang
            
            
            18
            %East
                Liaoning
            
            
            3
            %North
                Liaoning
            
            
            2
            %West
                Liaoning
            
            
            2
            %Others
            
            
            1
            %




*Retail
      Strategy*





To
      differentiate ourselves, we have a unique retail strategy to complement our
      wholesale operations. We sell our product to “showcase stores” which are owned
      and operated by independent operators. These specialty boutique-type stores
      must
      have the same design and physical layout and must follow our operating
      methodologies. These storefronts are highly visible with the ChumingTM brand
      name. We also set merchandising and pricing policies and all employees must
      undergo a mandatory training program. There are currently over 500 such boutique
      stores in Liaoning Province, providing high brand recognition and communicating
      a message of quality that will benefit all channels. These boutique stores
      target the new middle class that desire and can afford high quality goods and
      services. They provide particular convenience to a typical busy two-income,
      middle-class family which shops frequently after work. Most of these boutique
      shops are located in Dalian and the major cities of Liaoning Province. Each
      store has a minimum monthly sales requirement depending on the city and
      store.




18




Dealers,
      agents and wholesalers who we work with serve their own diverse distribution
      channels. Our affiliated dealers organize their sales to stores and
      supermarkets, such as Carrefour, Wal-mart, Hymall, New-mart and Metro. Our
      affiliated agents assist in identifying locations and opening ChumingTM franchise
      stores in their region, important to the expanding our revenues. Our affiliated
      wholesalers typically organize the sales to canteens and restaurants as well
      as
      food processing companies. In some regions, our affiliated agents will also
      directly contact local canteens and restaurants.




**Chuming’s
      Distribution Network**









19





We
      have
      our ChumingTM branded counters in large stores and supermarkets, which are the
      most important and highly visible locations to enhance our brand and image.
      Since large supermarkets such as Carrefour and Wal-mart have strict requirements
      to approve any suppliers, having ChumingTM counters in these megaretailers’
flagship stores reinforces the consumer confidence in our products. We have
      ChumingTM counters in more than 100 large supermarkets located in Northeast China
      and the Hebei Province.





Our
      most
      popular product, fresh pork, is sold primarily though our ChumingTM franchise
      stores. ChumingTM franchise stores are usually located in high-density, urban
      residential areas easily accessible by our customers. The ChumingTM franchise
      stores also save time compared to long lines sometimes found at large
      supermarkets. ChumingTM franchise stores are all equipped with refrigerators to
      keep the pork fresh. We have established more than 500 ChumingTM franchise stores
      now operating in Dalian and throughout the Liaoning Province. In the next few
      years, we aim to increase the number of our ChumingTM branded franchise stores to
      more than 1,000 outlets.




We
      provide operators of franchise stores and specialty counters with equipment
      (refrigerated showcases, signage, uniforms, heating equipment for processed
      food
      and other equipment), labels and packaging, technical assistance, and permission
      to sell our products under the ChumingTM brand name. These operators pay us an
      equipment deposit (to cover the cost of equipment), a trademark usage guarantee
      deposit, a uniform fee (for the cost of employee uniforms), a one-time star-up
      fee to cover the costs of certain materials, and an ongoing fee of approximately
      0.5% of the total purchase amount of the products these operators purchase
      from
      us. Operators agree to sell our products exclusively, and may sell other
      products only with our consent. Operators are responsible for payment of their
      own taxes and government fees, leasing expenses, and other operating costs.
      If
      an operator is terminated, we will refund the equipment deposit upon return
      of
      the equipment, and the trademark deposit if the operator has complied with
      the
      trademark usage guidelines we provide to them. We generally reward high-volume
      operators with discounts and incentives on a case-by-case basis.




***Delivery***




In
      China,
      one of the main obstacles to expanding market share and developing national
      brands has been logistical management during processing. We address this issue
      by equipping our processing plant with modern technologically advanced,
      state-of-the art equipment and production lines. Our advanced logistical
      infrastructure includes the use of bar coding and electronic interchange to
      enhance the speed and accuracy of data flow. Over the years, we have built
      an
      extensive logistical system that includes 21 contracted refrigerated container
      trucks that allow us to better preserve the meat and to expand our market scope
      by delivering food to farther retail points. As a result, we have been able
      to
      make deliveries within a 500km radius of our Dalian processing plant.
      Furthermore, our modern information technology system adds additional
      competitive advantage as it provides us real time market and production data
      which in turn enables us to capitalize on the timely information regarding
      market pricing, inventory levels, and changes in demand.




After
      orders are gathered and processed at the Sales Company, our products are
      delivered utilizing our transportation fleet and through pick-up by certain
      accounts at our facilities. The quality of our fresh pork is highly dependent
      on
      the storage room and delivery vehicles once they leave the chill room. We
      currently own 21 temperature-controlled vehicles, which we employ in our
      operations to help guarantee the freshness of pork at the point of delivery
      to
      customer locations in our primary market which is within a two-hour radius
      of
      Dalian.




20




**Quality
      Control**




We
      maintain all required licenses and certificates from the relevant central and
      local government authorities with regard to our pork production business. In
      2005, we were awarded ISO 9001:2000 certification that covers our production,
      research and development and sales activities. ISO 9001 certification indicates
      that our abattoirs and pork production operations comply with international
      standards of quality assurance established by the International Standards
      Organization. All of Chuming’s production lines have also passed the Hazard
      Analysis and Critical Control Point (HACCP) test, which is certified by Moody
      International Certification Ltd.




We
      currently have 78 Quality Control (QC) personnel who run and refine our quality
      assurance system. This system is divided into two sections: Meat Production
      Supervision and Processed Meat Supervision. The 78 employees who work in our
      quality assurance program consist of 33 quality control engineers, and 45 staff.
      All members of the QC team are trained technicians with qualifications and
      experience in animal husbandry, quarantines and veterinary medicine. The quality
      control laboratory meets and exceeds all standards set by the authorities and
      relevant agencies in the PRC.




In
      addition, on average 11 government inspectors work in our slaughtering and
      packaging plant every shift. They examine animals before slaughter, supervise
      sanitation, inspect carcasses and internal organs for diseases during the
      slaughtering and processing procedures, and then certify carcasses and packaged
      products as to consumer readiness.




As
      discussed in the above section regarding our principal products, the pork
      products produced from freshly slaughtered pigs at our facilities are chilled
      or
      frozen after slaughtering to prevent deterioration of the meat caused by
      bacteria or chemical changes. The chilled and frozen pork are maintained within
      the requisite temperature ranges, during subsequent handling, transportation
      and
      distribution to retain freshness and to prevent deterioration of the
      meat.




**Competition**




We
      are
      currently one of the largest meat producers in the three northeast provinces
      of
      Jilin, Liaoning and Hei Longjiang. According to management’s estimates, in
      Liaoning Province, we are the market leader for both fresh pork with 8.4% market
      share and for meat products with a 2.6% market share. Management estimates
      that
      in Dalian, we are the market leader for fresh pork with a 50% market share,
      and
      shares the lead position for meat products with a 20% market share. As we expand
      geographically, we expect to encounter additional regional and local
      competitors. Our management believes that all food segments in China compete
      on
      the basis of price, product quality, brand identification and customer service,
      and that we are well positioned in all of these areas.




***Major
      Domestic Competitors***




Currently,
      our primary competition comes from the domestic players that operate in a very
      fragmented industry environment. Presently, there is no clearly dominant
      producer in the PRC pork industry. The three largest producers in China,
      Shuanghui, People’s Food and China Yurun, together capture less than 5% of the
      total market. Most of the companies in the industry tend to focus on different
      product and market segments. Shuanghui has the largest market share in the
      HTMP
      pork segment, while Yurun is the leader in the LTMP space. Both companies have
      done well in the top tier markets. People’s Food, on the hand, tends to focus
      more of its distribution efforts on smaller cities, where mass distribution
      is
      more difficult, and typically does not sell through large retail channels.
      On
      the other hand, about 40% of China Yurun’s sales are through supermarket and
      hypermarket chains. In terms of geographical focus, we believe People’s Food has
      a strong presence in Northeastern China, and China Yurun has announced plans
      to
      expand into the Northeast with plans for two new plants in Shenyang and
      Harbin.




21




***New
      International Entrants***




After
      China joined the WTO, many domestic industries were opened to international
      competition, including the meat-processing industry. Foreign companies have
      already entered China’s major cities, mainly though the major hypermarkets such
      as Carrefour. So far, domestic players have an advantage in the introduction
      of
      new products based on local tastes and distribution in below Super-tier cities
      such as Beijing and Shanghai. Tyson Foods, Inc., U.S.A. has a joint venture
      with
      Shanghai Ocean Wealth Fish Products Corporation Limited. Hormel Foods
      Corporation, U.S.A., has set up representative offices in China in 1995 and
      currently operates processing factories in Shanghai and Beijing.





***Dalian
      Competitors - Fresh Pork***




In
      Dalian
      as of 2007, our key fresh pork competitors are Bangchui Island with an 18%
      market share and Jiuxing (Nine Stars) with a 12% market share.


**Fresh
                  Pork Producers**
              
              **Market Share(revenue)**Chuming
              
              
              50
              %Bangchui
                  Island
              
              
              18
              %Jiuxing
                  (Nine Stars)
              
              
              12
              %Taifu
              
              
              8
              %Tianxin
              
              
              6
              %Yurun
              
              
              6
              %





***Dalian
      Competitors - Meat Products***




In
      Dalian
      as of 2007, our main meat products competitors are Chengxin with a 20% market
      share, Chuhe with a 17% market share, Jin Baiwei with a 15% market share,
      Shineway with a 15% market share and Yurun with an 8% market share.


**Meat
                  Product Producers**
              
              **Market Share(revenue)**Chuming
              
              
              20
              %Chengxin
              
              
              20
              %Chuhe
              
              
              17
              %Jin
                  Baiwei
              
              
              15
              %Shineway
              
              
              15
              %Yurun
              
              
              8
              %Others
              
              
              5
              %




**Advertising
      and Promotional Activities**




Approximately
      US $75,000, US $100,000, US $150,000 and US $3.8 million were spent respectively
      in the fiscal years ended 2004, 2005, 2006, and 2007 on advertising and
      promotional activities. In 2007, we significantly increased our advertising
      budget.




22





Advertisements
      are principally for Processed Meat Products and Fresh Pork and are targeted
      at
      consumers in the Northeast PRC. We advertise periodically in the local media
      to
      create and maintain public awareness of our products and branding. These
      activities include television commercials, radio, magazine and newspaper
      advertisements, and exhibitions. We increase the frequency of advertisements
      whenever new products are launched.




**Intellectual
      Property Rights**




Through
      our advertising efforts and the consistent quality of its products, our
      management believes that consumers in the PRC have come to associate our
“ChumingTM” brand name with quality meat products. Thus, our management believes
      that the goodwill in the “ChumingTM” branding is a valuable asset to us. The
      “Chuming” trademark and rights to the “Huayu” trademark application in the PRC
      are owned by Dalian Chuming Industry Development Co., Ltd., a subsidiary of
      the
      Group. We have been granted a perpetual fully paid up license to use both of
      these trademarks in connection with our business, under two trademark agreements
      with Dalian Chuming Industry Development Co., Ltd.




We
      believe that the protection of our brand names is important to our marketing
      efforts and believe that we have taken appropriate steps to protect our brand.
      We have not discovered any counterfeiting or any infringements of our ChumingTM
or Huayu brand names during the three years prior to the date of this report.





We
      require all resellers who we work with, including specialty counters and
      franchise store operators, to comply with our trademark usage policy, and
      require them to pay trademark usage guarantee deposits. We also employee
      approximately 30 employees who randomly inspect the facilities of the over
      500
      operators we work with to ensure compliance with our policies and other
      guidelines. We will generally terminate our business relationship with operators
      found violating our policies.




**Research
      and Development**




We
      have
      two operations, a Meat Engineering Center and a Sea Products Center, focused
      on
      the development of new products to the market. In addition to meeting the taste
      demands of consumers, these groups focus on quality, nutrition and safety
      standards. These groups draw upon a 25-employee research and development staff,
      including three professors in the field of animal nutrition and biology,
      supporting the safe and rapid introduction to the market of new products,
      specifically in the areas of seafood and meat by-products. We currently have
      more than 100 products available to consumers, with the average rate of three
      new products ready for the market per month. We are also working on
      anti-freezing experiments to facilitate preservation of our meats so as to
      minimize or eliminate the use of chemical preservatives.




**Government
      Approval and Regulation of Principal Products**




The
      Chinese government is actively promulgating a plan for “safe meat” and is
      expected to raise the proportion of slaughtering automation to over seventy
      percent of all meat and actively enforce authorized slaughtering and quarantine.
      Government initiatives take the form of benefits ranging from special grants,
      subsidized financing, preferential tax policies, direct government funding
      and
      other types of subsidies aimed at encouraging the modernization of the meat
      industry. In addition, while it is possible that the Chinese central or
      provincial governments may enact more stringent regulations that raise standards
      for the meat processing industry, we believe that our company is currently
      a
      leader in meat processing safety standards, and would not be affected by such
      increased standards.





23




**Compliance
      with Environmental Laws**




We
      own
      two wastewater treatment plants on premise with a daily treating capacity of
      six
      hundred tons for each plant. Those plants were designed to comply with the
      Integrated Wastewater Discharge Standard of the PRC and the Environmental
      Protection Regulation of Dalian City. To the knowledge of our management, we
      have not breached any environment protection regulations during any of the
      past
      three years.




**Employees**




We
      currently have approximately 589 employees, the composition of which is as
      follows:


**R&D and**
                **Engineering**
              
              **Production**
              
              **General and**
                **Administrative**
              
              **Sales and**
                **Marketing**
              
              **Quality**
                **Control**
              
              **Total**Meat
                  Company
              
              
              10
              
              
              153
              
              
              25
              
              
              10
              
              
              8
              
              
              206Food
                  Company
              
              
              15
              
              
              165
              
              
              15
              
              
              18
              
              
              10
              
              
              211Sales
                  Company
              
              
              0
              
              
              0
              
              
              25
              
              
              135
              
              
              0
              
              
              160Total
              
              
              25
              
              
              318
              
              
              65
              
              
              163
              
              
              18
              
              
              589




We
      and
      our predecessor companies have experienced excellent employee retention, which
      we believe is a result of our consistently-applied management policies and
      proactive employee benefit program participation. The average tenure is four
      years for factory workers and twelve years for management staff. All employees
      have health insurance, unemployment insurance and retirement benefits that
      are
      provided by the government. We make regular payments into these
      government-sponsored health insurance and retirement programs for each employee.
      Additionally, we provide free meals and accommodations to all employees on
      shift.




Certain
      of our employees are represented by a labor union which is governed by PRC
      Company and Labor Laws. There have been no adverse labor incidents or work
      stoppages in our history or our predecessor companies. Management believes
      that
      our relationship with our employees and the union are good.




**Corporate
      Information**




Our
      principal executive offices are located at No. 9, Xin Yi Street, Ganjingzi
      District, Dalian City, Liaoning Province, PRC 116039. Our main telephone number
      is +86 411 867 166 96 and our fax number is +86 411 867 166 90.





24




**RISK
      FACTORS**





*You
      should carefully consider the risks described below together with all of the
      other information included in this report before making an investment decision
      with regard to our securities. The statements contained in or incorporated
      into
      this report that are not historic facts are forward-looking statements that
      are
      subject to risks and uncertainties that could cause actual results to differ
      materially from those set forth in or implied by forward-looking statements.
      If
      any of the following risks actually occurs, our business, financial condition
      or
      results of operations could be harmed. In that case, the trading price of our
      common stock could decline, and you may lose all or part of your
      investment.*





***Risks
      Relating to Our Business***




**Our
      limited operating history makes it difficult to evaluate our future prospects
      and results of operations.**




We
      have a
      limited operating history. Our holding company, Chuming WOFE, was incorporated
      in 2004, and the companies that form its present subsidiaries were incorporated
      in 2003 - 2004. Accordingly, you should consider our future prospects in light
      of the risks and uncertainties experienced by early stage companies in evolving
      industries such as the meat industry in China. Some of these risks and
      uncertainties relate to our ability to:





·
            maintain
                our market position in the meat business in
                China;




·
            offer
                new and innovative products to attract and retain a larger customer
                base;




·
            attract
                additional customers and increase spending per
                customer;




·
            increase
                awareness of our brand and continue to develop user and customer
                loyalty;




·
            respond
                to competitive market conditions;




·
            respond
                to changes in our regulatory
                environment;




·
            manage
                risks associated with intellectual property
                rights;




·
            maintain
                effective control of our costs and
                expenses;




·
            raise
                sufficient capital to sustain and expand our
                business;




·
            attract,
                retain and motivate qualified personnel;
                and




·
            upgrade
                our technology to support additional research and
                development.




If
      we are
      unsuccessful in addressing any of these risks and uncertainties, our business
      may be materially and adversely affected.





**If
      there are any interruptions to or decline in the amount or quality of our live
      pigs, raw pork or other major raw material supply, our business could be
      materially and adversely affected.**




Live
      pigs
      and raw pork are the principal raw materials used in our production. We procure
      approximately 60% of our live pigs from Group, and the remainder from various
      of
      third party suppliers who are independent farmers. Our third party suppliers
      may
      not continue to be able to supply an adequate number of live pigs to satisfy
      our
      present and future production needs. The supply of pigs is dependent on the
      output of pig farms, which may be affected by outbreaks of diseases or
      epidemics. Our current suppliers may not be able to provide live pigs of
      sufficient quality to meet our stringent quality control requirements. Any
      interruptions to or decline in the amount or quality of our live pig supply
      could materially disrupt our production and adversely affect our business.
      In
      addition to live pigs, we also use additives and packaging in our production,
      which we source from third party suppliers. Any interruptions to or decline
      in
      the amount or quality of our additives or packaging supply, could also disrupt
      our production or sales and adversely affect our business.




25




**We
      are vulnerable to increases in the price of live pigs and other operating costs,
      and we may not be able to entirely offset these increasing costs by increasing
      the prices of our products, particularly our processed meat
      products.**




We
      purchase agricultural products, such as live pigs, for use in our production
      process and for resale. The price of such commodities is subject to fluctuations
      that are attributable to a number of factors, such as the price of animal feed,
      diseases and infections, and weather conditions. If for example, worldwide
      and
      local grain prices should increase, this would affect the price of animal feed,
      which may increase the price of live pigs. Higher pig prices may force us to
      raise the prices we charge our customers for our products, however we may not
      always be able to pass on the entire amount of price increases to our customers,
      and/or consumers might cut back on consumption of meat products.





During
      2007, prices of live pigs rose sharply. If the costs of raw materials or other
      costs of production and distribution of our products increase further, and
      we
      are unable to entirely offset these increases by raising prices of our products,
      our profit margins and financial condition could be adversely affected.
      According to China Livestock and Products Annual Report 2007 dated on September
      25, 2007 by the USDA Foreign Agricultural Service, the severe supply shortage
      of
      hogs in 2007 was because of a series of outbreaks of Porcine
      Reproductive and Respiratory Syndrome **** (PR RS),
      also
      known as Blue Ear Disease, in China from May 2006. Blue Ear Disease is an
      infectious disease that affects swine, characterized by reproductive disorders,
      premature delivery, miscarriage, and stillbirth—as well as abnormal breathing in
      piglets. According to the report, shortages and a sharp pork price increase
      occurred as a result of Blue Ear Disease. The average pork price increased
      by 48
      percent from January to August 2007 over the same period in 2006, while prices
      in July and August 2007 increased by 86 and 87 percent, respectively, from
      the
      same months in 2006.




**We
      may be unable to anticipate changes in consumer preferences for processed meat
      products, which may result in decreased demand for our
      products.**




Our
      continued success in the processed meat products market is in large part
      dependent on our ability to anticipate and develop products that appeal to
      the
      changing tastes, dietary habits and preferences of customers. If we are not
      able
      to anticipate and identify new consumer trends and develop new products
      accordingly, demand for our products may decline and our operating results
      may
      be adversely affected. In addition, we may incur significant costs relating
      to
      developing and marketing new products or expanding our existing product
      offerings in reaction to what we perceive to be a consumer preference or demand.
      Such development or marketing may not result in the level of market acceptance,
      volume of sales or profitability anticipated.




**If
      the chilled and frozen pork market in China does not grow as we expect, our
      results of operations and financial conditions may be adversely
      affected.**




If
      the
      chilled and frozen pork market in China does not grow as we expect, our business
      may be harmed, we may need to adjust our growth strategy and our results of
      operation may be adversely affected.





26




**We
      require various licenses and permits to operate our business, and the loss
      of or
      failure to renew any or all of these licenses and permits could materially
      adversely affect our business.**




In
      accordance with PRC laws and regulations, we are required to maintain various
      licenses and permits in order to operate our business, including, without
      limitation, a slaughtering permit in respect of each of our chilled and frozen
      pork production facilities and a permit for production of industrial products
      in
      respect of each of our processed meat production facilities. We are required
      to
      comply with applicable hygiene and food safety standards in relation to our
      production processes. Our premises and transportation vehicles are subject
      to
      regular inspections by the regulatory authorities for compliance with applicable
      regulations. Failure to pass these inspections, or the loss of or failure to
      renew our licenses and permits, could require us to temporarily or permanently
      suspend some or all of our production or distribution operations, which could
      disrupt our operations and adversely affect our business.




**We
      are highly dependent on senior management and key research and development
      personnel.**




We
      are
      highly dependent on our senior management to manage our business and operations
      and our key research and development personnel for the development of new
      processing methods and technologies, food products and the enhancement of our
      existing products. In particular, we rely substantially on our chairman and
      chief executive officer, Mr. Shi Huashan, to manage our operations. We also
      depend on our key research personnel. In addition, we also rely on information
      technology and logistics personnel for the production, storage and shipment
      of
      our products and on marketing and sales personnel, engineers and other personnel
      with technical and industry knowledge to transport, market and sell our
      products. We do not maintain key man life insurance on any of our senior
      management or key personnel. The departure of any one of them, in particular
      Mr.
      Shi, would have a material adverse effect on our business and operations.
      Competition for senior management and research and development personnel is
      intense and the pool of suitable candidates is limited. We may be unable to
      locate a suitable replacement for any senior management or key research and
      development personnel that we lose. In addition, if any member of our senior
      management or key research and development personnel joins a competitor or
      forms
      a competing company, they may compete with us for customers, business partners
      and other key professionals and staff members of our company.





We
      compete for qualified personnel with other food processing companies, food
      retailers, logistics companies and research institutions. Intense competition
      for these personnel could cause our compensation costs to increase
      significantly, which could have a material adverse effect on our results of
      operations. Our future success and ability to grow our business will depend
      in
      part on the continued service of these individuals and our ability to identify,
      hire and retain additional qualified personnel. If we are unable to attract
      and
      retain qualified employees, we may be unable to meet our business and financial
      goals.




**Our
      growth strategy may prove to be disruptive and divert management
      resources.**




Our
      growth strategy may involve large transactions and present financial, managerial
      and operational challenges, including diversion of management attention from
      existing businesses, difficulty with integrating personnel and financial and
      other systems, increased expenses, including compensation expenses resulting
      from newly-hired employees, assumption of unknown liabilities and potential
      disputes. We could also experience financial or other setbacks if any of our
      growth strategies incur problems of which we are not presently aware. We may
      require additional financing in the future.





27




We
      may
      need to obtain additional debt or equity to fund future capital expenditures.
      Additional equity may result in dilution to the holders of our outstanding
      shares of capital stock. Additional debt financing may include conditions that
      would restrict our freedom to operate our business, such as conditions
      that:




·
            limit
                our ability to pay dividends or require us to seek consent for the
                payment
                of dividends;




·
            increase
                our vulnerability to general adverse economic and industry
                conditions;




·
            require
                us to dedicate a portion of our cash flow from operations to payments
                on
                our debt, thereby reducing the availability of our cash flow to fund
                capital expenditures, working capital and other general corporate
                purposes; and




·
            limit
                our flexibility in planning for, or reacting to, changes in our business
                and our industry.




We
      cannot
      guarantee that we will be able to obtain any additional financing on terms
      that
      are acceptable to us, or at all.




**Our
      operations are cash intensive and our business could be adversely affected
      if we
      fail to maintain sufficient levels of working capital.**




We
      expend
      a significant amount of cash in our operations, principally to fund our raw
      material procurement. Our suppliers, in particular, third party suppliers of
      pigs, typically require payment in full within seven days after delivery,
      although some of our suppliers provide us with credit. In turn, we typically
      require our customers of chilled and frozen pork to make payment in full on
      delivery, although we offer some of our long-standing customers credit terms.
      We
      generally fund most of our working capital requirements out of cash flow
      generated from operations. If we fail to generate sufficient revenues from
      our
      sales, or if we experience difficulties collecting our accounts receivables,
      we
      may not have sufficient cash flow to fund our operating costs and our business
      could be adversely affected.




**We
      may be unable to maintain our profitability in the face of a consolidating
      retail environment in China.**




We
      sell
      substantial amounts of our products to supermarkets and large retailers. The
      supermarket and food retail industry in China has been, and is expected to
      continue, undergoing a trend of development and consolidation. As the food
      retail trade continues to consolidate and our retail customers grow larger
      and
      become more sophisticated, they may demand lower pricing and increased
      promotional programs. Furthermore, larger customers may be better able to
      operate on reduced inventories and potentially develop or increase their focus
      on private label products. If we fail to maintain a good relationship with
      our
      large retail customers, or fail to maintain a wide offering of quality products,
      or if we lower our prices or increase promotional support of our products in
      response to pressure from our customers and are unable to increase the volume
      of
      our products sold, our profitability could decline.




**Our
      operating results may fluctuate from period to period and if we fail to meet
      market expectations for a particular period, our share price may
      decline.**




Our
      operating results have fluctuated from period to period and are likely to
      continue to fluctuate as a result of a wide range of factors, including seasonal
      variations in live pig supply and processed meat products consumption. Our
      production and sales of chilled and frozen pork are generally lower in the
      summer, due to lower supply of live pigs. Interim reports may not be indicative
      of our performance for the year or our future performance, and period-to-period
      comparisons may not be meaningful due to a number of reasons beyond our control.
      We cannot assure you that our operating results will meet the expectations
      of
      market analysts or our investors. If we fail to meet their expectations, there
      may be a decline in our share price.





