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


                                FORM 10-KSB/A
                               First Amendment

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


           Report For Period January 1, 1998 to December 31, 1998


                      CHINA PEREGRINE FOOD CORPORATION
           ------------------------------------------------------
           (Name of Small Business Issuer in its Amended Charter)

                       Commission File Number  0-20549

           Delaware                                 62-1681831
-------------------------------                -------------------
(State or other jurisdiction of                (I.R.S. Employer
 incorporation or organization)                Identification No.)


      11300 US Highway 1, Suite 202, North Palm Beach, Florida 33408 USA
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      (Address of principal executive offices)                 (Zip Code)

                     Telephone number:   (561) 625-1411
                                         --------------

       Securities registered under Section 12(b) of the Exchange Act:
                                    None

        Securities registered under Section 12(g) of the Exchange Act
                        Common Stock, $.001 par value
                              (Title of class)

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Check whether the issuer (1) filed all reports required to be filed by 
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]  No [X]

Check if disclosure of delinquent filers in response to Item 405 of 
Regulation S-B is not contained in this form, and no disclosure will be 
contained, to the best of registrant's knowledge, in definitive proxy or 
information statements incorporated by reference in Part III of this Form 
10-KSB or any amendment to this Form 10-KSB. [ ]

The issuer's revenues for its most recent fiscal year were $2,870,714

The aggregate market value of the voting stock held by non-affiliates of 
the issuer on March 1, 1999, based upon the $2.3125 per share average bid 
and asked prices of such stock on that date, was $10,981,452.  The number 
of issuer's shares of Common Stock outstanding as of March 1, 1999 was 
7,795,462.

Transitional Small Business Disclosure Format (check one): Yes [ ]  No [X]


                     DOCUMENTS INCORPORATED BY REFERENCE

PART III  Item 13    Exhibits


ITEM 1 - DESCRIPTION OF BUSINESS

                   BUSINESS AND DEVELOPMENT OF THE COMPANY

China Peregrine Food Corporation is a Delaware corporation formed on April 
26, 1996.  Presently, the Company owns the controlling interest in a Sino-
American joint venture in China known as Green Food Peregrine Children's 
Food Co. Ltd. ("Green Food Peregrine").  Green Food Peregrine is in the 
business of processing and distributing dairy and non dairy food products 
in the People's Republic of China and, at present, owns and operates a 
dairy processing plant in Shanghai. Green Food Peregrine is an equity joint 
venture with registered capital of US $5,000,000 and established under the 
law of the People's Republic of China on July 3, 1993.  The equity interest 
of Green Food Peregrine presently is divided among the Company (70%) and 
its Chinese partner, China National Green Food Corporation ("China National 
Green Food") (30%). Consistent with the national scope of the Green Food 
Peregrine joint venture, China National Green Food is wholly owned by the 
Ministry of Agriculture of the People's Republic of China. 

The business focus of Green Food Peregrine is providing milk and non-
carbonated beverages in China through the development and utilization of 
advanced food technology and western-style marketing expertise. Currently, 
Green Food Peregrine is manufacturing and distributing dairy products in 
Shanghai and is in the process of developing a number of new and non-
carbonated beverages for infants and school age children.  Green Food 
Peregrine intends to establish processing facilities and operate in cities 
with a population of more than two million throughout China.

From April of 1993, through March 5, 1997, the majority equity interest in 
Green Food Peregrine was owned by China Peregrine Enterprises, Limited 
("China Peregrine Enterprises"), a Texas limited partnership created for 
the sole purpose of controlling the operation of the Green Food Peregrine 
joint venture business.  The Green Food Peregrine joint venture company was 
formed pursuant to a Joint Venture Contract and Articles of Association, 
dated April 13, 1993, by and among China National Green Food, China 
Peregrine Enterprises, and Amer-China Partners Ltd. ("Amer-China"). 
Pursuant to the Joint Venture Contract and the Articles of Association for 
Green Food Peregrine, China Peregrine Enterprises was required to invest US 
$3,000,000 as its share of the joint venture's registered capital, with an 
initial investment of US $720,000.  Subsequent to the initial investments 
by the respective parties, the Articles of Association were amended to 
reflect an additional capital contribution by China Peregrine Enterprises, 
so that it ultimately obtained a 70% interest in Green Food Peregrine.  

From its inception in 1993 through the end of 1996, Green Food Peregrine 
sought to complete the construction of its processing plant for efficient 
production and to develop a foothold in the Shanghai retail milk market.  
The Shanghai operations were not profitable and China Peregrine Enterprises 
was in need of additional financing to fund those operations and to meet 
its capital contribution obligations under the Joint Venture Contract and 
the Articles of Association.  As a result, management of China Peregrine 
Enterprises embarked on fund raising efforts outside of the limited 
partnership participants, in an attempt to satisfy these financial needs.

The efforts to obtain outside financing continued through the close of 
1996, when China Peregrine Enterprises sought to provide for  its final 
required capital contribution installment of approximately US $1,200,000.  
At that time, negotiations began with representatives of the Company, which 
was then a non-operating corporate entity, to utilize the Company as an 
appropriate vehicle to manage the asset represented by the Joint Venture 
Contract, and to raise the required funds to go forward.  Those 
negotiations resulted in the March 5, 1997, purchase of the assets of China 
Peregrine Enterprises by the Company in exchange for common stock of the 
Company.  The assets purchased by the Company consisted of China Peregrine 
Enterprises' equity interest in Green Food Peregrine and its contractual 
rights under the Green Food Peregrine Joint Venture Contract.  After the 
acquisition of the China Peregrine Enterprises assets by the Company, the 
partners of that limited partnership held 45% of the Company's common 
stock.

The Company, which was formed on April 26, 1996, under the laws of the 
state of Delaware, was formerly known as Shakespeare Holding, Inc. 
("Shakespeare"). In February, 1997, Shakespeare merged with Manor Products 
Corp., a Delaware company established on January 26, 1996, and changed its 
name to China Peregrine Food Corporation. Manor was a shell company with 
331 shareholders and no operating history. Similarly, China Peregrine Food 
Corporation was a company without substantial assets or operating activity 
until it purchased the assets of China Peregrine Enterprises in March, 
1997.

Prior to the negotiations leading up to the acquisition of the assets of 
China Peregrine Enterprises by the Company, the two entities had no 
affiliation, other than a social acquaintance between  Mr. Paul Downes, an 
individual who controlled Shakespeare, as it was then known, and Mr. Dale 
Reese, the major investor in the China Peregrine Enterprises limited 
partnership.  The negotiations for the purchase of the China Peregrine 
Enterprises assets were conducted by and among (1) Mr. Downes, (2) Mr. 
Reese, (3) Mr. Charles Beech, who was responsible for negotiating and 
obtaining the Joint Venture Contract  in 1993 and who controlled the 
General Partner of China Peregrine Enterprises, and (4) Mr. Roy Warren, a 
financial consultant who had worked with China Peregrine Enterprises in its 
attempts to raise additional capital for the Joint Venture project.  These 
negotiations were an extension of the then ongoing attempts of China 
Peregrine Enterprises to raise additional capital.  By agreement of these 
parties, a plan to reorganize the business of the limited partnership was 
developed, which included the utilization of an entity which (1) was more 
suited to raising the needed additional capital, (2) preserved and 
protected the financial and control positions of those who held the major 
interests in the limited partnership, and (3) provided the requisite 
incentive for new participants to become involved directly on  a long term 
basis.  To achieve the first goal, the  already existing Shakespeare entity 
was utilized and, to achieve the second and third goals, the four parties 
responsible for the "reorganization" plan were issued common and preferred 
stock at par value as "founders" of the recast Company.

After the equity structure of the newly reorganized Shakespeare entity was 
determined and effected, the parties set about the task of making the 
Company (now called China Peregrine Food Corporation) the operating entity 
and raising new monies to support the Company.  Several significant steps 
were taken to achieve those goals, including (1) the retirement of China 
Peregrine Enterprise's bank debt in the amount of $1,260,0000, by Mr. 
Reese's assumption of same, (2) the transfer of the limited partnership's 
assets (the Joint Venture Contract) to the Company in exchange for stock, 
and (3) Mr. Reese's payment of approximately US$1,200,000 to satisfy 
capital contribution requirements of the Chinese Joint Venture, the 
repayment of which by the Company was financed, in part, through a limited 
public offering, commencing in March of 1997.  In consideration of Mr. 
Reese's assumption of the bank debt of China Peregrine Enterprises, he was 
issued 1,260,000 shares of the Company's Series A Preferred Stock, having  
an  agreed upon value of $1.00 per share.  Similarly, the Company issued 
1,040,000 shares of its common stock, at $1.00 per share, to China 
Peregrine Enterprises in connection with the Company's asset purchase, and 
the Company raised $975,000 to meet the Joint Venture Contract capital 
requirements, through the issuance of 975,000 shares of its common stock in 
connection with the March, 1997 limited public offering.

