UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM
10-Q





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







For the
quarterly period ended March 31, 2010





[
      ]
            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:  0-12792





CHINA
SWINE GENETICS, INC.


(Exact
name of registrant as specified in its charter)





Delaware
              (State
      or other jurisdiction of
              incorporation
      or organization)
            84-0916585
              (I.R.S.
      Employer Identification No.)





077
      Ala Napunani Street, Honolulu, HI
            96818(Address
      of principal executive offices)
            (Zip
      Code)





Registrant’s
telephone number (including area code):  808-429-5954






Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes X  No
____




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Date File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).     Yes ___  No
___


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





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





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




As of May
19, 2010, there were 20,291,112 shares of company common stock issued and
outstanding.





China
Swine Genetics, Inc.





Quarterly
Report on Form 10-Q





TABLE
OF CONTENTS





PART
      I – FINANCIAL INFORMATIONCautionary
      Note on Forward Looking Statements
            3Item
      1.
            Financial
      Statements
            4Item
      2.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            21Item
      3.
            Quantitative
      and Qualitative Disclosures About Market Risk
            31Item
      4(T).
            Controls
      and Procedures
            31PART
      II – OTHER INFORMATIONItem
      1.
            Legal
      Proceedings
            32Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            32Item
      3.
            Defaults
      Upon Senior Securities
            32Item
      4.
            Submission
      of Matters to a Vote of Security Holders
            32Item
      5.
            Other
      Information
            32Item
      6.
            Exhibits
            32SIGNATURES
            33







2


CAUTIONARY
NOTE ON FORWARD LOOKING STATEMENTS





In
addition to historical information, this Quarterly Report on Form 10-Q contains
forward looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995.  The forward looking statements are subject
to certain risks and uncertainties that could cause actual results to differ
materially from those reflected in such forward looking statements.  In
some cases, you can identify forward looking statements by terminology such as
“may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,”
“estimates,” “predicts,” “projects,” “potential,” “proposed,” “intended,” or
“continue” or the negative of these terms or other comparable
terminology.  Readers are cautioned not to place undue reliance on
these forward looking statements, which reflect management’s opinions only as of
the date thereof. In evaluating such forward looking statements, readers
should carefully review the discussion of risks and uncertainties in this
Quarterly Report on Form 10-Q and in our most recent Annual Report on Form 10-K
as well as in other filings with the Securities and Exchange
Commission  (“SEC”) including, without
limitation:





●
            our
      financial position, business strategy and other plans and objectives for
      future operations;





●
            the
      ability of our management team to execute its plans to meet its
      goals;





●
            our
      ability to attract and retain
management;





●
            our
      growth strategies;





●
            anticipated
      trends in our business;





●
            our
      ability to consummate or integrate
acquisitions;





●
            our
      liquidity and ability to finance our operations and acquisition and
      development activities;





●
            the
      timing, cost and procedure for proposed
  acquisitions;





●
            the
      impact of government regulation in China and
  elsewhere;





●
            estimates
      regarding future net revenues or
profits;





●
            planned
      capital expenditures (including the amount and nature
      thereof);





●
            estimates,
      plans and projections relating to construction of facilities and the
      acquisition of facilities or
businesses;





●
            the
      possibility that our acquisitions may involve unexpected
      costs;





●
            the
      impact of competition;





●
            general
      economic conditions, whether internationally, nationally or in the
      regional and local market areas in which we are doing business, that may
      be less favorable than expected;
and





●
            other
      economic, competitive, governmental, legislative, regulatory, geopolitical
      and technological factors that may negatively impact our businesses,
      operations and pricing.





The
discussion of risks and uncertainties set forth in this Quarterly Report on Form
10-Q and in our most recent Annual Report on Form 10-K as well as in other
filings with the SEC, is not necessarily a complete or exhaustive list of all
risks facing the Company at any particular point in time.  We operate
in the People’s Republic of China (“China” or “PRC”) in a highly
competitive and rapidly changing environment.  Therefore, it is likely
that new risks will emerge, and that the nature and elements of existing risks
will change, over time. It is not possible for management to predict all such
risk factors or changes therein, or to assess either the impact of all such risk
factors on our business or the extent to which any individual risk factor,
combination of factors, or new or altered factors, may cause results to differ
materially from those contained in any forward looking
statement.





Although
we believe that the expectations reflected in the forward looking statements are
reasonable, we cannot guarantee future results, growth rates, and levels of
activity, performance or achievements. Given the uncertainties that surround
such statements, you are cautioned not to place undue reliance on such forward
looking statements. Except as expressly required by the federal securities laws,
there is no undertaking to publicly update or revise any forward looking
statements, whether as a result of new information, future events, changed
circumstances or any other reason.


3


PART
I – FINANCIAL INFORMATION





Item1.     Financial
Statements




CHINA
SWINE GENETICS, INC.


CONDENSED
CONSOLIDATED BALANCE SHEETS


AS
OF MARCH 31, 2010


(UNAUDITED)


(Stated
in US Dollars)





March
      31, 2010
            
            
            June
      30, 2009Assets
            
            (Unaudited)
            
            
            (Audited)Current
      Assets:Cash
      and equivalents
            
            $
            3,295,658
            
            
            $
            82,854Accounts
      receivable
            
            
            -
            
            
            
            634,550Inventories
            
            
            1,711,719
            
            
            
            998,600Advanced
      to suppliers, net
            
            
            29,501,228
            
            
            
            20,654,804Prepayments
      and other current assets
            
            
            151,536
            
            
            
            146,789Total
      Current Assets
            
            
            34,660,141
            
            
            
            22,517,597Property,
      Plant, Equipment and Breeding Stock, net
            
            
            2,017,411
            
            
            
            2,486,610Total
      Long-Term Assets
            
            
            2,017,411
            
            
            
            2,486,610Total
      Assets
            
            
            36,677,552
            
            
            
            25,004,207Liabilities and
      EquityCurrent
      Liabilities:Accounts
      payable and accrued expenses
            
            
            565,269
            
            
            
            447,565Customer
      deposits
            
            
            -
            
            
            
            4,270Loans
      payable, net
            
            
            1,057,207
            
            
            
            1,068,909Convertible
      note, net
            
            
            552,605
            
            
            
            -Loans
      from shareholders/officers, net
            
            
            -
            
            
            
            11,024,211Deferred
      interest income
            
            
            41,552
            
            
            
            29,077Other
      current liabilities
            
            
            23,952
            
            
            
            64,593Total
      Current Liabilities
            
            
            2,240,585
            
            
            
            12,638,625Total
      Liabilities Equity
            
            
            2,240,585
            
            
            
            12,638,625China
      Swine Genetics Inc. Shareholders’ Equity:Preferred
      Stock, $0.001 par value, 9,995,200 shares authorized,zero
      shares issued and outstanding, respectively *
            
            
            -
            
            
            
            -Series
      A Convertible Preferred Stock ,$0.001 par value, 4,800 shares
      authorized,zero
      and 4,646.05933  shares issued and outstanding, respectively
      *
            
            
            -
            
            
            
            5Common
      stock, $0.001 par value, 300,000,000  shares
      authorized,20,091,112
      and 68,584 shares issued and outstanding, respectively *
            
            
            20,091
            
            
            
            69Additional
      paid-in capital *
            
            
            15,215,399
            
            
            
            4,043,180Additional
      paid-in capital-stock warrant
            
            
            1,794,281
            
            
            
            -Reserve
      funds
            
            
            3,405,859
            
            
            
            1,874,970Retained
      earnings
            
            
            12,974,020
            
            
            
            5,295,496Accumulated
      other comprehensive income
            
            
            741,039
            
            
            
            720,415Unearned
      compensation
            
            
            (13,680
            )
            
            
            -Total
      China Swine Genetics Inc. Shareholders’ Equity
            
            
            34,137,009
            
            
            
            11,934,135Noncontrolling
      Interest
            
            
            299,958
            
            
            
            431,447Total
      Equity
            
            
            34,436,967
            
            
            
            12,365,582Total
      Liabilities and Equity
            
            $
            36,677,552
            
            
            $
            25,004,207*
      As restated to show recapitalization and reverse split.





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




4


CHINA
SWINE GENETICS, INC.


CONDENSED
CONSOLIDATED STATEMENT OF INCOME


FOR
THE THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 2010 AND 2009


(UNAUDITED)


(Stated
in US Dollars)


For The Three Months Ended
                    March 31,
                  
                  
                  For The Nine Months Ended
                    March 31,2010
                  
                  
                  2009
                  
                  
                  2010
                  
                  
                  2009Unaudited
                  
                  
                  Unaudited
                  
                  
                  Unaudited
                  
                  
                  UnauditedRevenues
                  
                  $
                  14,921,687
                  
                  
                  $
                  7,740,915
                  
                  
                  $
                  59,814,100
                  
                  
                  $
                  34,139,865Cost
      of Goods Sold
                  
                  
                  12,243,434
                  
                  
                  
                  6,346,768
                  
                  
                  
                  47,081,844
                  
                  
                  
                  28,117,885Gross
      Profit
                  
                  
                  2,678,253
                  
                  
                  
                  1,394,147
                  
                  
                  
                  12,732,256
                  
                  
                  
                  6,021,980Operating
      ExpensesSelling
      expenses
                  
                  
                  523,272
                  
                  
                  
                  238,140
                  
                  
                  
                  1,880,582
                  
                  
                  
                  1,143,009Bad
      debt for advanced to suppliers
                  
                  
                  80,893
                  
                  
                  
                  8,011
                  
                  
                  
                  464,877
                  
                  
                  
                  14,724General
      and administrative expenses
                  
                  
                  441,349
                  
                  
                  
                  82,784
                  
                  
                  
                  740,927
                  
                  
                  
                  368,720Total
      Operating Expenses
                  
                  
                  1,045,514
                  
                  
                  
                  328,935
                  
                  
                  
                  3,086,386
                  
                  
                  
                  1,526,453Income
      From Operations
                  
                  
                  1,632,739
                  
                  
                  
                  1,065,212
                  
                  
                  
                  9,645,870
                  
                  
                  
                  4,495,527Other
      Income (Expenses or Losses )Interest  income
      (expenses), net
                  
                  
                  (203,317
                  )
                  
                  
                  1,053
                  
                  
                  
                  (201,497
                  )
                  
                  
                  (25,126
                  )Other  income
      (expenses), net
                  
                  
                  -
                  
                  
                  
                  1
                  
                  
                  
                  (6,451
                  )
                  
                  
                  9,091Losses
      on disposal of fixed assets
                  
                  
                  (9
                  )
                  
                  
                  (247,416
                  )
                  
                  
                  (107,789
                  )
                  
                  
                  (402,141
                  )Losses
      on disposal of inventories
                  
                  
                  (6,324
                  )
                  
                  
                  (74,787
                  )
                  
                  
                  (252,209
                  )
                  
                  
                  (216,239
                  )Total
      Other Expenses or Losses
                  
                  
                  (209,650
                  )
                  
                  
                  (321,149
                  )
                  
                  
                  (567,946
                  )
                  
                  
                  (634,415
                  )Income
      from Continuing Operations Before Income Taxes
                  
                  
                  1,423,089
                  
                  
                  
                  744,063
                  
                  
                  
                  9,077,924
                  
                  
                  
                  3,861,112Income
      Tax Provision
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Net
      Income Before Noncontrolling Interest
                  
                  
                  1,423,089
                  
                  
                  
                  744,063
                  
                  
                  
                  9,077,924
                  
                  
                  
                  3,861,112Less:
      Net loss attributable to the noncontrolling interest
                  
                  
                  (17,702
                  )
                  
                  
                  (145,314
                  )
                  
                  
                  (131,489
                  )
                  
                  
                  (253,831
                  )Net
      Income Attributable to China Swine Genetics Inc.
                  
                  $
                  1,440,791
                  
                  
                  $
                  889,377
                  
                  
                  $
                  9,209,413
                  
                  
                  $
                  4,114,943Earnings
      Per Share:-
      Basic
                  
                  $
                  0.07
                  
                  
                  $
                  12.97
                  
                  
                  $
                  0.87
                  
                  
                  $
                  60.00-
      Diluted
                  
                  $
                  0.08
                  
                  
                  $
                  0.04
                  
                  
                  $
                  0.86
                  
                  
                  $
                  0.21Weighted
      Common Shares Outstanding *-
      Basic
                  
                  
                  20,087,080
                  
                  
                  
                  68,584
                  
                  
                  
                  10,589,708
                  
                  
                  
                  68,584-
      Diluted
                  
                  
                  21,150,961
                  
                  
                  
                  20,027,167
                  
                  
                  
                  10,944,335
                  
                  
                  
                  20,027,167
  *
      As restated to show recapitalization and reverse
  split.






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


5


CHINA
SWINE GENETICS, INC.