28




**We
      derive all of our revenues from sales in China and any downturn in the Chinese
      economy could have a material adverse effect on our business and financial
      condition.**




All
      of
      our current revenues are generated from sales in China. We anticipate that
      revenues from sales of our products in China will continue to represent a
      substantial proportion of our total revenues in the near future. Any significant
      decline in the condition of the PRC economy could, among other things, adversely
      affect consumer buying power and discourage consumption of our products, which
      in turn would have a material adverse effect on our business and financial
      condition.





**We
      rely on our exclusive network of showcase stores, network stores and supermarket
      brand counters for the success of our sales and our brand image, and should
      they
      perform poorly, our business and brand image could be materially and adversely
      affected.**




In
      addition to our sales to wholesale customers, we sell our products through
      showcase stores, network stores and supermarket brand counters. All of these
      retail based stores exclusively sell our pork products and display the Chuming
      logo on our store facades. For the first half of 2007, these retail outlets
      accounted for approximately 43% of our total revenue. If the sales performance
      of our retail based stores deteriorates, this could adversely affect the
      financial results of the company. In addition, any sanitation, hygiene, or
      food
      quality problems that might arise from the retail based stores could adversely
      affect our brand image and lead to a loss of sales. Chuming does not own any
      of
      the retail based stores.




**We
      rely on the performance of our wholesaler, retailer and mass merchant customers
      for the success of our sales, and should they perform poorly or give priority
      to
      our competitors’ products, our business could be materially and adversely
      affected.**




In
      addition to our retail sales channel, we sell our products to supermarkets
      and
      large retailers, which in turn sell the products to end consumers. If the sales
      performance of our wholesale customers deteriorates, this could adversely affect
      our sales. Furthermore, our wholesale customers also carry products which
      directly compete with our products for retail space and consumer purchases.
      There is a risk that our wholesale customers may give higher priority to
      products of, or form alliances with, our competitors. If our wholesale customers
      do not continue to purchase our products, or provide our products with similar
      levels of promotional support, our sales performance and brand imaging could
      be
      adversely affected.




**The
      loss of any of our significant customers could have an adverse effect on our
      business.**




Our
      key
      customers are principally supermarkets and large retailers in the PRC. We have
      not entered into long-term supply contracts with any of these major customers.
      There can be no assurance that we will maintain or improve the relationships
      with these customers, or that we will be able to continue to supply these
      customers at current levels or at all. If we cannot maintain long-term
      relationships with our major customers, the loss of a significant portion of
      our
      sales to them could have an adverse effect on our business, financial condition
      and results of operations. Further, the loss of any one of our top five
      customers could cause us to suffer a temporary setback in our sales, which
      could
      have a short term negative effect on our financial results.





**Recent
      regulatory enforcement crackdowns on food processing companies in the PRC could
      adversely affect our businesses.**




Recently,
      the PRC government authorities have taken certain measures to maintain the
      PRC
      food market in good order and to improve the integrity of the PRC food industry,
      such as enforcing full compliance with industry standards and closing certain
      food processing companies in the PRC that did not meet regulatory standards.
      We
      cannot assure you that our businesses and operations will not be affected as
      a
      result of the deteriorating reputation of the food industry in the PRC due
      to
      recent scandals regarding food products.




29




**Environmental
      regulations and related litigation could have a material adverse effect on
      our
      business and results of operations.**




Our
      operations and properties are subject to extensive and increasingly stringent
      laws and regulations pertaining to, among other things, the discharge of
      materials into the environment and the handling and disposition of wastes
      (including solid and hazardous wastes) or otherwise relating to protection
      of
      the environment. Failure to comply with any laws and regulations and future
      changes to them may result in significant consequences to us, including civil
      and criminal penalties, liability for damages and negative
      publicity.




We
      have
      incurred, and will continue to incur, significant capital and operating
      expenditures to comply with these laws and regulations. W e cannot assure you
      that additional environmental issues will not require currently unanticipated
      investigations, assessments or expenditures, or that requirements applicable
      to
      us will not be altered in ways that will require us to incur significant
      additional costs.




**Deterioration
      of our perishable products may occur due to delivery delays, malfunctioning
      of
      freezer facilities or poor handling during transportation, which could adversely
      affect our business, results of operations and financial
      condition.**




The
      condition of our food products (being perishable goods) may deteriorate due
      to
      shipment or delivery delays, malfunctioning of freezer facilities or poor
      handling during delivery by shippers or intermediaries. We are not aware of
      any
      instances whereby we were made to compensate for delivery delays, malfunctioning
      of freezer facilities or poor handling during transportation. However, there
      is
      no assurance that such incidents will not occur in the future. In the event
      of
      any delivery delays, malfunctioning of freezer facilities or poor handling
      during transportation, we may have to make compensation payments and our
      reputation, business goodwill and revenue will be adversely
      affected.




**Unexpected
      business interruptions could adversely affect our
      business.**




Our
      operations are vulnerable to interruption by fire, power failure and power
      shortages, floods, computer viruses and other events beyond our control. In
      particular, China, especially eastern and southern China, is experiencing
      frequent electricity shortages. In addition, we do not carry business
      interruption insurance to compensate us for losses that may occur as a result
      of
      these kinds of events and any such losses or damages incurred by us could
      disrupt our production and other operations.





30




**If
      we fail to develop and maintain an effective system of internal controls, we
      may
      not be able to accurately report our financial results or prevent fraud; as
      a
      result, current and potential shareholders could lose confidence in our
      financial reports, which could harm our business and the trading price of our
      common stock.**




Effective
      internal controls are necessary for us to provide reliable financial reports
      and
      effectively prevent fraud. Section 404 of the Sarbanes-Oxley Act of 2002
      requires us to evaluate and report on our internal controls over financial
      reporting and have our independent registered public accounting firm annually
      attest to our evaluation, as well as issue their own opinion on our internal
      controls over financial reporting, beginning with our Annual Report on Form
      10-K
      for the fiscal year ended December 31, 2007. We plan to prepare for compliance
      with Section 404 by strengthening, assessing and testing our system of internal
      controls to provide the basis for our report. The process of strengthening
      our
      internal controls and complying with Section 404 is expensive and time
      consuming, and requires significant management attention, especially given
      that
      we have not yet undertaken any efforts to comply with the requirements of
      Section 404. We cannot be certain that the measures we will undertake will
      ensure that we will maintain adequate controls over our financial processes
      and
      reporting in the future. Furthermore, if we are able to rapidly grow our
      business, the internal controls that we will need will become more complex,
      and
      significantly more resources will be required to ensure our internal controls
      remain effective. Failure to implement required controls, or difficulties
      encountered in their implementation, could harm our operating results or cause
      us to fail to meet our reporting obligations. If we or our auditors discover
      a
      material weakness in our internal controls, the disclosure of that fact, even
      if
      the weakness is quickly remedied, could diminish investors’ confidence in our
      financial statements and harm our stock price. In addition, non-compliance
      with
      Section 404 could subject us to a variety of administrative sanctions, including
      the suspension of trading, ineligibility for listing on one of the Nasdaq Stock
      Markets or national securities exchanges, and the inability of registered
      broker-dealers to make a market in our common stock, which would further reduce
      our stock price.




**We
      will incur increased costs as a public company which may affect our
      profitability and an active trading market.**




As
      a
      public company, Chuming will incur significant legal, accounting and other
      expenses that it did not incur as a private company. We are now subject to
      the
      SEC’s rules and regulations relating to public disclosure. SEC disclosures
      generally involve a substantial expenditure of financial resources. In addition,
      the Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented
      by
      the SEC, have required changes in corporate governance practices of public
      companies. We expect that full compliance with these new rules and regulations
      will significantly increase our legal and financial compliance costs and make
      some activities more time-consuming and costly. For example, we will be required
      to create additional board committees and adopt policies regarding internal
      controls and disclosure controls and procedures. Such additional reporting
      and
      compliance costs may negatively impact our financial results. To the extent
      our
      earnings suffer as a result of the financial impact of our SEC reporting or
      compliance costs, our ability to develop an active trading market for our
      securities could be harmed.




**We
      have limited business insurance coverage.**




The
      insurance industry in China is still at an early stage of development. Insurance
      companies in China offer limited business insurance products. We do not have
      any
      business liability or disruption insurance coverage for our operations in China.
      Any business disruption, litigation or natural disaster may result in our
      incurring substantial costs and the diversion of our resources. In addition,
      since  our business operations are based outside of the U.S. (although we
      are a Nevada corporation quoted on the OTC Bulletin Board in the U.S.),
      directors and officers insurance may not be readily available to us at the
      prices and on terms acceptable to us. If we are not able to secure satisfactory
      D & O insurance coverage, we may not be able to attract the most qualified
      directors and officers, and our business could be indirectly adversely
      affected.





31




***Risks
      Relating To Our Industry***




**The
      pig slaughtering and processed meat industries in China are subject to extensive
      government regulation, which is in the process of change and
      development.**




The
      pig
      slaughtering and processed meat industries in China are heavily regulated by
      a
      number of governmental agencies, including primarily the Ministry of
      Agriculture, the Ministry of Commerce, the Ministry of Health, the General
      Administration of Quality Supervision, Inspection and Quarantine and the State
      Environmental Protection Administration. These regulatory bodies have broad
      discretion and authority to regulate many aspects of the pig slaughtering and
      processed meat industries in China, including, without limitation, setting
      hygiene standards for production and quality standards for processed meat
      products. In addition, the pig slaughtering and processed meat products
      regulatory framework in China is still in the process of being developed. If
      the
      relevant regulatory authorities set standards with which we are unable to comply
      or which increase our production costs and hence our prices so as to render
      our
      products non-competitive, our ability to sell products in China may be limited.




**The
      pig slaughtering and processed meat industries in China may face increasing
      competition from both domestic and foreign companies, as well as increasing
      industry consolidation, which may affect our market share and profit
      margin.**




The
      pig
      slaughtering and processed meat industries in China are highly competitive.
      Our
      processed meat products are targeted at mid- to high-end consumers, a market
      in
      which we face increasing competition, particularly from foreign suppliers.
      In
      addition, the evolving government regulations in relation to the pig
      slaughtering industry have driven a trend of consolidation through the industry,
      with smaller operators unable to meet the increasing costs of regulatory
      compliance and therefore are at a competitive disadvantage. We believe that
      our
      ability to maintain our market share and grow our operations within this
      landscape of changing and increasing competition is largely dependent upon
      our
      ability to distinguish our products and services.




In
      addition, prior to China’s entry into the World Trade Organization (“WTO”), high
      barriers to entry existed for many potential competitors in our business through
      the use of tariffs and restrictive import licensing and distribution practices.
      China’s admission to WTO has lowered some of the tariffs and other barriers to
      entry so we can expect that competition will increase.




We
      cannot
      assure you that our current or potential competitors will not develop products
      of a comparable or superior quality to ours, or adapt more quickly than we
      do to
      evolving consumer preferences or market trends. In addition, our competitors
      in
      the raw meat market may merge or form alliances to achieve a scale of operations
      or sales network which would make it difficult for us to compete. Increased
      competition may also lead to price wars, counterfeit products or negative brand
      advertising, all of which may adversely affect our market share and profit
      margin. We cannot assure you that we will be able to compete effectively with
      our current or potential competitors.




**The
      outbreak of animal diseases or other epidemics could adversely affect our
      operations.**




An
      occurrence of serious animal diseases, such as foot-and-mouth disease, or any
      outbreak of other epidemics in China affecting animals or humans might result
      in
      material disruptions to our operations, material disruptions to the operations
      of our customers or suppliers, a decline in the supermarket or food retail
      industry or slowdown in economic growth in China and surrounding regions, any
      of
      which could have a material adverse effect on our operations and turnover.
      There
      can be no assurance that our facilities or products will not be affected by
      an
      outbreak of any disease or outbreak in the future, or that the market for pork
      products in the PRC will not decline as a result of fear of disease. In either
      case, our business, results of operations and financial condition would be
      adversely and materially affected.




32




**Consumer
      concerns regarding the safety and quality of food products or health concerns
      could adversely affect sales of our products.**




Our
      sales
      performance could be adversely affected if consumers lose confidence in the
      safety and quality of our products. Consumers in the PRC are increasingly
      conscious of food safety and nutrition. Consumer concerns about, for example,
      the safety of pork products, or about the safety of food additives used in
      processed meat products, could discourage them from buying certain of our
      products and cause our results of operations to suffer.




**We
      may be subject to substantial liability should the consumption of any of our
      products cause personal injury or illness.**




The
      sale
      of food products for human consumption involves an inherent risk of injury
      to
      consumers. Such injuries may result from tampering by unauthorized third parties
      or product contamination or degeneration, including the presence of foreign
      contaminants, chemical substances or other agents or residues during the various
      stages of the procurement and production process. While we are subject to
      governmental inspections and regulations, we cannot assure you that consumption
      of our products will not cause a health-related illness in the future, or that
      we will not be subject to claims or lawsuits relating to such
      matters.




Even
      if a
      product liability claim is unsuccessful or is not fully pursued, the negative
      publicity surrounding any assertions that our products caused personal injury
      or
      illness could adversely affect our reputation with customers and our corporate
      and brand image. Consistent with industry practice in China, we do not maintain
      product liability insurance. Furthermore, our products could potentially suffer
      from product tampering, contamination or degeneration or be mislabeled or
      otherwise damaged. Under certain circumstances, we may be required to recall
      products. Even if a situation does not necessitate a product recall, we cannot
      assure you that government sanctions or product liability claims will not be
      asserted against us as a result. A product liability judgment against us or
      a
      product recall could have a material adverse effect on our business, financial
      condition or results of operations.




**Our
      product and company name may be subject to counterfeiting and/or imitation,
      which could impact upon our reputation and brand image as well as lead to higher
      administrative costs.**




We
      regard
      brand positioning as the core of our competitive strategy, and intend to
      position our brand, “ChumingTM” to create the perception and image of health,
      nutrition, freshness and quality in the minds of our customers. There have
      been
      frequent occurrences of counterfeiting and imitation of products in the PRC
      in
      the past. We cannot guarantee that counterfeiting or imitation of our products
      will not occur in the future or that we will be able to detect it and deal
      with
      it effectively. Any occurrence of counterfeiting or imitation could impact
      negatively upon our corporate and brand image, particularly if the counterfeit
      or imitation products cause sickness, injury or death to consumers. In addition,
      counterfeit or imitation products could result in a reduction in our market
      share, a loss of revenues or an increase in our administrative expenses in
      respect of detection or prosecution.




33





***Risks
      Relating To Conducting Business in the PRC***




Substantially
      all of our assets and projects are located in the PRC, and substantially all
      of
      our revenue is sourced from the PRC. Accordingly, our results of operations
      and
      financial position are subject to a significant degree to economic, political
      and legal developments in the PRC, including the following risks:




**Economic,
      political and social conditions and government policies in China could have
      a
      material adverse effect on our business, financial condition and results of
      operations.**





Economic,
      political and social conditions and government policies in China differ in
      many
      respects from other more fully industrialized nations, and below are examples
      of
      such differences.




·
            *Structure*.
                Agriculture still plays an important role in Chinese economy and
                employment. Agriculture still represents around 50% of the employment,
                which is substantially higher than most developed countries.




·
            *Capital
                re-investment*.
                Compared with more highly developed nations, there may be less
                availability to Chinese firms of all types of investment capital
                within
                China.




·
            *Government
                involvement*.
                China is still transitioning from a centrally planned economic model
                to
                that of a free market. As a result, the Chinese government has
                traditionally had a greater degree of regulatory involvement in the
                economic affairs and conduct of firms in China, as compared with
                firms in
                more advanced market-based economies.




·
            *Allocation
                of resources*.
                Related to the above point, the Chinese government may have greater
                ability to influence the allocation of capital, labor, materials,
                and
                other resources than governments of other advanced market-based economies.




·
            *Level
                of development*.
                Although China’s economy has been rapidly growing in recent years, certain
                aspects such as public infrastructure, poverty rate, and other
                measurements of development still lag behind highly developed nations,
                and
                this affects how companies must conduct business in China.




·
            *Control
                of foreign exchange*.
                China still maintains strict foreign exchange controls which has
                been in
                place since 1979, although steps have been taken to increase the
                exchangeability of the Chinese renminbi with other currencies.




·
            *Growth
                rate*.
                For several years, China’s economy has achieved consistent double digit
                growth rates, and this may put strain on infrastructure, availability
                on
                raw materials, and ability of firms to manage growth.




·
            *Rate
                of inflation*.
                According to the Consumer Price Index (CPI) compiled by the National
                Statistics Bureau of China, the overall rate of inflation (CPI) in
                August
                2007 is 6.5% and the rate of inflation for food in August 2007 was
                18.2%,
                which are substantially higher than most of the developed countries,
                and
                these factors affect the local market environment in which Chinese
                firms
                must operate.




The
      economy of China has been transitioning from a centrally planned economy to
      a
      more market-oriented economy. Although in recent years the PRC government has
      implemented measures emphasizing the utilization of market forces for economic
      reform, a substantial portion of productive assets in China is still owned
      by
      the PRC government. In addition, the PRC government continues to play a
      significant role in regulating industries by imposing industrial policies.
      It
      also exercises significant control over China’s economic growth through
      allocation of resources, controlling payment of foreign currency-denominated
      obligations, setting monetary policy and providing preferential treatment to
      particular industries or companies.




34




Policies
      and other measures taken by the PRC government to regulate the economy could
      have a significant negative impact on economic conditions in China, with a
      resulting negative impact on our business. For example, our financial condition
      and results of operations may be materially and adversely affected
      by:




·
            new
                laws and regulations and the interpretation of those laws and
                regulations;




·
            the
                introduction of measures to control inflation or stimulate
                growth;




·
            changes
                in the rate or method of taxation;




·
            the
                imposition of additional restrictions on currency conversion and
                remittances abroad; or




·
            any
                actions which limit our ability to develop, produce, import or sell
                our
                products in China, or to finance and operate our business in
                China.




**Uncertainties
      with respect to the PRC legal system could adversely affect
      us.**




We
      conduct our business primarily through our Chuming Operating Subsidiaries which
      are located in China, which are governed by PRC laws and regulations. In
      addition, because the parent companies that hold these entities, namely PSI
      and
      Energroup Holdings Corporation, are outside of China, we are generally subject
      to laws and regulations applicable to foreign investments in China and, in
      particular, laws applicable to wholly foreign-owned enterprises. The PRC legal
      system is based on written statutes. Prior court decisions may be cited for
      reference but have limited precedential value.





Since
      1979, PRC legislation and regulations have significantly enhanced the
      protections afforded to various forms of foreign investments in China. However,
      China has not developed a fully integrated legal system and recently enacted
      laws and regulations may not sufficiently cover all aspects of economic
      activities in China. In particular, because these laws and regulations are
      relatively new, and because of the limited volume of published decisions and
      their nonbinding nature, the interpretation and enforcement of these laws and
      regulations involve uncertainties. In addition, the PRC legal system is based
      in
      part on government policies and internal rules (some of which are not published
      on a timely basis or at all) that may have a retroactive effect. As a result,
      we
      may not be aware of our violation of these policies and rules until some time
      after the violation. In addition, any litigation in China may be protracted
      and
      result in substantial costs and diversion of resources and management
      attention.




**You
      may experience difficulties in effecting service of legal process, enforcing
      foreign judgments or bringing original actions in China based on United States
      or other foreign laws against us, our management or the experts named in this
      report.**




We
      conduct substantially all of our operations in China and substantially all
      of
      our assets are located in China. In addition, while we are incorporated in
      the
      State of Nevada, all of our senior executive officers reside within China.
      As a
      result, it may not be possible to effect service of process within the United
      States or elsewhere outside China upon our senior executive officers, including
      with respect to matters arising under U.S. federal securities laws or applicable
      state securities laws. Moreover, our PRC counsel has advised us that the PRC
      does not have treaties with the United States or many other countries providing
      for the reciprocal recognition and enforcement of judgment of
      courts.




35




**Governmental
      control of currency conversion may affect the value of your
      investment.**




The
      PRC
      government imposes controls on the convertibility of RMB into foreign currencies
      and, in certain cases, the remittance of currency out of China. We receive
      substantially all of our revenues in RMB. Under our current structure, our
      income is primarily derived from payments from Dalian Precious Sheen Investments
      Consulting Co., Ltd. Shortages in the availability of foreign currency may
      restrict the ability of our PRC subsidiaries and our affiliated entity to remit
      sufficient foreign currency to pay dividends or other payments to us, or
      otherwise satisfy their foreign currency denominated obligations. Under existing
      PRC foreign exchange regulations, payments of current account items, including
      profit distributions, interest payments and expenditures from trade-related
      transactions, can be made in foreign currencies without prior approval from
      the
      PRC State Administration of Foreign Exchange by complying with certain
      procedural requirements. However, approval from appropriate government
      authorities is required where RMB is to be converted into foreign currency
      and
      remitted out of China to pay capital expenses such as the repayment of bank
      loans denominated in foreign currencies. The PRC government may also at its
      discretion restrict access in the future to foreign currencies for current
      account transactions. If the foreign exchange control system prevents us from
      obtaining sufficient foreign currency to satisfy our currency demands, we may
      not be able to pay dividends in foreign currencies to our
      shareholders.




**Fluctuation
      in the value of RMB may have a material adverse effect on your
      investment.**




The
      value
      of RMB against the U.S. dollar and other currencies may fluctuate and is
      affected by, among other things, changes in political and economic conditions.
      Our revenues and costs are mostly denominated in RMB, while we report our
      financial results and position in U.S. dollars. Any significant fluctuation
      in
      value of RMB may materially and adversely affect our reported cash flows,
      revenues, earnings and financial position, and the value of, and any dividends
      payable on, our stock in U.S. dollars. For example, an appreciation of RMB
      against the U.S. dollar would make any new RMB denominated investments or
      expenditures more costly to us, to the extent that we need to convert U.S.
      dollars into RMB for such purposes. An appreciation of RMB against the U.S.
      dollar would also result in foreign currency translation losses for financial
      reporting purposes when we translate our U.S. dollar denominated financial
      assets into RMB, as RMB is our reporting currency.




**We
      face risks related to health epidemics and other
      outbreaks.**




Our
      business could be adversely affected by the effects of SARS or another epidemic
      or outbreak. China reported a number of cases of SARS in April 2004. Any
      prolonged recurrence of SARS or other adverse public health developments in
      China may have a material adverse effect on our business operations. For
      instance, health or other government regulations adopted in response may require
      temporary closure of our production facilities or of our offices. Such closures
      would severely disrupt our business operations and adversely affect our results
      of operations. We have not adopted any written preventive measures or
      contingency plans to combat any future outbreak of SARS or any other
      epidemic.




***Risks
      Related to Our Corporate Structure***




**In
      order to comply with PRC laws limiting foreign ownership of Chinese companies,
      we conduct our business in the PRC through Chuming WOFE by means of certain
      ownership arrangements. If the PRC government determines that these ownership
      arrangements do not comply with applicable regulations, our business could
      be
      adversely affected and we could be subject to sanctions.**




As
      a
      result of the share exchange transaction disclosed elsewhere in this report,
      we
      own 100% of the equity interest in Precious Sheen Investments Limited, a British
      Virgin Islands company (“PSI “). PSI owns 100% of the equity in Dalian Precious
      Sheen Investments Consulting Co., Ltd., a wholly foreign owned enterprise in
      the
      People’s Republic of China. Chuming WOFE is a holding company for the following
      three operating subsidiaries: (i) Dalian Chuming Slaughter and Packaging Pork
      Company Ltd., (ii) Dalian Chuming Processed Foods Company Ltd., and (iii) Dalian
      Chuming Sales Company Ltd., each of which is a limited liability company
      headquartered in, and organized under the laws of, China (collectively, the
      “Chuming Operating Subsidiaries”). Throughout this report, PSI, Chuming WOFE and
      the Chuming Operating Subsidiaries are sometimes collectively referred to
      as “Chuming.”




36




The
      PRC
      government restricts foreign investment in businesses in China. Accordingly,
      we
      operate our business in China through Chuming WOFE. Chuming WOFE holds
      the licenses and approvals necessary to operate our business in
      China.




Although
      we believe we comply with current PRC regulations, we cannot assure you that
      the
      PRC government would agree that these operating arrangements comply with PRC
      licensing, registration or other regulatory requirements, with existing policies
      or with requirements or policies that may be adopted in the future. If in the
      future the PRC government determines that we do not comply with applicable
      PRC
      law, it could impose fines on our PRC shareholders, and in extreme cases, the
      PRC government could take steps to revoke our business and operating licenses,
      require us to discontinue or restrict our operations, restrict our right to
      collect revenues, require us to restructure our operations, impose additional
      conditions or requirements with which we may not be able to comply, impose
      restrictions on our business operations or on our customers, or take other
      regulatory or enforcement actions against us that could be harmful to our
      business. Any of these or similar actions could significantly disrupt our
      business operations or restrict us from conducting a substantial portion of
      our
      business operations, which could materially and adversely affect our business,
      financial condition and results of operations.




**Recent
      PRC regulations relating to acquisitions of PRC companies by foreign entities
      may limit our ability to acquire PRC companies and adversely affect the
      implementation of our strategy as well as our business and
      prospects.**




The
      PRC
      State Administration of Foreign Exchange, or SAFE, issued a public notice in
      January 2005 concerning foreign exchange regulations on mergers and acquisitions
      in China. The public notice states that if an offshore company controlled by
      PRC
      residents intends to acquire a PRC company, such acquisition will be subject
      to
      strict examination by the relevant foreign exchange authorities. The public
      notice also states that the approval of the relevant foreign exchange
      authorities is required for any sale or transfer by the PRC residents of a
      PRC
      company’s assets or equity interests to foreign entities, such as us, for equity
      interests or assets of the foreign entities.




In
      April
      2005, SAFE issued another public notice further explaining the January notice.
      In accordance with the April notice, if an acquisition of a PRC company by
      an
      offshore company controlled by PRC residents has been confirmed by a Foreign
      Investment Enterprise Certificate prior to the promulgation of the January
      notice, the PRC residents must each submit a registration form to the local
      SAFE
      branch with respect to their respective ownership interests in the offshore
      company, and must also file an amendment to such registration if the offshore
      company experiences material events, such as changes in the share capital,
      share
      transfer, mergers and acquisitions, spin-off transactions or use of assets
      in
      China to guarantee offshore obligations.




On
      May
      31, 2007, SAFE issued another official notice known as “Circular 106,” which
      requires the owners of any Chinese company to obtain SAFE’s approval before
      establishing any offshore holding company structure for foreign financing as
      well as subsequent acquisition matters in China.