The March 5, 1997 purchase of the assets of China Peregrine Enterprises by 
the Company resulted in the Company becoming an operating entity.  In 
consideration for this purchase, the Company issued 45% of its outstanding 
common stock to the limited partnership.  As a result, owing to the 
Company's non-operating status prior to the above-described acquisition, 
this transaction has been accounted for as a "reverse" acquisition for 
financial reporting purposes. Although China Peregrine Enterprises is 
deemed to be the acquiring company for financial accounting and reporting 
purposes, the legal status of the Company as the surviving and operating 
corporation remains intact.

With the Company's acquisition of 100% of the assets of China Peregrine 
Enterprises, the Company was poised to become the controlling partner of 
Green Food Peregrine.  Since, however, Green Food Peregrine is a national 
Chinese joint venture, the Company's replacement of China Peregrine 
Enterprises as the controlling partner was subject to (1) the approval by 
the Board of Directors of Green Food Peregrine and (2) the approval by the 
Ministry of Foreign Trade and Economic Cooperation (MOFTEC), which is the 
Chinese governmental authority that initially approved the Green Food 
Peregrine joint venture in 1993. In typical fashion, that approval process 
took the form of proposed amendments to the Green Food Peregrine Articles 
of Association, calling for the replacement of China Peregrine Enterprises 
with the Company. In addition, the Joint Venture Contract was modified to 
reflect the change. During the interim period between the March 5, 1997 
acquisition transaction and final governmental approval, the Company 
operated Green Food Peregrine pursuant to an agency agreement executed by 
China Peregrine Enterprises and the Company.  Final governmental approval 
for the amended Articles of Association was obtained on July 31, 1998.  

The Joint Venture Contract by and among China Peregrine Enterprises 
Limited, China National Green Food Corporation and Amer-China Partners was 
executed on April 13, 1993.  Subsequent to the execution of the contract, 
the Company purchased the rights of China Peregrine Enterprises Limited and 
Amer-China Partners to this contract.  Pursuant to its terms, the execution 
of the contract and of all material changes to the Joint Venture Contract 
must be approved by the Ministry of Foreign Trade and Economic Cooperation.  
In accordance with the Joint Venture Contract, a limited liability company, 
known as Green Food Peregrine Children's Food Company Limited, was formed 
in July of 1993.  As a limited liability company, the liability of each 
equity owner is limited to its respective contributions of registered 
capital.  As such, no party is liable to the other for the liabilities of 
Green Food Peregrine.

The total registered capital for the Joint Venture Company is US 
$5,000,000, with China Peregrine Enterprises initially contributing 60% of 
that amount.  The contribution of capital, which is now completed under the 
express terms of the Joint Venture Contract, was paid into Green Food 
Peregrine in stages, the last payment of which occurred in March of 1997, 
in the amount of US $1,200,000.

The stated purpose of the Joint Venture Contract is to strengthen economic 
cooperation and exchange of technology to develop and improve the quality 
of products which are competitive in the domestic and international markets 
and to improve economic efficiency and ensure satisfactory economic 
profits.  The scope of the business of Green Food Peregrine is stated as 
the manufacture, distribution and marketing of children's fresh milk and 
other children's food products, including baby foods and supplements.  The 
geographic scope of the joint venture was initially set in Shanghai and 
Beijing, with expansion to other cities with a population exceeding 2 
million upon approval by the Board of Directors.

No party to the Joint Venture Contract may assign or sell any or part of 
its ownership interests without a written consent from all other parties to 
the Joint Venture Contract.  Similarly, any changes in the registered 
capital of the Joint Venture Company must receive the unanimous approval of 
the Board of Directors and be approved by the examination and approval 
authority. The respective responsibilities of the parties under the Joint 
Venture Contract include China National Green Food Corporation's assistance 
and compliance with all local legal, governmental and other requirements 
for the operation of the business.  The other parties, including the 
Company, have the responsibility for  providing equipment and materials to 
operate the business and to initiate and maintain qualified management, who 
have the responsibility of operating the business of the Joint Venture 
Company.

The Board of directors of the Joint Venture Company shall consist of five 
members, with China National Green Food Corporation having the right to 
appoint two members, the Company having the right to appoint three members, 
plus the appointment of one advisory director, who has no right to vote.  
The term of board members is four years unless extended by the appointing 
party.  The Chairman of the Board is elected from the members appointed by 
China National Green Food Corporation.  While the Chairman is designated as 
the Legal representative of the Joint Venture, the Chairman acts at all 
times subject to the direction of the Board of Directors.  The Joint 
Venture Contract provides that the Board of Directors is the "highest organ 
of power of the joint venture" and the Board has the sole power to revise 
the Articles of Association for the Joint Venture Company, increase or 
assign the registered capital and make determinations concerning the 
termination, dissolution or liquidation of the joint venture.

The management of the business of the Joint Venture Company is the 
responsibility of the General Manager, who is nominated by the Company and 
approved by the Board of Directors.  The General Manager is responsible for 
implementing all resolutions of the Board of Directors and for organizing 
and exercising management of the daily administrative and production 
functions of the Joint Venture Company. The General Manager also is 
responsible for the preparation of the annual business plan and budget, 
which is submitted to the Board of Directors for review.  The General 
Manager's responsibility for the annual business plan and budget includes 
the procurement of equipment and other property, raising and expenditure of 
capital, plans for production and marketing, maintenance and repair of 
property and equipment, budgetary estimates of the Joint Venture Company 
based on production plans and budgets, the formulation of training plans 
for joint venture personnel, the provision for raw material, fuel, water, 
electricity and other public facilities needed by the Joint Venture 
Company.

In addition, the General Manager is responsible for the control of all 
labor-management affairs, the procurement of materials and equipment to be 
utilized by the Joint Venture Company in its business, and the preparation 
of financial statements of account for the Joint Venture Company.

The term of the Joint Venture Contract is fifty years, and can be extended 
by the Board of Directors upon the approval and examination of the approval 
authority.  The Joint Venture Contract, however, may be terminated by 
written notice prior to the expiration of the stated term upon certain 
events including a violation of the Joint Venture Contract by any party, 
without resolution; accumulated losses in excess of the total registered 
capital, without resolution; assignment of equity ownership by one party 
without approval; and the violation of Chinese laws in the operation of the 
joint venture.  Upon a written notice of termination, the parties to the 
Joint Venture Contract are charged with making attempts to negotiate a 
resolution of the circumstances which led to the notice of termination 
within sixty days after the issuance of the termination notice.  If the 
parties cannot reach an agreement to settle the matter, the Board of 
Directors is directed to submit an application to the examination and 
approval authority for dissolution.

The Joint Venture Contract provides for the continuation of the operation 
of the Joint Venture Company subsequent to the expiration of the 50 year 
term, either by unanimous agreement or upon the satisfaction of certain 
terms and conditions by less than all of the parties to the Joint Venture 
Contract.  If the Joint Venture Company is not continued under any 
circumstances beyond the term of the Joint Venture Contract, provisions are 
made for the orderly liquidation of the assets of the company and any 
remaining capital after payment of debts shall be divided according to the 
parties' respective registered capital contributions.

If any party fails to fulfill its liabilities under the Joint Venture 
Contract, the breaching party shall have thirty days to resolve such breach 
after receiving written notice of the breach from the other party.  If the 
breaching party fails to correct the breach, that party shall compensate 
the other parties for all the direct and foreseeable loss arising from the 
breach of contract. Under no circumstances, however, shall the breaching 
party's liability exceed its registered capital contribution.

If any dispute is not resolved in accordance with the terms of the contract 
in the time periods provided, the dispute shall be submitted to the 
American Institute of the Stockholm chamber of commerce in Stockholm, 
Sweden, for the final decision in accordance with the arbitration rules of 
the Institute.

As part of the March 5, 1997 transaction between the Company and China 
Peregrine Enterprises, the Company (through a loan from Mr. Reese) 
contributed approximately US $1,200,000 to the registered capital of Green 
Food Peregrine, satisfying the requirements of both the Green Food 
Peregrine Joint Venture Contract and the Articles of Association, for the 
payment of the final installment of the registered capital.  The monies 
extended by Mr. Reese were paid back, in part, by a limited public offering  
of the Company's common stock.

On October 1, 1997, the Company and Amer-China executed an agreement for 
the transfer of Amer-China's contract rights and equity interest in Green 
Food Peregrine to the Company.  The consideration for this transfer was 
120,000 shares of the Company's common stock.  With the approval of this 
transfer by the Ministry of Foreign Trade and Economic Cooperation, the 
Company's equity interest in Green Food Peregrine increased from 67.6% to 
70%.