CONDENSED CONSOLIDATED
STATEMENTS OF CASH
FLOWS


FOR
THE NINE MONTHS ENDED MARCH 31, 2010


(UNAUDITED)


(Stated
in US Dollars)





For
      The Nine Months Ended March 31,2010
              
              
              2009Cash
      Flows From Operating Activities:
              
              Unaudited
              
              
              UnauditedNet
      Income
              
              $
              9,209,413
              
              
              $
              4,114,943Adjustments
      to Reconcile Net Income to Net CashProvided
      by Operating Activities:Depreciation
      and amortization
              
              
              378,429
              
              
              
              653,668Bad
      debt expense
              
              
              464,877
              
              
              
              14,724Welfare
      fees adjustment
              
              
              -
              
              
              
              10,128Net
      income attributable to noncontrolling interest
              
              
              (131,489
              )
              
              (253,831)Losses
      on disposal of fixed assets
              
              
              107,789
              
              
              
              402,141Losses
      on disposal of inventories
              
              
              252,209
              
              
              
              216,239Consulting
      fees adjusted from deferred
              
              
              9,320
              
              
              
              -Interest
      expenses for discount on convertible note
              
              
              181,886
              
              
              
              -Changes
      in Operating Assets and Liabilities:Accounts
      receivable
              
              
              634,550
              
              
              
              (168,441
              )Inventories
              
              
              (968,925
              )
              
              
              (994,567
              )Advanced
      to suppliers
              
              
              (9,290,385
              )
              
              
              (2,947,663
              )Prepayments
      and other current assets
              
              
              (4,640
              )
              
              
              45,665Accounts
      payable and accrued expenses
              
              
              117,305
              
              
              
              228,990Customer
      deposits
              
              
              (4,270
              )
              
              
              -Deferred
      interest income
              
              
              37,843
              
              
              
              -Other
      current liabilities
              
              
              (40,659
              )
              
              
              19,781Net
      Cash Provided by Operating Activities
              
              
              953,253
              
              
              
              1,341,777Cash
      Flows From Investing Activities:Payment
      for purchase of equipments
              
              
              (34,574
              )
              
              
              (4,296
              )Payment
      for construction in progress
              
              
              -
              
              
              
              (3,573
              )Proceeds
      from sale of property and equipments
              
              
              23,908
              
              
              
              46,957Payment
      for loan to related parties
              
              
              -
              
              
              
              (14,406
              )Net
      Cash (Used in) Provided by Investing Activities
              
              
              (10,666
              )
              
              
              24,682Cash
      Flows From Financing Activities:Proceeds
      from loans payable
              
              
              -
              
              
              
              494,905Proceeds
      from Convertible Notes
              
              
              2,165,000
              
              
              
              -Proceeds
      from discount on loans payable
              
              
              (37,
      843
              )
              
              
              -Repayment
      of loans payable
              
              
              -
              
              
              
              (1,501,157
              )Payments
      for loans to shareholders/officers
              
              
              (8,136
              )
              
              
              (85,677
              )Proceeds
      the repayment of loans by shareholders/officers
              
              
              151,262
              
              
              
              84,571Net
      Cash Provided by (Used in) Financing Activities
              
              
              2,270,283
              
              
              
              (1,007,358
              )
  Net
      Increase in Cash and Equivalents
              
              
              3,212,870
              
              
              
              359,101Effect
      of Exchange Rate Changes on Cash
              
              
              (66
              )
              
              
              (15,781
              )Cash
      and Equivalents at Beginning of Period
              
              
              82,854
              
              
              
              140,270Cash
      and Equivalents at End of Period
              
              $
              3,295,658
              
              
              $
              483,590SUPPLEMENTAL
      DISCLOSURES OF CASH FLOW INFORMATIONInterest
      paid
              
              $
              -
              
              
              $
              32,807Income
      taxes paid
              
              $
              -
              
              
              $
              -SUPPLEMENTAL  SCHEDULE
      OF NON-CASH INVESTING AND FINANING ACTIVITIESInventories
      transferred out to be breeding stock in fixed assets
              
              $
              4,802
              
              
              $
              12,406Construction
      in progress transferred out to be fixed assets
              
              $
              -
              
              
              $
              128,763Majority
      shareholder waive his right to the Company’s debt
              
              $
              11,169,236
              
              
              $
              -Issued
      shares for consulting service
              
              $
              23,000
              
              
              $
              -






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


6


CHINA
SWINE GENETICS, INC.


FOR
THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)


(Stated in US Dollars)





1.
            Interim
      Financial Statements:





The
unaudited condensed consolidated financial statements of China Swine Genetics,
Inc. (f/k/a Apogee Robotics, Inc) (the “Company”) and subsidiaries have been
prepared in accordance with U.S. generally accepted accounting
principles  (“U.S. GAAP”) for interim financial information and
pursuant to the requirements for reporting on Form 10-Q. Accordingly, they do
not include all the information and footnotes required by accounting principles
generally accepted in the United States of America for annual financial
statements. However, the information included in these interim financial
statements reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for the fair
presentation of the consolidated financial position and the consolidated results
of operations. Results shown for interim periods are not necessarily indicative
of the results to be obtained for a full year. The consolidated balance sheet
information as of June 30, 2009 was derived from the audited consolidated
financial statements included in the Company’s Annual Report on Form 10-K for
the fiscal year ended June 30, 2009. These interim financial statements should
be read in conjunction with that report.





The
condensed consolidated financial statements include the accounts of the Company
and its subsidiaries. All material intercompany balances and transactions have
been eliminated.





2.
            Organization
      and Nature of Operations





China
Swine Genetics, Inc. was founded as a Colorado corporation on June 29, 1983 and
was reinstated by the state of Colorado on March 15, 2007. The Company’s Board
of Directors and shareholders approved a change of domicile from the state of
Colorado to the state of Delaware on December 6, 2007. In connection with the
Company’s change of domicile, the Company increased its authorized capital stock
to 310,000,000 of which 300,000,000 are common stock, par value $0.001 per share
(the “Common Stock”), and 10,000,000 are preferred stock, par value $0.001 per
share, with the preferred stock issuable in series with such powers,
designations, preferences and relative, participating, optional or other
specific rights, and qualifications, limitations or restrictions thereof, as the
Board may fix from time to time by resolution or resolutions. For at least ten
years prior to August 13, 2009, the Company had not engaged in any business
operations.





On August
13, 2009, the Company acquired all of the outstanding capital stock of Advanced
Swine Genetics, Inc., a Nevada corporation (“Advanced Swine”). In exchange for
all the outstanding shares of Advanced Swine, the Company issued 4,646.05933
shares of its Series A Convertible Preferred Stock to the shareholders of
Advanced Swine (the “Share Exchange”).  Each share of Series A
Preferred Stock is convertible into Four Thousand One Hundred Sixty-Six and 2⁄3
(4,166.66) shares of Common Stock.





As
permitted by Delaware General Corporation Law, in order to better represent the
Company’s business, the Company adopted a resolution to change its name from
“Apogee Robotics, Inc.” to “China Swine Genetics, Inc.” The Certificate of
Amendment to the Company’s Certificate of Incorporation was filed on
September 9, 2009, effective on September 30, 2009.





Concurrent
with the name change, a 1 for 24 reverse split of the Common Stock was effected
on September 30, 2009.  Shareholders with 1 or more but fewer than 100
shares after the reverse split were issued shares to increase their holdings to
100 shares.  All other fractional shares resulting from the reverse
split were repurchased by the Company for $5.28 per share.





Advanced
Swine was incorporated under the laws of Nevada on June 29, 2007. It is an
intermediate holding company without its own operations. On February 28, 2008,
Advanced Swine acquired 100% equity interests of Heilongjiang SenYu Animal
Husbandry Co., Ltd. (“SenYu”). SenYu was incorporated on September 3, 2004,
under the laws of the People’s Republic of China (“PRC”). On December 20, 2007,
Advanced Swine entered into a share transfer
agreement with SenYu through which Advance Swine acquired all the equity
interests of SenYu. The share transfer was approved on February 4, 2008 by the
Heilongjiang Provincial Government, and the updated business license of SenYu
with the new shareholder’s name was issued on February 28, 2008 by Jiamusi
Administration for Industry and Commerce. As a result, SenYu became a foreign
wholly owned enterprise on February 28, 2008.


7





SenYu was
originally founded with a registered capital of $1,208,211(equivalent to RMB10
million) on September 3, 2004 and increased its registered capital to $6,165,762
(equivalent to RMB50 million) and $9,933,896 (equivalent to RMB80 million) on
January 18 and August 29, 2006, respectively.





SenYu was
in the development stage and incurred minor selling expenses and significant
general and administrative expenses prior to September, 2005. In September 2005,
SenYu accepted its first sales order of merchandise hogs and genetic boars, and
started its business as a farmer enterprise for breeding, feeding, and marketing
the grandparent and parent generation boars, and merchandise hogs.





In December 2005, SenYu entered into a joint venture
agreement with Polar Genetics, Inc., a Canadian corporation (the “Polar
Genetics”). The registered capital of Sino-Canadian SenYu Polar Swine Genetics
Company Limited (“Sino-Canadian”)  is
$2,068,368 (equivalent to RMB16.7 million).  According to the joint
venture agreement, SenYu and the Polar Genetics are required to contribute
$1,238,543 (equivalent RMB10 million) and 600 primary genetic boars worth
$829,825 (equivalent RMB6.7 million), respectively, in order to own 60% and 40%
of the joint venture, respectively. This joint venture had been approved by the
Jiamusi Administration for Industry and Commerce on March 30, 2006, and the
actual capital $1,246,028 (equivalent RMB10 million) was contributed by SenYu on
May 22, 2006. Polar Genetics did not contribute 600 primary genetic boars worth
$891,788 (equivalent RMB6.7 million) until October 12, 2007. Since China
custom’s officers did not complete the full inspection, and release the primary
genetic boars to the Sino-Canadian until November 27, 2007. Accordingly, SenYu
fully owned this joint venture until November 27, 2007. This joint venture was
in development stage and did not commence principal operations until November,
27, 2007.





3.
            Basis
      of Presentation





a.
            Fiscal
      Year





The
Company’s fiscal year ends on June 30. The accompanying condensed consolidated
financial statements of operations and cash flows include activities for the
nine months ended March 31, 2010 and 2009, respectively.





b.
            Principle
      of Consolidation





The
accompanying unaudited condensed consolidated financial statements present the
financial position, results of operations and cash flows of the Company and all
entities in which the Company has a controlling voting interest. These
consolidated financial statements include the financial statements of China
Swine Genetics, Inc. and its subsidiaries, namely, SenYu and Sino-Canadian. All
significant intercompany transactions and balances are eliminated in
consolidation.





The
accompanying unaudited condensed consolidated financial statements are prepared
in accordance with U.S. GAAP. This basis of accounting differs from that used in
the statutory accounts of some of the Company’s subsidiaries, which were
prepared in accordance with the accounting principles and relevant financial
regulations applicable to enterprises with foreign investment in the PRC (the
“PRC GAAP”). Necessary adjustments were made to the subsidiaries’ statutory
accounts to conform to U.S. GAAP to be included in these consolidated financial
statements.





4.
            Summary
      of Significant Accounting Policies





a.
            Use
      of Estimates





The
preparation of unaudited condensed consolidated financial statements in
conformity with U.S. GAAP requires management to make estimates and assumptions
that affect the amount reported in the unaudited condensed consolidated
financial statements and the accompany notes. Significant estimates include the
estimated useful lives and fair values of the assets. Actual results could
differ from those estimates.


8




b.
            Foreign
      Currency Translation





The
accompanying unaudited condensed consolidated financial statements are presented
in U.S. dollars. The company’s functional currency is the Renminbi (“RMB”). In
general, for consolidation purposes, the Company translates its assets and
liabilities into U.S. dollars using the applicable exchange rates prevailing at
the balance sheet date, and the statement of income and cash flows are
translated at average exchange rates during the reporting period. As a
result, amounts related to assets and liabilities reported on the statement of
cash flows will not necessarily agree with changes in the corresponding balances
on the balance sheet. Equity accounts are translated at historical rates.
Adjustments resulting from the translation of the financial statements are
recorded as accumulated other comprehensive income.








The
following rates are used in translating the RMB to the U.S. dollar presentation
disclosed in these condensed consolidated financial statements for the nine
months ended March 31, 2010 and 2009, respectively.