If
      we
      decide to acquire a PRC company, we cannot assure you that we or the owners
      of
      such company, as the case may be, will be able to complete the necessary
      approvals, filings and registrations for the acquisition. This may restrict
      our
      ability to implement our acquisition strategy and adversely affect our business
      and prospects. In addition, if such registration cannot be obtained, our company
      will not be able to receive dividends declared and paid by our subsidiaries
      in
      the PRC and may be forbidden from paying dividends for profit distribution
      or
      capital reduction purposes.




37




**Chuming
      WOFE is subject to restrictions on making payments to us.**




We
      are a
      holding company incorporated in the State of Nevada and do not have any assets
      or conduct any business operations other than our investment in Chuming and
      their operating subsidiaries in China. As a result of our holding company
      structure, we rely entirely on payments or dividends from Chuming WOFE for
      our
      cash flow to fund our corporate overhead and regulatory obligations. The PRC
      government also imposes controls on the conversion of Renminbi into foreign
      currencies and the remittance of currencies out of China. We may experience
      difficulties in completing the administrative procedures necessary to obtain
      and
      remit foreign currency. Further, if our subsidiaries in China incur debt on
      their own in the future, the instruments governing the debt may restrict their
      ability to make payments. If we are unable to receive all of the revenues from
      our operations through these contractual or dividend arrangements, we may be
      unable to pay dividends on our shares of common stock.




***Risk
      Relating to an Investment in Our Securities***




**Generally,
      we have not paid any cash dividends to our shareholders and no cash dividends
      will be paid in the foreseeable future.**




We
      do not
      anticipate paying cash dividends on our common stock in the foreseeable future
      and we may not have sufficient funds legally available to pay dividends. Even
      if
      the funds are legally available for distribution, we may nevertheless decide
      or
      may be unable due to pay any dividends. We intend to retain all earnings for
      our
      company’s operations.




**The
      application of the “penny stock” rules could adversely affect the market price
      of our common stock and increase your transaction costs to sell those
      shares.**




As
      long
      as the trading price of our common shares is below $5 per share, the open-market
      trading of our common shares will be subject to the “penny stock” rules. The
“penny stock” rules impose additional sales practice requirements on
      broker-dealers who sell securities to persons other than established customers
      and accredited investors (generally those with assets in excess of US$1,000,000
      or annual income exceeding US$200,000 or US$300,000 together with their spouse).
      For transactions covered by these rules, the broker-dealer must make a special
      suitability determination for the purchase of securities and have received
      the
      purchaser’s written consent to the transaction before the purchase.
      Additionally, for any transaction involving a penny stock, unless exempt, the
      broker-dealer must deliver, before the transaction, a disclosure schedule
      prescribed by the Securities and Exchange Commission relating to the penny
      stock
      market. The broker-dealer also must disclose the commissions payable to both
      the
      broker-dealer and the registered representative and current quotations for
      the
      securities. Finally, monthly statements must be sent disclosing recent price
      information on the limited market in penny stocks. These additional burdens
      imposed on broker-dealers may restrict the ability or decrease the willingness
      of broker-dealers to sell our common stock, and may result in decreased
      liquidity for our common stock and increased transaction costs for sales and
      purchases of our common stock as compared to other securities.




38




**Our
      common stock is thinly traded and, you may be unable to sell at or near “ask”
prices or at all if you need to sell your shares to raise money or otherwise
      desire to liquidate your shares.**




We
      cannot
      predict the extent to which an active public market for our common stock will
      develop or be sustained. However, we do not rule out the possibility of applying
      for listing on the Nasdaq Global Select Market, Nasdaq Global Market, Nasdaq
      Capital Market (the “Nasdaq Markets”), or other exchanges. Our common stock has
      historically been sporadically or “thinly-traded” on the “Over-the-Counter
      Bulletin Board,” meaning that the number of persons interested in purchasing our
      common stock at or near bid prices at any given time may be relatively small
      or
      nonexistent. This situation is attributable to a number of factors, including
      the fact that we are a small company which is relatively unknown to stock
      analysts, stock brokers, institutional investors and others in the investment
      community that generate or influence sales volume, and that even if we came
      to
      the attention of such persons, they tend to be risk-adverse and would be
      reluctant to follow an unproven company such as ours or purchase or recommend
      the purchase of our shares until such time as we become more seasoned and
      viable. As a consequence, there may be periods of several days or more when
      trading activity in our shares is minimal or non-existent, as compared to a
      seasoned issuer that has a large and steady volume of trading activity that
      will
      generally support continuous sales without an adverse effect on share price.
      We
      cannot give you any assurance that a broader or more active public trading
      market for our common stock will develop or be sustained, or that current
      trading levels will be sustained.





The
      market price of our common stock is particularly volatile given our status
      as a
      relatively small company with a small and thinly traded “float” that could lead
      to wide fluctuations in our share price. The price at which you purchase our
      common stock may not be indicative of the price that will prevail in the trading
      market. You may be unable to sell your common stock at or above your purchase
      price if at all, which may result in substantial losses to you.




The
      market for our common stock is characterized by significant price volatility
      when compared to seasoned issuers, and we expect that our share price will
      continue to be more volatile than a seasoned issuer for the indefinite future.
      The volatility in our share price is attributable to a number of factors. As
      noted above, our common stock is sporadically and/or thinly traded. As a
      consequence of this lack of liquidity, the trading of relatively small
      quantities of shares by our shareholders may disproportionately influence the
      price of those shares in either direction. The price for our shares could,
      for
      example, decline precipitously in the event a large number of our common shares
      are sold on the market without commensurate demand, as compared to a seasoned
      issuer which could better absorb those sales without adverse impact on its
      share
      price. The following factors also may add to the volatility in the price of
      our
      common stock: actual or anticipated variations in our quarterly or annual
      operating results; adverse outcomes; additions to or departures of our key
      personnel, as well as other items discussed under this “Risk Factors” section,
      as well as elsewhere in this Report. Many of these factors are beyond our
      control and may decrease the market price of our common stock, regardless of
      our
      operating performance. We cannot make any predictions or projections as to
      what
      the prevailing market price for our common stock will be at any time, including
      as to whether our common stock will sustain its current market prices, or as
      to
      what effect the sale of shares or the availability of common shares for sale
      at
      any time will have on the prevailing market price. However, we do not rule
      out
      the possibility of applying for listing on the Nasdaq Markets or another
      exchange.




Shareholders
      should be aware that, according to SEC Release No. 34-29093, the market for
      penny stocks has suffered in recent years from patterns of fraud and abuse.
      Such
      patterns include (1) control of the market for the security by one or a few
      broker-dealers that are often related to the promoter or issuer; (2)
      manipulation of prices through pre-arranged matching of purchases and sales
      and
      false and misleading press releases; (3) boiler room practices involving
      high-pressure sales tactics and unrealistic price projections by inexperienced
      sales persons; (4) excessive and undisclosed bid-ask differential and markups
      by
      selling broker-dealers; and (5) the wholesale dumping of the same securities
      by
      promoters and broker-dealers after prices have been manipulated to a desired
      level, along with the resulting inevitable collapse of those prices and with
      consequent investor losses. Our management is aware of the abuses that have
      occurred historically in the penny stock market. Although we do not expect
      to be
      in a position to dictate the behavior of the market or of broker-dealers who
      participate in the market, management will strive within the confines of
      practical limitations to prevent the described patterns from being established
      with respect to our securities. The occurrence of these patterns or practices
      could increase the volatility of our share price.




39




**Volatility
      in our common stock price may subject us to securities
      litigation.**




The
      market for our common stock may be characterized by significant price volatility
      when compared to seasoned issuers, and we expect our share price will be more
      volatile than a seasoned issuer for the indefinite future. In the past,
      plaintiffs have often initiated securities class action litigation against
      a
      company following periods of volatility in the market price of its securities.
      We may, in the future, be the target of similar litigation. Securities
      litigation could result in substantial costs and liabilities and could divert
      management’s attention and resources.




**Legislative
      actions, higher insurance costs and potential new accounting pronouncements
      may
      impact our future financial position and results of
      operations.**




There
      have been regulatory changes, including the Sarbanes-Oxley Act of 2002, and
      there may potentially be new accounting pronouncements or additional regulatory
      rulings that will have an impact on our future financial position and results
      of
      operations. The Sarbanes-Oxley Act of 2002 and other rule changes, as well
      as
      proposed legislative initiatives following the Enron bankruptcy, are likely
      to
      increase general and administrative costs and expenses. In addition, insurers
      are likely to increase premiums as a result of high claims rates over the past
      several years, which we expect will increase our premiums for insurance
      policies. Further, there could be changes in certain accounting rules. These
      and
      other potential changes could materially increase the expenses we report under
      generally accepted accounting principles, and adversely affect our operating
      results.




**Past
      activities of our company and its affiliates may lead to future liability for
      our company.**




Prior
      to
      our acquisition of Chuming in December 2007, we engaged in businesses unrelated
      to our current operations. Although certain previously controlling shareholders
      of our company are providing certain indemnifications against any loss,
      liability, claim, damage or expense arising out of or based on any breach of
      or
      inaccuracy in any of their representations and warranties made regarding such
      acquisition, any liabilities relating to such prior business against which
      we
      are not completely indemnified may have a material adverse effect on our
      company.




**Future
      sales of shares of our common stock may decrease the price for such
      shares.**




Actual
      sales, or the prospect of sales by our shareholders, may have a negative effect
      on the market price of the shares of our common stock. We may also register
      certain shares of our common stock that are subject to outstanding convertible
      securities, if any, or reserved for issuance under our stock option plans,
      if
      any. Once such shares are registered, they can be freely sold in the public
      market upon exercise of the options. If any of our shareholders either
      individually or in the aggregate cause a large number of securities to be sold
      in the public market, or if the market perceives that these holders intend
      to
      sell a large number of securities, such sales or anticipated sales could result
      in a substantial reduction in the trading price of shares of our common stock
      and could also impede our ability to raise future capital.




40




**Mergers
      of the type we just completed with Chuming are often heavily scrutinized by
      the
      SEC and we may encounter difficulties or delays in obtaining future regulatory
      approvals.**




Historically,
      the Securities and Exchange Commission and Nasdaq have not generally favored
      transactions in which a privately-held company merges into a largely inactive
      company with publicly traded stock, and there is a significant risk that we
      may
      encounter difficulties in obtaining the regulatory approvals necessary to
      conduct future financing or acquisition transactions, or to eventually achieve
      a
      listing of shares on one of the Nasdaq stock markets or on a national securities
      exchange. On June 29, 2005, the SEC adopted rules dealing with private company
      mergers into dormant or inactive public companies. As a result, it is likely
      that we will be scrutinized carefully by the SEC and possibly by the Financial
      Industry Regulatory Authority, which could result in difficulties or delays
      in
      achieving SEC clearance of any future registration statements or other SEC
      filings that we may pursue, in attracting FINRA-member broker-dealers to serve
      as market-makers in our common stock, or in achieving admission to one of the
      Nasdaq stock markets or any other national securities market. As a consequence,
      our financial condition and the value and liquidity of your shares of our common
      stock may be negatively impacted.




**Our
      corporate actions are substantially controlled by our principal shareholders
      and
      affiliated entities.**




Our
      principal shareholders and their affiliated entities will own approximately
      69.5% of our outstanding ordinary shares, representing approximately 69.5%
      of
      our voting power. These shareholders, acting individually or as a group, could
      exert substantial influence over matters such as electing directors and
      approving mergers or other business combination transactions. In addition,
      because of the percentage of ownership and voting concentration in these
      principal shareholders and their affiliated entities, elections of our board
      of
      directors will generally be within the control of these shareholders and their
      affiliated entities. While all of our shareholders are entitled to vote on
      matters submitted to our shareholders for approval, the concentration of shares
      and voting control presently lies with these principal shareholders and their
      affiliated entities. As such, it would be difficult for shareholders to propose
      and have approved proposals not supported by management. There can be no
      assurances that matters voted upon by our officers and directors in their
      capacity as shareholders will be viewed favorably by all shareholders of our
      company.




**The
      elimination of monetary liability against our directors, officers and employees
      under Nevada law and the existence of indemnification rights to our directors,
      officers and employees may result in substantial expenditures by us and may
      discourage lawsuits against our directors, officers and
      employees.**




Our
      articles of incorporation contain specific provisions that eliminate the
      liability of our directors for monetary damages to our company and shareholders,
      and we are prepared to give such indemnification to our directors and officers
      to the extent provided by Nevada law. We may also have contractual
      indemnification obligations under our employment agreements with our officers.
      The foregoing indemnification obligations could result in our company incurring
      substantial expenditures to cover the cost of settlement or damage awards
      against directors and officers, which we may be unable to recoup. These
      provisions and resultant costs may also discourage our company from bringing
      a
      lawsuit against directors and officers for breaches of their fiduciary duties,
      and may similarly discourage the filing of derivative litigation by our
      shareholders against our directors and officers even though such actions, if
      successful, might otherwise benefit our company and shareholders.




41




**The
      market price for our stock may be volatile.**




The
      market price for our stock may be volatile and subject to wide fluctuations
      in
      response to factors including the following:




·
            actual
                or anticipated fluctuations in our quarterly operating
                results;




·
            changes
                in financial estimates by securities research
                analysts;




·
            conditions
                in agricultural markets;




·
            changes
                in the economic performance or market valuations of other meat processing
                companies;




·
            announcements
                by us or our competitors of new products, acquisitions, strategic
                partnerships, joint ventures or capital
                commitments;




·
            addition
                or departure of key personnel;




·
            fluctuations
                of exchange rates between RMB and the U.S.
                dollar;




·
            intellectual
                property litigation;




·
            general
                economic or political conditions in
                China.




In
      addition, the securities market has from time to time experienced significant
      price and volume fluctuations that are not related to the operating performance
      of particular companies. These market fluctuations may also materially and
      adversely affect the market price of our stock.




**We
      may need additional capital, and the sale of additional shares or other equity
      securities could result in additional dilution to our
      shareholders.**




We
      believe that our current cash and cash equivalents, anticipated cash flow from
      operations and the net proceeds from a recent offering will be sufficient to
      meet our anticipated cash needs for the near future. We may, however, require
      additional cash resources due to changed business conditions or other future
      developments, including any investments or acquisitions we may decide to pursue.
      If our resources are insufficient to satisfy our cash requirements, we may
      seek
      to sell additional equity or debt securities or obtain a credit facility. The
      sale of additional equity securities could result in additional dilution to
      our
      shareholders. The incurrence of indebtedness would result in increased debt
      service obligations and could result in operating and financing covenants that
      would restrict our operations. We cannot assure you that financing will be
      available in amounts or on terms acceptable to us, if at all.




**Item
      1B. UNRESOLVED STAFF COMMENTS**




On
      February 11, 2008, we filed a registration statement on Form S-1 in order to
      register, for resale by selling shareholders, up to 7,727,271
      shares of our common stock. On
      March
      7, 2008, we received a letter from the staff of the Securities and Exchange
      Commission with comments on our initial Form S-1 filing. As of the date of
      this
      report, we are in the process of responding to the comments from the staff,
      and
      preparing an amendment to the S-1 registration statement.




**Item
      2. PROPERTIES**





*Facilities*




Our
      main
      facility and principal executive offices are located at No. 9, Xin Yi Street,
      Ganjingzi District, Dalian City, Liaoning Province, PRC 116039, which also
      serves as the headquarters for our food subsidiary and sales subsidiary. Our
      main facility is located on 89 acres in the industrial area of Dalian, where
      we
      have developed over 74,000 sq. meters of factory floor. In addition to our
      corporate offices, we also own and maintain housing for up to 760 employees,
      and
      health maintenance facilities. Our slaughtering subsidiary’s principal facility
      is located at No.2026, Zhuanshi Street, Wafangdian Town, Dalian City, Liaoning
      Province, PRC. We believe that these facilities will be sufficient to house
      our
      operations for at least the next three years, and we have the capacity to
      accommodate our projected long-term growth plans.




42





*Land
      Lease on Main Facility*




We
      have
      acquired the land use certificate for 89 acres of land in Dalian City, which
      entitles us to use and dispose of the land and the commercial or residential
      buildings located on the land. Our Food Co. occupies this piece of land.





We
      have
      also opened offices in eleven cities outside of Dalian. We have entered leasing
      agreements for those office spaces for terms ranging from one and three years.
      These offices are mainly sales offices and they are generally very small in
      size. They are located in surrounding cities, mainly in Liao Ning Province.
      In
      total, we paid approximately $58,000 rent in 2007 for these eleven
      offices.




*Real
      Property Rights*




We
      have
      rights to use and occupy two parcels of state-owned land, which are 106,466
      square meters and 48,461 square meters in area, respectively, on which our
      operations are located. These land use rights are granted to us under two
      certificates dated March 3, 2003, granted by the Government of the Ganjingzi
      District of Dalian: (i) Gan Guo Yong [2003] No. 04010 for Site Number 4-17-03-09
      (106,466 square meters), and (ii) Gan Guo Yong [2003] No. 04009 for Site Number
      4-17-03-10 (48,461 square meters). These land use rights entitle us to use
      of
      the land for a period of fifty years (until March 20, 2053) for industrial
      purposes. Our Food Co. occupies these two pieces of land.




We
      pledged our land use rights in the second parcel above (Gan Guo Yong [2003]
      No.
      04009 for Site Number 4-17-03-10) to the Bank of China, Liaoning Province
      Branch, and the pledge has a term from December 14, 2006 to December 13, 2011.
      Our plant, warehouse and office building have all been completed, and we are
      in
      the process of filing the proper documentation with the local PRC government
      to
      bring these properties into operation.





**Item
      3. LEGAL PROCEEDINGS**





We
      are
      not aware of any material existing or pending legal proceedings against us,
      nor
      are we involved as a plaintiff in any material proceeding or pending litigation.
      There are no proceedings in which any of our current directors, officers or
      affiliates, or any registered or beneficial shareholder, is an adverse party
      or
      has a material interest adverse to us.





**Item
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**





At
      a
      special meeting of shareholders of Energroup Technologies Corporation held
      on
      August 14, 2007, the Company’s shareholders approved proposals to: (i) effect a
      1-for-7 reverse stock split in the issued and outstanding shares of the
      Company’s common stock; and (ii) change state of incorporation of the Registrant
      from Utah to Nevada by merging the Registrant with and into Energroup Holdings
      Corporation, a wholly owned Nevada corporation, in connection with which the
      Articles of Incorporation and Bylaws of Energroup (Nevada) would become the
      Articles of Incorporation and Bylaws of the Company. The proposals were
      described in a definitive Schedule 14C Information Statement, which was filed
      with the Securities and Exchange Commission on July 23, 2007.





43


Pursuant
      to such shareholder approval, effective on August 20, 2007, the Company
      implemented a 1-for-7 reverse stock split in its issued and outstanding shares
      of common stock which reduced the number of the Company’s issued and outstanding
      shares of capital stock from 13,496,472 shares of common stock to approximately
      1,943,812 post-split shares of common stock. In connection with the reverse
      stock split, no shareholder of record on July 9, 2007, the record date for
      the
      Special Meeting, who held fewer than 100 shares was affected by the reverse
      stock split and no shareholder of record on the record date who held more than
      100 shares had his, her or its ownership reduced to fewer than 100 post-split
      shares of common stock as a result of the reverse stock split. In addition,
      effective on August 20, 2007, in a change-of-domicile merger, the Company was
      merged with and into Energroup (Nevada) and the Articles of Incorporation and
      Bylaws of Energroup (Nevada) became the Articles of Incorporation and Bylaws
      of
      the Company.





**PART
      II**





**Item
      5.**  **MARKET
      FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**





**Market
      Price of Common Equity**





Our
      common stock is current ly
      quoted
      on the OTC Bulletin Board under the symbol “ENHD.” As of December 31, 2007,
      there were approximately 179 shareholders of record of our common stock. The number
      of
      registered shareholders excludes any estimate by us of the number of beneficial
      owners of common shares held in street name. The following table sets forth
      the
      high and low bid information for the common stock for each quarter within the
      last two fiscal years, as reported by the OTC Bulletin Board. These quotations
      reflect inter-dealer prices, without retail mark-up, mark-down or commission
      and
      may not represent actual transactions.





**Low**
            
            **High****2007**Quarter
                ended December 31, 2007
            
            $
            5.00
            
            $
            5.00Quarter
                ended September 30, 2007
            
            $
            4.65
            
            $
            4.65Quarter
                ended June 30, 2007
            
            $
            4.65
            
            $
            4.65Quarter
                ended March 31, 2007
            
            $
            4.65
            
            $
            4.65**2006**Quarter
                ended December 31, 2006
            
            $
            0.30
            
            $
            0.30Quarter
                ended September 30, 2006
            
            $
            0.30
            
            $
            0.30Quarter
                ended June 30, 2006
            
            $
            0.30
            
            $
            1.01Quarter
                ended March 31, 2006
            
            $
            0.30
            
            $
            1.01**2005**Quarter
                ended December 31, 2005
            
            $
            0.50
            
            $
            0.50Quarter
                ended September 30, 2005
            
            $
            0.25
            
            $
            0.50Quarter
                ended June 30, 2005
            
            $
            0.05
            
            $
            0.025Quarter
                ended March 31, 2005
            
            
            n/a
            
            
            n/a




44




On
      March
      5, 2008, the closing sale price of our common
      stock on the OTC Bulletin Board was $5.00 per share. The share prices in the
      above table have been retroactively a djusted
      for: (i) a 1-for-7 reverse stock split effective August 20, 2007, and (ii)
      a
      1-for-4.6 reverse stock split effective December 14, 2007.





**Reverse
      Stock Splits**




In
      2007,
      we conducted two reverse stock splits:




(1)
      Effective August 20, 2007, the Company conducted a 1-for-7 reverse stock split
      in its issued and outstanding shares of common stock which reduced the number
      of
      the Company’s issued and outstanding shares of capital stock from 13,496,472
      shares of common stock to approximately 1,943,812 post-split shares of common
      stock. In connection with the reverse stock split, no shareholder of record
      on
      July 9, 2007, the record date for the Special Meeting, who held fewer than
      100
      shares was affected by the reverse stock split and no shareholder of record
      on
      the record date who held more than 100 shares had his, her or its ownership
      reduced to fewer than 100 post-split shares of common stock as a result of
      the
      reverse stock split. This 1-for-7 reverse stock split was approved by the
      shareholders of the Company in a special meeting.




(2)
      Effective December 14, 2007, prior to our reverse acquisition and financing
      transaction that was consummated on December 31, 2007, we conducted a 1-for-4.6
      reverse split of our common stock, par value $0.001. The action was approved
      by
      written consent of stockholders holding a majority of the Company’s outstanding
      Common Stock in lieu of a special meeting. As a result of the reverse split,
      the
      number of shares of the Company’s common stock issued and outstanding was
      reduced to 422,756. Commencing on December 14, 2007, the OTC Bulletin Board
      began quoting our common stock under the symbol ENHD.OB.




**Dividend
      Policy**





We
      do not
      anticipate declaring or paying any cash dividends on our capital stock. We
      currently intend to retain all of our net income for use in our business, and
      do
      not anticipate paying any cash dividends in the foreseeable future. Any future
      determination relating to dividend policy will be made at the discretion of
      our
      board of directors and will depend on a number of factors, including future
      earnings, capital requirements, financial condition and future prospects and
      other factors the board of directors may deem relevant.




45




**Item
      6. SELECTED FINANCIAL DATA**





You
      should read the summary consolidated financial data set forth below in
      conjunction with “ *Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations* ”
and
      our
      predecessor’s financial statements and the related notes included elsewhere in
      this report. The financial data for the twelve month period ending December
      31,
      2007, 2006 and 2005 were derived from audited financial statements included
      in
      this report. Historical results are not necessarily indicative of the results
      to
      be expected for any future period.




**(US dollars in thousands)****Twelve Months Ended**
              **December 31,****2007**
              **(audited)**
            
            **2006**
              **(audited)**
            
            **2005**
              **(audited)**
            
            **2004**
              **(audited)**
            
            **2003**
              **(unaudited)****Consolidated
                Statements of Operations Data:**Sales
            
            
            124,696
            
            
            70,396
            
            
            54,119
            
            
            654
            
            
            -Cost
                of Sales
            
            
            104,379
            
            
            57,794
            
            
            45,284
            
            
            711
            
            
            -Gross
                Profit
            
            
            20,317
            
            
            12,601
            
            
            8,835
            
            
            (56
            )
            
            -Operating
                Expenses
            
            
            6,246
            
            
            2,891
            
            
            1,647
            
            
            402
            
            
            -Income
                from Operations
            
            
            14,071
            
            
            9,709
            
            
            7,188
            
            
            (459
            )
            
            -Other
                Income (Expense), net
            
            
            (1,476
            )
            
            (1,583
            )
            
            (1,008
            )
            
            5,164
            
            
            -Income
                Before Taxes
            
            
            12,620
            
            
            8,126
            
            
            6,180
            
            
            4,705
            
            
            -Income
                Taxes
            
            
            968
            
            
            1.6
            
            
            191
            
            
            66
            
            
            -Net
                Income
            
            
            11,652
            
            
            8,128
            
            
            5,988
            
            
            4,772
            
            
            -Foreign
                Currency Translation
            
            
            2,064
            
            
            611
            
            
            286
            
            
            -
            
            
            -Comprehensive
                Income
            
            
            13,716
            
            
            8,739
            
            
            6,274
            
            
            0.7
            
            
            -Basic
                Net Income Per Share (in US$)
            
            
            0.67
            
            
            0.47
            
            
            0.35
            
            
            0.28
            
            
            -Diluted
                Net Income Per Share (in US$)
            
            
            0.67
            
            
            0.47
            
            
            0.35
            
            
            0.28
            
            
            -Basic
                Weighted Average Number of Shares Outstanding
            
            
            17,272,756
            
            
            17,272,756
            
            
            17,272,756
            
            
            17,272,756
            
            
            -Diluted
                Weighted Average Number of Shares Outstanding
            
            
            17,272,756
            
            
            17,272,756
            
            
            17,272,756
            
            
            17,272,756
            
            
            -


**(US dollars in thousands)****Twelve Months Ended**
                **December 31,****2007****(audited)**
              
              **2006****(audited)**
              
              **2005****(audited)**
              
              **2004****(audited)**
              
              **2003****(unaudited)****Balance
                  Sheet Data:**Total
                  Assets
              
              $
              66,620
              
              $
              56,846
              
              $
              50,993
              
              $
              29,957
              
              $
              -Current
                  Liabilities
              
              
              17,682
              
              
              16,764
              
              
              18,979
              
              
              2,358
              
              
              -Long
                  Term Liabilities
              
              
              -
              
              
              17,909
              
              
              18,580
              
              
              19,309
              
              
              -Stockholders
                  Equity
              
              
              48,938
              
              
              22,174
              
              
              13,434
              
              
              8,290
              
              
              -




46





**Item
              7.**
            **MANAGEMENT’S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS******





*The
      following discussion and analysis of the results of operations and financial
      condition of Chuming for the fiscal years ended December 31, 2007, 2006, and
      2005 should be read in conjunction with the Selected Consolidated Financial
      Data, the consolidated financial statements, and the notes to those financial
      statements that are included elsewhere in this report. Our discussion includes
      forward-looking statements based upon current expectations that involve risks
      and uncertainties, such as our plans, objectives, expectations and intentions.
      Actual results and the timing of events could differ materially from those
      anticipated in these forward-looking statements as a result of a number of
      factors, including those set forth under the Risk Factors, Cautionary Notice
      Regarding Forward-Looking Statements and Business sections in this report.
      We
      use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,”
“ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and
      similar expressions to identify forward-looking statements.*




**OVERVIEW**





We
      are a
      meat processing company that specializes in pork and pork products. We have
      a
      unique wholesale and retail distribution model and sell directly to over 7,600
      retail outlets, including supermarkets and hypermarkets across Northeast
      China.