On May 2, 1998, the Company approved and ratified an agreement between the 
Company and China National Green Food for the increase of the Company's 
equity interest in Green Food Peregrine from 70% to 76.92%.  This change in 
the ownership ratio will take place upon the payment of an additional US 
$1,500,000 in registered capital by the Company over the next eighteen 
months.  Since Chinese government regulations require approval of this 
change of the investment ratio by the Ministry of Foreign Trade and 
Economic Cooperation, the Company has agreed to an interim loan of US 
$500,000 to Green Food Peregrine, with the conversion of that loan to 
registered capital upon obtaining the required governmental approval.

On September 3, 1997 and June 28, 1998, respectively, the Company executed 
agreements to acquire a 52% interest in Hangzhou Meilijian Dairy Products 
Co., Ltd., ("Hangzhou Meilijian") from American Flavors China, Inc. 
("American Flavors China"), a Delaware corporation.  American Flavors China 
is controlled by Noam and Florence Sender.  Prior to this transaction, the 
Senders had no affiliation with the Company.  The remaining 48% of Hangzhou 
Meilijian is owned by Hangzhou Dairy Co., a controlled entity of the 
regional Chinese government.  On July 31, 1998, the Board of Directors of 
Hangzhou Meilijian approved the acquisition.  The acquisition transaction 
is subject to formal approval by the regional government agency.  That 
governmental approval process presently is pending. In the interim period, 
the operational control of Hangzhou Meilijian has been transferred to the 
Company pursuant to a principal/agent agreement with American Flavors 
China, effective July 31, 1998.  The Company, with the cooperation of its 
Chinese partner and American Flavors China, has installed a new management 
team to run the day to day operation of that dairy facility.

The Joint Venture Contract between Hangzhou Dairy Complex and American 
Flavors China, Inc. was executed on July 25, 1993. Pursuant to its terms, 
the execution of the contract and of all material changes to the Joint 
Venture Contract must be approved by the examination and approval 
authority.  As a limited liability company, the liability of each equity 
owner is limited to its respective contributions of registered capital.  As 
such, no party is liable to the other for the liabilities of the Joint 
Venture entity.

The total registered capital for the Joint Venture Company is US 
$5,000,000, with American Flavors China initially contributing 52% of that 
amount.  The contribution of capital, which is now completed under the 
express terms of the Joint Venture Contract, was paid into the Joint 
Venture entity in cash and equipment.

The stated purpose of the Joint Venture Contract is to strengthen economic 
cooperation and exchange of technology to develop and improve the quality 
of products which are competitive in the domestic and international markets 
and to improve economic efficiency and ensure satisfactory economic 
profits.  The scope of the business of the Joint Venture is stated as the 
manufacture, distribution and marketing of children's fresh milk and other 
children's food products, including baby foods and supplements.

No party to the Joint Venture Contract may assign or sell any or part of 
its ownership interests without a written consent from all other parties to 
the Joint Venture Contract.  Similarly, any changes in the registered 
capital of the Joint Venture Company must receive the unanimous approval of 
the Board of Directors and be approved by the examination and approval 
authority.

The Board of directors of the Joint Venture Company consists of six 
members, with three members being appointed by each party.  The term of 
board members is four years unless extended by the appointing party.  The 
Chairman of the Board is elected from the members appointed by American 
Flavors China and is designated as the legal representative of the Joint 
Venture.  The Board has the sole power to revise the Articles of 
Association for the Joint Venture Company, increase or assign the 
registered capital and make determinations concerning the merger, 
termination, dissolution or liquidation of the joint venture.  The 
management of the business of the Joint Venture Company is the 
responsibility of the Board of Directors, with limited powers delegated to 
the General Manager.

The term of the Joint Venture Contract is twenty years, and can be extended 
by the Board of Directors upon the approval and examination of the approval 
authority.  The Joint Venture Contract, however, may be terminated prior to 
the expiration of the stated term upon certain events including a violation 
of the Joint Venture Contract by any party, without resolution; accumulated 
losses resulting in the inability of the Joint Venture to continue; and 
conditions of impossibility of performance.

The Joint Venture Contract provides for the continuation of the operation 
of the Joint Venture Company subsequent to the expiration of the twenty 
year term, by unanimous agreement of the parties. If the Joint Venture 
Company is not continued beyond the term of the Joint Venture Contract, 
provisions are made for the orderly liquidation of the assets of the 
company and any remaining capital after payment of debts shall be divided 
according to the parties' respective registered capital contributions.

If any dispute is not resolved in accordance with the terms of the 
contract, the dispute shall be submitted to the American Institute of the 
Stockholm chamber of commerce in Stockholm, Sweden, for the final decision 
in accordance with the arbitration rules of the Institute.

                           BUSINESS OF THE COMPANY

GENERAL
-------

The Company is headquartered in North Palm Beach, Florida.  The Company 
directs the operations of its subsidiary, Green Food Peregrine, and the 
Hangzhou Meilijian joint venture, from that location and through frequent 
trips to China by either the Company's President or Chairman.  In addition, 
we have selected key personnel to run the day to day operation of the Green 
Food Peregrine dairy processing plant located in Shanghai, the People's 
Republic of China.  As such, we utilize monthly reports from our on site 
management, together with visits by stateside personnel to monitor and 
manage the Green Food Peregrine and Hangzhou Meilijian operations.

The mission of the Company is to implement a comprehensive manufacturing, 
distribution and marketing strategy that allows the Company to operate its 
joint operations in Shanghai profitably and, subsequently, to expand the 
joint venture business into new markets with dairy and non-dairy food 
products.  This strategy involves the creation of a nationwide network of 
state-of-the-art manufacturing facilities that can process products and 
deliver the highest quality fresh refrigerated pasteurized milk to the 
local consumer.  Such facilities will allow the Company to develop its 
position as an effective competitor in the dairy business in major cities 
in China and allow for the expansion of the Company's business into other 
dairy and non-dairy food products.  As such, the present business of the 
Company is two-fold: first, the manufacturing, marketing and distribution 
of dairy and, ultimately, a combination of dairy and non-dairy products to 
consumers; and second, the expansion of these operations to major cities 
throughout the People's Republic of China, either through acquisitions of 
existing dairy processing facilities or the construction of new facilities.

With respect to the expansion of products to include non-dairy items, such 
as fruit juices, new juice products currently are being formulated and 
tested in laboratory and consumer preference conditions to develop products 
which best appeal to local consumers.  We expect that this testing and 
formulation process will present sufficient data for a decision on the 
release of new non-dairy products in the Shanghai market during the last 
quarter of 1999.  In Hangzhou, our joint venture currently produces and 
sells a variety of juice products, which account for approximately 10% of 
Hangzhou Meilijian's annual gross sales.  While we are attempting to 
increase overall sales in the Hangzhou market, no special efforts are 
anticipated to increase non-dairy sales as a percentage of gross sales.

With respect to the Company's current acquisition activities, we anticipate 
that negotiations, due diligence and appraisal processes pertaining to 
existing dairies under consideration for possible acquisition will be 
completed by the third quarter of 1999, at which time a decision will be 
made.  Funding of any such acquisitions will be provided through the sale 
of the Company's equity.  At present, we do not anticipate the expansion of 
operations through the construction of new dairy facilities.

The Shanghai manufacturing plant has been in full operation since December 
of 1994, and consists of a 15,000+ sq. ft. facility having a daily capacity 
of 45 tons.  The process involves the receipt of tested and accepted milk 
from a farm tanker, which is transferred to a blanching process stage.  In 
the blanching process, the milk is heated and cooled to a very cold 
temperature to stabilize quality.  Also, a lactose enzyme is introduced at 
this stage, which converts lactose to glucose and galatose during 
subsequent cold storage.  The raw, stabilized and lactose reduced milk is 
then transferred to a blender, where pre-prepared and pre-weighed additives 
are incorporated.  The milk is placed in blend tanks, which perform an 
averaging and accumulation function for the pasteurization and homogenizing 
system, following which the product is transferred to cold finished product 
tanks.  As a final pre distribution step, the product is filled into gable 
top cartons of an appropriate size, and packed into corrugated boxes.

PRINCIPAL PRODUCTS, MARKETS AND DISTRIBUTION METHODS
----------------------------------------------------

The Products
------------

Historically and at present, the predominant milk product available to 
consumers in major cities in the People's Republic of China has been non-
refrigerated "baggie milk," prepared for retail consumption on a daily 
basis. Once opened, baggie milk must be consumed immediately, since the 
shelf life of this product is non-existent. The processing of baggie milk 
customarily has involved either a type of pasteurization that has not met 
western bacteria count standards, or the utilization of an ultra high 
temperature (UHT) process.  As a result of the excessive temperatures to 
which the milk is subjected, however, the UHT process can adversely affect 
the nutrient value and the taste of the end product. The distribution of 
milk in China has been through a methodology known as the "reserve system" 
which was put in place more than a decade ago as a way to deliver state-
produced milk directly to milk stations and public housing units.  Since 
refrigeration is not part of this distribution system, the trend in recent 
years has been to utilize UHT processed milk products in an attempt to meet 
bacteria count standards.