For
      The Nine Months Ended March 31,2010
            
            
            2009Assets
      and liabilities
            the
      nine months ended rate of US
            
            $
            0.14650
            
            
            $
            0.14634
            
            /RMBRevenue
      and expenses
            average
      rate of US
            
            $
            0.14644
            
            
            $
            0.14624
            
            /RMB





c.
            Revenue
      Recognition





Revenues
from products sales are recorded when both title to the goods and risk of
ownership are transferred to the customer upon shipment, provided that no
significant obligations remain. Net sales reflect units shipped at selling
prices reduced by certain sales allowances.





d.
            Income
      Taxes





The
Company and its subsidiary in the U.S., Advanced Swine, are subjected to U.S.
federal income taxes, and State of Delaware and State of Nevada annual franchise
taxes, respectively. Its PRC subsidiaries were exempt from the income taxes per
PRC tax laws and regulations that exempt companies engaged in the agricultural
breeding of livestock. In addition, the Company’s PRC subsidiaries expect to use
their retained earnings to support their PRC operations, and will not declare
any dividends within the predictable future. In addition, there was no net
income generated by the Company and its U.S. subsidiary, Advanced Swine, during
the nine months ended March 31, 2010 and 2009. Therefore, for the nine months
ended March 31, 2010 and 2009, the Company was not subject to any income taxes
in PRC and U.S.





The
Company follows ASC 740 – “Accounting for Income Taxes”, which requires
recognition of deferred taxes, assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred tax assets and liabilities are based
on the differences between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.





The
Company adopted the provisions of FASB Interpretation No. 48, “Accounting
for Uncertainty in Income Taxes”, (“FIN 48”), codified in FASB ASC Topic 740, on
January 1, 2007. As a result of the implementation of FIN 48, the Company made a
comprehensive review of its portfolio of tax positions in accordance with
recognition standards established by FIN 48, and the Company recognized no
material adjustments to liabilities or stockholders’ equity. When tax returns
are filed, it is highly certain that some positions taken would be sustained
upon examination by the taxing authorities, while others are subject to
uncertainty about the merits of the position taken or the amount of the position
that would be ultimately sustained. The benefit of a tax position is recognized
in the financial statements in the period during which, based on all available
evidence, management believes it is more likely than not that the position will
be sustained upon examination, including the resolution of appeals or litigation
processes,
if any. Tax positions taken are not offset or aggregated with other positions.
Tax positions that meet the more-likely-than-not recognition threshold are
measured as the largest amount of tax benefit that is more than 50 percent
likely of being realized upon settlement with the applicable taxing authority.
The portion of the benefits associated with tax positions taken that exceeds the
amount measured as described above is reflected as a liability for unrecognized
tax benefits in the accompanying balance sheets along with any associated
interest and penalties that would be payable to the taxing authorities upon
examination.  Interest associated with unrecognized tax benefits is
classified as interest expense and penalties are classified in selling, general
and administrative expenses in the statements of income. The adoption of FIN 48
did not have a material impact on the Company’s financial
statements.   At March 31, 2010 and June 30, 2009, the Company
did not take any uncertain positions that would necessitate recording of tax
related liability.


9





e.
            Stock-Based
      Compensation





The
Company measures compensation expense for its non-employee stock-based
compensation under the FASB ASC 505-50, “Accounting for Equity Instruments that
are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services”. The fair value of the option issued is used to
measure the transaction, as this is more reliable than the fair value of the
services received. Fair value is measured as the value of the Common Stock on
the date that the commitment for performance by the counterparty has been
reached or the counterparty’s performance is complete. The fair value of
the equity instrument is charged directly to compensation expense and additional
paid-in capital.





f.
            Basic
      and diluted net income per share





The
Company accounts for net income per common share in accordance with the FASB
issued ASC 260, “Earnings per Share” (“EPS”).  ASC 260 requires the
disclosure of the potential dilution effect of exercising or converting
securities or other contracts involving the issuance of Common Stock. Basic net
income per share is determined based on the weighted average number of common
shares outstanding for the period.  Diluted net income per share is
determined based on the assumption that all dilutive convertible shares and
stock options were converted or exercised into Common Stock.





g.
            Cash
      and Cash Equivalents





The
Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. The carrying value of cash
equivalents approximates market value.





h.
            Accounts
      Receivable





Accounts
receivable are recognized and carried at original invoice amount less allowance
for any uncollectible amounts. The Company provides an allowance for doubtful
accounts equal to the estimated losses that will be incurred in the collection
of all receivables. The estimated losses are based on a review of the current
status of the existing receivables. Per historical records, the Company had no
uncollectible amount occurred. Therefore, the Company had not recorded the
allowance for doubtful accounts as of March 31, 2010 and 2009.





i.
            Inventories





Inventories
are stated at the lower of cost or market. Cost of raw materials is determined
on a first-in, first-out basis (“FIFO”). Finished goods are determined on a
weighted average basis and are comprised of direct materials, direct labor and
an appropriate proportion of overhead.





j.
            Bad
      Debt Allowance





In order
to acquire significant amounts of commercial hogs, the Company advanced
additional money to Heilongjiang WangDa Feedstuff Co., Ltd. (“WangDa”). Since
the advances to WangDa  were a significant part of total assets, the
Company’s subsidiary, SenYu, adopts a bad debt allowance at 0.5% of the amount
of money advanced to WangDa. Commencing April 2009, our allowance rate was
increased from 0.5% to 5%.


10


k.     Plant,
Property, Equipment and Breeding Stock





Depreciation
of property, plant, equipment, and breeding stock is computed using the
straight-line method over the estimated useful lives of assets as
follows:





YearsLand
      improvements
            10
      yearsLeasehold
      improvements
            Lower
      of term of lease or 5 yearsBuildings
            10
      yearsMachinery
      and equipment
            2
      years to 10 yearsBreeding
      stock
            3
      years to 5 years






Repairs
and maintenance expenditures which do not extend the useful lives of the related
assets are expensed as incurred, whereas significant renewals and betterments
are capitalized. The cost and related accumulated depreciation of assets sold or
otherwise retired are eliminated from the accounts and any gain or loss is
included in our statements of operations.





l.
            Cost
      of Sales





Cost of
sales consists primarily of purchase cost of fodder, direct labor, depreciation
and manufacturing overheads, which are directly attributable to the production
of processed breeding hogs.





m.
            Selling,
      General and administrative Costs





Selling
costs consist primarily of salaries, freight costs, advertising fee, which
incurred in the course of the sale of goods. General and administrative costs
consist of salaries, entertainment expenses, professional expenses and other
expenses, which resulted from organization and management for the operating
activities.





n.
            Fair
      value of financial instruments





The
carrying amounts of cash and equivalents, accounts receivable, advance to
suppliers, prepayments and other current assets, accounts payable and accrued
expenses, customer deposits, and other current liabilities approximate their
fair value because of the immediate or short-term maturity of these financial
instruments.





ASC Topic
820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair
value of financial instruments held by the Company. ASC Topic 825, “Financial
Instruments,” defines fair value, and establishes a three-level valuation
hierarchy for disclosures of fair value measurement that enhances disclosure
requirements for fair value measures.  The carrying amounts reported in the
consolidated balance sheets for receivables and current liabilities qualify as
financial instruments and are a reasonable estimate of their fair values because
of the short period of time between the origination of such instruments and
their expected realization and their current market rate of interest. The three
levels of valuation hierarchy are defined as follows:





●
            Level
      1 inputs to the valuation methodology are quoted prices (unadjusted) for
      identical assets or liabilities in active markets.●
            Level
      2 inputs to the valuation methodology include quoted prices for similar
      assets and liabilities in active markets, and inputs that are observable
      for the asset or liability, either directly or indirectly, for
      substantially the full term of the financial
instrument.●
            Level
      3 inputs to the valuation methodology are unobservable and significant to
      the fair value measurement.





The
Company analyzes all financial instruments with features of both liabilities and
equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC
815.





As of
March 31, 2010, the Company did not identify any assets and liabilities that are
required to be presented on the balance sheet at fair value.


11


o.     Recent
Accounting Pronouncements





On
February 25, 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-09
Subsequent Events Topic 855, “Amendments to Certain Recognition and Disclosure
Requirements,” effective immediately. The amendments in the ASU remove the
requirement for an SEC filer to disclose a date through which subsequent events
have been evaluated in both issued and revised financial statements. Revised
financial statements include financial statements revised as a result of either
correction of an error or retrospective application of US GAAP. The FASB
believes these amendments remove potential conflicts with the SEC’s literature.
Subsequent events have been evaluated through the date the financial statements
were issued.





In
January 2010, FASB amended ASC 820, "Disclosures about Fair Value Measurements."
The new disclosures and clarifications of existing disclosures are effective for
interim and annual reporting periods beginning after December 15, 2009, except
for the disclosures about purchases, sales, issuances, and settlements in the
roll forward of activity in Level 3 fair value measurements. Those disclosures
are effective for fiscal years beginning after December 15, 2010, and for
interim periods within those fiscal years. The Company has determined the
adoption of this disclosure does not have a material impact on its financial
statements.





In
December 2009, FASB issued an Accounting Standards Update (“ASU”) No. 2009-16,
“Accounting for Transfers of Financial Assets”. This Accounting Standards Update
amends the FASB Accounting Standards Codification for the issuance of FASB
Statement No. 166, Accounting for Transfers of Financial Assets—an amendment of
FASB Statement No. 140. The amendments in this Accounting Standards Update
improve financial reporting by eliminating the exceptions for qualifying
special-purpose entities from the consolidation guidance and the exception that
permitted sale accounting for certain mortgage securitizations when a transferor
has not surrendered control over the transferred financial assets. In addition,
the amendments require enhanced disclosures about the risks that a transferor
continues to be exposed to because of its continuing involvement in transferred
financial assets. Comparability and consistency in accounting for transferred
financial assets will also be improved through clarifications of the
requirements for isolation and limitations on portions of financial assets that
are eligible for sale accounting. The Company does not expect the adoption of
this ASU to have a material impact on its financial statements.





In
October 2009, the FASB issued ASU regarding accounting for own-share lending
arrangements in contemplation of convertible debt issuance or other
financing.  This ASU requires that at the date of issuance of the
shares in a share-lending arrangement entered into in contemplation of a
convertible debt offering or other financing, the shares issued shall be
measured at fair value and be recognized as an issuance cost, with an offset to
additional paid-in capital. Further, loaned shares are excluded from basic and
diluted earnings per share unless default of the share-lending arrangement
occurs, at which time the loaned shares would be included in the basic and
diluted earnings-per-share calculation.  This ASU is effective for
fiscal years beginning on or after December 15, 2009, and interim periods within
those fiscal years for arrangements outstanding as of the beginning
of those fiscal years. The
Company does not expect this ASU to have a material impact on its financial
statements.





In August
2009, the FASB issued ASU regarding measuring liabilities at fair value. This
ASU provides additional guidance clarifying the measurement of liabilities at
fair value in circumstances in which a quoted price in an active market for the
identical liability is not available; under those circumstances, a reporting
entity is required to measure fair value using one or more of valuation
techniques, as defined. This ASU is effective for the first reporting period,
including interim periods, beginning after the issuance of this ASU. The
adoption of this ASU did not have a material impact on the Company’s
consolidated financial statements.




5.
            Inventories





Inventories
on March 31, 2010 and June 30, 2009 consisted of the following:





March
      31, 2010
            
            
            June
      30, 2009(Unaudited)
            
            
            (Audited)Raw
      materials
            
            $
            48,820
            
            
            $
            57,106Work
      in progress
            
            
            697,371
            
            
            
            615,487Finished
      goods
            
            
            965,528
            
            
            
            326,007Total
            
            $
            1,711,719
            
            
            $
            998,600




12





Inventory
turnover for the nine months ended March 31, 2010 and 2009 consisted of the
following:





For
      The Nine Months Ended March 31,2010
            
            
            2009Inventory
      turnover
            
            
            34.74
            
            
            
            19.54





Since
there was significantly increased cost of goods sold resulted from the fact that
we continued to successfully expand our sales quantities of merchandise hogs for
the nine months ended March 31, 2010 as compared to the same period in 2009,
whereas,   the average inventories were decreased in the nine
months ended March 31, 2010 as compared to the same period in 2009. As a result,
the inventories turnover figure for the nine months ended March 31, 2010 was
more than the amount in the same period in 2009.