Dalian
      Precious Sheen Investments Consulting Co., Ltd., or Chuming WOFE, is our holding
      company established in the People’s Republic of China (the “PRC” or “China”) as
      a holding company for our three PRC operating subsidiaries, referred to
      elsewhere in this report as the “Chuming Operating Subsidiaries”:




1.
            Dalian
                Chuming Slaughter and Packaging Pork Company Ltd. (also referred
                to in
                this report as “Meat Company”), whose primary business activity is
                acquiring, slaughtering and packaging of pork and
                cattle;2.
            Dalian
                Chuming Processed Foods Company Ltd. (also referred to in this report
                as
                “Food Company”), whose primary business activity is the processing of raw
                and cooked meat products; and3.
            Dalian
                Chuming Sales Company Ltd. (also referred to in this report as “Sales
                Company”), which is responsible for Chuming’s sales, marketing and
                distribution operations.




The
      Chuming Operating Subsidiaries are spun off constituents of Chuming’s former
      parent company, Dalian Chuming Group Co., Ltd., or the “Group.” Our 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. We are headquartered in the City of Dalian,
      Liaoning Province of China. Chuming WOFE was incorporated in China as wholly
      foreign owned enterprise on in December 2007.




**Recent
      Events in 2007 – Reverse Acquisition and Financing
      Transaction**





On
      December 31, 2007, Energroup acquired all of the outstanding shares of PSI
      in exchange for the issuance by Energroup 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 Energroup (excluding
      the shares issued in the Financing). As a result of this Exchange Transaction,
      PSI became Energroup’s wholly owned subsidiary and Energroup acquired the
      business and operations of Chuming WOFE.





47




Concurrently
      with the closing of the Exchange Transaction, on December 31, 2007 we raised
      $17,000,000 in a private placement by issuing 3,863,635 shares of our common
      stock to investors at $4.40 per share.




**CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES**





Our
      management’s discussion and analysis of our financial condition and results of
      operations are based on our combined financial statements, which have been
      prepared in accordance with accounting principles generally accepted in the
      United States. The preparation of these financial statements requires us to
      make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and the disclosure of contingent assets and liabilities at the
      date
      of the financial statements as well as the reported net sales and expenses
      during the reporting periods. On an ongoing basis, we evaluate our estimates
      and
      assumptions. We base our estimates on historical experience and on various
      other
      factors that we believe are reasonable under the circumstances, the results
      of
      which form the basis for making judgments about the carrying value of assets
      and
      liabilities that are not readily apparent from other sources. Actual results
      may
      differ from these estimates under different assumptions or
      conditions.





While
      our
      significant accounting policies are more fully described in Note 2 to our
      combined financial statements included in this report, we believe that the
      following accounting policies are the most critical to aid you in fully
      understanding and evaluating this management discussion and
      analysis:





*Method
      of Accounting*





We
      maintain our 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 us 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.





*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.





Our
      three
      operating subsidiaries, the Meat Company, Food Company and Sales Company, were
      incorporated and have been in existence since December 2004. As of December
      31,
      2006, the detailed identities of the consolidating subsidiaries are as
      follows:





48




**Name of Company**
            
            **Place of****Incorporation**
            
            **AttributableEquity****Interest**
            
            **Registered Capital**Precious
                Sheen Investments Limited
            
            
            BVI
            
            
            100
            %
            
            USD
                10,000Dalian
                Chuming Precious Sheen Investment Consulting Co., Ltd.
            
            
            PRC
            
            
            100
            %
            
            RMB29,400,682Dalian
                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.





*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.





*Accounts
      Receivable*





We extend
      unsecured, non interest bearing credit to our customers;
      accordingly, we carry 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 must approve credit extended to new customers who have met the
      criteria of our credit policy.





*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.





*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.





49




Construction
      in progress represents the direct costs of design, acquisition, and construction
      of buildings, building improvements and land improvements. Capitalization of
      these costs ceases when substantially all activities necessary to prepare the
      assets for their intended use are completed. At such point, construction in
      progress is transferred to its respective asset classification. No depreciation
      is provided until it is completed and ready for intended use.





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:





**Fixed
                Asset Classification**
            
            **Useful Life**Land
                Improvements
            
            10
                yearsBuildings
            
            20
                yearsBuilding
                Improvements
            
            10
                yearsManufacturing
                Machinery & Equipment
            
            10
                yearsOffice
                Equipment
            
            5
                yearsFurniture
                & Fixtures
            
            5
                yearsVehicles
            
            5
                years




*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.





*Accounting
      for Impairment of Assets*





We review
      the recoverability of our 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 our 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.





*Customer
      Deposits*





Customer
      Deposits represents money we have received in advance for purchases of pork
      and
      pork products. We consider customer deposits as a liability until products
      have
      been shipped and sales revenue is earned.





*Statutory
      Reserve*





Statutory
      reserve refers 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.





50





*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. Our current component of other comprehensive income is the
      foreign currency translation adjustment.





*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.





*Cost
      of Sales*





Our
      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





*Selling
      Expense*





Selling
      expenses are comprised of outbound freight, salary for the sales force, client
      entertainment, commissions, depreciation, advertising, and travel and lodging
      expenses.





*General
      and 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.




*Shipping
      and handling*





All
      shipping and handling are expensed as incurred and are included as a component
      of cost of sales.





*Advertising
      Expense*





Costs
      related to advertising and promotion expenditures are expensed as incurred
      during the year. Advertising costs are charged to selling expense.





*Income
      Taxes*





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





51




We
      are
      operating in the PRC, and in accordance with the relevant tax laws and
      regulations of PRC, the corporation income tax rate is 33%.





*Economic
      and Political Risks*





Our
      operations are conducted in the PRC. Accordingly, our 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.





*Foreign
      Currency Translation*





We
      maintain our 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, our financial statements 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
      shareholders’ 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 shareholders’ equity.





**Exchange
                Rates**
            
            **2007**
            
            **2006**
            
            **2005**Year
                end RMB: US$ exchange rate
            
            
            7.31
            
            
            7.82
            
            
            8.07Average
                yearly RMB: US$ exchange rate
            
            
            7.61
            
            
            7.98
            
            
            8.20





Chinese
      RMB are not freely convertible into other foreign currencies, and all foreign
      exchange transactions must take place through authorized government regulatory
      institutions. No representation is made that the RMB amounts could have been,
      or
      could be, converted into U.S. Dollars at the rates used in
      translation.





*Earnings
      Per Share*





Basic
      earnings per share is computed by dividing net income by the weighted average
      number of ordinary shares outstanding during the period. Diluted earnings per
      share is computed by dividing net income by the sum of the weighted average
      number of ordinary shares outstanding and dilutive potential ordinary shares
      during the years. During the years ended 2004, 2005, and 2006, no dilutive
      potential ordinary shares were issued.





We
      compute 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., 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.





52




*Recent
      Accounting Pronouncements*





In
      July
      2006, the FASB issued FIN 48, Accounting for Uncertainty in Income Taxes—an
      Interpretation of FASB Statement No. 109, which clarifies the accounting for
      uncertainty in tax positions. This Interpretation requires that the Company
      recognizes in its consolidated financial statements the impact of a tax position
      if that position is more likely than not of being sustained on audit, based
      on
      the technical merits of the position. The provisions of FIN 48 are effective
      for
      the Company on January 1, 2007, with the cumulative effect of the change in
      accounting principle, if any, recorded as an adjustment to opening retained
      earnings.





In
      September 2006, the FASB issued SFAS 157, Fair Value Measurements, which defines
      fair value, establishes a framework for measuring fair value in generally
      accepted accounting principles, and expands disclosures about fair value
      measurements. SFAS 157 applies under other accounting pronouncements that
      require or permit fair value measurements, where fair value is the relevant
      measurement attribute. The standard does not require any new fair value
      measurements. SFAS 157 is effective for financial statements issued for fiscal
      year beginning after November 15, 2007, and interim periods within those fiscal
      years.





In
      September 2006, the SEC issued SAB No. 108, which provides guidance on the
      process of quantifying financial statement misstatements. In SAB No. 108, the
      SEC staff establishes an approach that requires quantification of financial
      statement errors, under both the iron-curtain and the roll-over methods, based
      on the effects of the error on each of the Company’s financial statements and
      the related financial statement disclosures. SAB No.108 is generally effective
      for annual financial statements in the first fiscal year ending after November
      15, 2006. The transition provisions of SAB No. 108 permits existing public
      companies to record the cumulative effect in the first year ending after
      November 15, 2006 by recording correcting adjustments to the carrying values
      of
      assets and liabilities as of the beginning of that year with the offsetting
      adjustment recorded to the opening balance of retained earnings.





In
      February 2007, the Financial Accounting Standards Board issued SFAS No. 159,
      The
      Fair Value Option for Financial Assets and Financial Liabilities—Including an
      Amendment of SFAS 115 (SFAS No. 159), which allows for the option to measure
      financial instruments and certain other items at fair value. Unrealized gains
      and losses on items for which the fair value option has been elected are
      reported in earnings. The objective of SFAS 159 is to provide opportunities
      to
      mitigate volatility in reported earnings caused by measuring related assets
      and
      liabilities differently without having to apply hedge accounting provisions.
      SFAS 159 also establishes presentation and disclosure requirements designed
      to
      facilitate comparisons between companies that choose different measurement
      attributes for similar types of assets and liabilities. This statement is
      effective for financial statements issued for fiscal years beginning after
      November 15, 2007. The Company is currently evaluating the impact of SFAS No.
      159 on our consolidated financial statements.





In
      December 2007, the FASB issued SFAS 141 (revised 2007), *Business
      Combinations* ,
      (‘‘SFAS
      141(R)’’). SFAS 141(R) retains the fundamental requirements of the original
      pronouncement requiring that the purchase method be used for all business
      combinations, but also provides revised guidance for recognizing and measuring
      identifiable assets and goodwill acquired and liabilities assumed arising from
      contingencies, the capitalization of in-process research and development at
      fair
      value, and the expensing of acquisition-related costs as incurred. SFAS 141(R)
      is effective for fiscal years beginning after December 15, 2008. In the event
      that the Company completes acquisitions subsequent to its adoption of SFAS
      141
      (R), the application of its provisions will likely have a material impact on
      the
      Company’s results of operations, although the Company is not currently able to
      estimate that impact.





53




In
      December 2007, the FASB issued SFAS 160, *Noncontrolling
      Interests in Consolidated Financial Statements − an amendment of ARB No.
      51* .
      SFAS
      160 requires that ownership interests in subsidiaries held by parties other
      than
      the parent (previously referred to as minority interests), and the amount of
      consolidated net income, be clearly identified, labeled and presented in the
      consolidated financial statements. It also requires once a subsidiary is
      deconsolidated, any retained noncontrolling equity investment in the former
      subsidiary be initially measured at fair value. Sufficient disclosures are
      required to clearly identify and distinguish between the interests of the parent
      and the interests of the noncontrolling owners as components of equity. It
      is
      effective for fiscal years beginning after December 15, 2008, and requires
      retroactive adoption of the presentation and disclosure requirements for
      existing minority interests. All other requirements are applied prospectively.
      The Company does not expect the adoption of SFAS 160 to have a material impact
      on its financial condition or results of operations.





We
      do not
      anticipate that the adoption of the above standards will have a material impact
      on our consolidated financial statements.





**RESULTS
      OF OPERATIONS**





**Comparison
      of Years Ended December 31, 2007 and December 31,
      2006.**





The
      following table sets forth the results of our operations for the periods
      indicated as a percentage of net sales:


**Year Ended**
              
              
              
              **Year Ended****December 31,**
              
              **% of**
              
              **December 31,**
              
              **% of****2007**
              
              **Sales**
              
              **2006**
              
              **Sales**Sales
              
              $
              124,696,036
              
              
              100.00
              %
              $
              70,396,439
              
              100.00 %Cost
                  of Sales
              
              
              104,378,909
              
              
              83.67
              %
              
              57,794,853
              
              82.10
                  %Gross
                  Profit
              
              
              20,317,127
              
              
              16.33
              %
              
              12,601,586
              
              17.90 %Selling
                  Expenses
              
              
              4,672,862
              
              
              3.75
              %
              
              1,556,805
              
              2.21 %General
                  & Administrative Expenses
              
              
              1,572,836
              
              
              1.26
              %
              
              1,334,866
              
              1.90 %Total
                  operating Expense
              
              
              6,245,698
              
              
              5.01
              %
              
              2,891,671
              
              4.11 %Operating
                  Income / (Loss)
              
              
              14,071,429
              
              
              11.32
              %
              
              9,709,915
              
              13.79 %Other
                  Income (Expense)
              
              
              (1,475,730
              )
              
              (1.16)
              %
              
              (1,583,155
              )
              (2.25) %Earnings
                  Before Tax
              
              
              12,619,687
              
              
              10.16
              %
              
              8,126,760
              
              11.54 %(Income
                  Tax Expense) / Deferred Tax Benefit
              
              
              (967,540
              )
              
              (0.78)
              %
              
              (1,609
              )
              0.00 %Net
                  Income
              
              $
              11,652,147
              
              
              9.38
              %
              $
              8,128,369
              
              11.55 %Basic
                  and Diluted Earnings Per Share
              
              
              0.67
              
              
              
              
              
              0.47Weighted
                  Average Shares Outstanding
              
              
              17,272,756
              
              
              
              
              
              17,272,756




*Sales.* Our
        sales include revenues from sales of our Fresh Pork, Frozen Pork, and Processed
        Food Products. During the year ended December 31, 2007, we had sales of
        $124,696,036 as compared to sales of $70,396,439 for the year ended December
        31,
        2006, an increase of approximately 77%. This increase consisted of an increase
        in the sale of Fresh Pork of $51.6 million or 112%, from $46.0 million in
        2006
        to $97.7 million in 2007, an increase in the sale of Frozen Pork of $1.6
        million
        or 22%, from $7.2 million to $8.8 million, and an increase in the sale of
        Processed Food Products of $1.1 million or 6.3%, from $17.1 to $18.2 million
        for
        the years then ended.  In 2007, we raised our average per-kilogram sale
        prices to our customers, which coincided with an increase in the cost of
        live
        pigs and other production costs. In addition, despite these consumer price
        increases, in 2007 our sales volume of products (by weight) increased, with
        the
        largest increase in volume occurring in our Processed Foods division. In
        2007,
        we began selling our products through over 170 new franchise operators.
        Management believes that this increase in sales volume, despite raised consumer
        prices, resulted from increased consumer demand, and increased consumer
        awareness of our brand and availability of our products.




54




*Cost
      of Sales.* Cost of
      sales for 2007 increased by $47,361,536 or 81.9%, from $57,794,853 for the
      year
      ended December 31, 2006 to $104,333,172 for the year ended December 31, 2007.
      The increase was attributable to the 77% increase in sales for 2007 as compared
      to the prior year. Our cost of sales for our various product categories in
      2007
      is summarized as follows:


**(In
                  thousands of U.S.
                  Dollars)****% of**
              
              
              
              **% of****2007**
              
              **Sales**
              
              **2006**
              
              **Sales**Fresh
                  Pork
              
              $
              84,622
              
              
              81.11
              %
              $
              36,016
              
              
              62.32
              %Frozen
                  Pork
              
              
              7,058
              
              
              6.76
              %
              
              4,856
              
              
              8.40
              %Processed
                  Food Products
              
              
              12,653
              
              
              12.13
              %
              
              16,924
              
              
              29.28
              %Total
                  Cost of Sales:
              
              $
              104,378
              
              
              100
              %
              $
              57,795
              
              
              100
              %




In
      the
      second quarter of 2007, and throughout the year, we experienced a sharp increase
      in the cost of live pigs. Management estimates that the average cost of live
      pigs increased by approximately 60%
      for 2007, as compared with the prior year, which was the most significant factor
      causing an increase in our cost of sales. Secondly, we experienced price
      increases in electricity, water and coal, all of which we use in our production
      process. Thirdly, wages increased in 2007 by an estimated 7.5%. Lastly, we
      experienced slight increases in transportation and delivery costs in 2007.
      Management estimates that we were able to recoup approximately 90% of these
      cost
      increases through increased consumer prices for our products. Management also
      believes that productivity remained steady, with no significant changes from
      2006 to 2007.




*Gross
      Profit.* Gross
      profit was $20,317,127 for the year ended December 31, 2007 as compared to
      $12,601,586 for the year ended December 31, 2006, representing an increase
      of
      $7,761,277, or approximately 61.1%. Management attributes the increase in gross
      profit to strong increases in sales, driven by strong demand for our products.
      In addition, we were able to achieve price increases in order to mitigate the
      impact of higher commodity and input prices in 2007. Our gross profit as a
      percentage of sales was 16.33% in 2007 as compared to 17.90% in 2006. The slight
      decrease in gross profit as a percentage of sales was attributable to these
      commodity and input price increases, not all of which we were able to pass
      on to
      our customers in the form of higher product prices.





*Selling
      Expenses.* Selling
      expenses totaled $4,672,862 for the year ended December 31, 2007, as compared
      to
      $1,556,805 for the year ended December 31, 2006, an increase of $3,116,057
      or
      200%. In 2007 we expanded our advertising and marketing expenditures from
      $150,000 in 2006, to $3.8 million in 2007, in our efforts to increase brand
      awareness and encourage sales. These activities included television commercials,
      radio, magazine and newspaper advertisements, and exhibitions.





*General
      and Administrative Expenses.* General
      and Administrative Expenses totaled $1,572,836 for the year ended December
      31,
      2007 as compared to $1,334,866 for the year ended December 31, 2006, an increase
      of $237,970 or 17.8%. This modest increase is primarily attributable to
      increased hiring of staff, and slight increases in business expenses related
      to
      new customer acquisition.





55




*Other
      Income (Expense).* Our other income (expense) consisted of Interest Income,
      Other Expenses, and Interest Expense. We had total Other Expenses of $1,451,742
      for the year ended December 31, 2007 as compared to $1,583,155 for the year
      ended December 31, 2006, a decrease of $131,413 or 8.3%. The decrease in Other
      Expenses in 2007 is primarily attributable to a decrease in Interest Expenses,
      as we reduced the principal amount outstanding under our bank loan obligations
      by approximately $17 million.





*Net
      Income* .
      Our net
      income for the year ended December 31, 2007 was $11,652,147 as compared to
      $8,128,369 for the year ended December 31, 2006, an increase of $3,523,778
      or
      43.9%. This increase in net income is basically attributable to the factors
      described above, but primarily from the increase in sales and gross profit.
      Net
      income as a percentage of sales decreased from 11.55% in 2006 to 9.38% in 2007,
      and management attributes this primarily decrease to our expanded advertising
      and marketing initiatives in 2007. A secondary contributing factor to the
      decrease in net income as a percentage of sales was a $965,930 increase in
      tax
      expenses in 2007 as compared to 2006. In 2006, we benefitted from a one-time
      tax
      credit from the Dalian City local government of approximately $440,000. In
      2007
      we received no such tax credit, and also recognized higher taxable income.





**Comparison
      of Years Ended December 31, 2006 and December 31,
      2005.**





The
      following table sets forth the results of our operations for the periods
      indicated as a percentage of net sales:


**Year Ended**
              
              
              
              **Year Ended****December 31,**
              
              **% of**
              
              **December 31,**
              
              **% of****2006**
              
              **Sales**
              
              **2005**
              
              **Sales**Sales
              
              $
              70,396,439
              
              
              100.00
              %
              $
              54,119,895
              
              
              100.00
              %Gross
                  Profit
              
              
              12,601,586
              
              
              17.90
              %
              
              8,835,709
              
              
              83.67
              %Selling
                  Expenses
              
              
              1,556,805
              
              
              2.21
              %
              
              711,226
              
              
              16.33
              %General
                  & Administrative Expenses
              
              
              1,334,866
              
              
              1.90
              %
              
              936,179
              
              
              1.31
              %Total
                  operating Expense
              
              
              2,891,671
              
              
              4.11
              %
              
              1,647,405
              
              
              1.73
              %Operating
                  Income / (Loss)
              
              
              9,709,915
              
              
              13.79
              %
              
              7,188,304
              
              
              3.04
              %Other
                  Income (Expense)
              
              
              (1,583,155
              )
              
              -2.25
              %
              
              (1,008,248
              )
              
              13.28
              %Earnings
                  Before Tax
              
              
              8,126,760
              
              
              11.54
              %
              
              6,180,056
              
              
              -1.86
              %(Income
                  Tax Expense) / Deferred Tax Benefit
              
              
              (1,609
              )
              
              0.00
              %
              
              (191,284
              )
              
              11.42
              %Net
                  Income
              
              $
              8,128,369
              
              
              11.55
              %
              $
              5,988,772
              
              
              -0.35
              %Basic
                  and Diluted Earnings Per Share
              
              
              0.47
              
              
              
              
              
              0.35Weighted
                  Average Shares Outstanding
              
              
              17,272,756
              
              
              
              
              
              17,272,756
  56
  *Sales.* Our
        sales include revenues from sales of our Fresh Pork, Frozen Pork, and Processed
        Food Products. During the year ended December 31, 2006, we had sales of
        $70,396,439 as compared to sales of $54,119,895 for the year ended December
        31,
        2005, an increase of approximately 30%. This increase is attributable to
        an
        increase in the sale of Fresh Pork of $9,354,422 or 26%, from $36,684,253
        in
        2005 to $46,038,675 in 2006, an increase in the sale of Frozen Pork of
        $1,918,527 or 37%, from $5,309,877 to $7,228,405, and an increase in the
        sale of
        Processed Food Products of $5,003,594 or 42%, from $12,125,765 to $17,129,359
        for the years then ended.  The most notable factor in the increase in our
        sales in 2006 from the prior year was the expansion of sales through sales
        agents, whose customers are resellers who operated specialty counters. In
        2007,
        expansion of sale through agents brought an additional $13 million in sales,
        compared to sales through agents in 2005. Also in 2007, we added over 300
        retailers to our network (from approximately 100 operators in 2005 to 425
        operators in 2006), which increased sales by an additional $5 million compared
        to the prior year. We also began selling our products in 31 new supermarket
        locations, which added $4 million to our sales as compared to the prior year.
        We
        also added seafood to our product line at the end of 2005, which began
        generating sales and contributed an estimated $2.9 million in sales. Overall,
        in
        2006 management believe the key drivers for our sales results was our ramp-up
        of
        production capacity from increased availability of live hogs, increased brand
        awareness among consumers, increased availability of our product though retain
        channels, and the expansion of our product line with the addition of seafood.




*Cost
      of Sales.* Cost of
      sales for 2006 increased $12,510,667 or 28%, from $45,284,186 for the year
      ended
      December 31, 2005 to $57,794,853 for the year ended December 31, 2006. The
      increase in our cost of sales for our various product categories is summarized
      as follows:


**% of**
              
              
              
              **% of****2006**
              
              **Sales**
              
              **2005**
              
              **Sales**Fresh
                  Pork
              
              $
              36,015,632
              
              
              51.16
              %
              $
              29,609,886
              
              
              54.71
              %Frozen
                  Pork
              
              
              4,855,542
              
              
              6.90
              %
              
              3,779,626
              
              
              6.98
              %Processed
                  Food Products
              
              
              16,923,679
              
              
              24.04
              %
              
              11,894,674
              
              
              21.98
              %Total
                  Cost of Sales:
              
              $
              57,794,853
              
              
              82.10
              %
              $
              45,284,186
              
              
              83.67
              %




Since
      our
      fresh pork production line began in late 2004, we began to realize operating
      efficiencies, and in 2006, this contributed to a reduction in the cost of sales
      for fresh pork as a percentage of total sales. Our efficiency gains in fresh
      pork production was partially offset by the startup costs associated with
      launching our new seafood products. In 2005 our production of seafood was
      limited, but in 2006 we began producing seafood products in significant volume.
      Our operating costs, such as the price of live pigs, utilities (electricity,
      water and coal), labor and transportation remained relatively unchanged from
      2005 to 2006.





*Gross
      Profit.* Gross
      profit was $12,601,586 for the year ended December 31, 2006 as compared to
      $8,835,709 for the year ended December 31, 2005, representing gross margins
      of
      approximately 17.90% and 16.33% of sales, respectively. As previously discussed,
      we achieved operating efficiencies in 2006 in the production of fresh pork,
      which also contributed to an increase in our gross profit margin in 2006 as
      compared with 2005. These efficiency gains were partially offset by the cost
      of
      launching our new line of seafood products and ramping up seafood production
      in
      2005. At the same time, the cost of our operating inputs remained relatively
      unchanged from 2005 to 2006, which helped us increase our gross profit margin.





*Selling
      Expenses.* Selling
      expenses totaled $1,556,805 for the year ended December 31, 2006, as compared
      to
      $711,226 for the year ended December 31, 2005, an increase of $845,579 or 119%.
      This increase is primarily attributable to new business development. Management
      attributes the increase in selling expenses for 2006 to the roll-out of our
      seafood line and hiring new sales personnel to expansion of our sales and
      marketing efforts. Selling expenses in 2006 included market research, give-away
      of product samples, and some advertising.