Fresh, pasteurized and refrigerated milk of western quality and other fresh 
dairy beverages generally have not been available at the retail level to 
any significant degree.  In recent years, several state owned facilities in 
major cities, along with a few regional joint ventures between the Chinese 
government and private groups, have developed more advanced methods of 
processing, packaging, and delivering fresh, refrigerated milk products.  
To date, however, these fresh refrigerated milk products represent less 
than a fifteen percent market share in the major markets throughout the 
People's Republic of China.

The Company's subsidiary, Green Food Peregrine, has constructed an initial 
manufacturing facility in Shanghai that processes, packages and distributes 
western quality fresh, pasteurized, refrigerated milk. Green Food Peregrine 
has produced and distributed branded products of this type since the second 
quarter of 1995. Initially, the Shanghai plant was set up as a test market 
to develop the Company's operational plans, ranging from production, 
operations, marketing and sales, prior to local expansion.  Included in 
this initial and continuing operation is our attempt to implement a strong 
consumer acceptance for our Happy Family(TM) brand of dairy products.  In 
Shanghai, Green Food Peregrine is the only company that sells western 
quality pasteurized, fresh, refrigerated milk in gable topped cartons.  
"Gable topped" cartons are traditional Western style treated paper box like 
containers with triangular "gable" tops.  Five years ago, 100% of the milk 
purchased by Shanghai consumers was the traditional non-refrigerated baggie 
milk.  In 1998, chain food stores in Shanghai significantly increased the 
availability of refrigeration at retail. The Happy FamilyJ brand is the 
only gable top milk sold in Shanghai, which is fresh, pasteurized and 
refrigerated.

Suppliers
---------

Both the Shanghai and Hangzhou operations utilize cartons and boxes 
supplied by International Paper Company.  In Shanghai, Green Food Peregrine 
purchases raw milk from a number of suppliers, with 60% of such purchases 
from East Sea Dairy Company and Hangzian Dairy, on an equal basis (30% 
each).  The remaining 40% of purchases are spread among a group of 
suppliers, with no significant percentage attributable to any one dairy.  
In Hangzhou, the Hangzhou Meilijian joint venture buys 80% of its raw milk 
from the Company's partner in that joint venture, Hangzhou Dairy Complex.  
The remaining 20% of purchases are from a variety of other dairies.  
Neither facility has experienced problems with suppliers and we anticipate 
that the required raw goods supply will be stable and adequate in the 
future.

Price Strategy
--------------

Green Food Peregrine refrigerated milk is sold in Shanghai at a premium 
compared to the price per ounce of the milk that is distributed in 240 ml 
plastic baggie packages.  Typically, baggie milk is sold at .8 renminbi 
(RMB), or approximately US$0.09 (at the government set exchange rate of 
8.3), as compared to 3 RMB, or approximately US$0.36, for the 240 ml Green 
Food Peregrine milk.  While more expensive, Green Food Peregrine market 
research conducted in 1994, suggests that consumers would prefer the Happy 
Family(TM) product to the "baggie milk" product and package. Green Food 
Peregrine in-market experience through 1998 confirms this and supports our 
strategy rationale that Chinese consumers are willing to pay a premium for 
quality and value.  Demographic statistics also confirm that urban 
consumers have the financial capability to pay a premium price for premium 
value at the consumer products level. Therefore, depending on the 
competitive individual products, and the quality of those competitive 
individual products, Green Food Peregrine expects to continue to price its 
gable top milk higher than the per ounce price of baggie milk.

The 1994 market research referenced above and elsewhere in this discussion 
was designed by Message Factors, Inc., a US marketing company controlled by 
Mr. Charles Beech, with experience in marketing in the People's Republic of 
China.  The actual market research was performed by Modern International 
Market Research, Inc., a recognized independent Chinese marketing research 
company based in Shanghai.

The referenced demographic statistics in this discussion are based upon 
extrapolations from the Chinese State Statistical Bureau Reports for 1997 
and China The Consumer Revolution, Conhua Li, Deloitte & Touche Consulting 
Group, John Wiley & Sons, Publishers, 1998.

Distribution
------------

Currently, Green Food Peregrine product distribution is being held at a 
limited store distribution level pending additional working capital 
contributions by the Company. Presently, numerous state owned dairies and 
beverage companies distribute throughout Shanghai. The direct competition 
for milk in cartons, however, emanates from two state owned enterprises and 
one Korean joint venture. Sales of carton milk represent approximately 40% 
of the total milk sales in the Shanghai metropolitan area. Since the 
commencement of the Shanghai plant operation, Green Food Peregrine has 
sought to place its products in chain stores in an effort to maximize its 
distribution efforts. In 1998, approximately 650 chain stores exist in 
Shanghai, with Green Food Peregrine distributing its product to 
approximately 70% of these stores.  The remaining 30% of the chain stores 
are in locations in the large Shanghai metropolitan area that are not 
efficient for our present distribution efforts. We believe that, as time 
moves forward, the vast majority of milk products will be sold through 
these stores and new channels of distribution will need to be developed for 
the smaller retail shops.

Distribution by Green Food Peregrine in Shanghai starts with the delivery 
of product from the processing plant to a distribution center in a large 
refrigerated truck operated by the joint venture.  Green Food Peregrine van 
type refrigerated trucks then pick up product at the distribution center 
once each day for delivery throughout the Shanghai metropolitan area, with 
typically 20 to 30 delivery stops per day.  Presently, drivers are not 
responsible for the collection of payment for product, which is 
accomplished through a direct invoice system.

In Hangzhou, 90% of product distribution is accomplished utilizing the 
traditional Chinese "reserve system" discussed below.  Each delivery truck 
is insulated and makes deliveries directly from the processing plant.  
Typically, each delivery truck makes one plant pick up and follows the same 
delivery route each day.

Distribution Opportunities
--------------------------

Until the very recent past (in the last three years) most fresh dairy 
products in China were delivered from a non-refrigerated vehicle to a non-
refrigerated point of purchase.  Typically, this point of purchase was in 
the housing units (similar to large apartment buildings) of consumers.  As 
a result, product was delivered within hours of production (in the very 
early morning hours), purchased by the consumer immediately upon delivery 
to their housing unit, and consumed within hours of purchase.  Under this 
"reserve system," milk is packaged in 240 ml soft baggie packets that are 
purchased daily in the lobby of the respective housing units.  This milk 
historically has a high bacteria count and less than satisfactory taste by 
western standards.

In Shanghai, as well as in most of the rest of China, delivery of fresh, 
refrigerated products and merchandising of fresh, refrigerated products at 
retail virtually had been non-existent. During the last two years, however, 
the appearance of retail super stores and grocery chain stores has opened 
the door for more "westernized" marketing of refrigerated products such as 
milk. Today, Green Food Peregrine products are sold in 450 super stores and 
chain stores.  These 450 stores are the largest of this type in Shanghai 
and represent approximately 85% of the milk business in area chain stores. 
Given that the number of these supermarkets in Shanghai grew in 1997 by 
40%, we expect Green Food Peregrine to be represented in over 800 such 
stores by the year 2000, as the number of these stores grows.

The incremental product acceptance of premium fresh, refrigerated milk in 
Shanghai is such that our distribution system must expand. We can produce 
many times the volume of milk than we can distribute currently and we 
intend to increase distribution to take advantage of our production 
capabilities.  Accordingly, the strategy developed for Shanghai for 1999 
calls for employment of additional refrigerated trucks to facilitate our 
expected expansion of distribution to the many retail outlets in Shanghai. 

Sales Expansion / Working Capital
---------------------------------

In 1999, Green Food Peregrine intends aggressively to expand its sales and 
distribution in Shanghai. We fully intend to increase our presence in all 
super stores and supermarkets while continuing to serve a small percentage 
of the local retail trade. The new consumer buying patterns in Shanghai 
have attracted many new food retailers in this market as consumer 
expenditures for food have increased by 60% in the past 5 years.

Servicing these stores and the introduction of new products such as juices 
could expand our sales approximately three-fold in 1999, and will require 
capital expenditures, including investment in equipment and working capital 
to finance receivables. The 1999 plan calls for the investment of 
approximately US $2,000,000 and, if successfully implemented, could bring 
the Green Food Peregrine business to a break even point during the next 
twelve months. In addition, Green Food Peregrine intends to develop, 
market, and distribute new products in Shanghai and other cities.  In the 
next twelve months, we will focus on the expansion of Green Food 
Peregrine's market share within the current market and with existing and 
new products in Shanghai.  The financing required for these activities will 
be provided by sales of the Company's securities, as discussed in Item 6.