6.
            Advanced
      to Suppliers, Net





In order
to raise good quality commercial hogs, and control the quality of feeding
materials and procedures, SenYu has a cooperation agreement with WangDa, a
professional feeding materials provider and a collector for good quality
commercial hogs, on October 11, 2007. Pursuant to the terms of the agreement,
SenYu agreed to loan money to WangDa to support WangDa’s farmers’ use of good
quality feedstuffs to raise their commercial hogs, and then sell those hogs to
SenYu once they mature. WangDa can offset the loan amount from SenYu once it
delivers the farmers’ commercial hogs to SenYu. In order to extend farmer-base
production model and acquire significant amounts of hogs in the near future from
WangDa, SenYu loaned an aggregate amount of $31,050,190 (equivalent to RMB
211,944,870) to WangDa as of March 31, 2010. SenYu adopted a bad debt allowance
at 5% of the principal amount advanced for the nine months ended March 31, 2010
and for the fiscal year ended June 30, 2009. Accordingly, the bad debt
allowances were $1,552,509 (equivalent to RMB 10,597,244) and $1,086,681
(equivalent to RMB7, 422,782) as of March 31, 2010 and June 30, 2009,
respectively. Including the amount of advances to suppliers by the joint
venture, Sino-Canadian, the Company had a total net amount advanced to suppliers
as of March 31, 2010 and June 30, 2009 as follows:





March
      31, 2010
            
            
            June
      30, 2009(Unaudited)
            
            
            (Audited)Advanced
      to suppliers
            
            $
            31,053,737
            
            
            $
            21,741,485Less:
      Accumulated bad debt allowance
            
            
            1,552,509
            
            
            
            1,086,681Advanced
      to suppliers, net
            
            $
            29,501,228
            
            
            $
            20,654,804




SenYu
entered into a supplementary agreement with WangDa on December 12, 2008 to
secure SenYu’s loan to WangDa. Pursuant to the supplementary agreement, once
WangDa has breached the terms of the cooperation agreement, SenYu can exercise
the following rights to secure its loans to WangDa: (1) step into WangDa’s shoes
without any condition, and have all creditor’s rights of WangDa with its
contracted farmers, (2) if such rights still do not satisfy the loss of SenYu,
then SenYu will have a secured interest in all of WangDa’s assets, which include
but not limited to the building, equipment, and working capital of
WangDa.





SenYu
renewed the cooperation agreement with WangDa effective January 1, 2009. SenYu
still finances WangDa, with fixed profit margins set by SenYu, and WangDa in
turn finances the farmers by providing fodder on credit at discount rates
obtained through volume purchasing. WangDa also guarantees the repurchase of
mature hogs that meet SenYu’s quality standards. In case WangDa breaches the
terms of the cooperation agreement, SenYu can still exercise the above rights to
secure its loans to WangDa.


13





Advances
to suppliers aging as of March 31, 2010 and June 30, 2009 consisted of the
following:





March
      31, 2010
            
            
            June
      30, 2009(Unaudited)
            
            
            (Audited)Less
      than 90 days
            
            $
            13,629,086
            
            
            $
            7,04291days-180days
            
            
            17,421,474
            
            
            
            21,734,443181days-365days
            
            
            3,177
            
            
            
            -Total
            
            $
            31,053,737
            
            
            $
            21,741,485




The
Company’s advances to suppliers with ages of less than 91 days represented
approximately 43.89% and 0.03% of the total advanced to suppliers as of March
31, 2010 and June 30, 2009, respectively.





Advances
to WangDa’ turnover for the nine months ended March 31, 2010 and 2009 consisted
of the following:





For
      The Nine Months Ended March 31,2010
            
            
            2009Advanced
      to WangDa’ turnover
            
            
            1.79
            
            
            
            1.56





There was
significantly increased purchases of commercial hogs from WangDa resulting from
the Company’s increase in sales of commercial hogs for the nine months ended
March 31, 2010 as compared to the same period in 2009, and the amount of
increased purchases were significantly greater than the amount of increased
average advances to WangDa in the nine months ended March 31, 2010 as compared
to the same period in 2009. As a result, the turnover rate of advances to WangDa
for the nine months ended March 31, 2010 was more than the amount in the same
period in 2009.





7.
            Prepayments
      and Other Current Assets





As of
March 31, 2010 and June 30, 2009, prepayments and other current assets consisted
of the following:





March
      31, 2010
            
            
            June
      30, 2009(Unaudited)
            
            
            (Audited)Prepaid
      rents
            
            $
            45,181
            
            
            $
            46,263Advance
      to employees
            
            
            9,904
            
            
            
            39,313Other
      receivable
            
            
            96,451
            
            
            
            61,213Total
            
            $
            151,536
            
            
            $
            146,789




8.
            Property,
      Plant, Equipment, and Breeding Stock,
Net





Property,
Plant, Equipment, and Breeding Stock, less accumulated depreciation, consisted
of the following:





March
      31, 2010
            
            
            June
      30, 2009(Unaudited)
            
            
            (Audited)Land
      improvements
            
            $
            278,369
            
            
            $
            278,173Leasehold
      improvements
            
            
            100,153
            
            
            
            65,533Buildings
      and improvements
            
            
            1,764,393
            
            
            
            1,763,151Machinery
      and equipments
            
            
            687,550
            
            
            
            687,065Breeding
      stock
            
            
            491,196
            
            
            
            866,821Sub-Total
            
            
            3,321,661
            
            
            
            3,660,743Less:
      Accumulated depreciation
            
            
            1,304,250
            
            
            
            1,174,133Total
            
            $
            2,017,411
            
            
            $
            2,486,610




Depreciation
expenses for the nine months ended March 31, 2010 and 2009 were $378,429 and
$653, 668 respectively. Loss on disposal of fixed assets for the nine months
ended March 31, 2010 and 2009 was $107,789 and $402, 141
respectively.




14





9.
            Loans
      Payable, Net





Loans
payable as of March 31, 2010 and June 30, 2009 consisted of the
following:





Loans
      payable, netMarch
      31, 2010
              
              
              June
      30, 2009(Unaudited)
              
              
              (Audited)On
      December 1 and 16, 2005, the Company obtained loans in an aggregate amount
      of RMB2.8 million (equivalent to $410,203 and $409,915 as of March 31,
      2010 and June 30, 2009, respectively) and RMB0.7 million (equivalent to
      $102,550 and $102,479 as of March 31, 2010 and June 30, 2009,
      respectively) from Jiamusi Government Financial Bureau (“JGFB”) by pledging some
      buildings in Huanan, which have a carrying value of approximately RMB2.6
      million (equivalent to $380,840 ). The term of the debt was originally
      from October 31, 2005 to 2007. Since the Company is an agricultural
      enterprise and its business is supported by the Chinese government, these
      loans do not bear interest, and the original due date was extended to
      December 31, 2008, and has since been extended to December 31,
      2010
              
              $
              512,753
              
              
              $
              512,394On
      April 20 and September 25, 2007, Sino-Canadian, obtained loans in an
      aggregate amount of RMB1.5 million (equivalent to $219,751 and $219,597 as
      of March 31, 2010 and June 30, 2009, respectively) and RMB0.5 million
      (equivalent to $73,252 and $73,199 as of March 31, 2010 and June 30, 2009,
      respectively) from TangYuan Government Financial Bureau (“TGFB”) by
      pledging some buildings in Heijinhe, which have a carrying value of
      approximately RMB5.1 million (equivalent to $747,032 ). The term of the
      debt was originally from January 1, 2007 to December 31, 2008. Since the
      Chinese government supports the Company’s business, these loans do not
      bear interest and all of their due dates have been extended to December
      31, 2010
              
              
              293,003
              
              
              
              292,796On
      May 9, 2007, the Company obtained a loan in an aggregate amount of RMB2
      million (equivalent to $292,954 and $293,003 as of March 31, 2010 and June
      30, 2009, respectively) from JGFB by pledging some buildings in Huanan,
      which have a carrying value of approximately RMB1.5 million (equivalent to
      $219,715). The term of the debt was originally from January 1, 2007 to
      December 31, 2008. Since the government supports the Company’s business,
      this loan does not bear interest and the due date had been extended to
      December 31, 2009 by JGFB on June 16, 2008.  Whereas, on
      December 16, 2009, the due dates of these loans have been extended to
      December 31, 2010
              
              
              293,003
              
              
              
              292,796Total
      loans payable
              
              $
              1,098,759
              
              
              $
              1,097,986Less:
      discount on loans payable
              
              
              41,552
              
              
              
              29,077Total
      loans payable, net
              
              $
              1,057,207
              
              
              $
              1,068,909
 15


10.
            Convertible
      Note, Net





On
February 22, 2010 the Company consummated an offering of 10% Secured Convertible
Notes (the “Notes”) in
the principal amount of $2,165,000. The Notes were sold at par to twelve
investors. The maturity date of the Notes is February 22, 2011. Interest on the
Notes at 10% per annum is payable quarterly. Payment of interest and principal
is secured by a pledge of the Company’s shares owned by Ligang Shang, the
majority shareholder of the Company. In the event that the Company completes an
equity financing of $5 million or more (a “Qualified Financing”), the
Notes will automatically convert into securities of like kind to the securities
sold in the Qualified Financing at a 50% discount to the purchase price of the
securities in the Qualified Financing.  If the Company does not
complete such a Qualified Financing prior to the maturity date of the Notes, the
Company will be required to issue to the Note-holders warrants to purchase
shares of the Common Stock at $1.50 per share, up to the principal amount of the
Notes .Upon conversion of the Notes into Common Stock, the Company shall issue
to Primary Capital, LLC warrants to purchase 8% of the securities issuable to
the investors upon conversion.





The
Company assumes it will not complete a Qualified Financing prior to the maturity
date of the Notes listed above, and records the difference between the market
price of Common Stock on February 22, 2010 and the warrant conversion price of
$1.50 per share as a “discount on convertible note”, and the sum is carried on
the balance sheet as an “additional paid-in capital-stock warrant” in the amount
of $1,794,281 as of March 31, 2010.





If the
investors exercise the warrants in the future, the Company will debit the total
proceeds received as “Additional Paid-in Capital – Stock Warrant”, and credit
the “Common Stock” and “Additional Paid-in Capital in Excess of Par”. However,
if the investors fail to exercise the warrants in the future, the Company will
write them off by debit “Additional Paid-in Capital –Stock Warrant” for
$1,794,281, and credits “Additional Paid-In Capital from Expired Warrants” for a
like amount.





Net of
convertible notes as of March 31, 2010 and June 30, 2009 consisted of the
following:





March
      31, 2010
            
            
            June
      30, 2009(Unaudited)
            
            
            (Audited)Convertible
      note
            
            $
            2,165,000
            
            
            $
            -Less:
      Discount on convertible note
            
            
            1,612,395
            
            
            
            -Convertible
      note, net
            
            $
            552,605
            
            
            $
            -




11.
            Loans
      from Shareholders/Officers, Net





Loans
from shareholders/officers are unsecured, non-interest bearing, and have not set
repayment date. At the quarter ended September 30, 2009, in order to increase
the working capital of the Company, the majority shareholder, Mr. Ligang Shang,
waived his right to collect the Company’s debt to him in an aggregate amount of
$11,169,236.  That sum was added to paid-in capital as of September
30, 2009. In addition, there were no loans from shareholders/officers during the
period from October 1, 2009 to March 31, 2010. As a result, the total net amount
of loans from the shareholders/officers was zero as of March 31,
2010.


16




12.
              Commitments




The
Company enters into forward commercial hog sales contracts with its major
customers to decrease its market risk in the ordinary course of business. The
Company utilizes forward contracts to establish adequate sales to minimize the
risk of market fluctuations. The Company continually monitors its overall market
position and fair value. The contracts information listed as
follows:





Contract
      #
            
            Sales
      Contracts
            
            Client’s
      Name
            
            Contract
      Term
            
            Sales
      Quantities1
            
            Merchandise
      hogs sales
            
            Beijing
      Da Hongmen
            
            from
      September 28, 2009 to
              September
      28, 2010
            
            120
      thousand hogs
              per
      year2
            
            Merchandise
      hogs sales
            
            Beijing
      Fifth Meat Processing Factory
            
            from
      August 29, 2009 to
              August
      28, 2010
            
            180
      thousand hogs
              per
      yearSales
      Price
            
            Hog
      Average Weight
            
            Hogs
      Quality
            
            Penalty1
            
            Market
      value in Beijing area
            
            From
      75 to 90kg
            
            second
      or/and third generation
              of
      merchandise hogs
            
            1%
      penalty if the merchandise hogs
      delivered late2
            
            Market
      value in Beijing area
            
            From
      75 to 90kg
            
            second
      or/and third generation
              of
      merchandise hogs
            
            1%
      penalty if the merchandise hogs
      delivered late




The
Company leases office space, employee living space, and certain pigsties under
non-cancelable operating leases. The rental expenses under operating leases were
$140,791 and $140,047 in the nine months ended March 31, 2010 and 2009,
respectively. Future minimum rental commitments on March 31, 2010, are as
follows:





For
      The Nine Months Ending March 31,
            
            Amount2011
            
            $
            142,2582012
            
            
            6,0642013
            
            
            1,4642014
            
            
            1,4642015
            
            
            1,464Thereafter
            
            
            28,434Total
      minimum payments required
            
            $
            181,148





13.
            Stockholders’
      Equity





a.     Series
A Convertible Preferred Stock





In
exchange for the outstanding shares of Advanced Swine, the Company issued
4,646.05933 shares of its Series A Convertible Preferred Stock to the
shareholders of Advanced Swine.  Each share of Series A Preferred
Stock is convertible into Four Thousand One Hundred Sixty-Six and 2⁄3 (4,166.66)
shares of Common Stock. There were 4,800 shares of Series A Preferred Shares
authorized, with par value $0.001 per share, as of June 30, 2009.