*General
      and Administrative Expenses.* General
      and Administrative Expenses totaled $1,334,866 for the year ended December
      31,
      2006 as compared to $936,179 for the year ended December 31, 2005, an increase
      of $398,687 or 43%. This increase is primarily attributable to increases in
      management compensation and hiring of new staff, and increased business expenses
      such as business travel.





57




*Other
      Income (Expense).* Our
      other income (expense) consisted of Interest Income, Other Expenses, and
      Interest Expense. We had total Other Expense of $1,583,155 for the year ended
      December 31, 2006 as compared to $1,008,248 for the year ended December 31,
      2005, an increase of $574,907 or 57%. The increase in other expenses is mainly
      due to an increase of Interest Expense of $486,821 or 50.17%, from $970,383
      at
      the year ended December 31, 2005 to $1,457,204 at the year ended December 31,
      2006. In December of 2005, we obtained a $4.4 million working capital loan
      from
      a local bank in China, which we used in the operations of the Food Company.
      As a
      result, we incurred increased interest expenses in 2006 as compared to 2005.





*Net
      Income* .
      Our net
      income for the year ended December 31, 2006 was $8,128,369 as compared to
      $5,988,772 for the year ended December 31, 2005, which is an increase of
      $2,139,597, or 35.7%. Management attributes this increase in net income to
      an
      increase in sales and operating efficiencies in the production of fresh pork,
      offset by higher interest expenses, higher personnel costs, and increased
      selling expenses.





**Comparison
      of Years Ended December 31, 2005 and December 31,
      2004.**





The
      following table sets forth the results of our operations for the periods
      indicated as a percentage of net sales:


**Year Ended
                  December 31,2005**
              
              **%of Sales**
              
              **Year Ended
                  December 31,2004**
              
              **% of Sales**Sales
              
              
              54,119,895
              
              
              100.00
              %
              
              654,749
              
              
              100.00
              %Cost
                  of Sales
              
              
              45,284,186
              
              
              83.67
              %
              
              711,473
              
              
              108.66
              %Gross
                  Profit
              
              
              8,835,709
              
              
              16.33
              %
              
              (56,724
              )
              
              -8.66
              %Selling
                  Expenses
              
              
              711,226
              
              
              1.31
              %
              
              14,109
              
              
              2.15
              %General
                  and Administrative Expenses
              
              
              936,179
              
              
              1.73
              %
              
              388,264
              
              
              59.30
              %Total
                  operating Expense
              
              
              1,647,405
              
              
              3.04
              %
              
              402,373
              
              
              61.45
              %Operating
                  Income/(Loss)
              
              
              7,188,304
              
              
              13.28
              %
              
              (459,097
              )
              
              -70.12
              %Other
                  Income (Expense)
              
              
              (1,008,248
              )
              
              -1.86
              %
              
              5,164,941
              
              
              788.84
              %Earnings
                  Before Tax
              
              
              6,180,056
              
              
              11.42
              %
              
              4,705,844
              
              
              718.72
              %(Income
                  Tax Expense)/Deferred Tax Benefit
              
              
              (191,284
              )
              
              -0.35
              %
              
              66,403
              
              
              10.14
              %Net
                  Income
              
              
              5,988,772
              
              
              11.07
              %
              
              4,772,247
              
              
              728.87
              %Basic
                  and Diluted Earnings Per Share
              
              
              0.35
              
              
              
              
              
              0.28Weighted
                  Average Shares Outstanding
              
              
              17,272,756
              
              
              
              
              
              17,272,756


*Sales.* Our
      sales include revenues from sales of our Fresh Pork, Frozen Pork, and Processed
      Food Products. During the year ended December 31, 2005. We had sales of
      $54,119,895 as compared to sales of $654,749 for the year December 31, 2004,
      an
      increase of $53,465,146. This increase is attributable to an increase in the
      sale of Fresh Pork of $36,099,228 or 6,171% from $585,025 in 2004 to $36,684,253
      in 2005, an increase in the sale of Frozen Pork of $5,240,153 or 7,516% from
      $69,724 to $5,309,877 and an increase in the sale of Proceed Food Products
      of
      $12,125,765 from nil to $12,125,765. For most of 2004, we did not generate
      income, and began production of fresh frozen pork in December 2004. Accordingly,
      we recorded a large increase in sales from 2004 to 2005, due to the fact that
      we
      began production in the latter part of 2004. In 2005, we generated approximately
      $31 million in sales through agents whose customers are specialty counter
      resellers. In 2005 we also began selling or products through supermarkets at
      61
      new locations which added $14 million to our sales, and worked with operators
      to
      establish approximately 100 Chuming branded franchise stores, which added
      another $2.5 million to our sales in 2005. In addition, in 2005 we began selling
      our product to canteens, restaurants and other customers. Previously in 2004,
      we
      only generated sales through agents.





58




*Cost
      of Sales* .
      Cost of
      sales for 2005 increased $44,572,713, from $711,473 for the year ended December
      31, 2004 to $45,284,186 for the year ended December 31, 2005. The increase
      in
      our cost of revenues for our various product categories is summarized as
      follows:


**2005**
              
              **% of****Sales**
              
              **2004**
              
              **% of****Sales**Fresh
                  Pork
              
              
              29,609,886
              
              
              54.71
              %
              
              598,253
              
              
              91.37
              %Frozen
                  Pork
              
              
              3,779,626
              
              
              6.98
              %
              
              113,220
              
              
              17.29
              %Processed
                  Food Products
              
              
              11,894,674
              
              
              21.98
              %
              
              0
              
              
              0.00
              %Total
                  Cost of Sales:
              
              
              45,284,186
              
              
              83.67
              %
              
              711,473
              
              
              108.66
              %




Management
      attributes the increases in operating costs to the fact that production of
      our
      products began in the latter part of 2004. In general, management believes
      there
      was not a significant change in the basic operating inputs (such as live pigs,
      utilities, labor and transportation) from 2004 to 2005.





*Gross
      Profit.* Gross
      profit was $8,835,709 for the year ended December 31, 2005 as compared to loss
      of $56,724 for the year ended December 31, 2004. The increase in our gross
      profit was due to the fact that we began production of our products in late
      2004.





*Selling
      Expenses* .
      Selling
      expenses totaled $711,226 for the year ended December 31, 2005, as compared
      to
      $14,109 for the year ended December 31, 2004, representing an increase of
      $697,117. Management attributes these higher selling expenses in 2005 to the
      addition of a new sales force, and various business development expenses
      incurred in the process of pursuing relationships with supermarkets, resellers
      and other customers.





*General
      and Administrative Expenses* .
      General
      and Administrative Expenses totaled $936,179 for the year ended December 31,
      2005 as compared to $388,264 for the year ended December 31, 2004, an increase
      of $547,915. Management attributes these increases expenses in 2005 to the
      hiring of management personnel, and business expenses associated with
      development of relationships with supermarkets, resellers and other customers.





*Other
      Income (Expense).* Our
      other income (expense) consisted of other income, interest income, other
      expenses, and interest expense. We had total net other expenses of $1,008,248
      for the year ended December 31, 2005 as compared to total net other income
      of
      $5,164,941 for the year ended December 31, 2004. The increase in other expenses
      in mainly due to an increase in other expenses of $38,905 and interest expense
      of $860,023 due to an increase in borrowings. The increase in other income
      in
      2004 resulted from one-time government grants provided by the Wa Fang Dian
      Industrial District Construction Administration.





*Net
      Income* .
      Our net
      income for the year ended December 31, 2005 was $5,988,772 as compared to
      $4,772,247 for the year ended December 31, 2004. In 2004, our income was mostly
      a result of other income, consisting of one-time government grants provided
      by
      the Wa Fang Dian Industrial District Construction Administration. In contrast,
      in 2005 our net income was principally attributable to income from our
      operations.




59




**LIQUIDITY
      AND CAPITAL RESOURCES**




**Cash
      Flows**





***Twelve
      Months Ended December 31, 2007***





Net
      cash
      inflow sourced from operating activities was $23.0 million in fiscal 2007 and
      while net cash flow used in operating activities was $7.1 million in fiscal
      2006. Prior to 2007, we offered flexible payment terms to agents who purchase
      pork products from us for resale to retailers, but in March of 2007, we
      eliminated this practice and required agents to pay promptly for products
      ordered. In addition, we have worked with our larger customers to make
      improvements in the collection process. As a result we believe we have improved
      our process of collecting accounts receivable as compared to the prior year.
      In
      2007, we also used $108.5 million in cash to purchase materials and pay
      employees in our efforts to satisfy increased customer demand for our products.




Net
      cash
      flow used in investing activities was $11.3 million in fiscal 2007, compared
      to
      cash used in investing activities of $1.9 million in fiscal 2006. The increase
      in cash flow used in investing activities from 2006 to 2007 was a result of
      an
      equity financing, and a one-time payment by us for land use rights. In 2007,
      we
      completed a $17 million private placement, and agreed to have $4.25 million
      of
      the net proceeds deposited into an escrow account for release contingent upon
      our satisfaction of certain criteria relating to the structure of the board,
      management and appointment of and auditing firm. Also in 2007, we paid
      approximately $4.2 million to our local government for land use rights which
      we
      acquired in 2004.





Net
      cash
      flow used in financing activities was $2.7 million in fiscal 2007 as compared
      to
      net cash sourced from financing activities of $1.8 million in fiscal 2006.
      This
      change was a result of our $17 million private placement financing, $4.25
      million of which was held back in an escrow account, and the repayment of a
      construction loan with an original principal amount of $19.3 million, in
      addition to other short term loans. Our private placement financing brought
      in
      approximately $14.7 million in cash proceeds, excluding amounts held back in
      escrow. However, this cash inflow was offset by the payment of $23.2 million
      that was used toward to repayment in full of our construction loan from 2004,
      and certain short term business loans. For additional details concerning the
      repayment, see Note 9(B) in the footnotes to our financial statements included
      with this report.





***Twelve
      Months Ended December 31, 2006***





Net
      cash
      outflow used in operating activities was $7.1 million in fiscal 2006 and while
      net cash inflow provided by operating activities was $18.9 million in
      fiscal 2005. In 2006, we used significant cash for the purchase of raw materials
      and inputs in order to satisfy customer orders, which totaled approximately
      $65
      million, as compared to $30 million in 2005. In 2006, however, cash received
      from customers was approximately $60 million, which was less than the $70
      million in sales we recorded in 2006. Management estimates that approximately
      $12 million in receivables generated in 2006 were not collected until after
      December 31, 2006, and management believes this is attributable to the longer
      collection periods associated with sales to large supermarkets, restaurant
      chains and other similar customers with which it does an increasing amount
      of
      business.




Net
      cash
      flow used in investing activities was $1,920,586 for fiscal 2006 and compared
      to
      net cash used in investing activities of $11,453,481 in fiscal 2005. In 2004
      we
      completed the construction of our plant and equipment used in our fresh pork,
      frozen pork, and processed foods business. We used $10.5 million in cash in
      2004
      and $$11.4 million in cash to pay for this construction. Although we began
      operations in December 2004, a large portion of our construction cost was
      deferred to 2005 because it was dependent upon completion of a government
      permitting process which was completed in 2005. In addition, we acquired a
      50
      year land use right from the government in 2004, however, pursuant to an
      agreement with the local government, we were permitted to defer a one-time
      payment of $4.2 million to 2007. Since the one-time payment secures us land
      use
      rights for fifty year, management does not presently anticipate that any
      additional cash payments will be required of us in connection with land use
      rights in the foreseeable future.





60




Net
      cash
      flow used in financing activities was $1,753,971 in fiscal 2006 as compared
      to
      net cash provided by financing activities of $2,496,786 for fiscal 2005. Net
      cash provided by financing activities in both 2005 and 2006 is from bank
      borrowings for purposes of financing the purchase of raw materials and inputs
      used in our operations.





**Contractual
      Obligations and Off-Balance Sheet Arrangements**




***Contractual
      Obligations***




We
      have
      certain fixed contractual obligations and commitments that include future
      estimated payments. Changes in our business needs, cancellation provisions,
      changing interest rates, and other factors may result in actual payments
      differing from the estimates. We cannot provide certainty regarding the timing
      and amounts of payments. We have presented below a summary of the most
      significant assumptions used in our determination of amounts presented in the
      tables, in order to assist in the review of this information within the context
      of our consolidated financial position, results of operations, and cash
      flows.





The
      following tables summarize our contractual obligations as of December 31, 2007,
      and the effect these obligations are expected to have on our liquidity and
      cash
      flows in future periods.





**Payments Due by Period****Total**
            
            **Less than 1**
              **year**
            
            **1-3 Years**
            
            **3-5 Years**
            
            **5 Years +**Contractual
                Obligations :Bank
                Indebtedness
            
            $
            7,500,000
            
            $
            -
            
            $
            7,500,000
            
            $
            -
            
            $
            -Other
                Indebtedness
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Capital
                Lease Obligations
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Operating
                Leases
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Purchase
                Obligations
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Total
                Contractual Obligations:
            
            $
            7,500,000
            
            $
            -
            
            $
            7,500,000
            
            $
            -
            
            
            -




***Off-balance
      Sheet Arrangements***




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





61




**Related
      Party Transactions**





For
      a
      description of our related party transactions, see the section of this Report
      entitled “Certain Relationships and Related Transactions.”





**ITEM
      7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**





**Quantitative
      and Qualitative Disclosures about Market Risk**





We
      do not
      use derivative financial instruments in our investment portfolio and have no
      foreign exchange contracts. Our financial instruments consist of cash and cash
      equivalents, trade accounts receivable, accounts payable and long-term
      obligations. We consider investments in highly liquid instruments purchased
      with
      a remaining maturity of 90 days or less at the date of purchase to be cash
      equivalents. However, in order to manage the foreign exchange risks, we may
      engage in hedging activities to manage our financial exposure related to
      currency exchange fluctuation. In these hedging activities, we might use
      fixed-price, forward, futures, financial swaps and option contracts traded
      in
      the over-the-counter markets or on exchanges, as well as long-term structured
      transactions when feasible.





*Interest
      Rates* .
      Our
      exposure to market risk for changes in interest rates relates primarily to
      our
      short-term investments and short-term obligations; thus, fluctuations in
      interest rates would not have a material impact on the fair value of these
      securities. At September 30, 2007, we had approximately $ 2,457,434 in cash
      and
      cash equivalents. A hypothetical 10% increase or decrease in interest rates
      would not have a material impact on our earnings or loss, or the fair market
      value or cash flows of these instruments.




*Foreign
      Exchange Rate.* All of
      our sales and inputs are transacted in Renminbi (“RMB”). As a result, changes in
      the relative values of U.S. Dollars and RMB affect our reported levels of
      revenues and profitability as the results are translated into U.S. Dollars
      for
      reporting purposes. However, since we conduct our sales and purchase inputs
      in
      RMB, fluctuations in exchange rates are not expected to significantly affect
      our
      financial stability, or gross and net profit margins. We do not currently expect
      to incur significant foreign exchange gains or losses, or gains or losses
      associated with any foreign operations.





Our
      exposure to foreign exchange risk primarily relates to currency gains or losses
      resulting from timing differences between signing of sales contracts and
      settling of these contracts. Furthermore, we translate monetary assets and
      liabilities denominated in other currencies into RMB, the functional currency
      of
      our operating business. Our results of operations and cash flow are translated
      at average exchange rates during the period, and assets and liabilities are
      translated at the unified exchange rate as quoted by the People’s Bank of China
      at the end of the period. Translation adjustments resulting from this process
      are included in accumulated other comprehensive income in our statement of
      shareholders’ equity. We recorded net foreign currency gains of $285,352 and
      $610,696 in 2005 and 2006, respectively. We have not used any forward contracts,
      currency options or borrowings to hedge our exposure to foreign currency
      exchange risk. We cannot predict the impact of future exchange rate fluctuations
      on our results of operations and may incur net foreign currency losses in the
      future. As our sales denominated in foreign currencies, such as RMB, continue
      to
      grow, we may consider using arrangements to hedge our exposure to foreign
      currency exchange risk. Our financial statements are expressed in
      U.S. dollars but the functional currency of our operating subsidiary is
      RMB. The value of your investment in our stock will be affected by the foreign
      exchange rate between U.S. dollars and RMB. A decline in the value of RMB
      against the U.S. dollar could reduce the U.S. dollar equivalent
      amounts of our financial results, the value of your investment in our company
      and the dividends we may pay in the future, if any, all of which may have a
      material adverse effect on the price of our stock.





62




**ITEM
      8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**


Consolidated
                  Balance Sheets as of December 31, 2007, 2006 and 2005Consolidated
                  Statements of Operations for the Years Ended December 31, 2007,
                  2006 and
                  2005Consolidated
                  Statements of Changes in Stockholders’ Equity for the years Ended December
                  31, 2007, 2006 and 2005Consolidated
                  Statements of Cash Flows for the Years Ended December 31, 2007,
                  2006 and
                  2005Notes
                  to Consolidated Financial
                  Statements


63




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, 2007, 2006, and 2005 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, 2007, 2006, and 2005, 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., LLPMarch
                8, 2008
            Certified
                Public Accountants





**Energroup
        Holdings Corporation**
 **Consolidated
        Balance Sheets**
 **At
        December 31, 2007, 2006, and 2005**
 **(Stated
        in US Dollars)**
  **Note**
              
              **2007**
              
              **2006**
              
              **2005****ASSETS****Current
                  Assets**Cash
              
              
              *2(D*)**
              
              $
              14,031,851
              
              $
              3,075,787
              
              $
              10,179,414Restricted
                  Cash
              
              
              *3*
              
              
              4,250,000
              
              
              -
              
              
              -Accounts
                  Receivable
              
              
              *2(E),4*
              
              
              622,433
              
              
              1,798,397
              
              
              3,247,304Other
                  Receivable
              
              
              
              
              
              1,068,939
              
              
              679,019
              
              
              1,006,541Related
                  Party Receivable
              
              
              *6*
              
              
              3,964,357
              
              
              13,148,788
              
              
              -Inventory
              
              
              *2(F),5*
              
              
              2,916,016
              
              
              2,385,447
              
              
              2,850,213Advance
                  to Suppliers
              
              
              *2(G*)**
              
              
              267,807
              
              
              1,110,449
              
              
              704,706Prepaid
                  Expenses
              
              
              
              
              
              46,401
              
              
              90,913
              
              
              48,191Prepaid
                  Taxes
              
              
              
              
              
              185,319
              
              
              -
              
              
              -Deferred
                  Tax Asset
              
              
              *2(Q*)**
              
              
              613,844
              
              
              574,316
              
              
              158,992Total
                  Current Assets
              
              
              
              
              
              27,966,967
              
              
              22,863,116
              
              
              18,195,361**Non-Current
                  Assets**Property,
                  Plant & Equipment,*net*
              
              
              *2(H),7*
              
              
              24,836,496
              
              
              20,875,462
              
              
              21,093,489Land
                  Use Rights,*net*
              
              
              *2(I),8*
              
              
              12,855,980
              
              
              8,911,119
              
              
              8,525,125Construction
                  in Progress
              
              
              *2(J*)**
              
              
              927,866
              
              
              4,165,407
              
              
              3,149,690Other
                  Assets
              
              
              
              
              
              32,619
              
              
              30,519
              
              
              29,553Total
                  Assets
              
              
              
              
              **$**
              **66,619,928**
              
              **$**
              **56,845,623**
              
              **$**
              **50,993,218****LIABILITIES
                  & STOCKHOLDERS' EQUITY****Current
                  Liabilities**Bank
                  Loans
              
              
              *9(A*)**
              
              $
              7,383,095
              
              $
              6,971,538
              
              $
              3,777,838Accounts
                  Payable
              
              
              
              
              
              3,779,274
              
              
              4,207,992
              
              
              7,645,595Taxes
                  Payable
              
              
              
              
              
              1,677,194
              
              
              2,259,465
              
              
              831,699Other
                  Payable
              
              
              
              
              
              1,471,381
              
              
              1,362,607
              
              
              842,806Accrued
                  Liabilities
              
              
              
              
              
              3,347,013
              
              
              912,707
              
              
              988,851Customer
                  Deposits
              
              
              *2(L*)**
              
              
              24,161
              
              
              1,049,212
              
              
              437,472Related
                  Party Payable
              
              
              
              
              
              -
              
              
              -
              
              
              4,454,927Total
                  Current Liabilities
              
              
              
              
              
              17,682,118
              
              
              16,763,521
              
              
              18,979,188**Long
                  Term Liabilities**Bank
                  Loans
              
              
              *9(B*)**
              
              
              -
              
              
              17,908,539
              
              
              18,579,533Total
                  Liabilities
              
              
              
              
              $
              17,682,118
              
              $
              34,672,060
              
              $
              37,558,721




See
      Accompanying Notes to Financial Statements


F-2


**Energroup
        Holdings Corporation**
 **Consolidated
        Balance Sheets**
 **At
        December 31, 2007, 2006, and 2005**
 **(Stated
        in US Dollars)**


**Note**
            
            **2007**
            
            **2006**
            
            **2005**Stockholders'
                EquityPreferred
                Stock - $0.001 Par Value10,000,000
                Shares Authorized;0
                Shares Issued & Outstanding at December 31, 2007, 2006, and 2005,
                respectively.
            
            
            
            
            $
            -
            
            $
            -
            
            $
            -Common
                Stock - $0.001 Par Value 21,739,130 and 17,273,756 Shares Authorized;
                21,136,392 Shares Issued & Outstanding at December 31, 2007, 2006, and
                2005, respectively.
            
            
            
            
            
            21,137
            
            
            17,273
            
            
            17,273Additional
                Paid in Capital
            
            
            
            
            
            15,440,043
            
            
            2,396,079
            
            
            2,396,079Statutory
                Reserve
            
            
            *2(M),10*
            
            
            751,444
            
            
            751,444
            
            
            72,508Retained
                Earnings
            
            
            
            
            
            29,764,236
            
            
            18,112,089
            
            
            10,662,654Accumulated
                Other Comprehensive Income
            
            
            *2(N*)**
            
            
            2,960,951
            
            
            896,679
            
            
            285,983Total
                Stockholders' Equity
            
            
            
            
            
            48,937,811
            
            
            22,173,564
            
            
            13,434,497Total
                Liabilities & Stockholders' Equity
            
            
            
            
            **$**
            **66,619,928**
            
            **$**
            **56,845,623**
            
            **$**
            **50,993,218**


See
        Accompanying Notes to Financial Statements


F-3


**Energroup
        Holdings Corporation**
 **Consolidated
        Statements of Operations**
 **For
        the years ended December 31, 2007, 2006, and 2005**
 **(Stated
        in US Dollars)**


Note
            
            **2007**
            
            **2006**
            
            **2005**RevenueSales
            
            
            *2(O*)**
            
            $
            124,696,036
            
            $
            70,396,439
            
            $
            54,119,895Cost
                of Sales
            
            
            *2(P*)**
            
            
            104,378,909
            
            
            57,794,853
            
            
            45,284,186Gross
                Profit
            
            
            
            
            
            20,317,127
            
            
            12,601,586
            
            
            8,835,709Operating
                ExpensesSelling
                Expenses
            
            
            *2(Q*)**
            
            
            4,672,862
            
            
            1,556,805
            
            
            711,226General
                & Administrative Expenses
            
            
            2*(R*)**
            
            
            1,572,836
            
            
            1,334,866
            
            
            936,179Total
                Operating Expense
            
            
            
            
            
            6,245,698
            
            
            2,891,671
            
            
            1,647,405Operating
                Income/(Loss)
            
            
            
            
            
            14,071,429
            
            
            9,709,915
            
            
            7,188,304Other
                Income (Expenses)Other
                Income
            
            
            
            
            
            114,496
            
            
            -
            
            
            -Interest
                Income
            
            
            
            
            
            -
            
            
            147
            
            
            1,040Other
                Expenses
            
            
            
            
            
            (90,508
            )
            
            (126,098
            )
            
            (38,905
            )Interest
                Expense
            
            
            
            
            
            (1,475,730
            )
            
            (1,457,204
            )
            
            (970,383
            )Total
                Other Income (Loss) and Expense
            
            
            
            
            
            (1,451,742
            )
            
            (1,583,155
            )
            
            (1,008,248
            )Earnings
                before Tax
            
            
            
            
            
            12,619,687
            
            
            8,126,760
            
            
            6,180,056Income
                Tax Expense/(Deferred Tax Benefit)
            
            
            *2(V),13*
            
            
            (967,540
            )
            
            1,611
            
            
            (191,284
            )Net
                Income
            
            
            
            
            **$**
            **11,652,147**
            
            **$**
            **8,128,371**
            
            **$**
            **5,988,772**Earnings
                Per Share
            
            
            *2(Y),16*-Basic
            
            
            
            
            $
            0.67
            
            $
            0.47
            
            $
            0.35-Diluted
            
            
            
            
            $
            0.67
            
            $
            0.47
            
            $
            0.35Weighted
                Average Shares Outstanding-Basic
            
            
            
            
            
            17,272,756
            
            
            17,272,756
            
            
            17,272,756-Diluted
            
            
            
            
            
            17,272,756
            
            
            17,272,756
            
            
            17,272,756




See
        Accompanying Notes to Financial Statements
  F-4
  **Energroup
        Holdings Corporation**
 **Consolidated
        Statements of Changes in Stockholders’ Equity**
 **For
        the years ended December 31, 2007, 2006, and 2005**
 **(Stated
        in US Dollars)**


**Accumulated****Common**
            
            **Additional**
            
            
            
            
            
            **Comprehensive****Shares**
            
            
            
            **Paid
                in**
            
            **Statutory**
            
            **Retained**
            
            **Other****Outstanding**
            
            **Amount**
            
            **Capital**
            
            **Reserve**
            
            **Earnings**
            
            **Income**
            
            **Total**Balance,
                January 1, 2005
            
            
            17,272,756
            
            $
            17,273
            
            $
            2,396,079
            
            $
            -
            
            $
            4,746,390
            
            $
            631
            
            $
            7,160,373Net
                Income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            5,988,772
            
            
            
            
            
            5,988,772Appropriations
                of Retained Earnings
            
            
            
            
            
            
            
            
            
            
            
            72,508
            
            
            (72,508
            )
            
            
            
            
            -Foreign
                Currency Translation Adjustment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            285,352
            
            
            285,352Balance,
                December 31, 2005
            
            
            17,272,756
            
            $
            17,273
            
            $
            2,396,079
            
            $
            72,508
            
            $
            10,662,654
            
            $
            285,983
            
            $
            13,434,497Balance,
                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
            