Marketing and Advertising
-------------------------

In China, the viewing rate for television is over 80% for those who have 
watched television as recently as the previous day.  This figure rises to 
86% for urban population.  Nationwide, 54% of households own black and 
white televisions and another 40% have color televisions. In Beijing and 
Shanghai, 94% of households own color televisions.

At this time, there virtually is no advertising for milk or ready-to-feed 
infant formula in Shanghai. There is TV and print advertising for other 
carbonated and non-carbonated beverages, and multi-national company 
branded, aseptic and powdered products. We believe that all beverage 
advertising for branded quality products will increase overall awareness 
and consumption for these categories. After Green Food Peregrine has 
expanded its distribution, we intend to begin print and television 
advertising.

Competition
-----------

In Shanghai, Green Food Peregrine is subject to significant competition 
from various dairy product producing sources that offer both traditional 
baggie milk and gable top milk at reduced prices. In the first two months 
of 1998, QJ Dairy, a privately (non-government) owned Korean enterprise, 
entered the market as a new competitor and significantly lowered its prices 
in order to achieve a greater market share. While the price reduction by 
the competitor was dealt with effectively by the Company to protect its 
market share, there can be no assurance that similar events will not take 
place in the future, requiring more drastic measures by Green Food 
Peregrine. Accordingly, as part of the Company's marketing strategy, we 
intend to emphasize consumer awareness of the differences in quality and 
taste between Green Food Peregrine's products and those of competitors.  We 
believe that this type of consumer awareness can mitigate the negative 
effects of reduced prices by competitors.

Currently, there is competition for gable top milk in Shanghai. This 
competition is represented by Shanghai Dairy Corporation, a subsidiary of a 
Hong Kong conglomerate, which enjoys approximately 80% of the overall 
retail milk market in the metropolitan area, two state dairies and the 
Korean joint venture.  The only pasteurized and fresh product, however, is 
produced by the Company.  As a result, Green Food Peregrine intends to 
continue its focus on the quality of raw milk purchased, our processing, 
and the efficiency of packaging and distribution to promote its brand 
image.

For quite some time, there have been powdered and aseptic packaged products 
available in China that could be considered as indirect competition to the 
Happy FamilyJ product line. Green Food Peregrine market research, which 
commenced in 1994 (discussed above) and continues through the present, 
however, as well as Green Food Peregrine in-market consumer experience, 
demonstrate a consumer preference for the Happy FamilyJ brand.  Green Food 
Peregrine strategy is to continue to build the Happy FamilyJ brand and logo 
to create a real competitive point of difference through highest quality 
products, packaging and effective marketing.

Heinz and Gerber have been importing their non-refrigerated baby food 
products to China.  Also, Nestle and other companies have been importing 
powdered baby formula and powdered milk. There is a segment of the market 
that will purchase these products, but market research and the in-market 
experience of Green Food Peregrine, in combination with its refrigerated 
distribution system, demonstrates that there is today an existing and 
growing market for fresh refrigerated Happy FamilyJ products.

Warner Bros. Licensing
----------------------

In January 1999, the Company signed a Master Licensing Agreement with 
Warner Brothers Consumer Products Co. and obtained the right to utilize 
Warner Brothers' "Looney Tunes"TM character images and names in the 
Shanghai and Hangzhou greater metropolitan areas.  This licensing agreement 
gives the Company exclusive rights with respect to such images and names in 
the defined geographic regions for use in connection with specified 
categories of products sold by the Company's subsidiaries in those areas.  
The Company will introduce these "Looney Tunes"TM products in the Shanghai 
and Hangzhou markets in the summer of 1999.

ACQUISITION ACTIVITIES AND STRATEGY
-----------------------------------

General
-------

We intend to continue to focus the Company's efforts on producing quality 
products through technological innovation.  In addition, we intend to 
explore the opportunities presented by our joint venture business which are 
the result of a shortage of technological facilities with respect to the 
processing of dairy and other products, the emerging Chinese consumer 
market, and the shift from a controlled economy to a free market system in 
this industry.  The government of the People's Republic of China has 
prioritized the development of children's food, in particular milk 
products, to better serve its people. The role of agriculture, in general, 
in China is of paramount importance and is the largest segment of China's 
economy in terms of capital demands, consumer expenditure and employment.  
In addition, owing to the relatively low level of productivity in 
agricultural sectors and the challenge of feeding 1.2 billion people, the 
government of China continues to place a high priority on improving this 
segment of its economy with new technologies and methodologies.  As a 
result, the Ministry of Agriculture, which wholly owns our partner in Green 
Food Peregrine, plays an important role in economic and political decisions 
that effect the food industry in China.

Recently, the Chinese government changed its laws with respect to the 
future ownership of companies presently owned by state enterprises.  These 
laws now allow for the acquisition of state owned facilities by private 
investors, including foreign-Chinese joint venture combinations.  We intend 
to pursue an acquisition strategy which involves the creation of new joint 
ventures with our existing partner to acquire state owned dairies, to 
retool the production facilities of those dairies, and to offer high 
quality products to the Chinese consumer.

Hangzhou Meilijian Dairy Co.
----------------------------

The Hangzhou based joint venture has been in business for over 40 years and 
has over 420 employees. Sales for this joint venture in 1997 were 
approximately US $6,240,000.  Hangzhou Meilijian has 60% of the total 
market share in the Hangzhou urban area, which has a population of 5.8 
million.  Hangzhou Meilijian produces and distributes dairy and juice 
products, including baggie milk, milk powder, aseptic packaged milk and 
juice products, as well as bottled drinkable yogurt.  Hangzhou is located 
approximately 180 miles from Shanghai.  The Company plans to utilize this 
acquisition and its proximity to the Shanghai operation to cross-market 
products in both cities.

With this recent approval of the American Flavors China acquisition 
transaction by the Board of Directors of Hangzhou Meilijian, we intend to 
complete the formulation of a comprehensive market analysis to determine 
whether the 85% market share presently enjoyed by Hangzhou Meilijian can be 
improved.

Potential Acquisition Activities
--------------------------------

In August of 1998, management of the Company met with representatives of 
our partner in Green Food Peregrine to explore, among other things, the 
potential acquisition of state owned dairies as part of the national 
government's announced privatization program, either through the existing 
joint venture or through the establishment of individual, separate joint 
ventures for each potential acquisition site. A strategy was developed with 
our partner to pursue this acquisition program.

As part of this strategy, the Chairman and President of the Company, 
together with representatives of our partner in China, met with 
representatives of four state-owned dairies and visited each dairy 
facility.  The Company has executed "letters of intent" with each of these 
dairies and with our partner to continue the acquisition/negotiation 
process.

In China, the acquisition of state-owned enterprises by foreign entities 
usually involves the creation of a joint venture company by articles of 
association contemporaneous with the execution of a joint venture 
agreement.  That agreement then governs the respective registered capital 
requirements of the parties and the ongoing rights and obligations of such 
parties in and to the joint venture business. The actual "price" of the 
acquisition of hard assets is a non-negotiated figure, set prior to the 
execution of these documents by an appraisal report generated by government 
qualified and approved third-party business appraisers. Presently, we are 
examining a proposed joint venture contract for potential use in this 
process and we are arranging for appraisals of each dairy involved.  While 
these activities are ongoing, "letters of intent" in China have no legal 
effect and we cannot assume that  acquisitions are probable.

DOING BUSINESS IN CHINA

Investments in China involve several risks including internal and 
international political risks, evolving national economic policies as well 
as financial and accounting standards, expropriation and the potential for 
a reversal in economic conditions.

Green Food Peregrine's revenues will be in Chinese renminbi (RMB).  In 
order to pay the Company fees and dividends, Green Food Peregrine will need 
to convert RMB into US dollars.  Under current Chinese law, the conversion 
of RMB into foreign currency requires government consent.  To date, Green 
Food Peregrine has been able to convert currency without problem.  
Government authorities, however, may impose restrictions, which could 
impact this flexibility.

To complete the planned expansion into additional facilities, we will need 
various levels of central and local government approval. These approvals 
may include site permits, building permits, and approval for transfer of 
assets.  While we believe that, because of the importance attached to 
nutrition issues for children by the central government, the encouragement 
for the Company to expand either through the Green Food Peregrine joint 
venture or separate new joint ventures will continue, there can be no 
assurance of continuation of the government support which Green Food 
Peregrine has enjoyed since its inception.

With respect to the conditions and activities of Chinese companies with 
which the Company is involved pursuant to its joint venture contracts, the 
operations of these joint venture companies must be viewed in the context 
of the Chinese business environment existing in the People's Republic of 
China. There can be no assurance that the sources from which information is 
provided concerning the day to day activities of such joint ventures, 
including their respective relationships to local governmental and 
regulatory authorities, are wholly reliable.  Official statistics also may 
be produced on a basis different to that used in western countries.  Any of 
the statements as to operations contained in this document must be subject 
to some degree of uncertainty due to doubts about the reliability of 
available information from and with regard to the respective joint 
ventures.