There
were 4,646.05933 outstanding shares of Series A Convertible Preferred Stock that
were convertible into 19,958,583 shares of Common Stock following the effect of
the reverse stock split.  The Series A Preferred Shares have voting
rights equal to the number of common shares into which they are
convertible.





If
a dividend is declared, the holders of Series A Convertible Preferred Stock will
be entitled to participate in the dividend as if such shares had been converted
to Common Stock.  In the event of liquidation, the holder of each
share of Series A Convertible Preferred Stock will receive $.01 per share, then
participate in the liquidation as if the Series A Convertible Preferred Stock
had been converted to Common Stock.  The holder of Series A
Convertible Preferred
Stock has voting rights equal to the number of common shares into which the
Series A shares are convertible.  The Company may redeem the Series A
Convertible Preferred Stock for a price of $.01 per share at any time when there
is sufficient authorized Common Stock for conversion of the Series A Convertible
Preferred Stock.


17





b.     Preferred
Stock





The Board
of Directors of the Company is authorized to designate the preferred stock
in classes, and to determine the rights, privileges and limitations of the
shares in each class. There were 9,995,200 share of Preferred Stock authorized,
par value $0.001 per share, and zero share of Preferred Stock outstanding and
issued as of March 31, 2010 and June 30, 2009, respectively.





c.
            Common
      Stock





After the
change of domicile from Colorado to Delaware on December 6, 2007, the Company
had 300,000,000 authorized shares Common Stock, par value $0.001 per share. On
November 9, 2009, 4,646.05933 outstanding shares of Series A Convertible
Preferred Stock were converted into 19,958,583 shares of Common Stock. On
January 29, 2010, the board of directors of the Company authorized, and on
February 2, 2010, the Company issued 5,000 shares of Common Stock to its
consultant for services rendered for the term from January 29, 2010 to June 30,
2010. As a result, the Company had 20,091,112 and 68,584 shares of Common Stock
outstanding and issued as of March 31, 2010 and June 30, 2009,
respectively.





Holders
of the Common Stock are entitled to one vote for each share held on all matters
to be voted on by the stockholders.  There is no cumulative voting in
the election of directors.  Holders of Common Stock are entitled to
receive such dividends as may be declared from time to time by the Board of
Directors with respect to the Common Stock out of funds legally available
therefor and, in the event of liquidation, dissolution or winding up of the
Company, to share proportionally in all assets remaining after payment of
liabilities.  The holders of Common Stock have no pre-emptive or
conversion rights and are not subject to further calls or
assessments.  There are no redemption or sinking fund provisions
applicable to the Common Stock.





d.
            Reverse
      Stock Split





Effective
on September 30, 2009, the Company implemented a reverse split of its Common
Stock. No fractional shares or scrip were issued; rather, in the case of each
shareholder who held less than one whole share or held 100 or more shares after
the Reverse Split, the Company purchased all fractional shares resulting from
the Reverse Split for $5.28 per share.  In the case of each
shareholder who would otherwise hold at least one but fewer than 100 shares as a
result of the Reverse Split, the Company issued a number of shares equal to the
difference between the shares held by the shareholder and 100, so that each such
shareholder owns 100 whole shares.





All
presentations regarding outstanding Common Stock in these financial statements
have been adjusted to reflect the Reverse Stock Split as if it had occurred on
July 1, 2007.





e.
            Additional
      Paid-In Capital





The
additional paid-in capital represents the excess of the aggregate fair value of
the capital contributed over the par value of the stock issued. There was
$15,215,399 and $4,043,180 recorded as additional paid-in capital as of the
quarter ended March 31, 2010 and the year ended June 30, 2009,
respectively.





f.
            Additional
      Paid-in Capital Stock Warrant





On February 22, 2010 the Company consummated an offering of
10% Secured Convertible Notes (the “Notes”) in the principal
amount of $2,165,000. The Notes were sold at par to twelve investors. The
maturity date of the Notes is February 22, 2011. Interest on the Notes at 10%
per annum is payable quarterly. Payment of interest and principal is secured by
a pledge of the Company’s shares owned by Ligang Shang, the majority shareholder
of the Company. In the event that the Company completes an equity financing of
$5 million or more (a “Qualified Financing”), the
Notes will automatically convert into securities of like kind to the securities
sold in the Qualified Financing at a 50% discount to the purchase price of the
securities in the Qualified Financing.  If the Company does not
complete such a Qualified
Financing prior to the maturity date of the Notes, the Company will be required
to issue to the Note-holders warrants to purchase shares of the Common Stock at
$1.50 per share, up to the principal amount of the Notes .Upon conversion of the
Notes into Common Stock, the Company shall issue to Primary Capital, LLC
warrants to purchase 8% of the securities issueable to the investors upon
conversion.


18





The
Company assumes it will not complete a Qualified Financing prior to the maturity
date of the Notes listed above, and records the difference between the market
price of Common Stock on February 22, 2010 and the warrant conversion price of
$1.50 per share as a “discount on convertible note”, and the sum is carried on
the balance sheet as an “additional paid-in capital-stock warrant” in the amount
of $1,794,281 as of March 31, 2010.





g.
            Shares
      Base Compensation and Unearned
Compensation




On
January 29, 2010, the board of directors of the Company authorized, and on
February 2, 2010 the Company issued, 5,000 shares of Common Stock to its
consultant for services rendered for the term from January 29, 2010 to June 30,
2010. The Company debited unearned compensation on the grant date, January 29,
2010, and will recognize total compensation expenses over the period ended June
30, 2010. Unearned compensation represents the cost of services yet to be
performed, and the Company reports unearned compensation in shareholders’ equity
in the balance sheets, as a contra-equity account.





14.
            Basic
      and Diluted Earnings Per Share





The
following table sets forth the computation of basic and diluted net income per
share:




For
      The Three Months Ended
              March
      31,
            
            
            For
      The Nine Months Ended
              March
      31,2010
            
            
            2009
            
            
            2010
            
            
            2009Unaudited
            
            
            Unaudited
            
            
            Unaudited
            
            
            UnauditedBasic:Numerator:Net income for basic calculation
            
            $
            1,440,791
            
            
            $
            889,377
            
            
            $
            9,209,413
            
            
            $
            4,114,943Denominator:Weighted average common   shares
            
            
            20,087,080
            
            
            
            68,584
            
            
            
            10,589,708
            
            
            
            68,584Net
      income per share — basic
            
            $
            0.07
            
            
            $
            12.97
            
            
            $
            0.87
            
            
            $
            60.00Diluted:Numerator:Net
      income for basic calculation
            
            $
            1,440,791
            
            
            $
            889,377
            
            
            $
            9,209,413
            
            
            $
            4,114,943Effect
      of dilutive securities issued
            
            
            204,739
            
            
            
            -
            
            
            
            204,739
            
            
            
            -Net income for diluted calculation
            
            $
            1,645,530
            
            
            $
            889,377
            
            
            $
            9,414,152
            
            
            $
            4,114,943Denominator:Denominator
      for basic calculation
            
            
            20,087,080
            
            
            
            68,584
            
            
            
            10,589,708
            
            
            
            68,584Weighted
      average effect of  dilutive securities:Convertible
      debt
            
            
            1,063,881
            
            
            
            -
            
            
            
            354,627
            
            
            
            -Series
      A convertible preferred  stock
            
            
            -
            
            
            
            19,958,583
            
            
            
            -
            
            
            
            19,958,583Denominator
      for diluted calculation
            
            
            21,150,961
            
            
            
            20,027,167
            
            
            
            10,944,335
            
            
            
            20,027,167Net income per share — diluted
            
            $
            0.08
            
            
            $
            0.04
            
            
            $
            0.86
            
            
            $
            0.21


19




15.
              Concentration
      of Business
 
 a.     Financial
Risks


The
Company provides credit in the ordinary course of business. The Company performs
ongoing credit evaluations of its customers and maintains allowances for
doubtful accounts based on factors surrounding the credit risk of specific
customers, historical trends, and other information. The Company advances
significant funds to its major supplier, WangDa. The Company also performs
ongoing credit evaluations of its advances and maintains allowances for doubtful
amounts based on factors surrounding the credit risk of its
suppliers.





b.     Major
Customers





The
following summarizes sales to major customers (each represented 10% or more of
the Company’s total sales revenues):




Sold
      to
            
            Number
      of
            
            Percentage
      ofFor
      The Nine Months Ended March 31,
            
            Major
      Customers
            
            Customers
            
            Total
      Sales Revenue2010
            
            $     59,020,984
            
            2
            
            98.67
      %2009
            
            $     32,583,314
            
            2
            
            95.44%





c.
            Major
      Suppliers





The
following summarizes purchases from major suppliers (each representing10% or
more of purchased):





Purchased
      from
            
            Number
      of
            
            Percentage
      ofFor
      The Nine Months Ended March 31,
            
            Major
      Suppliers
            
            Suppliers
            
            Total
      Purchased2010
            
            $     47,410,096
            
            1
            
            99.88%2009
            
            $     28,040,578
            
            1
            
            99.66%




16.
            Geographical
      Risks





Substantially
all of the Company’s operations are carried out in the PRC. Accordingly, the
Company’s business is subject to considerations and risks different from those
in the United States, including changes in the political, economic, social,
legal, and tax environments in PRC, as well as changes in inflation and interest
rates. Changes in laws and regulations concerning PRC’s purchases and sales of
hogs and genetic boars, and feedstuffs business, could significantly affect the
Company’s future operating results and financial position.




17.
            Subsequent
      Event





Pursuant
to the consulting agreements with Mr. Liangchun Cong and Mr. Frank T. Hau on
April 16, 2010, the Company issued an aggregate of 200,000 shares of Common
Stock to Mr. Cong and Mr. Hau as consultancy fees for the services that Mr. Gong
and Mr. Hau provide to the Company for three years starting April 16, 2010. As a
result, the Company had 20,291,112 shares of Common Stock, par value $.001 per
share, outstanding and issued as of May 10, 2010.


20


ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION





The
following discussion and analysis of financial condition and results of
operations relates to the operations and financial condition reported in the
unaudited condensed consolidated financial statements of the Company for the
nine months and three months ended March 31, 2010 and 2009, respectively, and
should be read in conjunction with such financial statements and related notes
included in this report.  Those statements in the following discussion
that are not historical in nature should be considered to be forward looking
statements that are inherently uncertain. Actual results and the timing of the
events may differ materially from those contained in these forward looking
statements due to a number of factors, including those discussed in the
“Cautionary Note on Forward Looking Statements” set forth elsewhere in this
Report.








Overview





China
Swine Genetics, Inc. was founded as a Colorado corporation on June 29, 1983 and
was re-domiciled to the State of Delaware on December 6, 2007. In connection
with the Company’s change of domicile, the Company increased its authorized
capital stock to 310,000,000 of which 300,000,000 are Common Stock, and
10,000,000 are Preferred Stock, each with a par value of $0.001 per share, with
the preferred stock issuable in series with such powers, designations,
preferences and relative, participating, optional or other specific rights, and
qualifications, limitations or restrictions thereof, as the Board may fix from
time to time by resolution or resolutions. Prior to August 13, 2009, the Company
had not engaged in any business operations.





On August
13, 2009, the Company acquired all of the outstanding capital stock of Advanced
Swine by issuing 4,646.05933 shares of its Series A Convertible Preferred
Stock to the shareholders of Advanced Swine.  Each share of Series A
Preferred Stock is convertible into Four Thousand One Hundred Sixty-Six and 2⁄3
(4,166.66) shares of Common Stock.





A
Certificate of Amendment to the Company’s Certificate of Incorporation was filed
on September 9, 2009 to change the Company’s name from Apogee Robotics, Inc. to
“China Swine Genetics, Inc.” Concurrent with the name change, a 1 for 24 reverse
split was effected on September 30, 2009.  Shareholders with 1 or more
but fewer than 100 shares after the reverse split were issued shares to increase
their holdings to 100 shares.  All other fractional shares resulting
from the reverse split were repurchased by the Company for $5.28 per
share.





Advanced
Swine was incorporated under the laws of Nevada on June 29, 2007. It is an
intermediate holding company that conducts its business through its subsidiaries
in the PRC. On December 20, 2007, Advanced Swine entered into a share transfer
agreement with SenYu through which Advance Swine acquired all the equity
interests in SenYu. SenYu was incorporated on September 3, 2004, under the laws
of PRC. SenYu was originally founded with a registered capital of
$1,208,211(equivalent to RMB10 million) on August 27, 2004 and increased its
registered capital to $6,165,762 (equivalent to RMB50 million) and $9,933,896
(equivalent to RMB80 million) on January 18 and August 29, 2006, respectively.
SenYu was in the development stage and incurred minor selling expenses and
significant general and administrative expenses until September, 2005, when it
accepted its first sales order of merchandise hogs and genetic boars, and
started its business as a farmer enterprise for breeding, feeding, and marketing
the grandparent and parent generation boars, and merchandise hogs.