            $
            48,937,811





**Comprehensive
                Income 2005**
            
            **Comprehensive
                Income 2006**
            
            **Comprehensive
                Income 2007**
            
            **Accumulated**
              **Totals**Prior
                Period Adjustment
            
            
            **-**
            
            
            **-**Net
                Income
            
            $
            5,988,772
            
            $
            8,128,371
            
            $
            11,652,147
            
            $
            25,769,290Foreign
                Currency Translation Adjustment
            
            
            285,352
            
            
            610,696
            
            
            2,064,272
            
            
            2,960,320$
            6,274,124
            
            $
            8,739,067
            
            $
            13,716,419
            
            $
            28,729,610




See
        Accompanying Notes to Financial Statements
  F-5
  **Energroup
        Holdings Corporation**
 **Consolidated
        Statements of Cash Flows**
 **For
        the years ended December 31, 2007, 2006, and 2005**
 **(Stated
        in US Dollars)**


**2007**
            
            **2006**
            
            **2005****Cash
                Flow from Operating Activities**Cash
                Received from Customers
            
            $
            133,746,774
            
            $
            59,979,793
            
            $
            50,354,793Cash
                Paid to Suppliers & Employees
            
            
            (108,527,656
            )
            
            (65,116,627
            )
            
            (30,159,011
            )Interest
                Received
            
            
            -
            
            
            147
            
            
            1,040Interest
                Paid (net of amount capitalized)
            
            
            (1,247,575
            )
            
            (1,580,310
            )
            
            (987,223
            )Income
                Tax Paid
            
            
            (1,007,067
            )
            
            (400,065
            )
            
            (280,676
            )Miscellaneous
                Receipts
            
            
            9,182
            
            
            -
            
            
            -Cash
                Sourced/(Used) in Operating Activities
            
            
            22,973,657
            
            
            (7,117,062
            )
            
            18,928,923**Cash
                Flows from Investing Activities**Escrowed
                Funds from Private Placement Placed in Restricted Cash
            
            
            (4,250,000
            )
            
            -
            
            
            -Payments
                for Purchases of Equipment & Construction of Plant
            
            
            (2,882,433
            )
            
            (1,655,077
            )
            
            (11,430,320
            )Payments
                for Purchases of Land Use Rights
            
            
            (4,198,178
            )
            
            (265,509
            )
            
            (23,161
            )Payments
                for Deposits
            
            
            (2,100
            )
            
            -
            
            
            -Cash
                Sourced/(Used) in Investing Activities
            
            
            (11,333,712
            )
            
            (1,920,586
            )
            
            (11,453,481
            )**Cash
                Flows from Financing Activities**Financing
                      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 Borrowings from Bank & Shareholder
            
            
            5,725,377
            
            
            1,753,971
            
            
            2,496,786Repayment
                of Bank Loans
            
            
            (23,222,359
            )
            
            -
            
            
            -Cash
                Sourced/(Used) in Financing Activities
            
            
            (2,749,154
            )
            
            1,753,971
            
            
            2,496,786**Net
                Increase/(Decrease) in Cash & Cash Equivalents****for
                the Year**
            
            
            8,891,791
            
            
            (7,283,677
            )
            
            9,972,228**Effect
                of Currency Translation**
            
            
            2,064,273
            
            
            180,050
            
            
            161,641**Cash
                & Cash Equivalents at Beginning of Year**
            
            
            3,075,787
            
            
            10,179,414
            
            
            45,545**Cash
                & Cash Equivalents at End of Year**
            
            **$**
            **14,031,851**
            
            **$**
            **3,075,787**
            
            **$**
            **10,179,414**




See
        Accompanying Notes to Financial Statements




F-6


**Energroup
        Holdings Corporation**
 **Reconciliation
        of Net Income to Cash Provided/(Used) in Operating
        Activities**
 **For
        the years ended December 31, 2007, 2006, and 2005**
 **(Stated
        in US Dollars)**


**2007**
            
            **2006**
            
            **2005**Net
                Income
            
            $
            11,652,147
            
            $
            8,128,371
            
            $
            5,988,772*Adjustments
                to Reconcile Net Income to Net Cash Provided by Cash
                Activities:*Liquidated
                Damages Included in Accrued Liabilities
            
            
            (1,700,000
            )
            
            -
            
            
            -Amortization
            
            
            253,317
            
            
            160,782
            
            
            156,442Depreciation
            
            
            2,158,940
            
            
            1,651,055
            
            
            1,059,292Provision
                for Bad Debt on Note Receivable
            
            
            5,456
            
            
            -
            
            
            75,539Decrease/(Increase)
                in Accounts Receivable
            
            
            1,170,508
            
            
            1,523,176
            
            
            (3,195,887
            )Decrease/(Increase)
                in Other Receivable
            
            
            (389,920
            )
            
            353,046
            
            
            (990,603
            )Decrease/(Increase)
                in Related Party Receivable
            
            
            9,184,432
            
            
            (12,877,984
            )
            
            -Decrease/(Increase)
                in Inventory
            
            
            (530,569
            )
            
            546,573
            
            
            (2,400,613
            )Decrease/(Increase)
                in Advance to Suppliers
            
            
            842,641
            
            
            (374,793
            )
            
            5,756,820Decrease/(Increase)
                in Prepaid VAT Taxes
            
            
            (185,317
            )
            
            -
            
            
            110,180Decrease/(Increase)
                in Prepaid Expenses
            
            
            44,512
            
            
            (40,297
            )
            
            (47,352
            )Decrease/(Increase)
                in Deferred Tax Benefit
            
            
            (39,528
            )
            
            (401,674
            )
            
            (89,392
            )Increase/(Decrease)
                in Accounts Payable
            
            
            (428,718
            )
            
            (3,611,921
            )
            
            6,360,359Increase/(Decrease)
                in Taxes Payable
            
            
            (582,271
            )
            
            1,371,696
            
            
            818,340Increase/(Decrease)
                in Other Payable
            
            
            108,773
            
            
            482,075
            
            
            729,493Increase/(Decrease)
                in Related Party Payable
            
            
            -
            
            
            (4,506,002
            )
            
            3,933,551Increase/(Decrease)
                in Accrued Liabilities
            
            
            (767,589
            )
            
            (106,278
            )
            
            318,134Increase/(Decrease)
                in Customer Advances
            
            
            (1,025,051
            )
            
            585,113
            
            
            421,387Total
                of all adjustments
            
            
            11,321,510
            
            
            (15,245,431
            )
            
            12,940,151**Net
                Cash Provided by/(Used in) Operating Activities**
            
            **$**
            **22,973,657**
            
            **$**
            **(7,117,062**
            **)**
            **$**
            **18,928,923**




See
        Accompanying Notes to Financial Statements
  F-7
 **Energroup
          Holdings Corporation**


**Notes
          to Consolidated Financial Statements**
 **As
          of and for the years ended December 31, 2007, 2006, and
          2005**
  1.
                  The
                        Company and Principal Business
                        Activities
 Energroup
          Holdings Corporation (the “Company”) (OTCBB: EGHC) 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., (the “Food
          Company”) (2) Dalian Chuming Slaughter and Packaging Pork Company Ltd. (the
“Meat Company”), and (3) Dalian Chuming Sales Company Ltd. (the “Sales
          Company”), which are incorporated in the People’s Republic of China (the “PRC”).
          The Company is headquartered in the City of Dalian, Liaoning Province of
          China.
 
 The
          three
          operating subsidiaries were spun-off constituents of former parent company,
          Dalian Chuming Group Co. Ltd. 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 WOFE”), a wholly foreign owned enterprise incorporated in the
          PRC.
 
 Chuming
          WOFE is an intermediary holding company established in the People’s Republic of
          China (the “PRC” or “China”) formed for the purpose of providing a group
          structure to enhance the viable capacity of its three PRC operating
          subsidiaries.
 
 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 WOFE 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 (“PSI”) in May 2007. On
          September 26, 2007, Chuming WOFE 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 WOFE. On October 23, 2007,
          Chuming WOFE 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 WOFE to PSI, and upon this
          transfer, Chuming WOFE became a wholly foreign owned enterprise, with PSI
          as the
          100% owner of Chuming WOFE (including its subsidiaries). On December 13,
          2007,
          the PRC government authorities issued Chuming WOFE a business license formally
          recognizing it as a wholly foreign owned enterprise, of which PSI is the
          sole
          shareholder.
 F-8
  **Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of and for the years ended December 31, 2007, 2006, and
        2005**


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 the Company’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.





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.




F-9


**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of and for the years ended December 31, 2007, 2006, and
        2005**


*(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, 2006, the
      detailed identities of the consolidating subsidiaries are as follows:
      -





**Name
                of Company**
            
            **Place
                of****Incorporation**
            
            **Attributable**
              **Equity****Interest**
            
            **Registered**
              **Capital**Precious
                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.





*(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.




F-10


**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of and for the years ended December 31, 2007, 2006, and
        2005**


*(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)*
            *Advances
                to Suppliers*





Advances
      to suppliers represent the cash paid in advance for purchasing raw materials.
      The advances to suppliers are 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.





Construction
      in progress represents the direct costs of design, acquisition, and construction
      of buildings, building improvements and land improvements. Capitalization of
      these costs ceases when substantially all activities necessary to prepare the
      assets for their intended use are completed. At such point, construction in
      progress is transferred to its respective asset classification. No depreciation
      is provided until it is completed and ready for intended use.


F-11




**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of and for the years ended December 31, 2007, 2006, and
        2005**


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: -





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.




F-12




**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of and for the years ended December 31, 2007, 2006, and
        2005**


*(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 equalling 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.





*(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.




F-13




**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of and for the years ended December 31, 2007, 2006, and
        2005**


*(S)*
            *Shipping
                and handling*





All
      shipping and handling are expensed as incurred and are included as a component
      of cost of sales.





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





*(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.




F-14




**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of and for the years ended December 31, 2007, 2006, and
        2005**


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**
            
            **2007**
            
            **2006**
            
            **2005**Year
                end RMB : US$ exchange rate
            
            
            7.31
            
            
            7.82
            
            
            8.07Average
                yearly RMB : US$ exchange rate
            
            
            7.61
            
            
            7.98
            
            
            8.20





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*





Basic
      earnings per share is computed by dividing net income by the weighted average
      number of ordinary shares outstanding during the period. Diluted earnings per
      share is computed by dividing net income by the sum of the weighted average
      number of ordinary shares outstanding and dilutive potential ordinary shares
      during the years. During the years ended 2004, 2005, and 2006, no dilutive
      potential ordinary shares were issued.





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., 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-15


**Energroup
          Holdings Corporation**
 **Notes
          to Consolidated Financial Statements**
 **As
          of and for the years ended December 31, 2007, 2006, and
          2005**


*(Z)*
            *Recent
                Accounting Pronouncements*





In
      July
      2006, the FASB issued FIN 48, Accounting for Uncertainty in Income Taxes—an
      Interpretation of FASB Statement No. 109, which clarifies the accounting for
      uncertainty in tax positions. This Interpretation requires that the Company
      recognizes in its consolidated financial statements the impact of a tax position
      if that position is more likely than not of being sustained on audit, based
      on
      the technical merits of the position. The provisions of FIN 48 are effective
      for
      the Company on January 1, 2007, with the cumulative effect of the change in
      accounting principle, if any, recorded as an adjustment to opening retained
      earnings.





In
      September 2006, the FASB issued SFAS 157, Fair Value Measurements, which defines
      fair value, establishes a framework for measuring fair value in generally
      accepted accounting principles, and expands disclosures about fair value
      measurements. SFAS 157 applies under other accounting pronouncements that
      require or permit fair value measurements, where fair value is the relevant
      measurement attribute. The standard does not require any new fair value
      measurements. SFAS 157 is effective for financial statements issued for fiscal
      year beginning after November 15, 2007, and interim periods within those fiscal
      years.





In
      September 2006, the SEC issued SAB No. 108, which provides guidance on the
      process of quantifying financial statement misstatements. In SAB No. 108, the
      SEC staff establishes an approach that requires quantification of financial
      statement errors, under both the iron-curtain and the roll-over methods, based
      on the effects of the error on each of the Company’s financial statements and
      the related financial statement disclosures. SAB No.108 is generally effective
      for annual financial statements in the first fiscal year ending after November
      15, 2006. The transition provisions of SAB No. 108 permits existing public
      companies to record the cumulative effect in the first year ending after
      November 15, 2006 by recording correcting adjustments to the carrying values
      of
      assets and liabilities as of the beginning of that year with the offsetting
      adjustment recorded to the opening balance of retained earnings.





In
      February 2007, the Financial Accounting Standards Board issued SFAS No. 159,
      The
      Fair Value Option for Financial Assets and Financial Liabilities—Including an
      Amendment of SFAS 115 (SFAS No. 159), which allows for the option to measure
      financial instruments and certain other items at fair value. Unrealized gains
      and losses on items for which the fair value option has been elected are
      reported in earnings. The objective of SFAS 159 is to provide opportunities
      to
      mitigate volatility in reported earnings caused by measuring related assets
      and
      liabilities differently without having to apply hedge accounting provisions.
      SFAS 159 also establishes presentation and disclosure requirements designed
      to
      facilitate comparisons between companies that choose different measurement
      attributes for similar types of assets and liabilities. This statement is
      effective for financial statements issued for fiscal years beginning after
      November 15, 2007. The Company is currently evaluating the impact of SFAS No.
      159 on our consolidated financial statements.




F-16




**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of and for the years ended December 31, 2007, 2006, and
        2005**
  In
      December 2007, the FASB issued SFAS 141 (revised 2007), *Business
      Combinations* ,
      (‘‘SFAS
      141(R)’’). SFAS 141(R) retains the fundamental requirements of the original
      pronouncement requiring that the purchase method be used for all business
      combinations, but also provides revised guidance for recognizing and measuring
      identifiable assets and goodwill acquired and liabilities assumed arising from
      contingencies, the capitalization of in-process research and development at
      fair
      value, and the expensing of acquisition-related costs as incurred. SFAS 141(R)
      is effective for fiscal years beginning after December 15, 2008. In the event
      that the Company completes acquisitions subsequent to its adoption of SFAS
      141
      (R), the application of its provisions will likely have a material impact on
      the
      Company’s results of operations, although the Company is not currently able to
      estimate that impact.





In
      December 2007, the FASB issued SFAS 160, *Noncontrolling
      Interests in Consolidated Financial Statements − an amendment of ARB No.
      51* .
      SFAS
      160 requires that ownership interests in subsidiaries held by parties other
      than
      the parent (previously referred to as minority interests), and the amount of
      consolidated net income, be clearly identified, labeled and presented in the
      consolidated financial statements. It also requires once a subsidiary is
      deconsolidated, any retained noncontrolling equity investment in the former
      subsidiary be initially measured at fair value. Sufficient disclosures are
      required to clearly identify and distinguish between the interests of the parent
      and the interests of the noncontrolling owners as components of equity. It
      is
      effective for fiscal years beginning after December 15, 2008, and requires
      retroactive adoption of the presentation and disclosure requirements for
      existing minority interests. All other requirements are applied prospectively.
      The Company does not expect the adoption of SFAS 160 to have a material impact
      on its financial condition or results of operations.





The
      Company does not anticipate that the adoption of the above standards will have
      a
      material impact on these consolidated financial statements.




F-17




**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**


**As
      of and for the years ended December 31, 2007, 2006, and
      2005**




3.
            Restricted
                Cash





The
      restricted cash reflects funds received from the financing transaction described
      in Note 16 that is held in an escrow with US Bank in the United States. These
      funds are restricted until the Company has fulfilled the following criteria:
      (1)
      the hiring of a Chief Financial Officer that meets the approval of the
      investors, at such point the Company will release $1.5 million from restriction,
      the Company must satisfy this requirement within 90 days of the closing of
      the
      financing transaction, (2) the Company appoints 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.





4.
            Accounts
                Receivable





Accounts
      Receivable at December 31, consisted of the following: -





**2007**
            
            **2006**
            
            **2005**Accounts
                Receivable – Trade
            
            $
            707,156
            
            $
            1,877,664
            
            $
            3,324,058Less:
                Allowance for Doubtful Accounts
            
            
            (84,723
            )
            
            (79,267
            )
            
            (76,754
            )Net
                Accounts Receivable
            
            $
            622,433
            
            $
            1,798,397
            
            $
            3,247,304




**2007**
            
            **2006**
            
            **2005***Allowance
                for Bad Debts*Beginning
                Balance
            
            
            79,267
            
            
            76,754
            
            
            -Allowance
                Provided
            
            
            5,456
            
            
            2,513
            
            
            76,754Charged
                Against Allowance
            
            
            -
            
            
            -
            
            
            -Ending
                Balance
            
            
            84,723
            
            
            79,267
            
            
            76,754




5.
            Inventory






**2007**
            
            **2006**
            
            **2005**Raw
                Materials
            
            
            1,039,440
            
            
            875,223
            
            
            719,804Work
                in Progress
            
            
            547,889
            
            
            365,961
            
            
            101,932Finished
                Goods
            
            
            1,328,688
            
            
            1,144,263
            
            
            2,028,477$
            2,916,016
            
            $
            2,385,447
            
            $
            2,850,213




F-18
 
  **Energroup
          Holdings Corporation**
 **Notes
          to Consolidated Financial Statements**
 **As
          of and for the years ended December 31, 2007, 2006, and
          2005**


6.
            Related
                Party Receivable





In
      the
      normal course of business, the Company conducts transactions with the following
      related parties, that are not consolidated into the Company or its subsidiaries:
      (1) Dalian Chuming Group Co., Ltd., also referred to as the “Group”, and the
      Group’s subsidiaries: (2) Dalian Chuming Industrial Development Co., Ltd., (3)
      Dalian Chuming Trading Co., Ltd, (4) Dalian Mingxing Livestock Product Co.
      Ltd.,
      (5) Dalian Chuming Stockbreeding Combo Development Co., Ltd., (6) Dalian Chuming
      Fodder Co., Ltd., (7) Dalian Chuming Biological Technology Co., Ltd., and (8)
      Dalian Huayu Seafood Food Co., Ltd. The Company and the aforementioned related
      parties share common beneficial ownership. All related
      party transactions are conducted between Chuming WOFE and the Group. All
      transactions with related parties are generally performed at arm’s length, and
      in 2007, all such transactions were conducted at arm’s length.




F-19


**Energroup
          Holdings Corporation**
 **Notes
          to Consolidated Financial Statements**
 **As
          of and for the years ended December 31, 2007, 2006, and
          2005**


7.
              Property,
                  Plant & Equipment





**Accumulated****Cost**
            
            **Depreciation**
            
            **Net****December
                31, 2007**Land
                Improvements
            
            
            491,071
            
            
            82,031
            
            
            409,040Building
                Improvements
            
            
            76,859
            
            
            15,811
            
            
            61,048Buildings
            
            
            19,342,461
            
            
            2,424,415
            
            
            16,918,046Manufacturing
                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
            
            
            30,18929,800,898
            
            
            4,964,402
            
            
            24,836,496




**Accumulated****Cost**
              
              **Depreciation**
              
              **Net****December
                  31, 2006**Land
                  Improvements
              
              
              441,484
              
              
              59,789
              
              
              381,695Building
                  Improvements
              
              
              54,291
              
              
              9,406
              
              
              44,885Buildings
              
              
              14,167,331
              
              
              1,104,854
              
              
              13,062,477Manufacturing
                  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
              
              
              20,081$
              23,680,920
              
              $
              2,805,458
              
              $
              20,875,462


**Accumulated****Cost**
            
            **Depreciation**
            
            **Net****December
                31, 2005**Land
                Improvements
            
            
            316,013
            
            
            20,672
            
            
            295,341Building
                Improvements
            
            
            52,570
            
            
            4,114
            
            
            48,456Buildings
            
            
            13,580,630
            
            
            399,299
            
            
            13,181,331Manufacturing
                Equipment
            
            
            7,630,412
            
            
            554,540
            
            
            7,075,872Office
                Equipment
            
            
            60,367
            
            
            10,757
            
            
            49,610Vehicles
            
            
            523,854
            
            
            93,269
            
            
            430,585Furniture
                & Fixture
            
            
            13,838
            
            
            1,544
            
            
            12,294$
            22,177,684
            
            $
            1,084,195
            
            $
            21,093,489








8.
            Land
                Use Right





The
      Company had the following intangible assets outstanding at December
      31:




**2007**
            
            **2006**
            
            **2005**Land
                Use Rights, at Cost
            
            
            13,501,580
            
            
            9,303,402
            
            
            8,746,015*less:*Accumulated Amortization
            
            
            (645,600
            )
            
            (392,283
            )
            
            (220,890
            )$
            12,855,980
            
            $
            8,911,119
            
            $
            8,525,125




F-20




**Energroup
          Holdings Corporation**
 **Notes
          to Consolidated Financial Statements**
 **As
          of and for the years ended December 31, 2007, 2006, and
          2005**


9.
            Bank
                Loans





*(A)*
            *Short
                Term Bank Loans*





At
      December 31, 2007 the Company had the following short term loans
      outstanding:





**Bank**
            
            **Interest
                Rate**
            
            **Due
                Date**
            
            **Amount**Bank
                of China
            
            
            8.02
            %
            
            11/17/2008
            
            $
            1,914,111Shanghai
                Pudong Development Bank
            
            
            7.65
            %
            
            7/1/2008
            
            
            5,468,984$
            7,383,095




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 Dalian Chuming
      Group Co., Ltd; 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. Dalian Chuming Group Co., Ltd. (“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 Dalian Chuming Group Co.,
      Ltd
      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.





At
      December 31, 2007, the debt had been repaid in its entirety to Dalian Chuming
      Group Co. Ltd. The Company repaid the balance by extinguishing 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 Dalian Chuming Group Co. Ltd 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.




F-21


**Energroup
            Holdings Corporation**
 **Notes
            to Consolidated Financial Statements**
 **As
            of and for the years ended December 31, 2007, 2006, and
            2005**


10.
            Capitalization





As
      a
      result of a reverse-merger 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
                Shell 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.





**2007**
            
            **2006**
            
            **2005**PRC
                Registered Capital
            
            
            3,642,866
            
            
            2,413,352
            
            
            2,413,352-
                  Statutory Reserve Ceiling based on 50% of Registered
                  Capital
            
            
            1,821,433
            
            
            1,206,676
            
            
            1,206,676Less: 
                - Retained Earnings appropriated to Statutory Reserve
            
            
            751,444
            
            
            751,444
            
            
            73,250Reserve
                  Commitment Outstanding
            
            **$**
            **1,069,989**
            
            **$**
            **455,232**
            
            **$**
            **1,133,426**




12.
            Advertising
                Costs





Advertising
      expenses were $3,611,666, $869, and $268 for the years ended December 31, 2007,
      2006, and 2005 respectively.




F-22




**Energroup
          Holdings Corporation**
 **Notes
          to Consolidated Financial Statements**
 **As
          of and for the years ended December 31, 2007, 2006, and
          2005**


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
      2007, 2006, and 2005.





The
      Company’s operating subsidiary, Food Company, has made provisions for income
      taxes in years 2007, 2006, and 2005 of $967,539, $400,605,
      and $ 338,214,
      respectively.





The
      Company’s operating subsidiary, Sales Company, has not made provisions for
      income taxes in years 2007, 2006, and 2005 as it has incurred operating losses
      for those respective years.





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
                  benefit
              
              
              (967,539
              )ii.
              
              
              2006
              
              
              Tax
                  expense
              
              
              1,609iii.
              
              
              2005
              
              
              Tax
                  benefit
              
              
              (191,284
              )


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. 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 2 5%
      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 outstanding at December 31, 2007.





There
      were no severance packages to any key management personnel that have resigned
      from their positions. The Company has the right to terminate employment for
      cause at any time.





F-23
 
  **Energroup
          Holdings Corporation**
 **Notes
          to Consolidated Financial Statements**
 **As
          of and for the years ended December 31, 2007, 2006, and
          2005**


15.
            Operating
                Segments





The
      Company individually tracks the performance of its three operating subsidiaries
      Meat Company, Food Company, Sales Company, and the ultimately holding parent
      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.





Below
      is
      a presentation of the Company’s Statement of Income and Balance Sheet for its
      operating subsidiaries at, and for the year ended, December 31, 2007. The
      Company has also provided reconciling adjustments with the Company and its
      intermediate holding companies Chuming WOFE and PSI.




**MeatCompany**
            
            **Food**
              **Company**
            
            **SalesCompany**
            
            **WOFE,**
              **BVI,
                & Eliminations**
            
            **Total**Sales
            
            $
            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 (Expenses)
            
            
            (691,006
            )
            
            (712,807
            )
            
            (47,929
            )
            
            -
            
            
            (1,451,742
            )Earnings
                before Tax
            
            
            10,151,543
            
            
            2,911,336
            
            
            (415,931
            )
            
            (27,261
            )
            
            12,619,687Tax
            
            
            -
            
            
            967,539
            
            
            -
            
            
            -
            
            
            967,539**Net
                Income**
            
            **$**
            **10,151,543**
            
            **$**
            **1,943,797**
            
            **$**
            **(415,931**
            **)**
            **$**
            **(27,261**
            **)**
            **$**
            **11,652,147**




F-24


**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of and for the years ended December 31, 2007, 2006, and
        2005**





**Meat
                Company**
            
            **Food
                Company**
            
            **Sales
                Company**
            
            **WOFE,**
              **BVI,
                & Eliminations**
            
            **Total**Current
                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
            
            
            -
            
            
            38,652,961**Total
                Assets**
            
            **$**
            **58,643,808**
            
            **$**
            **35,589,986**
            
            **$**
            **24,668,818**
            
            **$**
            **(52,282,684**
            **)**
            **$**
            **66,619,928**Current
                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
            
            
            48,937,810**Total
                Liabilities****&
                Net Assets**
            
            **$**
            **58,643,808**
            
            **$**
            **35,589,986**
            
            **$**
            **24,668,818**
            
            **$**
            **(52,282,684**
            **)**
            **$**
            **66,619,928**




F-25


**Energroup
          Holdings Corporation**
 **Notes
          to Consolidated Financial Statements**
 **As
          of and for the years ended December 31, 2007, 2006, and
          2005**


16.
            Earnings
                Per Share





Components
      of basic and diluted earnings per share were as follows: -




**12
                months**
              **ended**
              **December 31,**
              **2007**
            
            **12
                months**
              **ended**
              **December 31,**
              **2006**
            
            **12
                monthsended**
              **December 31,**
              **2005**Net
                Income (A)
            
            $
            11,652,147
            
            $
            8,128,371
            
            $
            5,988,772Basic
                Weighted Average Shares Outstanding (B)
            
            
            17,272,756
            
            
            17,272,756
            
            
            17,272,756Dilutive
                Shares:-Addition
                to Common Stock from Exercise of Placement Warrants
            
            
            -
            
            
            -
            
            
            -Diluted
                Weighted Average Shares Outstanding: (C)
            
            
            17,272,756
            
            
            17,272,756
            
            
            17,272,756Earnings
                Per Share-Basic
                (A)/(B)
            
            $
            .67
            
            $
            0.47
            
            $
            0.35-Diluted
                (A)/(C)
            
            $
            .67
            
            $
            0.47
            
            $
            0.35Weighted
                Average Shares Outstanding-Basic
            
            
            17,272,756
            
            
            17,272,756
            
            
            17,272,756-Diluted
            
            
            17,272,756
            
            
            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.