Moreover, while the government of the People's Republic of China has 
pursued a policy which has prioritized the development of children's food, 
in particular milk products, to better serve its people resulting in a 
focus on the role of agriculture, in general, in China, there can be no 
assurance that this policy will continue in the long term.  Similarly, the 
recent changes in the laws of China pertaining to the future ownership of 
commercial facilities presently owned by the state, which has resulted in a 
perceived policy shift from a controlled economy to a free market system in 
the dairy industry, may not be accurate in concept or in execution.  As 
such, the risk is present that the acquisition strategy set forth in this 
document may not be successful owing to a change in government approach, or 
that the very existence of the joint venture businesses in which the 
Company has controlling interests may be affected adversely.

EMPLOYEES

As of February 28, 1999, the Company had four full time employees located 
at its North Palm Beach corporate offices.  For the same time period, Green 
Food Peregrine had 75 employees servicing its Shanghai facility, 
functionally categorized as follows: management, 4; administrative, 10; 
manufacturing 41; and distribution, 20.

PART I

ITEM 2 - DESCRIPTION OF PROPERTY

Neither China Peregrine Food Corporation nor its subsidiary, Green Food 
Peregrine, currently owns any real property.  As of February 1, 1999, the 
Company's corporate offices are located at 11300 US Highway 1, Suite 202, 
North, Palm Beach, Florida, pursuant to a lease with HCF Realty, Inc., 
having a term of five years.  The Company's current aggregate monthly rent 
amounts to approximately $4,900, which will increase (assuming an estimated 
annual increase of 2%) to approximately  $6,100 per month by the fifth 
year.

The following properties are currently leased by Green Food Peregrine:

1.    Office facilities located in Shanghai presently are rented on a month 
      to month basis following the expiration of a lease term ending 
      November 28, 1998, at the rate of RMB16,520 per month (approximately 
      US $1,990).  A new lease term will be negotiated for this space 
      during the later part of March, 1999.

2.    A ground lease for the land on which the dairy processing facility is 
      located for a term ending June 30, 2043, at the rate of RMB25,000.00 
      per month (approximately US $3,012).

3.    Distribution center located in Shanghai, for a monthly tenancy, at 
      the rate of RMB 8,500 per month (approximately US $1,025).

While Green Food Peregrine does not own any real estate, it does own the 
buildings located on the land, which is subject to the above described 
ground lease.  As of December 31, 1997, the plant and buildings comprising 
the Shanghai facility are carried on the books of Green Food Peregrine at a 
net book value of US $495,661.

Currently, the Company does not have a policy to acquire property for 
possible capital gains or income generation.  In addition, the Company does 
not invest in securities of real estate entities or developed or 
underdeveloped properties.

PART I

ITEM 3 - LEGAL PROCEEDINGS

There currently are no claims or lawsuits against the Company or its 
subsidiaries.  The Company, however, may become involved in litigation and 
claims arising in the ordinary course of its business.

PART I

ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

      The annual (special) meeting of the shareholders of the Company was 
held at The Ritz-Carlton, Fairlane Plaza, 300 Town Center Drive, Dearborn, 
Michigan, on September 24, 1998, at 1:00 p.m.  The following matters were 
submitted to the shareholders at the Annual Meeting.

      The first Proposal to be submitted at the Annual Meeting was the 
election of four (4) directors of the Company for respective terms to 
expire at the second subsequent annual meeting of shareholders of the 
Company, to be held in the year 2000.  The Board of Directors accepted 
nominations for the following persons as directors of the Company, all of 
whom presently serve as directors of the Company:

      Mr. Charles Beech     (Chairman, Chief Operating Officer and a Director)
      Mr. Paul Downes       (Director)
      Mr. John McCormack    (Director)
      Mr. Roy Warren        (President and a Director)

Total  Share Votes Recorded  for Directors                  5,782,832
Total Share Votes                                           7,553,219
Quorum Percentage                                               76.56%

<TABLE>
<CAPTION>
                           For          Against    Abstain
                           ---          -------    -------

<S>                        <C>                     <C>
Votes for Mr. Beech        5,585,631               197,201(1)
Votes Mr. Downes           5,385,631               397,201(2)
Votes for Mr. McCormack    5,585,631               197,201(1)
Votes for Mr. Warren       5,585,631               197,201(1)

<FN>
<F1>  (1)  Abstain: All Broker, Dealers
<F2>  (2)  Abstain: 197,201 Broker, Dealers
</FN>
</TABLE>

Directors whose term of office as a director expires in 1999:

      Mr. John Cummings
      Mr. Philip Pearce
      Mr. Michael Lucci
      Mr. George Holdsworth

      The second Proposal submitted at the Annual Meeting was the 
ratification or rejection of the selection by the Board of Directors of BDO 
Seidman, LLP as independent public accountants for the Company for the 
current fiscal year and for the past fiscal year.  BDO Seidman, LLP has 
examined the financial matters of the Company and of its Chinese subsidiary 
as well as its predecessor operating entity and has issued a report on its 
audit of said matters for the years ending December 31, 1996 through 1998.

Total  Share Votes Recorded for  Accountant                 5,602,832
Total Share Votes                                           7,553,219
Quorum Percentage                                               74.17%

<TABLE>
<CAPTION>
                           For          Against    Abstain
                           ---          -------    -------

<S>                        <C>          <C>        <C>
Votes for Ratification     5,585,530    200 (1)    14,102 (1)

<FN>
<F1>  (1)  All Broker, Dealers
</FN>
</TABLE>


PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS

Market Price
------------

Of the 7,795,462 shares of the Company's Common Stock issued and 
outstanding as of March 1, 1999, approximately 1,000,000 shares are and 
have been subject to over-the-counter trading on the NASD OTC Electronic 
Bulletin Board, since October 24, 1997. The following quarterly quotations 
for Common Stock transactions on the OTC Bulletin Board reflect inter-
dealer prices, without retail mark-up, mark-down or commissions and may not 
represent actual transactions.

<TABLE>
<CAPTION>
                 QUARTER         HIGH BID PRICE    LOW BID PRICE
                 -------         --------------    -------------

<S>         <C>                      <C>               <C>
1997        Q4 (10/1 - 12/31)        $6.87             $3.00

1998        Q1 (1/3 - 3/31)          $4.10             $2.10

            Q2 (4/1 - 6/30)          $2.60             $0.60

            Q3 (7/1 - 9/30)          $2.50             $0.33

            Q4 (10/1 - 12/31)        $2.25             $1.00
</TABLE>


Non-Market Equity Subject to Options, Warrants and Conversion
-------------------------------------------------------------

Stock Warrants and Options

The Company issued warrants for 975,000 shares of common stock as part of 
the units sold in the Rule 504, Regulation D limited public offering.  
These warrants may be exercised at any time after May 31, 1998, and from 
time to time thereafter through and including March 31, 1999, at $5.00 per 
share of common stock purchased.  The common stock underlying these 
Warrants are not part of or covered by the 1997 504 limited public 
offering.

During 1997, the Company signed a total of four stock options agreements 
with certain shareholders and non-employee directors.  These four stock 
option agreements are summarized as follows:

<TABLE>
<CAPTION>
                     Granting     Options     Exercise    Vesting    Expiration
                       Date       Granted      Price      Period        Date
                     ----------------------------------------------------------

<S>                  <C>         <C>           <C>         <C>       <C>
Agreement One        4/29/97     1,005,533     $1.00       None      4/28/2002
Agreement Two        4/30/97     2,000,000     $1.00       None      4/29/2002
Agreement Three      10/1/97        25,000     $1.00       None      9/30/2002
Agreement Four       10/1/97        15,000     $1.00       None      9/30/2002
------------------------------------------------------------------------------
Total options granted in 1997    3,045,533
                                 =========
</TABLE>


On May 2, 1998, the Company issued 557,000 units (each unit composed of one 
share of common stock and one warrant to purchase one share of common 
stock) at a price of $2.50 per unit, pursuant to a private offering in 
accordance with the exemption provided in Regulation D, Rule 506. The 
holders of such warrants are entitled to purchase, from time to time, up to 
557,000 shares of common stock, at an exercise price of $1.00 per share, at 
any time after June 30, 1998 and through and including June 30, 2003. 

On November 23, 1998, the Company issued 83,334 shares of its Series C 
Convertible Preferred Stock, and 50,000 shares of such stock on January 4, 
1999, pursuant to a Rule 504, Regulation D. limited public offering.  
Associated with this 504 offering was the grant of 533,335 Warrants for the 
Company's Common Stock. at an exercise price of $1.00 per share.  Of the 
Warrants granted, 83,334 expire May 10, 1999, and 450,000 Warrants will 
expire April 30, 1999.