In
December 2005, SenYu established a joint venture named Sino-Canadian SenYu Polar
Swine Genetics Company Limited (“Sino-Canadian”) with Polar
Genetics Inc., a Canadian corporation (the “Polar Genetics”). This joint venture
was in the development stage and did not commence principal operations until
November 27, 2007.





Both
SenYu and Sino-Canadian JV engage in the business of breeding and raising hogs
and piglets, then distributing them to slaughter facilities and pork
distributors in the PRC. Our objective is to establish ourselves as a leading
producer and distributor of commercial hogs and piglets in the
PRC.


21





THREE
MONTHS ENDED MARCH 31, 2010 COMPARED TO THREE MONTHS ENDED MARCH 31,
2009





For
      The Three Months
            
            
            
            
            
            For
      The Three Months
            
            
            
            
            
            2010
      Vs 2009Ended
      March 31, 2010
            
            
            
            
            
            Ended
      March 31, 2009
            
            
            
            
            
            Increase/
      (decrease)(Unaudited)
            
            
            
            
            
            (Unaudited)Revenues
            
            $
            14,921,687
            
            
            
            
            
            $
            7,740,915
            
            
            
            
            
            $
            7,180,772
            
            
            
            93
            %Cost
      of Goods Sold
            
            
            12,243,434
            
            
            
            82.1
            %
            
            
            6,346,768
            
            
            
            82.0
            %
            
            
            5,896,666
            
            
            
            93
            %Gross
      Profit
            
            
            2,678,253
            
            
            
            17.9
            %
            
            
            1,394,147
            
            
            
            18.0
            %
            
            
            1,284,106
            
            
            
            92
            %Operating
      ExpensesSelling
      expenses
            
            
            523,272
            
            
            
            
            
            
            
            238,140
            
            
            
            
            
            
            
            285,132
            
            
            
            120
            %Bad
      debt for advanced to suppliers
            
            
            80,893
            
            
            
            
            
            
            
            8,011
            
            
            
            
            
            
            
            72,882
            
            
            
            910
            %General
      and administrative expenses
            
            
            441,349
            
            
            
            
            
            
            
            82,784
            
            
            
            
            
            
            
            358,565
            
            
            
            433
            %Total
      Operating Expenses
            
            
            1,045,514
            
            
            
            7.0
            %
            
            
            328,935
            
            
            
            4.2
            %
            
            
            716,579
            
            
            
            218
            %Income
      From Operations
            
            
            1,632,739
            
            
            
            10.9
            %
            
            
            1,065,212
            
            
            
            13.8
            %
            
            
            567,527
            
            
            
            53
            %Other
      Income (Expenses or Losses)Interest
      (expenses)  income, net
            
            
            (203,317
            )
            
            
            
            
            
            
            1,053
            
            
            
            
            
            
            
            (204,370
            )
            
            
            -19408
            %Other
      income (expenses), net
            
            
            -
            
            
            
            
            
            
            
            1
            
            
            
            
            
            
            
            (1
            )
            
            
            -100
            %Losses
      on disposal of fixed assets
            
            
            (9
            )
            
            
            
            
            
            
            (247,416
            )
            
            
            
            
            
            
            247,407
            
            
            
            -100
            %Losses
      on disposal of inventories
            
            
            (6,324
            )
            
            
            
            
            
            
            (74,787
            )
            
            
            
            
            
            
            68,463
            
            
            
            -92
            %Total
      Other Expenses or Losses
            
            
            (209,650
            )
            
            
            
            
            
            
            (321,149
            )
            
            
            
            
            
            
            111,499
            
            
            
            -35
            %Income
      from Continuing Operations Before Income Taxes
            
            
            1,423,089
            
            
            
            9.5
            %
            
            
            744,063
            
            
            
            9.6
            %
            
            
            679,026
            
            
            
            91
            %Income
      Tax Provision
            
            
            -
            
            
            
            
            
            
            
            -
            
            
            
            
            
            
            
            -Net
      Income Before Noncontrolling Interest
            
            
            1,423,089
            
            
            
            9.5
            %
            
            
            744,063
            
            
            
            9.6
            %
            
            
            679,026
            
            
            
            91
            %Less:
      Net loss attributable to the noncontrolling interest
            
            
            (17,702
            )
            
            
            
            
            
            
            (145,314
            )
            
            
            
            
            
            
            127,612
            
            
            
            -88
            %Net
      Income Attributable to China Swine Genetics Inc.
            
            $
            1,440,791
            
            
            
            
            
            
            $
            889,377
            
            
            
            
            
            
            $
            551,414
            
            
            
            62
            %





Revenues





Total
revenues were $14,921,687 for the three months ended March 31, 2010, an increase
of $7,180,772 or 93%, compared to $7,740,915 for the three months ended March
31, 2009. The increase in revenues mainly resulted from increased orders from
our major customers. We increased sales volume of commercial hogs from 38,169
for the three months ended March 31, 2009 to 85,294 during the three months
ended March 31, 2010.





The
following table sets forth information regarding the sales of our principal
products during the three months ended March 31, 2010 and 2009:





For
      The Three Months Ended March 312010
            
            
            2009
            
            
            2010
      Less 2009Quantities
              (Capita)
            
            
            Amount
            
            
            Sale
              %
            
            
            Quantities
              (Capita)
            
            
            Amount
            
            
            Sale
              %
            
            
            Quantities
              (Capita)
            
            
            Amount
            
            
            Sale
              %Commercial
      Hogs Purchased From WangDa
            
            
            85,294
            
            
            $
            14,452,503
            
            
            
            97
            %
            
            
            38,169
            
            
            $
            6,993,419
            
            
            
            90
            %
            
            
            47,125
            
            
            $
            7,459,084
            
            
            
            107
            %Others
      Hogs Raised By Us
            
            
            2,227
            
            
            
            469,184
            
            
            
            3
            %
            
            
            4,666
            
            
            
            747,497
            
            
            
            10
            %
            
            
            (2,439
            )
            
            
            (278,312
            )
            
            
            -37
            %Total
            
            
            87,521
            
            
            $
            14,921,687
            
            
            
            100
            %
            
            
            42,835
            
            
            $
            7,740,915
            
            
            
            100
            %
            
            
            44,686
            
            
            $
            7,180,772
            
            
            
            93
            %


Commercial
hogs refers to those hogs purchased from WangDa and sold to our major
customers.


Other
hogs refers to hogs raised in our own breeding facilities.




22




The
increase in quantities sold, as reflected in the table, is primarily
attributable to our policy of committing all of our available cash resources to
the expansion of the herds under our control.





The
following table sets forth information regarding the average price per capita of
our principal products during the three months ended March 31, 2010 and
2009.




Average
      Unit Sales Price Per Capita
            
            
            Basic
      Change2010
            
            
            2009
            
            
            Per
      CapitaCommercial
      Hogs Purchased From WangDa
            
            $
            169.44
            
            
            $
            183.22
            
            
            $
            (13.78
            )Others
      Hogs Raised By Us
            
            
            210.68
            
            
            
            160.20
            
            
            
            50.489Overall
      Average Products
            
            
            170.49
            
            
            
            180.71
            
            
            
            (10.22
            )





The
decrease in average unit sales price (per capita), as reflected in the table, is
primarily attributable to the facts that market price of hogs per kilogram
declined in the three months ended March 31, 2010 as compared to the same period
in 2009. The average unit sales price of others hogs increased for the three
months ended March 31, 2010 as compared to the same period in 2009. The increase
resulted from the fact that we sold more hogs whose weights for the three months
ended March 31, 2010 were higher than the weights in the same period in
2009.  Assuming we measure the average unit sales price of other hogs
by kilogram, the average unit sales of other hogs per kilogram in the third
quarter of 2010 was less than the amount in the same period in
2009.




Cost
of Goods Sold





Our cost
of goods sold consists primarily of direct and indirect manufacturing costs,
including production overhead costs, and purchase costs for the hogs purchased
from WangDa. Cost of goods sold for the three months ended March 31, 2010 was
$12,243,434, as compared to $6,346,768 for the three months ended March 31,
2009, an increase of $5,896,666 or 93%. This increase was primarily attributable
to increased sales volume for the three months ended March 31, 2010, as compared
to the same period in 2009.





Gross
margin was 17.9% for the three months ended March 31, 2010 and 18% for the three
months ended March 31, 2009. The slight decline in gross profit percentage was
due to the fact that we reduced number of hogs in our breeding facilities
starting in July 2009 because the market price of hogs significantly declined.
As a result, more manufacturing costs were allocated to unit cost of breeding
hogs per capita for the three months ended March 31, 2010 as compared to the
same period in 2009.  Higher gross margin of commercial hogs was
offset by reduction in market price of hogs per kilogram and the increased costs
of “other hogs”. Therefore, gross margin was reduced slightly for the three
months ended March 31, 2010, compared to the same period in 2009.





The
following table sets forth information regarding the average cost per capita of
our principal products during the three months ended March 31, 2010 and
2009.





Average
      Unit Costs Price Per Capita
            
            
            Basic
      Change2010
            
            
            2009
            
            
            Per
      CapitaCommercial
      Hogs Purchased From WangDa
            
            $
            136.43
            
            
            $
            148.99
            
            
            $
            (12.56
            )Others
      Hogs Raised By Us
            
            
            188.56
            
            
            
            123.63
            
            
            
            64.93Overall
      Average Hogs
            
            
            142.92
            
            
            
            148.17
            
            
            
            (5.25
            )




23





The
decrease in average cost per capita, as reflected in the table, is primarily
attributable to the fact that we sold more commercial hogs in the third quarter
of 2010 as compare to the same period in 2009.





Costs of
commercial hogs consist of fodder costs and payment of partial profits to
WangDa’s franchise farmers. The average unit costs for commercial hogs per
capita decreased for the three months ended March 31, 2010 as compared to the
same period in 2009. The decrease resulted from the fact that fodder costs
declined for the three months ended March 31, 2010 as compared to the same
period in 2009. Furthermore, the market price of hogs per kilogram declined in
the three months ended March 31, 2010 as compare to the same period in 2009, and
payment of partial profits to WangDa’s franchise farmers were reduced
significantly for the three months ended March 31, 2010 as compared to the same
period in 2009. Accordingly, the average unit cost of commercial hogs decreased
in the quarter ended March 31, 2010.





The
average unit costs for other hogs increased significantly for the three months
ended March 31, 2010, as compared to the same period in 2009. The increase
resulted from the fact that we reduced the number of hogs in our breeding
facilities beginning in July 2009 because the market price of hogs significantly
declined. As a result, more manufacturing costs were allocated to unit cost of
other hogs for the three months ended March 31, 2010.  Consequently,
the average unit cost of other hogs rose significantly in the third quarter of
2010.





Selling
Expenses





Selling
expense rose at a greater pace than our revenues, from $238,140 for the three
months ended March 31, 2009 to $523,272 for the three months ended March 31,
2010, which represented an increase of $285,132 or 120%. This was mainly due to
an increase in employee compensation associated with expansion of our internal
sales team, and our development of a shipping program between Jiamusi and
Beijing using the services provided by Jiamusi Shunlida Transporting Co., Ltd
effective from October 2007 through December 31, 2009, and Jiamusi Hongqi
Transporting Agency Co., Ltd. commencing in January 2010.





Bad
debt for advanced to suppliers





The
provision for bad debt expense was $80,893 for the three months ended March 31,
2010, as compared to $8,011 for the three months ended March 31, 2009, an
increase of $72,882 or 910%. The increase is primarily attributable to increased
bad debt allowance from 0.5% to 5% with respect to the significant advances to
suppliers commencing in April 2009. In order to acquire significant amounts of
hogs WangDa, the advances to WangDa continued to increase rapidly. For the
higher risk of default, we determined that it was appropriate to increase our
allowance rate from 0.5% to 5% starting April 2009. This led to an expense of
$80,893 for the three months ended March 31, 2010.





General
and Administrative Expenses





General
and administrative expenses were $441,349 for the three months ended March 31,
2010, as compared to $82,784 for the three months ended March 31, 2009, an
increase of $358,565 or 433%. The increase was primarily attributable to
increased consulting fees in connection with fund raising in the U.S., public
relationship advisory charges and professional fees during the three months
ended March 31, 2010 as compared to the same period in 2009.





Total
Operating Expenses





During
the three months ended March 31, 2010, total operating expenses were
$1,045,514 as compared to $328,935 for the three months ended March 31,
2009, an increase of $716,579 or 218%. This increase was attributable to the
increases described above in selling expenses, increase in bad debt allowance
for funds advanced to suppliers and general administrative expenses during the
three months ended March 31, 2010, compared to the same period in 2009. We
expect that our selling, general and administrative expenses will increase in
the future in proportion to the growth of our
business.


24





Other
Income (Expense or Losses)





During
the three months ended March 31, 2010, other expense or losses, net,
amounted to $209,650 as compared to other expenses or losses, net of $321,149
during the three months ended March 31, 2009, a decrease of $111,499 or
35%.