F-26




**Energroup
          Holdings Corporation**
 **Notes
          to Consolidated Financial Statements**
 **As
          of and for the years ended December 31, 2007, 2006, and
          2005**


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 WOFE. Chuming WOFE 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”).





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 WOFE 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.


F-27




**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of and for the years ended December 31, 2007, 2006, and
        2005**


At
      December 31, 2007, 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
            
            
            3,863,635iii.
            
            
            Common
                shares issuable upon exercise of placement agent warrants
            
            
            386,36421,522,755





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-28




**ITEM
              9.**
            **CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE**





On
      February 6, 2008, MantylaMCREYNOLDS LLC (“McReynolds”) resigned as the
      independent auditor of Energroup Holdings Corporation. McReynolds served as
      the
      our independent auditor for the Registrant’s fiscal years ended December 31,
      1999 through December 31, 2006, and the interim periods during 2007. On December
      31, 2007, we completed a reverse takeover transaction which resulted in a change
      of control of the Company, and acquisition by the Company of a food processing
      company based in the city of Dalian, China. Following this change,
      MantylaMCREYNOLDS LLC resigned as our independent auditor.





McReynolds’
      report on the our financial statements for the two most recent fiscal years
      did
      not contain any adverse opinions or disclaimers of opinion, and were not
      qualified or modified as to uncertainty, audit scope, or accounting principles,
      except for a going concern opinion expressing substantial doubt about the
      ability of the Companyto continue as a going concern with respect to the
      Registrant in 2006, during which time the Registrant had “shell company” status
      under Rule 12b-2 of the Exchange Act.





During
      the two most recent fiscal years and the interim periods through February 6,
      2008, there were no disagreements with McReynolds on any matter of accounting
      principles or practices, financial statement disclosure or auditing scope or
      procedure, which disagreements if not resolved to the satisfaction of McReynolds
      would have caused them to make reference to this subject matter of the
      disagreements in connection with their report, nor were there any “reportable
      events” as such term is described in Item 304(a)(1)(iv) of Regulation
      S-B. On
      February 11, 2008, we filed a Current Report on Form 8-K disclosing the
      resignation of MantylaMCREYNOLDS
      LLC. In connection with their resignation, McReynolds furnished a letter stating
      that McReynolds reviewed our 8-K and was in agreement with the statements made
      concerning the auditor in the 8-K.





Also
      on
      February 6, 2008, we engaged Samuel H. Wong & Co., LLP (“Wong & Co.”) as
      the our outside independent accounting firm. This action has also been approved
      by the Registrant’s Board of Directors. During the two most recent fiscal years
      and any subsequent interim period prior to the engagement of Wong & Co.,
      neither us nor anyone on our behalf consulted with Wong & Co., regarding
      either (i) the application of accounting principles to a specified transaction,
      either contemplated or proposed, or the type of audit opinion that might be
      rendered on our financial statements, or (ii) any matter that was either the
      subject of a “disagreement” or a “reportable event.”





**ITEM
              9A.**
            **CONTROLS
                AND PROCEDURES**





**Evaluation
      of Disclosure Controls and Procedures**





We
      maintain disclosure controls and procedures that are designed to ensure that
      information required to be disclosed in our Exchange Act reports is recorded,
      processed, summarized and reported within the time periods specified in the
      SEC’s rules and forms, and that such information is accumulated and communicated
      to our management, including its chief executive officer and chief financial
      officer, as appropriate, to allow timely decisions regarding required
      disclosure. In designing and evaluating the disclosure controls and procedures,
      management recognizes that any controls and procedures, no matter how well
      designed and operated, can provide only reasonable assurance of achieving the
      desired control objectives, and management necessarily is required to apply
      its
      judgment in evaluating the cost-benefit relationship of possible controls and
      procedures.


64





As
      of
      December 31, 2007, the end of the fiscal year covered by this report, we
      carried out an evaluation, under the supervision and with the participation
      of
      our management, including our chief executive officer and our chief financial
      officer, of the effectiveness of the design and operation of our disclosure
      controls and procedures. Based on the foregoing, our chief executive officer
      and
      chief financial officer concluded that our disclosure controls and procedures
      (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
      Act
      of 1934) were effective at the reasonable assurance level.





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





Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting, as such term is defined in
      Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over
      financial reporting is a process designed under the supervision of our principal
      executive and principal financial officers to provide reasonable assurance
      regarding the reliability of financial reporting and the preparation of
      financial statements for external purposes in accordance with GAAP.




Under
      the
      supervision and with the participation of our management, including our chief
      executive officer and chief financial officer, we conducted an evaluation of
      the
      effectiveness of our internal control over financial reporting as of
      December 31, 2007.




On
      December 31, 2007, we acquired the business of Chuming via a share exchange
      transaction. Prior to the share exchange transaction, Energroup was a public
      reporting “shell” company with nominal assets whose sole business was to
      identify, evaluate and investigate various companies with the intent that,
      if
      such investigation warrants, a reverse merger transaction be negotiated and
      completed pursuant to which Energroup would acquire a target company with an
      operating business with the intent of continuing the acquired company’s business
      as a publicly held entity. As a public reporting shell company, we did not
      maintain elaborate controls and procedures. Additionally, as a privately-held
      company prior to the share exchange transaction, Chuming only maintained
      controls and procedures necessary and as suitable for a privately held company.
      Consequently, immediately following our share exchange transaction, we lacked
      the controls and procedures that would be appropriate for a public reporting
      company of our size and stature.





As
      a
      result of the material weaknesses described below, our management concluded
      that
      as of December 31, 2007 we did not maintain effective internal control over
      financial reporting based on the criteria established in Internal
      Control—Integrated Framework, issued by COSO.




A
      “material weakness” is a significant deficiency, or combination of significant
      deficiencies, that results in more than a remote likelihood that a material
      misstatement of the annual or interim financial statements presented will not
      be
      prevented or detected. A “significant deficiency” is a control deficiency, or
      combination of control deficiencies, that adversely affects a company’s ability
      to initiate, authorize, record, process or report external financial data
      reliably in accordance with GAAP such that there is more than a remote
      likelihood that a misstatement of the annual or interim financial statements
      presented that is more than inconsequential will not be prevented or detected.


At
        December 31, 2007, Chuming and its business first became a part of the
        Company, and as of that date, management has identified the following material
        weaknesses in our internal control over financial reporting, and has proposed
        the following plan of implementation with respect to each material weakness:
 ·
                *Weakness:*The
                    Company’s board of directors has yet to pass a formal resolution to put
                    in
                    place a strategic plan and framework in order to comply with
                    the
                    regulations placed on issuers concerning internal
                    controls.
  *Implementation
          Plan:* The
          board of directors intends to pass a resolution to adopt the Committee
          of
          Sponsoring Organizations of the Treadway Commission (COSO) Framework which
          provides for a structure to establish a control environment, risk assessment,
          control activities, information and communication, and monitoring of effective
          internal controls. The board also intends that the Chief Executive Officer
          shall
          be made to take ultimate ownership of establishing an effective internal
          control
          system.
  ·
                *Weakness:*The Company lacks a comprehensive Code of Ethics that is applicable
                    to the
                    entire Company including officers, employees, and
                    directors.
  *Implementation
          Plan:* The
          Company intends to adopt a formal Code of Ethics that will communicated
          to all
          personnel at all levels of the organization, and that senior management
          will be
          held to a standard that they will be responsible to encourage an environment
          that promotes ethical behavior and discourages both the necessity of, and
          the
          opportunities to act unethically.
  ·
                *Weakness:*The
                    Company lacks a guideline that specifically states the objective
                    and core
                    functions of the Company so that there is no ambiguity to all
                    members of
                    the organization as to what type of business transactions the
                    Company
                    should be conducting. This guideline should also be reviewed
                    on regular
                    basis by management and the Board of Directors in order to address
                    the
                    ever changing business environment and the demands of the
                    market.
  *Implementation
          Plan:* Management
          intends to prepare a guideline that the board of directors will review
          and
          adopt.


65


·
                *Weakness:*The
                    Company has material weaknesses in its system of producing information
                    for
                    financial reporting and management of fixed and intangible assets.
                    The
                    cost basis, and the related accumulated amortization and depreciation
                    pertaining to these assets presently are poorly kept. The calculation
                    of
                    the expense for amortization and depreciation for these assets
                    is
                    inconsistent and at times the necessary details to make the calculation
                    are, at times not readily available. For certain subsidiaries
                    there are
                    assets that have not been assigned a unique identifying number
                    or code to
                    result in proper tracking of those particular
                    assets.
  *Implementation
          Plan:* The
          Company will revisit its management of and systems for dealing with fixed
          and
          intangible assets for financial reporting purposes. The Company will also
          conduct training for its employees, in order improve the over quality of
          calculations. Finance managers will be required to review and sign off
          on
          schedules and accounting entries related to these assets, with a focus
          in
          accuracy and precision of calculation and recording of entries.
  ·
                *Weakness:*The Company’s disclosures for related party transaction are unclear. Since
                    the corporate reorganization and separation of Chuming from the
                    Group
                    occurred recently, the Company does not have detailed discussions
                    of the
                    nature of transactions between it and certain related parties.
                    The Company
                    needs to formalize all netting agreements for which the related
                    parties,
                    at different times, can be both a vendor and a
                    customer.
  *Implementation
          Plan:* The
          Company will write and rewrite formal contracts with these Related Parties
          that
          will detail the nature of these transactions. Schedules detailed these
          transactions will be revised to be easily be understandable and detailed
          for
          their inclusion in the Company’s financial statements.
  ·
                *Weakness:*The Company accounting department is currently understaffed and
                    lacks
                    personnel with expertise in US GAAP and SEC reporting
                    standards.
  *Implementation
          Plan:* The
          Company is currently in the hiring process for a senior financial accounting
          officer and staff accountants to fulfill the demands and rigors of being
          a US
          public reporting company. The Company will also provide training to existing
          employees on the requirements of US GAAP and SEC Reporting
          standards.
  ·
                *Weakness:*The
                    Company does not have an internal audit function and
                    department.
  *Implementation
          Plan:* The
          Company will establish an internal audit department.
  ·
                *Weakness:*The Company does not have a standardized and unified Enterprise
                    Resource
                    Planning Software (ERP). The Company’s accounting systems are disparate
                    and sometimes manual in nature which makes them neither scalable
                    nor
                    efficient for financial reporting purposes and management decision
                    making
                    needs.
  *Implementation
          Plan:* The
          Company will review its current ERP systems and consider the need to either
          purchase a new package or revise the functionality and deployment of its
          current
          systems.
  This
          report does not specifically detail all possible material weaknesses of
          the
          Company that may lead to material misstatements in the Company’s financial
          statements. However, in light of the Chuming’s transition from being a
          privately-owned enterprise to becoming a part of a U.S. public reporting
          company, we believe the foregoing report serves as a valuable evaluation
          of the
          current status of the Company’s internal controls.
 Any
        one
        of the material weaknesses described above could result in a misstatement
        of the
        aforementioned accounts or disclosures that would result in a material
        misstatement to the annual or interim Consolidated Financial Statements that
        might not be prevented or detected. As a result, management has determined
        that
        each of the control deficiencies discussed above constitutes a material
        weakness.




Management’s
      assessment of the effectiveness of our internal control over financial reporting
      as of December 31, 2007 has been audited by Samuel H. Wong & Co., our
      independent registered public accounting firm, as stated in their report, which
      is included herein.


66





**Changes
      in Internal Controls**





There
      were no changes in our internal control over financial reporting (as defined
      in
      Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as
      amended) during the quarter ended December 31, 2007 that have materially
      affected, or are reasonably likely to materially affect, our international
      control over financial reporting.





**ITEM
              9B.**
            **OTHER
                INFORMATION**





None.


67


**PART
      III**





**ITEM
              10.**
            **DIRECTORS
                AND EXECUTIVE OFFICERS OF THE
                REGISTRANT**




**Departure
      of Directors or Certain Officers; Election of Directors; Appointment of Certain
      Officers; Compensatory Arrangements of Certain Officers**





On
      December 31, 2007, our then sole director and officer, Timothy Halter, resigned
      in connection with the change in control transaction (the reverse acquisition
      and share exchange previously described), and appointed the following persons
      to
      our board of directors:




**Name**
            
            **Age**
            
            **Position**Shi
                Huashan
            
            49
            
            Chairman
                of the Board of DirectorsWang
                Shu
            
            33
            
            DirectorMa
                Fengqin
            
            45
            
            DirectorWang
                Shuying
            
            57
            
            DirectorMatthew
                Dillon
            
            47
            
            DirectorWendy
                Li
            
            47
            
            DirectorNestor
                Gounaris
            
            36
            
            Director




On
      February 21, 2008, the board of directors of Energroup appointed Mr. James
      Boyle
      as a director on the board of directors of the Registrant, effective February
      21, 2008. Mr. Boyle is one of seven directors presently serving on the board
      of
      directors.





Mr.
      James
      Boyle, age 47, is Principal and Managing Partner of Expat-CFO Services Ltd.
      in
      Shanghai, and has held this position since 2001. Expat-CFO serves U.S. and
      European multinational companies and private equity firms including Callaway
      Golf, Daymon Worldwide, Louisville Bedding and Kemin Industries, providing
      interim controller and CFO services, accounting and treasury outsourcing, and
      M&A transaction advisory including due diligence, deal structuring and
      valuation. From 1996-2001, Mr. Boyle worked for Dura-Line Shanghai Plastics
      Co.,
      Ltd., as Business Development and China Start-Up Manager, Deputy General
      Manager, CFO, and Acting Managing Director. Mr. Boyle is fluent in Mandarin,
      earning a Bachelor of Science degree from the State University of New York
      Maritime College in Economics and Marine Transportation, and an MBA from the
      Thunderbird School of Global Management in International Management and Finance.
      He is a member of the Institute of Management Accountants and the American
      Chamber of Commerce in Shanghai, and serves as President of the Shanghai Chapter
      of the Thunderbird Alumni Association. There are no family relationships, and
      there are no arrangements or understandings between Mr. Boyle and any of the
      executive officers of the Registrant, pursuant to which he was selected to
      serve
      as a director.




**Management**




At
        December 31, 2007, Mr. Timothy Halter was our sole director and officer. following
        persons were appointed as The
        appointment of the following persons to the board of directors became effective
        ten days following the mailing and filing of an information statement on
        schedule 14f-1, which was January 28, 2008.


68





**Name**
            
            **Age**
            
            **Position**
            
            Effective
                  Date of AppointmentShi
                Huashan
            
            49
            
            President
                and Chief Executive Officer*
            
            January
                  28, 2008Wang
                Shu
            
            33
            
            Chief
                Financial Officer and Director*
            
            January
                  28, 2008Ma
                Fengqing
            
            46
            
            Vice
                President and Director
            
            January
                  28, 2008Wang
                Shuying
            
            57
            
            Director
            
            January
                  28, 2008Matthew
                Dillion
            
            47
            
            Director
            
            January
                  28, 2008Nestor
                Gounaris
            
            47
            
            Director
            
            January
                  28, 2008


*
        The
        effective date of appointment of the CEO and CFO was December 31,
        2007.


***Mr.
      Shi Huashan*** **,** age
      49, **** is
      a
      graduate of Beijing Renwen University in Corporate Law, and the founder of
      Chuming. Mr. Shi Huashan has nearly 20 years of experience in the food industry.
      He established Dalian Chuming Industry Development Company in 1992, which
      started the Dalian Chuming Group Co., Ltd. From 1992 to present he has served
      as
      President and CEO of Chuming and the Dalian Chuming Group Co., Ltd. companies.
      In 2004, he was selected by the China Meats Association as one of the “Ten Most
      Influential Entrepreneurs in the China Meat Industry.” Mr. Shi Huashan is the
      current President of the Dalian Food Association. He is Chuming’s President,
      Chief Executive Officer, and Chairman of the Board of Directors.




***Ms.
      Wang Shu*** **,** age 33,
      is a graduate of Liaoning University, with a major in accounting, Ms. Wang
      Shu
      has more than 11 years of experience in finance. From 1996 to 2001, she worked
      at Dalian Huaqiao House Development Company as its chief accountant. In 2001,
      she joined Dalian Chuming Group Co., Ltd., and in her present role serves as
      Chuming’s as Chief Financial Officer, and as a member of the Board of
      Directors




***Ms.
      Ma Fengqin*** **,** age
      46,
      is a graduate of Dalian Electric Power Economic School, with a major in
      accounting. From 1990 to 1993, she worked at Dalian Thermo Engineering Company
      as its Chief Accountant. From 1992 to 2001, Ms. Ma served as Vice President
      of
      Dalian Chuming Industry Development Company. Since 2002 she has served as
      Chuming’s Vice President, and a member of the Board of Directors. Ms. Ma is
      married to Mr. Shi Huashan, Chairman of the Board of Directors.





***Ms.
      Wang Shuying*** **,** age 57,
      member of the Chuming Board of Directors, served from 1996-2004 as Chief of
      the
      Dalian Planning Committee’s Agriculture Economy Development Section, and now
      works as a consultant to the Section.  From 1991-1996 she was Vice Chief of
      the Section.  A graduate of Dalian Railway College, she was a staff member
      of the Dalian Machinery Bureau’s Agriculture Machinery Department from
      1977-1984.  From 1984-1989 Ms. Wang was Chief of the Dalian Planning
      Committee’s Industry Section, before undertaking German language studies at the
      Beijing Foreign Trading University.  She completed a training program in
      Germany at Heidelberg Hiller College from 1989-1991 prior to returning to
      Dalian’s Planning Committee.





***Mr.
      Matthew Dillon*** **,** age 47,
      member of the Chuming Board of Directors, has been President of Dalian
      Global Link Consultants in Dalian, China since 1998.  He was previously a
      Senior Engineer with Aeronautical Radio, Inc. in Annapolis, MD and an
      Avionics Systems Specialist in the U.S. Air Force.  Mr. Dillon speaks
      Mandarin, earning a Chinese Language Certificate from Dalian Maritime
      University, where he has owned the Dalian I-55 Coffee Stop and Bakery since
      2000.  A graduate of Southern Illinois University with a BS degree in
      Industrial Engineering and Technology, he also earned a Master of Divinity
      degree from the Southern Baptist Theological Seminary in Louisville,
      KY.





***Mr.
      Nestor Gounaris*** ,
      age 36,
      member of the Chuming Board of Directors, has been a principal since 2005 with
      China Solutions LLC, a Shanghai- and New York-based advisory firm assisting
      its clients with foreign direct investments and operations in China. From 2003
      to 2005 he was an associate with Simmons & Simmons in Shanghai, working in
      the law firm's PRC-focused corporate and foreign direct investment practice.
      Mr.
      Gounaris worked for O'Melveny & Myers in Shanghai as an associate from 2001
      to 2003. An Honors Paralegal with the U.S. Department of Justice's Antitrust
      Division in Washington, D.C. from 1996-1998, he holds a degree in Foreign
      Studies from Georgetown University's School of Foreign Service, and a juris
      doctor degree from the University of Virginia School of Law. Mr. Gounaris has
      been a research fellow for the North Atlantic Treaty Organization in Washington,
      D.C., and a Boren Fellow for the Academy of Educational Development in
      Charlottesville, VA and Shanghai. He is a member of the State Bar of New York,
      and is fluent in Mandarin and modern Greek.


69





**Family
      Relationships**





President
      and Chairman of the Board of Directors Mr. Shi Huashan, and Ms. Ma Fengqin,
      who
      is a vice president and director, are husband and wife.





**Involvement
      in Certain Legal Proceedings**




Our
      directors, executive officers and control persons have not been involved in
      any
      of the following events during the past five years:




1.    
      any bankruptcy petition filed by or against any business of which such person
      was a general partner or executive officer either at the time of the bankruptcy
      or within two years prior to that time;




2.    
      any conviction in a criminal proceeding or being subject to a pending criminal
      proceeding (excluding traffic violations and other minor offenses);




3.    
      being subject to any order, judgment, or decree, not subsequently reversed,
      suspended or vacated, of any court of competent jurisdiction, permanently or
      temporarily enjoining, barring, suspending or otherwise limiting his involvement
      in any type of business, securities or banking activities; or




4.    
      being found by a court of competent jurisdiction (in a civil action), the SEC
      or
      the Commodity Futures Trading Commission to have violated a federal or state
      securities or commodities law, and the judgment has not been reversed,
      suspended, or vacated.




**Audit
      Committee Financial Expert**




Our
      Board
      of Directors does not have a separate audit committee. However, the board
      has determined based on information provided to it, that Mr. James Boyle possesses
      the qualifications to be an “audit committee financial expert”, and is
“independent” as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the
      Securities Exchange Act of 1934, as amended.




We
      believe that the members of our board of directors are collectively capable
      of
      analyzing and evaluating our financial statements and understanding internal
      controls and procedures for financial reporting.




**Section
      16(a) of the Exchange Act**




Section
      16(a) of the Securities Exchange Act of 1934, as amended, requires our directors
      and certain of our officers, as well as persons who own more than 10% of a
      registered class of our equity securities (“Reporting Persons”), to file reports
      with the Securities and Exchange Commission. To our knowledge, based solely
      on
      review of the copies of such reports furnished to us and written representations
      that no other reports were required, during the fiscal year ended December
      31,
      2007 all Section 16(a) filing requirements applicable to its officers, directors
      and greater than ten percent shareholders were complied with, except that Form
      3s were inadvertently filed late by Fuyuan Chen, Shu Wang, Huashanshi and Shine
      Gold Holdings Limited on January 16, 2008, and a Form 4 was inadvertently filed
      late by Alycia D. Anthony on May 14, 2007.


70





**Code
      of Ethics**





A
      code of
      ethics relates to written standards that are reasonably designed to deter
      wrongdoing and to promote:





·
            Honest
                and ethical conduct, including the ethical handling of actual or
                apparent
                conflicts of interest between personal and professional
                relationships;





·
            Full,
                fair, accurate, timely and understandable disclosure in reports and
                documents that are filed with, or submitted to, the SEC and in other
                public communications made by an
                issuer;





·
            Compliance
                with applicable governmental laws, rules and
                regulations;





·
            The
                prompt internal reporting of violations of the code to an appropriate
                person or persons identified in the code;
                and





·
            Accountability
                for adherence to the code.





The
      Company has not adopted a formal code of ethics. However, the Company intends
      to
      develop a formal code of ethics that will apply to all of its employees
      (including its executive officers). Upon completion, the Company will provide
      to
      any person, without charge and upon request, a copy of the code of ethics.




**ITEM
              11.**
            **EXECUTIVE
                COMPENSATION**





**Compensation
      Discussion and Analysis**





This
      compensation discussion and analysis describes the material elements of the
      compensation awarded to our current executive officers. This compensation
      discussion focuses on the information contained in the following tables and
      related footnotes and narrative for the last completed fiscal year. Our Board
      of
      Directors currently oversees and administers our executive compensation program.





Our
      current executive compensation program presently includes a base salary. Our
      compensation program does not include (i) discretionary annual cash
      performance-based incentives, (ii) termination/severance and change of control
      payments, or (iii) perquisites and benefits.





*Our
      Compensation Philosophy and Objectives*





Our
      philosophy regarding compensation of our executive officers includes the
      following principles:




·
              our
                  compensation program should align the interests of our management
                  team
                  with those of our shareholders;
  71
  ·
              our
                  compensation program should reward the achievement of our strategic
                  initiatives and short- and long-term operating and financial
                  goals;
  ·
              compensation
                  should appropriately reflect differences in position and
                  responsibility;
  ·
              compensation
                  should be reasonable and bear some relationship with the compensation
                  standards in the market in which our management team operates;
                  and
  ·
              the
                  compensation program should be understandable and
                  transparent.


In
      order
      to implement such compensation principles, we have developed the following
      objectives for our executive compensation program:


·
              overall
                  compensation levels must be sufficiently competitive to attract
                  and retain
                  talented leaders and motivate those leaders to achieve superior
                  results;
  ·
              a
                  portion of total compensation should be contingent on, and variable
                  with,
                  achievement of objective corporate performance goals, and that
                  portion
                  should increase as an executive’s position and responsibility
                  increases;
  ·
              total
                  compensation should be higher for individuals with greater responsibility
                  and greater ability to influence our achievement of operating goals
                  and
                  strategic initiatives;
  ·
              the
                  number of elements of our compensation program should be kept to
                  a
                  minimum, and those elements should be readily understandable by
                  and easily
                  communicated to executives, shareholders, and others;
                  and
  ·
              executive
                  compensation should be set at responsible levels to promote a sense
                  of
                  fairness and equity among all employees and appropriate stewardship
                  of
                  corporate resources among
                  shareholders.





*Determination
      of Compensation Awards*





Our
      Board
      of Directors is provided with the primary authority to determine the
      compensation awards available to our executive officers. To aid the board of
      directors in making its determination for the last fiscal year, our current
      senior management provided recommendations to the board of directors regarding
      the compensation of all executive officers.





**Director
      Compensation**





We
      did
      not pay any compensation to members of our board of directors for fiscal year
      2007.





**Executive
      Compensation**





The
      following executive compensation disclosure reflects all compensation for fiscal
      year 2007 received by our principal executive officer, principal financial
      officer, and three most highly compensated executive officers whose salary
      exceeded US$100,000. We refer to these individuals in this report as “named
      executive officers.”