Convertible Preferred

Series A: In February, 1997, the Company reorganized its members of the 
founding group.  As a result, the total founders increased from one entity 
to three individuals and two entities.  Consequently, 788,000 shares of 
common stock and 500,000 shares of preferred stock at par value of $0.001 
per share were issued to the newly joined founders, pursuant to the 
exemption from Section 5 registration provided by Section 4(2) of the 
Securities Act of 1933 (the Act).

Each share of Series A preferred stock entitles its holder to receive 
dividends at the same rate paid to common shareholders. Each share of 
Series A preferred stock is convertible into one share of common stock, as 
adjusted, for such things as stock split, stock dividends and other similar 
dilutive occurrences.  At any time subsequent to December 31, 1997, the 
holder of each share of Series A preferred stock is allowed to convert all 
or part of the Series A preferred shares into corresponding shares of 
common stock on a one for one basis.

Series B: On March 15, 1997, the Company issued 1,260,000 shares of Series 
B Convertible Preferred Stock, pursuant to Section 4(2) of the Act, at 
stated value of $1.00 per share to three shareholders in consideration of 
their assumption of the obligation to pay off approximately $1,260,000 of 
an outstanding line of credit owed by CPEL to a Tennessee-based financial 
institute.

Each share of Series B preferred stock is convertible into one share of 
common stock, as adjusted, for such things as stock split, stock dividends 
and other similar dilutive occurrences.  At any time subsequent to December 
31, 1998 the holder of each share of Series B preferred stock, is allowed 
to convert all of part of the Series B preferred shares into corresponding 
shares of common stock.  Each share of Series B preferred stock entitles 
its holder to accumulate dividends at 9% per annum, even if the dividends 
are payable only upon dissolution and liquidation of the Company and 
redemption called by the Company.  However, each share of Series B 
preferred stock entitles its holder to receive dividends at the same rate 
paid to common shareholders if the Company declares or pays dividends to 
common shareholders.  The shares of Series B preferred stock are redeemable 
at $1.00 per share totaling $1,260,000 called by the Company any time after 
December 31, 1998.

Series C: On November 23, 1998 and January 4, 1999, respectively, the 
Company issued 133,334 shares of Series C Convertible Preferred Stock, 
pursuant to a Rule 504, Regulation D limited public offering, at a stated 
value of $3.00 per share to two corporate investors.  The proceeds of this 
504 offering were used by the Company to fund an increase of its equity 
share of the registered capital in the Green Food Peregrine joint venture.

Series C Convertible Preferred Stock shall pay or accrue dividends at the 
rate of 8% per annum, as a percentage of the Stated Value, payable in cash 
or Common Stock quarterly, at the option of the Company. Accrued dividends 
shall be payable upon conversion or redemption Upon any liquidation, 
dissolution or winding-up of the Company, whether voluntary or involuntary, 
but subject to the Liquidation rights of the holders of Series A and Series 
B Convertible Preferred Stock, the holders of Series C Convertible 
Preferred Stock shall be entitled to receive out of the assets of the 
Company, whether such assets are capital or surplus, for each share of 
Series C Convertible Preferred Stock an amount equal to the Stated Value 
plus all accrued but unpaid dividends per share, whether declared or not, 
before any distribution or payment shall be made to the holders of any 
Junior Securities, and if the assets of the Company shall be insufficient 
to pay in full such amounts, then the entire assets to be distributed to 
the holders of Series C Convertible Preferred Stock shall be distributed 
among the holders of Series C Convertible Preferred Stock ratably in 
accordance with the respective amounts that would be payable on such shares 
if all amounts payable thereon were paid in full. The Company shall have 
the right, at the Company's option, to redeem all or a portion of the 
Series C Convertible Preferred Stock at a price per share equal to the sum 
of (a) the Stated Value and (b) a sum equal to ten percent (10%) of the 
Stated Value, computed on a simple interest, non-compounded, and non-
annualized basis.

Rule 144 Stock
--------------

Of the 7,795,462 shares of Common Stock presently issued and outstanding, 
1,388,456 shares have been held by non-affiliates of the Company for in 
excess of one year; an additional 2,695,544 shares of Common Stock have 
been held by affiliates for in excess of one year. These shares may be sold 
pursuant to Rule 144, subject to the volume and other limitations set forth 
under Rule 144. In general, under Rule 144 as currently in effect, a person 
(or persons whose shares are aggregated) who has beneficially owned 
restricted shares of the Company for at least one year is entitled to sell, 
within any three-month period and in accordance with an approved manner of 
sale, an amount of shares that does not exceed the greater of (i) the 
average weekly trading volume in the Company's common stock during the four 
calendar weeks preceding such sale, or (ii) 1% of the shares then 
outstanding. A person who is not deemed to be an "affiliate" of the Company 
and who has held restricted shares for at least two years would be entitled 
to sell such shares without regard to the resale limitations of Rule 144.

<TABLE>
<CAPTION>
Holders at  March 1, 1999
-------------------------

<S>                            <C>                 <C>
Common Stock                   7,795,462 shares    442 holders
Preferred Stock (Series A)       500,000 shares      1 holder
Preferred Stock (Series B)     1,260,000 shares      3 holders
Preferred Stock (Series C)        58,715 shares      1 holder
</TABLE>


Dividends
---------

The Company has not paid dividends on its Common Stock and does not 
anticipate paying dividends. The Company intends to retain future earnings, 
if any, to finance working capital, to expand its operations, and to pursue 
its acquisition strategy.

The holders of Common Stock are entitled to receive, pro rata, such 
dividends and other distributions as and when declared by the Company's 
Board of Directors out of the assets and funds legally available therefor. 
The availability of funds to the Company is dependent upon dividends or 
distribution of profits from its subsidiaries, and may be subject to 
regulatory control and approval by the appropriate government authorities 
on either a regional or national level in the People's Republic of China.

The Company has accrued dividends for its Convertible Preferred Stock in 
the amount of $85,050.00, as of December 31, 1997 and $200,667 as of 
December 30, 1998.

RECENT SALES OF UNREGISTERED SECURITIES

FISCAL YEAR 1997

1997 Recapitalization
---------------------

Prior to February 1997, the Company (then known as Shakespeare Holding, 
Inc.) was owned by Tamarind Management, Ltd., which held 472,000 shares of 
Shakespeare's common stock as the original "founder."  Shakespeare did no 
business and was not an operating entity.  In February 1997, however, the 
Company underwent a "reorganization" by increasing the members of its 
founding group to include two of the major participants in the China 
Peregrine Enterprises, Limited (CPEL), the corporate General Partner of the 
CPEL limited partnership, and a financial consultant.  As a result, the 
total founders increased from one entity to three individuals and two 
entities. Consequently, 788,000 shares of common stock and 500,000 shares 
of preferred stock at par value of $0.001 per share were issued to the 
newly joined founders, pursuant to the exemption from Section 5 
registration provided by Section 4(2) of the Securities Act of 1933 (the 
Act).  This "reorganization" resulted from and was part of an overall plan 
of the new "founders" to utilize the Company to purchase the assets of 
CPEL, and operating entity with business interests in the People's Republic 
of China.

Merger with Shell
-----------------

On February 28, 1997, the Company issued 25,000 shares of common stock in 
exchange for 100% of equity interest in Manor Products Corp. (Manor), 
pursuant to the safe harbor provisions of Regulation D, Rule 504.  Manor 
was a Delaware company established on January 10, 1996 without any 
operating activities or substantial assets.  In early 1996, 80% of equity 
interest of Manor was bought by Mr. Paul Downes, a principal of Tamarind 
Management, Ltd., the initial founding entity of the Company.  Manor had 
331 shareholders and 20,000,000 shares of common stock authorized.  As of 
February 9, 1997, Manor had 4,090,448 shares outstanding.  Pursuant to a 
merger agreement, each one thousand shares of Manor were exchanged for one 
share of common stock of the Company, with fractional share rounded up to 
the nearest full share.  The remaining shares of the 25,000 shares of 
common stock issued by the Company at that time were issued to this 
principal individually.

Purchase of China Peregrine Enterprises, Limited Assets
-------------------------------------------------------

On March 5, 1997, the Company issued 1,040,000 shares of common stock in 
exchange for the assets of China Peregrine Enterprises, Limited (CPEL), 
pursuant to Section 4(2) of the Act.  CPEL was a Texas limited partnership, 
set up to manage its interest in China operation conducted by a Chinese 
joint venture known as Green Food Peregrine Children's Food Co. Ltd. (GFP).  
By this transaction, the Company assumed all of the rights and obligations 
of CPEL in and to the GFP Chinese Joint Venture.  With the completion of 
the transaction, the Company became an operating entity.