For the
three months ended March 31, 2010, net interest expense was $203,317 as
compared to net interest income of $1,053 during the three months ended
March 31, 2009, a decrease of $204,370 or 19,408%. This decrease was
primarily attributable to the fact that the Company issued secured convertible
notes to certain investors in the aggregate amount of $2,165,000 on February 22,
2010 with an accrued interest rate of 10% per year. Accordingly, the Company
incurred more interest expense for the three months ended March 31, 2010 as
compared to the same period in 2009.





In order
to maximize the return on our investment in swine, we routinely cull breeding
sows that have lost their productivity. In addition, our herds are subject to
ordinary risks of mortality. If a hog dies before sale and before we have fully
depreciated our investment in the hog, we incur an expense equal to the
unamortized cost of the hog.  Such incidences of swine mortality
caused us an expense of $6,333 in the three months ended March 31, 2010,
recorded as “losses on disposal of fixed assets” or “losses on disposal of
inventories” depending on the category of the deceased hog. In the three months
ended March 31, 2009, our mortality losses were $322,203. This category of
expense will vary from quarter to quarter, depending on factors such as weather,
disease, and other seasonal factor. The Company culled more breeding swine as a
result of their lower productivity in the third quarter of 2009. Accordingly,
losses on “disposal of fixed assets” or “losses on disposal of inventories” for
the three months ended March 31, 2010 was less than the amounts in the same
period in 2009.





Income
Taxes





Our
provisions for income taxes for the three months ended March 31, 2010 and 2009
were zero and zero, respectively. Our PRC subsidiaries were exempt from the
income taxes per PRC tax laws and regulations that exempt companies engaged in
the agricultural breeding of livestock. But for that exemption, our income under
Chinese accounting principles would be taxed at a rate of 25%. The Company and
its subsidiary in the U.S., Advanced Swine, are subjected to U.S. federal income
taxes, and State of Delaware and State of Nevada annual franchise taxes,
respectively. The Company’s PRC subsidiaries expect to use their retained
earnings to support their PRC operations, and will not declare any dividends
within the predictable future. In addition, there was no net income generated by
the Company and its U.S. subsidiary, Advanced Swine, during the nine months
ended March 31, 2010 and 2009. Therefore, for the three months ended March 31,
2010 and 2009, the Company was not subject to any income taxes in PRC and
U.S.





Net
Income and Comprehensive Income





During
the three months ended March 31, 2010, Sino-Canadian, the joint venture in which
we hold 60% of the equity, incurred a net loss of approximately
$44,255.  In our Statements of Operations, the 40% of that loss
allocable to our joint venture partner was attributed to “Noncontrolling
Interest” and added to our net income.  In the future, if
Sino-Canadian realizes a net profit, the 40% of that gain allocable to our joint
venture partner will likewise be deducted from our net income.  Our
net income for the quarter ended March 31, 2010, after that deduction, totaled
$1,440,791.


25


Our
business operates primarily in Chinese Renminbi (“RMB”), but we report our
results in our SEC filings in U.S. dollars.  The conversion of our accounts
from RMB to U.S. dollars results in translation adjustments.  While our net
income will be added to the retained earnings on our balance sheets; the
translation adjustments will be added to a line item on our balance sheet
labeled “accumulated other comprehensive income,” since they will be more
reflective of changes in the relative values of U.S. and Chinese currencies than
of the success of our business. During the three months ended March 31, 2010,
the effect of converting our financial results to U.S. dollars was to add $5,497
to our accumulated other comprehensive income.  During the third
quarter of fiscal 2009, when the exchange rate between the RMB and the U.S.
dollar was much more volatile, there was a decrease of $41,226 to our
accumulated other comprehensive income.





NINE
MONTHS ENDED MARCH 31, 2010 COMPARED TO NINE MONTHS ENDED MARCH 31,
2009





For
      The Nine Months
            
            
            
            
            
            For
      The Nine Months
            
            
            
            
            
            2010
      Vs 2009Ended
      March 31, 2010
            
            
            
            
            
            Ended
      March 31, 2009
            
            
            
            
            
            Increase/
      (decrease)(Unaudited)
            
            
            
            
            
            (Unaudited)Revenues
            
            $
            59,814,100
            
            
            
            
            
            $
            34,139,865
            
            
            
            
            
            $
            25,674,235
            
            
            
            75.2
            %Cost
      of Goods Sold
            
            
            47,081,844
            
            
            
            78.7
            %
            
            
            28,117,885
            
            
            
            82.4
            %
            
            
            18,963,959
            
            
            
            67.4
            %Gross
      Profit
            
            
            12,732,256
            
            
            
            21.3
            %
            
            
            6,021,980
            
            
            
            17.6
            %
            
            
            6,710,276
            
            
            
            111.4
            %Operating
      ExpensesSelling
      expenses
            
            
            1,880,582
            
            
            
            
            
            
            
            1,143,009
            
            
            
            
            
            
            
            737,573
            
            
            
            64.5
            %Bad
      debt for advanced to suppliers
            
            
            464,877
            
            
            
            
            
            
            
            14,724
            
            
            
            
            
            
            
            450,153
            
            
            
            3057.3
            %General
      and administrative expenses
            
            
            740,927
            
            
            
            
            
            
            
            368,720
            
            
            
            
            
            
            
            372,207
            
            
            
            101.0
            %Total
      Operating Expenses
            
            
            3,086,386
            
            
            
            5.2
            %
            
            
            1,526,453
            
            
            
            4.5
            %
            
            
            1,559,933
            
            
            
            102.2
            %Income
      From Operations
            
            
            9,645,870
            
            
            
            16.1
            %
            
            
            4,495,527
            
            
            
            13.2
            %
            
            
            5,150,343
            
            
            
            114.6
            %Other
      Income (Expenses or Losses)Interest
      (expenses)  income, net
            
            
            (201,497
            )
            
            
            
            
            
            
            (25,126
            )
            
            
            
            
            
            
            (176,371
            )
            
            
            702.0
            %Other
      income (expenses), net
            
            
            (6,451
            )
            
            
            
            
            
            
            9,091
            
            
            
            
            
            
            
            (15,542
            )
            
            
            -171.0
            %Losses
      on disposal of fixed assets
            
            
            (107,789
            )
            
            
            
            
            
            
            (402,141
            )
            
            
            
            
            
            
            294,352
            
            
            
            -73.2
            %Losses
      on disposal of inventories
            
            
            (252,209
            )
            
            
            
            
            
            
            (216,239
            )
            
            
            
            
            
            
            (35,970
            )
            
            
            16.6
            %Total
      Other Expenses or Losses
            
            
            (567,946
            )
            
            
            
            
            
            
            (634,415
            )
            
            
            
            
            
            
            66,469
            
            
            
            -10.5
            %Income
      from Continuing Operations Before Income Taxes
            
            
            9,077,924
            
            
            
            15.2
            %
            
            
            3,861,112
            
            
            
            11.3
            %
            
            
            5,216,812
            
            
            
            135.1
            %Income
      Tax Provision
            
            
            -
            
            
            
            
            
            
            
            -
            
            
            
            
            
            
            
            -Net
      Income Before Noncontrolling Interest
            
            
            9,077,924
            
            
            
            15.2
            %
            
            
            3,861,112
            
            
            
            11.3
            %
            
            $
            5,216,812
            
            
            
            135.1
            %Less:
      Net loss attributable to the noncontrolling interest
            
            
            (131,489
            )
            
            
            
            
            
            
            (253,831
            )
            
            
            
            
            
            $
            122,342
            
            
            
            -48.2
            %Net
      Income Attributable to China Swine Genetics Inc.
            
            $
            9,209,413
            
            
            
            
            
            
            $
            4,114,943
            
            
            
            
            
            
            $
            5,094,470
            
            
            
            123.8
            %







Revenues





Total
revenues were $59,814,100 for the nine months ended March 31, 2010 compared to
$34,139,865 for the nine months ended March 31, 2009, an increase of $25,674,235
or 75%. The increase in revenues resulted from increased orders from our major
customers. During the nine months ended March 31, 2009, we increased sales
volume of commercial hogs and other hogs from 190,481 to 329,434 for the nine
months ended March 31, 2010.


26


The
following table sets forth information regarding the sales of our principal
products during the nine months ended March 31, 2010 and 2009.





For
      the Nine Months Ended March 312010
            
            
            2009
            
            
            2010
      Less 2009Quantities
              (Capita)
            
            
            Amount
            
            
            Sale
              %
            
            
            Quantities
              (Capita)
            
            
            Amount
            
            
            Sale
              %
            
            
            Quantities
              (Capita)
            
            
            Amount
            
            
            Sale
              %Commercial
      Hogs Purchased From WangDa
            
            
            323,514
            
            
            $
            59,020,984
            
            
            
            99
            %
            
            
            180,168
            
            
            $
            32,583,314
            
            
            
            95
            %
            
            
            143,346
            
            
            $
            26,437,670
            
            
            
            81
            %Others
      Hogs Raised By Us
            
            
            5,920
            
            
            
            793,117
            
            
            
            1
            %
            
            
            10,313
            
            
            
            1,556,551
            
            
            
            5
            %
            
            
            (4,393
            )
            
            
            (763,435
            )
            
            
            -49
            %Total
            
            
            329,434
            
            
            $
            59,814,100
            
            
            
            100
            %
            
            
            190,481
            
            
            $
            34,139,865
            
            
            
            100
            %
            
            
            138,953
            
            
            $
            25,674,235
            
            
            
            32
            %








The
increase in quantities sold, as reflected in the table, is primarily
attributable to our policy of committing all of our available cash resources to
the expansion of the herds under our control.





The
following table sets forth information regarding the average price per capita of
our principal products during the nine months ended March 31, 2010 and 2009.





Average
      Unit Sales Price Per Capita
            
            
            Basic
      Change2010
            
            
            2009
            
            
            Per
      CapitaCommercial
      Hogs Purchased From WangDa
            
            $
            182.44
            
            
            $
            180.85
            
            
            $
            1.59Others
      Hogs Raised By Us
            
            
            133.97
            
            
            
            150.93
            
            
            
            (16.96
            )Overall
      Average Hogs
            
            
            181.57
            
            
            
            179.23
            
            
            
            2.34




The
increase in average unit sales price per capita, as reflected in the table, is
primarily attributable to the fact that the sales price of commercial hogs rose
slightly in the nine months ended March 31, 2010, as compared to the same period
in 2009. The average unit sales price of others hogs per capita decreased
significantly for the nine months ended March 31, 2010 as compared to the same
period in 2009. The decrease resulted from the fact that we sold more swine with
a higher unit sales price which was a part of other hogs in the nine months
ended March 31, 2009, as compared to the same period in 2010.




Cost
of Sales and Gross Profit





Our costs
of goods sold consisted primarily of direct and indirect manufacturing costs,
including production overhead costs and costs of our purchases of hogs from
WangDa. Cost of goods sold for the nine months ended March 31, 2010, was
$47,081,844, as compared to $28,117,885 for the nine months ended March 31,
2009, an increase of $18,963,959 or 67.4%. This increase was primarily
attributable to increased sales volume.





Gross
margin was 21.3% for the nine months ended March 31, 2010 and 17.6% for the nine
months ended March 31, 2009. The increase in gross margin was due to the fact
that we reduced the number of hogs in our breeding facilities because the market
price of hogs significantly declined. As a result, more manufacturing costs were
allocated to unit cost of breeding hogs per capita for the nine months ended
March 31, 2010 as compared to the ame
period in 2009.  For the commercial hogs purchased from WangDa, since
we reduced fodders costs, commercial hogs brought higher gross margin in the
nine months ended March 31, 2010 as compared to the same period in 2009. Higher
gross margin of commercial hogs was offset slightly by the increase in costs of
other hogs.


27





The
following table sets forth information regarding the average cost per capita of
our principal products during the nine months ended March 31, 2010 and
2009.





Average
      Unit Costs Price Per Capita
            
            
            Basic
      Change2010
            
            
            2009
            
            
            Per
      CapitaCommercial
      Hogs Purchased From WangDa
            
            $
            142.08
            
            
            $
            148.99
            
            
            $
            (6.91
            )Others
      Hogs Raised By Us
            
            
            188.56
            
            
            
            123.63
            
            
            
            64.93Overall
      Average Hogs
            
            
            142.92
            
            
            
            147.62
            
            
            
            (4.70
            )




The
decrease in average cost per capita, as reflected in the table, is primarily
attributable to the fact that we sold more commercial hogs with a lower unit
cost in the nine months ended March 31, 2010 as compared to the same period in
2009.





The
average unit cost for other hogs increased significantly for the nine months
ended March 31, 2010 as compared to the same period in 2009. The increase
resulted from the fact that we reduced the number of hogs in our breeding
facilities because the market price of hogs significantly declined. As a result,
more manufacturing costs were allocated to unit cost of other hogs per capita
for the nine months ended March 31, 2010.  Consequently, the average
unit cost of other hogs per capital rose significantly in the quarter ended
March 31, 2010.