**Summary
      Compensation**





The
      following table reflects all compensation awarded to, earned by or paid to
      our
      directors and named executive officers for our fiscal years ended December
      31,
      2006 and 2007:


72


**Summary
      Compensation**





**Annual
                Compensation (2)****Name
                and**
              **Principal
                Position**
            
            **Fiscal**
              **Year**
            
            **Salary
                (1)**
              **($)**
            
            **All Other**
              **Compensation (3)**
              **($)**
            
            **Total**
              **($)**Shi
                Huashan
            
            
            2007
            
            $
            60,000
            
            
            -
            
            
            60,000Chief
                Executive Officer, President
            
            
            2006
            
            
            50,000
            
            
            -
            
            
            50,000Wang
                Shu
            
            
            2007
            
            $
            20,000
            
            
            10,000
            
            
            30,000Chief
                Financial Officer
            
            
            2006
            
            
            15,000
            
            
            5,000
            
            
            -Wang
                Shuying
            
            
            2007
            
            
            -
            
            
            -
            
            
            -Director
            
            
            2006
            
            
            -
            
            
            -
            
            
            -Matthew
                Dillion
            
            
            2007
            
            
            -
            
            
            -
            
            
            -Director
            
            
            2006
            
            
            -
            
            
            -
            
            
            -Ma
                Fengqin
            
            
            2007
            
            
            -
            
            
            -
            
            
            -Director
            
            
            2006
            
            
            -
            
            
            -
            
            
            -Nestor
                Gounaris
            
            
            2007
            
            
            -
            
            
            -
            
            
            -Director
            
            
            2006
            
            
            -
            
            
            -
            
            
            -James
                Boyle
            
            
            2007
            
            
            -
            
            
            -
            
            
            -Director
            
            
            2006
            
            
            -
            
            
            -
            
            
            -





(1)
            Expressed
                in U.S. Dollars based on the interbank exchange rate of 7.61 RMB for
                each 1.00 U.S. Dollar for the year ended December 31,
                2007.(2)
            In
                2007, compensation paid to our officers and directors included no
                bonuses,
                stock or option awards, non-equity incentive plan awards, or non-qualified
                deferred compensation, and accordingly, these columns have been omitted
                from this table.(3)
            In
                2007, all other compensation includes transportation subsidy,
                telecommunication subsidy, and other fringe
                benefits.





None
      of
      our executive officers received, nor do we have any arrangements to pay out,
      any
      bonus, stock awards, option awards, non-equity incentive plan compensation,
      or
      non-qualified deferred compensation.





**Grants
      of Plan-Based Awards**





We
      did
      not make any grants of plan-based awards to our directors or named executive
      officers during our fiscal year-ended December 31, 2007.


73





**Outstanding
      Equity Awards**





There
      are
      no unexercised options, stock that has not vested, or equity incentive plan
      awards for any of our directors or named executive officers outstanding as
      of
      December 31, 2007.





**Option
      Exercises and Stock Vested**





There
      were no exercises of stock options, stock appreciation rights, or similar
      instruments, and no vesting of stock, including restricted stock, restricted
      stock units and similar instruments, during the last completed fiscal year
      for
      any of our directors or named executive officers.





**Pension
      Benefits**





We
      currently have no plans that provide for payments or other benefits at,
      following, or in connection with retirement of our directors or named executive
      officers.





**Nonqualified
      Defined Contribution and Other Nonqualified Deferred Compensation
      Plans**





We
      currently have no defined contribution or other plans that provide for the
      deferral of compensation to our directors or named executive officers on a
      basis
      that is not tax-qualified.





**Potential
      Payments Upon Termination or Change-in-Control**





Other
      than any employment agreements described in this report, we currently have
      no
      contract, agreement, plan or arrangement, whether written or unwritten, that
      provides for payments to a named executive officer at, following, or in
      connection with any termination, including without limitation resignation,
      severance, retirement or a constructive termination of a named executive
      officer, or a change in control of the registrant or a change in the named
      executive officer’s responsibilities, with respect to each named executive
      officer.




**Employment
      Agreements**





Effective
      at closing of the Exchange Transaction described elsewhere in this report,
      we
      entered into executive employment agreements with each of Mr. Shi Huashan
      (President and Chief Executive Officer), Ms. Wang Shu (acting Chief Financial
      Officer) and Mr. Chen Fuyuan (Chief Operating Officer). Each agreement provides
      for a yearly salary of USD $100,000 payable in monthly installments in
      accordance with our standard payroll practices for salaried employees. Each
      executive officer’s salary will be subject to adjustment pursuant to our
      employee compensation policies in effect from time to time. Under the terms
      of
      each of the agreements, each executive officer will be entitled to the benefits
      that we customarily make available to employees in comparable positions. Each
      officer has the right to terminate his or her employment by giving us prior
      notice with or without cause, and we hold an equal right. The Board of Directors
      or appropriate committee thereof, may from time to time, in its sole discretion,
      adjust the salaries and benefits paid to our executive officers. A copy of
      the
      employment agreements are included as exhibits to our Form 8-K filed on January
      7, 2008.





The
      following is a summary of the compensation to be paid under these employment
      agreements in the upcoming fiscal year ended December 31, 2008 to our named
      executive officers:


74


**Summary
      of Compensation To Be Paid Under Employment Agreements for**


**Fiscal
      Year Ended December 31, 2008**





**Annual
                Compensation****Name
                and Principal Position**
            
            **Salary**
            
            **Bonus
                (1)**
            
            **Other annual**
              **Compensation**Shi
                Huashan
              President,
                Chief Executive Officer
            
            $
            100,000
            
            
            —
            
            
            —Wang
                Shu
              Chief
                Financial Officer
            
            $
            100,000
            
            
            —
            
            
            —Chen
                Fuyuan
              Chief
                Operating Officer
            
            $
            100,000
            
            
            —
            
            
            —




(1) 
        We have no arrangements with our executive officers to pay bonuses
      or other annual compensation.




**Indemnification
      of Officers and Directors**





The
      Nevada Revised Statutes and our bylaws permit us to indemnify our officers
      and
      directors for liabilities they may incur, including liabilities under the
      Securities Act and Exchange Act. Our bylaws provide that our officers and
      directors may be indemnified by us in the event of third party actions, if
      the
      officer or director acted in good faith and in a manner that he or she
      reasonably believed was in or not against the company’s best interests, and with
      respect to any criminal action or proceeding, had no reason to believe that
      his
      or her actions were unlawful. Our bylaws also provide that we may provide
      indemnification for our officer and directors for any action by the company
      against such directors and officers, if the officer or director acted in good
      faith and in a manner that he or she reasonably believed was in or not against
      the company’s best interests, except no indemnification may be made for
      negligence or misconduct of such director’s or officer’s duties to the company,
      unless a court in which the matter is brought determines that in view of all
      the
      circumstance of the case, the person is fairly and reasonably entitled to
      indemnification. This and our bylaws indemnification may, however, be
      unenforceable as against public policy.




**ITEM
              12.**
            **SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**





The
      following table sets forth information regarding the beneficial ownership of
      our
      common stock as of December 31, 2007, for each of the following
      persons:





·
            each
                of our directors and each of the named executive officers in the
                “Management” section of this
                report;


·
            all
                directors and named executive officers as a group;
                and


·
            each
                person who is known by us to own beneficially five percent or more
                of our
                common stock.





Beneficial
      ownership is determined in accordance with the rules of the SEC. Unless
      otherwise indicated in the table, the persons and entities named in the table
      have sole voting and sole investment power with respect to the shares set forth
      opposite the shareholder’s name. Unless otherwise indicated, the address of each
      beneficial owner listed below is c/o Dalian Precious Sheen Investments
      Consulting Co., Ltd., No. 9, Xin Yi Street, Ganjingzi District, Dalian City,
      Liaoning Province, PRC 116039. The percentage of class beneficially owned set
      forth below is based on 21,136,391 shares of our common stock outstanding on
      December 31, 2007.


75





**Common Stock Beneficially Owned****Named
                executive officers and directors:**
            
            **Number
                of**
              **shares**
              **beneficially**
              **owned**
            
            **Percentage of**
              **class beneficially**
              **owned**Shi
                Huashan
            
            
            14,688,948
            (1)
            
            69.5
            %Wang
                Shu
            
            
            0
            
            
            0
            %Chen
                Fuyuan
            
            
            0
            
            
            0
            %Ma
                Fengqin
            
            
            0
            
            
            0
            %Nestor
                Gounaris
            
            
            0
            
            
            0
            %Matthew
                Dillon
            
            
            0
            
            
            0
            %Wang
                Shuying
            
            
            0
            
            
            0
            %James
                Boyle
            
            
            0
            
            
            0
            %All
                directors and executive officers as a group (7 persons)
            
            
            14,688,948
            
            
            69.5
            %**5%
                Shareholders:**Shine
                Gold Holdings Limited
            
            
            10,690,668
            (1)
            
            50.6
            %Shiny
                Snow Holdings Limited
            
            
            1,948,890
            (1)
            
            9.2
            %Smart
                Beat Limited
            
            
            2,049,390
            (1)
            
            9.7
            %Barry
                Kitt
            
            
            2,045,455
            (2)
            
            9.7
            %




(1)
            Shine
                Gold Holdings Limited, Shiny Snow Holding Limited, and Smart Beat
                Limited,
                are each companies organized under the laws of the British Virgin
                Islands
                (collectively, the “Shi Family Companies”). The registered address
                for the Shi Family Companies is Palm Grove House, P.O. Box 438,
                Road Town, Tortola, British Virgin Islands. Mr. Shi Huashan and
                certain of his relatives (the “Shi Family”) have entered into trust
                agreements with three non-PRC individuals, under which the non-PRC
                individuals shall hold the shares of the Shi Family Companies as
                trustees for the benefit of the Shi Family. The natural persons with
                voting power and investment power on behalf of the Shi Family
                Companies are (i) Chong Shun, (ii) Kuo Ching Wan Amy, and (iii) Wey
                Meirong, respectively (collectively, the “Trustees”).
                As beneficiaries of the trust arrangements, members of the Shi Family
                have only economic rights with respect to the shares held by the
                Shi Family Companies. Mr. Shi Huashan and the Shi Family hereby
                disclaim beneficial ownership except to the extent of their pecuniary
                interest in the Company shares held by the Shi Family
                Companies.(2)
            Barry
                Kitt exercises investment discretion and control over the shares
                of common
                stock of the Company held by The Pinnacle Fund, L.P., a Texas limited
                partnership (“Pinnacle”) and Pinnacle China Fund, L.P., a Texas limited
                partnership (“Pinnacle China”). Pinnacle Advisers, L.P. (“Advisers”) is
                the general partner of Pinnacle. Pinnacle Fund Management, LLC
                (“Management”) is the general partner of Advisers. Mr. Kitt is the sole
                member of Management. Pinnacle China Advisers, L.P. (“China Advisers”) is
                the general partner of Pinnacle China. Pinnacle China Management,
                LLC
                (“China Management”) is the general partner of China Advisers. Kitt China
                Management, LLC (“China Manager”) is the manager of China Management. Mr.
                Kitt is the manager of China Manager. As of December 31, 2007, Pinnacle
                and Pinnacle China were the beneficial owners of 2,045,454 shares
                of
                Common Stock. Mr. Kitt may be deemed to be the beneficial owner of
                the shares of Common Stock beneficially owned by Pinnacle and Pinnacle
                China. Mr. Kitt expressly disclaims beneficial ownership of all
                shares of Common Stock beneficially owned by Pinnacle and Pinnacle
                China.


76





**Equity
      Compensation Plan Information**




We
      have
      not adopted any equity compensation plan as of December 31,
      2007.





**ITEM
              13.**
            **CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS******





**Related
      Party Transactions of Chuming**





Four
      members of Chuming management’ team also have roles with Chuming’s former
      parent, Dalian Chuming Group Co., Ltd. Mr. Shi Huashan, our President and CEO,
      together with Ms. Wang Shu, CFO, Mr. Chen Fuyuan, COO and Mr. Yan Jinglu,
      Marketing Director, are not exclusively employed by Chuming. They are also
      under
      contract with Chuming’s former parent, the Dalian Chuming Group Co., Ltd.,
      although they work for Chuming on a full time basis.





Chuming
      conducts business with the following related parties: Dalian Chuming Group
      Co.,
      Ltd. which is currently composed of the following subsidiaries that are not
      consolidated in Chuming: (1) Dalian Chuming Industrial Development Co., Ltd.,
      (2) Dalian Chuming Trading Co., Ltd, (3) Dalian Mingxing Livestock Product
      Co.
      Ltd., (4) Dalian Chuming Stockbreeding Combo Development Co., Ltd., (5) Dalian
      Chuming Fodder Co., Ltd., and (6) Dalian Chuming Biological Technology Co.,
      Ltd.. Chuming and the aforementioned related parties have a common ownership.
      All transactions with related parties were performed at arm’s length.





On
      December 17, 2007 Dalian Chuming Slaughter and Packaging Pork Company, a
      subsidiary of Chuming, entered into a Long-Term Hog Procurement Agreement IV
      with Dalian Chuming Group Company, Ltd., Chuming’s former parent. This agreement
      specifies that Dalian Chuming Group Co., Ltd. should supply no less than 750,000
      live hogs to Chuming in 2008, 800,000 in 2009, and 800,000 in 2010, and the
      price for the hogs is at the fair market price at the time of
      acquisition.





**Related
      Party Transactions**





Set
      forth
      below are the related party transactions since December 31, 2006 between the
      Company’s shareholders, officers and/or directors, and the Company.





*Related
      Party Transactions - Chuming*





In
      the
      normal course of business, we conduct transactions with the following related
      parties, that are not consolidated into the Company or its subsidiaries: (1)
      Dalian Chuming Group Co., Ltd., also referred to this report as the “Group”, and
      the Group’s subsidiaries: (2) Dalian Chuming Industrial Development Co., Ltd.,
      (3) Dalian Chuming Trading Co., Ltd, (4) Dalian Mingxing Livestock Product
      Co.
      Ltd., (5) Dalian Chuming Stockbreeding Combo Development Co., Ltd., (6) Dalian
      Chuming Fodder Co., Ltd., (7) Dalian Chuming Biological Technology Co., Ltd.,
      and (8) Dalian Huayu Seafood Food Co., Ltd. The Company and the aforementioned
      related parties share common beneficial ownership. All related
      party transactions are conducted between Chuming WOFE and the Group. All
      transactions with related parties are generally performed at arm’s length, and
      in 2007, all such transactions were conducted at arm’s length.


The
        “Chuming” trademark and rights to the “Huayu” trademark application in the PRC
        are owned by Dalian Chuming Industry Development Co., Ltd., a subsidiary
        of the
        Group. We have been granted a perpetual fully paid up license to use both
        of
        these trademarks in connection with our business, under two trademark agreements
        with Dalian Chuming Industry Development Co., Ltd.
 
 On
        December 17, 2007, Meat Company entered into a Long Term Hog Procurement
        Agreement with the Group, under which the Group agreed to supply, at current
        fair market value at the time of supply, 750,000 hogs in calendar year 2008,
        800,000 hogs in calendar year 2009, and 800,000 hogs in calendar year
        2010.
  *Related
        Party Transactions – Prior to Change in Control*





The
      Company recorded a liability of $25,871 as of March 31, 2007. The unsecured
      loan
      bears no interest and is due on demand. For the three months ended March 31,
      2007 and 2006, a shareholder paid $3,193 and $2,538 in expenses on behalf of
      the
      Company, respectively.


77





On
      May 3,
      2007, the Company, along with its then-current directors and executive officers,
      entered into a stock purchase agreement with Halter Financial Investments,
      L.P.,
      a Texas limited partnership (“HFI”), pursuant to which the Company agreed to
      sell to HFI 11,200,000 pre-reverse split shares (approximately 1,600,000
      post-reverse split shares) of unregistered, restricted common stock for $350,000
      cash. This transaction closed on May 22, 2007. In conjunction with this stock
      purchase agreement, on May 3, 2007, certain of the Company’s then-principal
      shareholders, as a condition of the closing of the stock purchase agreement
      surrendered and cancelled 1,350,000 then-issued and outstanding shares of the
      Company common stock. These shares were surrendered as follows: Jenson Services,
      Inc., which then owned 2,480,500 pre-reverse split shares (approximately 354,290
      post-reverse split shares) (or approximately 68% of our then-outstanding voting
      securities) delivered 375,000 of its pre-reverse split shares (approximately
      53,572 post-reverse split shares) for cancellation; James P. Doolin, which
      then
      owned 475,000 pre-reverse split shares (approximately 67,858 post-reverse split
      shares) (or approximately 13% of our then-outstanding voting securities)
      delivered 475,000 pre-reverse split shares (approximately 67,858 post-reverse
      split shares) for cancellation; and his sister, Alycia Anthony, which then
      owned
      500,000 pre-reverse split shares (approximately 71,429 post-reverse split shares
      (or approximately 14% of our then-outstanding voting securities) delivered
      500,000 pre-reverse split shares (approximately 71,429 post-reverse split
      shares) for cancellation. All of these cancelled shares were returned to the
      status of authorized and unissued shares of the Company. No consideration was
      given by the Company in the cancellation of these shares. The effect of the
      share cancellations was to reduce the carrying par value of shares surrendered
      and a corresponding increase to additional paid-in capital.





Under
      the
      terms of the stock purchase agreement, on May 3, 2007, the Company’s
      then-current board of directors declared a special cash distribution of $0.1219
      per share to the Company’s shareholders of record as of May 17, 2007, the record
      date for the special cash distribution. Neither HFI or the shares surrendered
      by
      Jenson Services or James P. Doolin or Alycia Anthony participated in the special
      cash distribution. The special cash distribution was paid on May 29, 2007,
      to
      shareholders of record on the record date, subject to the closing of the stock
      purchase agreement. The special cash distribution was paid to the holders of
      an
      aggregate 2,297,421 pre-reverse split shares of the Company’s common stock,
      after giving effect to the cancellation of 1,350,000 pre-reverse split shares
      discussed above, which resulted in a total cash distribution of approximately
      $280,000. The special cash distribution was a condition of the closing of the
      stock purchase agreement. The special cash distribution is treated as a cash
      dividend in the Company’s financial statements for the quarters ended June 30
      and September 30, 2007.





Further,
      the stock purchase agreement contained covenants that required HFI, in its
      capacity as the Company’s controlling shareholder following closing of the stock
      purchase agreement, to agree that it will not approve any reverse splits other
      than a one-time reverse split of not greater than 1-for-7 without the prior
      consent of the Company’s former officers as representatives of the Company’s
      continuing shareholders; that it will not authorize the issuance of any
      additional shares of common stock or securities convertible into shares of
      common stock except in connection with a combination transaction with a
      corporation with current business operations (a “Going Public Transaction”); and
      that it will not allow the Company to enter into a Going Public Transaction
      unless the Company, on a combined basis with the operating entity with which
      it
      completes a Going Public Transaction, satisfies the financial conditions for
      listing on the NASDAQ Small-Cap Market immediately following the closing of
      the
      Going Public Transaction. The stock purchase agreement also grants demand and
      “piggy back” registration rights to HFI and to any continuing holders of the
      Company’s common stock that are deemed to be holding “restricted
      securities.”


78


**ITEM
              14.**
            **PRINCIPAL
                ACCOUNTANT FEES AND SERVICES**





As
      approved by our board of directors, we dismissed MantylaMCREYNOLDS
      LLC (“McReynolds”) as our independent auditors effective February 06,
      2008.  McReynolds served as our independent auditors for the fiscal
      years ended December 31, 2006 and December 31, 2005 and for the quarterly
      review for 2006. On February 06, 2008, we engaged Samuel H. Wong & Co., LLP
      (“Wong & Co.”) as our outside independent accounting firm for the fiscal
      years ended December 31, 2007.





The
      following table sets forth fees billed to us by our current auditors, Samuel
      H.
      Wong & Co., LLP, during the fiscal years ended December 31, 2006 and
      December 31, 2007 for: (i) services rendered for the audit of our
      annual financial statements and the review of our quarterly financial
      statements, (ii) services by our auditor that are reasonably related to the
      performance of the audit or review of our financial statements and that are
      not
      reported as Audit Fees, (iii) services rendered in connection with tax
      compliance, tax advice and tax planning, and (iv) all other fees for
      services rendered.




December 31,
                2007
              
              December 31,
                2006(i)     
                  Audit Fees
              
              $
              204,817
              
              $
              -(ii)    
                  Audit Related Fees
              
              
              -
              
              
              -(iii)   
                  Tax Fees
              
              
              -
              
              
              -(iv)   
                  All Other Fees
              
              
              -
              
              
              -Total fees
              
              $
              204,817
              
              $
              -





Fees
      for
      audit services include fees associated with the annual audit and the review
      of
      documents filed with the Securities and Exchange Commission including quarterly
      reports on Form 10-Q and the annual report on Form 10-K. Audit-related fees
      principally included accounting consultation and information system control
      reviews. **** Tax
      fees
      included tax compliance, tax advice and tax planning work.


79


**PART
      IV**





**ITEM
              15.**
            **EXHIBITS,
                FINANCIAL STATEMENT
                SCHEDULES**





**a.
      (1)**  **Financial
      Statements**





The
      following consolidated financial statements of Energroup Holdings Corporation
      are included in Part II, Item 8 of this Report:


Consolidated
                  Balance Sheets as of December 31, 2007, 2006 and 2005Consolidated
                  Statements of Operations for the Years Ended December 31, 2007,
                  2006 and
                  2005Consolidated
                  Statements of Changes in Stockholders’ Equity for the years Ended December
                  31, 2007, 2006 and 2005Consolidated
                  Statements of Cash Flows for the Years Ended December 31, 2007,
                  2006 and
                  2005Notes
                  to Consolidated Financial
                  Statements




**(2)
      Financial Statement Schedules**




Schedules
      are omitted because the required information is not present or is not present
      in
      amounts sufficient to require submission of the schedule or because the
      information required is given in the consolidated financial statements or the
      notes thereto.


80


**(3)
      Exhibits**





**EXHIBIT
      INDEX**





**Exhibit**
              **Number**
            
            **Description**2.1
            
            Share
                Exchange Agreement by and among the Company, PSI and PSI Shareholders
                dated December 2007 (1)2.2
            
            Articles
                and Plan of Merger (change in domicile from Utah to Nevada)
                (2)3.1
            
            Articles
                of Incorporation of  Energroup Holdings Corporation
                (4)3.2
            
            Bylaws
                of Energroup Holdings Corporation (4)3.3
            
            Articles
                of Amendment to Articles of Incorporation of  Energroup Holdings
                Corporation (4)3.4
            
            Articles
                of Amendment to Articles of Incorporation of Energroup Technologies,
                Inc.
                (Reverse Split) (2)3.5
            
            Articles
                of Incorporation of Energroup Holdings Corporation (2)3.6
            
            Certificate
                of Amendment to Articles of Incorporation of Energroup Holdings
                Corporation (Reverse Split) (3)4.1
            
            Registration
                Rights Agreement dated December 2007 among Energroup and the investors
                signatory thereto (1)4.2
            
            Form
                of Common Stock Purchase Warrant issued to Placement Agent (December
                2007)
                (1)10.1
            
            Lockup
                Agreement dated December 2007 among Energroup and the Shareholders
                signatory thereto (1)10.2
            
            Executive
                Employment Agreement dated December 2007 between Energroup and Mr.
                Shi
                Huashan (1)10.3
            
            Executive
                Employment Agreement dated December 2007 between Energroup and Ms.
                Wang
                Shu (1)10.4
            
            Executive
                Employment Agreement dated December 2007 between Energroup and Mr.
                Chen
                Fuyuan (1)10.5
            
            Long-Term
                Hog Procurement Agreement dated December 17,2007 between Dalian Chuming
                Group Co., Ltd. and Dalian Chuming Slaughter and Packaging Pork Company,
                Ltd. (1)10.6
            
            Trademark
                License Contract (Chuming) dated December 2007 (English translation)
                (1)10.7
            
            Trademark
                License Contract (Huayu) dated December 2007 (English translation)
                (1)10.8
            
            Securities
                Purchase Agreement dated December 2007 among Energroup, PSI, Chuming,
                and
                the investors signatory thereto
                (1)


81





10.9
            
            Make
                Good Escrow Agreement dated December 2007 among Energroup, Make Good
                Pledgor, Escrow Agent and the investors signatory thereto
                (1)10.10
            
            Holdback
                Escrow Agreement dated December 2007 among Energroup, Escrow Agent
                and the
                investors signatory thereto (1)21.1
            
            List
                of Subsidiaries
                (4)24.1
            
            Power
                of Attorney (included as part of the signature pages to this registration
                statement)31.1
            
            Certification
                by Chief Executive Officer pursuant to Sarbanes-Oxley Section
                302.31.2
            
            Certification
                by Chief Financial Officer pursuant to Sarbanes-Oxley Section
                302.32.1
            
            Certification
                by Chief Executive Officer pursuant to 18 U.S.C. Section
                1350.32.2
            
            Certification
                by Chief Financial Officer pursuant to 18 U.S.C. Section
                1350.





(1)
      Previously filed with our Current Report on Form 8-K on January 7, 2008 and
      incorporated herein by reference.





(2)
      Previously filed with our Current Report on Form 8-K on August 22, 2007 and
      incorporated herein by reference.





(3)
      Previously filed with our Current Report on Form 8-K on December 14, 2007 and
      incorporated herein by reference.





(4)
      Previously filed with our General form for registration of securities under
      the
      Securities Act of 1933 on Form S-1 on February 11, 2008 and incorporated herein
      by reference.


82


**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 31 st day of
      March, 2008.





**ENERGROUP
                HOLDINGS CORPORATION**By:
            /s/
                Shi Huashan**Shi
                Huashan**
              **President,
                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,
            
            March
                31, 2008**Shi
                Huashan**
            
            President,
                and Director
              (Principal
                Executive Officer)/s/
                Wang Shu
            
            Chief
                Financial Officer and Director
            
            March
                31, 2008**Wang
                Shu**
            
            (Principal
                Financial and Accounting Officer)/s/
                Wang Shuying
            
            Director
            
            March
                31, 2008**Wang
                Shuying**/s/
                Matthew Dillion
            
            Director
            
            March
                31, 2008**Matthew
                Dillion**/s/
                Ma Fengqin
            
            Director
            
            March
                31, 2008**Ma
                Fengqin**/s/

                Nestor Gounaris
            
            Director
            
            March
                31, 2008**Nestor
                Gounaris**/s/
                James Boyle
            
            Director
            
            March
                31, 2008**James
                Boyle**


83