Selling
Expenses





Selling
expense rose at a pace slightly less than our revenues, from $1,143,009 for the
nine months ended March 31, 2009 to $1,880,582 for the nine months ended March
31, 2010, which represented an increase of $737,573 or 64.5%. The increase was
mainly due to our development of a shipping program between Jiamusi and Beijing
using the services of Jiamusi Shunlida Transporting Co., Ltd through December
31, 2009 and Jiamusi Hongqi Transporting Agency Co., Ltd beginning in January
2010.





Bad
debt for advanced to suppliers





Provision
for bad debt expense was $464,877 for the nine months ended March 31, 2010, as
compared to $14,724 for the nine months ended March 31, 2009, an increase of
$450,153 or 3,057.3%. The increase was primarily attributable to increased bad
debt allowance from 0.5% to 5% with respect to the significant advances to
suppliers commencing in April 2009. In order to acquire significant amounts of
hogs WangDa, we increased our advances to WangDa. For the risk of default, we
determined that it was appropriate to increase our allowance rate from 0.5% to
5% beginning in April 2009. This led to an expense of $464,877 for the nine
months ended March 31, 2010.





General
and Administrative Expenses





General
and administrative expenses were $740,927 for the nine months ended March 31,
2010, as compared to $368,720 for the nine months ended March 31, 2009, an
increase of $372,207 or 101%. The increase was primarily attributable to
increased consulting fees associated with fund raising in the U.S., public
relationship advisory charges and professional fees during the nine months ended
March 31, 2010 as compared to the same period in 2009.





Total
Operating Expenses





During
the nine months ended March 31, 2010, total operating expenses were
$3,086,386 as compared to $1,526,453 for the nine months ended March 31,
2009, an increase of $1,559,933 or 102.2%. This increase was attributable
to the increases described above in selling expenses, the increase in bad debt
allowance for funds advanced to suppliers and general administrative expenses
during the nine months ended March 31, 2010 compared to the same period in 2009.
Moreover, we expect that our selling, general and administrative expenses will
increase in the future in proportion to the growth of our
business.


28





Other
Income (Expense or Losses)





During
the nine months ended March 31, 2010, other expense or losses , net,
amounted to $567,946 as compared to other expenses or losses, net of $634,415
during the nine months ended March 31, 2009, a decrease of $66,469 or
10.5%.





For the
nine months ended March 31, 2010, net interest expenses was $201,497 as
compared to net interest expense of $25,126 during the nine months ended
March 31, 2009, an increase of $176,371 or 702%. This increase was
primarily attributable to the fact that the Company issued secured convertible
notes to certain investors in an aggregate amount of $2,165,000 on February 22,
2010, with an accrued interest rate of 10% per year. Accordingly, the Company
incurred more interest expense for the nine months ended March 31, 2010 as
compared to the same period in 2009.





In order
to maximize the return on our investment in swine, we routinely cull breeding
sows that have lost their productivity. In addition, our herds are subject to
ordinary risks of mortality. If a hog dies before sale and before we have fully
depreciated our investment in the hog, we incur an expense equal to the
unamortized cost of the hog.  Such incidences of swine mortality
caused us an expense of $359,998 in the nine months ended March 31, 2010,
recorded as “losses on disposal of fixed assets” or “losses on disposal of
inventories” depending on the category of the deceased hog. For the nine months
ended March 31, 2009, our mortality losses were $618,380. This category of
expense will vary from quarter to quarter, depending on factors such as weather,
disease, and other seasonal factors.





Income
Taxes





Our
provisions for income taxes for the nine months ended March 31, 2010 and 2009
were zero and zero, respectively. Our PRC subsidiaries were exempt from the
income taxes per PRC tax laws and regulation that exempt companies engaged in
the agricultural breeding of livestock. But for that exemption, our income under
Chinese accounting principles would be taxed at a rate of 25%. The Company and
its subsidiary in the U.S., Advanced Swine, are subjected to U.S. federal income
taxes, and State of Delaware and State of Nevada annual franchise taxes,
respectively. The Company’s PRC subsidiaries expect to use their retained
earnings to support their PRC operations, and will not declare any dividends
within the predictable future. In addition, there was no net income generated by
the Company and its U.S. subsidiary, Advanced Swine, during the nine months
ended March 31, 2010 and 2009. Therefore, for the nine months ended March 31,
2010 and 2009, the Company was not subject to any income taxes in PRC and
U.S.




Net
Income and Comprehensive Income





During
the nine months ended March 31, 2010, Sino-Canadian J.V., the joint venture in
which we hold 60% of the equity, incurred a net loss of approximately
$328,723.  In our Statements of Operations, the 40% of that loss
allocable to our joint venture partner was attributed to “Noncontrolling
Interest” and added to our net income.  In the future, if
Sino-Canadian realizes a net profit, the 40% of that gain allocable to our joint
venture partner will likewise be deducted from our net income.  Our
net income for the quarter ended March 31, 2010, after that deduction, totaled
$9,209,413.





Our
business operates primarily in Chinese Renminbi (“RMB”), but we report our
results in our SEC filings in U.S. dollars.  The conversion of our accounts
from RMB to U.S. dollars results in translation adjustments.  While our net
income will be added to the retained earnings on our balance sheets; the
translation adjustments will be added to a line item on our balance sheets
labeled “accumulated other comprehensive income,” since they will be more
reflective of changes in the relative values of U.S. dollars and RMB than of the
success of our business During the nine months ended March 31, 2010, the effects
of converting our financial results to U.S. dollars was to add $20,624 to our
accumulated other comprehensive income.  During the first third
quarter ended March 31, 2009, when the exchange
rate between the Renminbi and the U.S. dollar was much more volatile, there was
an increase of $70,124 in our accumulated other comprehensive
income.


29




Liquidity
and Capital Resources





After our
founders made the initial contribution of our registered capital, the growth of
our business has been funded, primarily, by the revenues resulting from our
business operations, by loans from the Chinese Government’s Financial Bureau and
by loans from our shareholders. We did, however, owe $11,167,236 to our majority
shareholder, Ligang Shang, representing funds he loaned to Advanced Swine during
our development period.  At the end of the first quarter of fiscal
year 2010, however, Mr. Shang agreed to waive his right to collect that sum, and
contributed it to the capital of the Company.  Accordingly, our
working capital increased by the amount of the cancelled loan, as did our
paid-in capital.





Our
working capital at March 31, 2010 totaled $32,419,558, an increase of
$22,540,586 from our $9,878,972 in working capital as of June 30, 2009. The
increase was approximately equal to sum of the debt cancelled by Ligang Shang
and our net income of $9,209,373 for the first third quarters ended March 31,
2010.  In general, since we carry only a small amount of accounts
receivable, and an inventory suitable only for sale in the current season, our
working capital will tend to ebb and flow in proportion to our net
income.





Net
Cash Provided by Operating Activities





Included
in our March 31, 2010 working capital was $29,501,228 recorded as advanced to
our suppliers. In order to raise quality commercial hogs, and control the
quality of feeding materials and procedures, we entered into a cooperation
agreement with WangDa, our major feedstuff supplier, to provide our farmers
fodder to raise their commercial hogs. The supplier can offset the loan amount
from us once it delivers the farmers’ commercial hogs to
us.  Primarily as a result of our use of cash for this purpose, our
operations provided us only $953,252 in cash, despite $9,209,413 in net income
during the nine months ended March 31, 2010.




Net
Cash Used in Investments Activities





Investment
activities for the nine months ended March 31, 2010 was ($10,666) as compared to
$24,682 for the nine months ended March 31, 2009. This change was primarily
attributable to proceeds from the sale of property and equipment during the
third quarter of 2009, and the payment for the purchase of equipment during the
third quarter of 2010.





Net
Cash Provided By Financing Activities Financing





We
currently have $1,057,207 in loans payable to non-affiliates, including $805,756
due to an agency of the government of Jiamusi and $293,003 due to an agency of
the government of TangYuan, with a total discount on loans payable of
$41,552.  All of the loans are interest-free and all of them are
payable on December 31, 2010.  The payment date for each of these
loans has been extended in the past, as these agencies have made the loans for
the purpose of supporting our operations. We expect the loans will be extended
in the future.





On
February 22, 2010 the Company consummated an offering of 10% Secured Convertible
Notes (the “Notes”) in
the principal amount of $2,165,000. The Notes were sold at par to twelve
investors. The maturity date of the Notes is February 22, 2011. Interest on the
Notes at 10% per annum is payable quarterly. Payment of interest and principal
is secured by a pledge of the Company’s shares owned by Ligang Shang, the
majority shareholder of the Company. In the event that the Company completes an
equity financing of $5 million or more (a “Qualified Financing”), the
Notes will automatically convert into securities of like kind to the securities
sold in the Qualified Financing at a 50% discount to the purchase price of the
securities in the Qualified Financing.  If the Company does not
complete such a Qualified Financing prior to the maturity date of the Notes, the
Company will be required to issue to the Note-holders warrants to purchase
shares of the Common Stock at $1.50 per share, up to the principal amount of the
Notes .Upon conversion of the Notes into Common Stock, the Company shall issue
to Primary Capital, LLC warrants to purchase 8% of the securities issueable to
the investors upon conversion.




We
believe that we have sufficient funds to operate our existing business for the
next twelve months. However, in addition to funds available from operating and
loans from shareholders, we may need external sources of capital for our
expansion of our facilities and to increase the roster of our franchisee
farmers, in order to reach our goal of producing one million commercial hogs in
2011. There can be no assurance that we will be able to obtain such additional
financing at acceptable terms to us, or at all.


30





Off-Balance
Sheet Arrangements





We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition or results of
operations.





Application
of Critical Accounting Policies





While our
significant accounting policies are more fully described in Note 4 to our
consolidated financial statements, we believe that those policies are the most
critical to aid you in fully understanding and evaluating “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.”





In
preparation of our financial statements, we are required to formulate working
policies regarding valuation of our assets and liabilities and to develop
estimates of those values.  In our preparation of the financial statements
for the nine months ended March 31, 2010, there was no estimate made which was
(a) subject to a high degree of uncertainty, and (b) material to our results.





We made
no material changes to our critical accounting policies in connection with the
preparation of our financial statements for the nine months ended March 31,
2010.





Impact
of Accounting Pronouncements





There
were certain recent accounting pronouncements that may have a material effect on
our Company’s financial position or results of operations. All of them described
under the caption “Recent Accounting Pronouncements” of Note 4 “Summary of
Significant Accounting Policies” in the “Notes of Condensed Consolidated
Financial Statement” listed under the Financial Statements Section which is
included in Item “o” hereof.




Item
3.     Quantitative and Qualitative Disclosures About
Market Risk





Not
applicable.





Item
4(T).     Controls and Procedures





Disclosure
Controls and Procedures





We
maintain a system of disclosure controls and procedures designed for the purpose
of ensuring that information required to be disclosed in our SEC 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 our Chief Executive Officer and our
Chief Financial Officer, as appropriate to allow timely decisions regarding
required disclosures.





As of the
end of the period covered by this report, we carried out an evaluation, under
the supervision and with the participation of the Company’s management,
including its Chief Executive Officer and Chief Financial Officer, the
effectiveness of the design and operation of the Company’s disclosure controls
and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934). Based on that evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that our disclosure controls and procedures
were effective as of March 31, 2010.





Changes
in Internal Control Over Financial Reporting





There
were no changes in our internal controls over financial reporting subject to the
above corrective actions with regard to significant deficiencies or material
weaknesses that occurred during the fiscal quarter ended March 30, 2010 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.


31


PART II – OTHER
INFORMATION





Item
1.     Legal Proceedings





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





Item
2.     Unregistered Sales of Equity Securities and Use
of Proceeds





None.





Item
3.     Defaults Upon Senior Securities





None.





Item
4.     Submission of Matters to a Vote of Security
Holders





None.





Item
5.     Other Information





None.





Item
6.     Exhibits





(a)  Exhibits





Exhibit
      Number
            Description
      of Exhibit31.1*
            Certification
      of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
      promulgated under the Securities and Exchange Act of 1934, as
      amended.31.2*
            Certification
      of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a),
      promulgated under the Securities and Exchange Act of 1934, as
      amended.32.1*
            Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002 (Chief Executive
  Officer).32.2*
            Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002 (Chief Financial
  Officer).


_________________


* Filed
herewith


32


SIGNATURES





In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.





China
      Swine Genetics, Inc.May
      20, 2010
            By:
            /s/
      Zhenyu ShangZhenyu
      Shang
              Chief
      Executive Officer
              (Principal
      Executive Officer)May
      20, 2010
            By:
            /s/ Tongyu
      ZhangTongyu
      Shang
              Chief
      Financial Officer
              (Principal
      Financial and
              Accounting
      Officer)









33