Issuance of Preferred Stock in 1997 in Consideration for Assumption of Debt
---------------------------------------------------------------------------

As a condition to the Company's purchase of CPEL's assets, the Company 
required that all non joint venture obligations of CPEL be removed from 
CPEL's books. Accordingly, three shareholders of the Company agreed to 
assume such non joint venture debt, which consisted of a line of credit 
obligation existing at the First Tennessee Bank.  On March 15, 1997, the 
Company issued 1,260,000 shares of Series B preferred stock, pursuant to 
Section 4(2) of the Act, at stated value of $1.00 per share to three 
shareholders in consideration of their assumption of the obligation to pay 
off approximately $1,260,000 of an outstanding line of credit owed by CPEL 
to the Tennessee-based financial institution.  The outstanding line of 
credit was incurred by CPEL during 1995 and 1996 and paid off in 1997.  Two 
of the three shareholders to whom the Series B shares were issued were part 
of the reorganized "founders" group, and the third was a limited partner in 
CPEL

Satisfaction of registered Capital Requirements of Joint Venture
----------------------------------------------------------------

In the Spring of 1997, the payment of the last installment to satisfy the 
capital contribution requirements of the GFP joint venture contract and 
Articles of Association for that joint venture company became due. Payment 
of this last installment was necessary to secure the continued involvement 
of the Company in the GFP joint venture. Accordingly, by late March, 1997, 
certain shareholders of the Company loaned sufficient funds to pay the 
capital contribution installment then due. On May 1,1997, the Company 
closed a Rule 504, Regulation D, limited public offering of 975,000 units, 
each unit consisting of one share of common stock and a warrant for one 
share of common stock, at $1.00 per unit to raise money to repay these 
loans, the proceeds of which had been utilized to pay the required capital 
contribution. The net proceeds of this offering amounted to $975,000. All 
of the proceeds of this limited public offering were earmarked for and 
utilized to repay the shareholders loans. This 504 offering was combined 
with the issuance of 25,000 shares by the Company in the above discussed 
merger transaction with Manor Corp. for reporting and integration purposes.  
The common stock underlying the warrants were not part of this 504 
offering, having an exercise date deferred for one year.  This offering 
closed May 1, 1997.

Working Capital Funding
-----------------------

Subsequent to Rule 504, Regulation D offering, the Company conducted a 
separate private placement to issue 1,520,000 shares of its common stock at 
$1.00 per share, commencing May 2, 1997, to raise funds for general working 
capital. The total proceeds from this Section 4(2) private placement, which 
closed May 31, 1997, amounted to $1,520,000.  All subscribers were required 
to execute subscription agreements and a questionnaire, which qualified 
them as "accredited" investors.  These purchasers were existing 
shareholders, having participated in the 504 offering, or were associates 
of such 504 investors.

Issuance of Common Stock for Services
-------------------------------------

During 1997, the Company incurred consulting, legal and accounting expenses 
relating to these fund raising activities, and other directors' fees and 
travel expenses.  The Company issued a total of 469,000 shares of common 
stock at $1.00 per share for these expenses, pursuant to Section 4(2).  
Each recipient of these shares had worked closely with management of the 
Company and had access to detailed corporate information.

<TABLE>
<CAPTION>
Description                                  Date       Shares      Identity
-------------------------------------------------------------------------------------------------------

<S>                                        <C>          <C>         <S>
Assumption of CPEL's accrued legal         03/15/97     200,000     Peregrine Enterprises, Inc.
fees

Issuance of stock for legal fees           03/30/97      15,000     Roy D. Toulan, Jr.
relating to fund raising

Issuance of stock for stock                04/15/97     100,000     Continental Capital & Equity 
promotion service                                                   Corporation

Issuance of stock for promotion            05/01/97      35,000     Robert Mazzei (10,000); Settondown
services                                                            Capital Int'l (10,000); John Bannon 
                                                                    (10,000); Carol Bowes (5,000)

Issuance of stock for financial            06/01/97      10,000     Manchester Asset Management, Ltd.
consultation services 

Issuance of stock for consulting           07/01/97      24,000     Susan Lurvey (12,000); Dennison 
service                                                             Chapman (12,000)

Issuance of stock for accounting           10/01/97      15,000     Seymour Borislow (10,000)
service                                                             Jeffrey Factor (5,000)

Issuance of stock for consulting           10/15/97      25,000     David Dreyer
service 

Issuance of stock for a directors' fee     11/01/97      25,000     Philip Pearce

Issuance of stock for travel expense       11/17/97      20,000     Tamarind Management Ltd.(15,000)
                                                                    Dale Reese (5,000)
-------------------------------------------------------------------------------------------------------
</TABLE>


Grant of Options
----------------

During 1997, the Company signed a total of four stock options agreements 
with certain shareholders and non-employee directors for restricted shares 
pursuant to Section 4(2) of the Act.  These four stock option agreements 
are summarized as follows:

<TABLE>
<CAPTION>
                     Granting     Options     Exercise    Vesting    Expiration
                       Date       Granted      Price      Period        Date
                     ----------------------------------------------------------

<S>                  <C>         <C>           <C>         <C>       <C>
Agreement One        4/29/97     1,005,533     $1.00       None      4/28/2002
Agreement Two        4/30/97     2,000,000     $1.00       None      4/29/2002
Agreement Three      10/1/97        25,000     $1.00       None      9/30/2002
Agreement Four       10/1/97        15,000     $1.00       None      9/30/2002
------------------------------------------------------------------------------
Total options granted in 1997    3,045,533             -none exercised
</TABLE>
                                 ---------

FISCAL YEAR 1998

Issuance of Stock for Services Rendered
---------------------------------------

On January 15, 1998, the Company issued 50,000 shares of common stock at 
$1.00 per share to Settondown International, Ltd. (Settondown) in exchange 
for services by that capital service company, pursuant to Section 4(2) of 
the Act.  Settondown has consulted with the Company and its reorganization 
"founders" from early 1997.  Settondown's business involves consultation 
and finder services for corporate financing on a private and limited basis.

On February 2, 1998, the Company issued 5,272 shares of common stock at 
$2.25 per share to Kenneth G. Hanson in exchange for his services in 
connection with the furnishing of the Company's corporate office, pursuant 
to Section 4(2) of the Act.  Mr. Hanson gained detailed knowledge of the 
business and operations of the Company through his access to top level 
management at the West Palm Beach corporate offices.

Purchase of Amer-China Partners, Limited Interest in Joint Venture
------------------------------------------------------------------

On February 19, 1998, the Company issued 120,000 shares of common stock at 
a price of $1.00 per share to Amer-China Partners, Limited (ACPL) pursuant 
to a signed agreement dated October 1, 1997, to acquire ACPL's entire 
interest and right (2.4%) in and to the Green Food Peregrine Children's 
Food Co. Ltd., pursuant to Section 4(2) of the Act.

Working Capital Funding
-----------------------

On May 2, 1998, the Company issued 557,000 units (each unit composed of one 
share of common stock and one warrant to purchase one share of common 
stock) at a price of $2.50 per unit, pursuant to a private offering in 
accordance with the exemption provided in Regulation D, Rule 506.  The net 
proceeds of this offering were $1,387,500.  Among the 557,000 shares 
issued, 2,000 shares were issued in exchange for accounting services.  The 
holders of such warrants are entitled to purchase, from time to time, up to 
557,000 shares of common stock, per value $0.001 per share, at an exercise 
price of $1.00 per share, at any time after June 30, 1998 and through and 
including June 30, 2003.  The 557,000 shares were sold to 33 purchasers 
who, with one exception,  all qualified as "accredited" investors.

Purchase of American Flavors China, Inc. Interest in
----------------------------------------------------
 Hangzhou Meilijian Joint Venture
 --------------------------------

On June 19, 1998, the Company entered into a definitive agreement with 
American Flavors China, Inc., a U.S.-based entity, to acquire its 52% 
equity interest in Hangzhou Meilijian Dairy Products Co. Ltd. (Hangzhou 
Meilijian).  The Boards of Directors of both companies and of the joint 
venture have approved the acquisition. Hangzhou Dairy Co. Ltd., a state-
owned enterprise in Zhejian Province of China, controls the remaining 48% 
of equity interest in Hangzhou Meilijian.  The aforesaid acquisition is 
subject to approval by the local government authorities, which presently is 
pending. The terms of the acquisition agreement, in part, resulted in the 
issue of 1,531,685 shares of the Company's common stock to American Flavors 
China, Inc., pursuant to Section 4(2) of the Act.  The negotiations for 
this purchase covered a time period at approximately one year.  During that 
time, the principals at American Flavors China, Inc. were given appropriate 
corporate information concerning the business and operations of the 
Company.

Working Capital Funding
-----------------------

Between December 17, 1998 and February 18, 1999, the Company issued 265,000 
shares of its Common Stock to 15 holders of Warrants, issued May 1, 1997, 
as a result of the exercise of those Warrants.  All investors receiving 
these shares were shareholders of the Company and are "accredited" 
investors.  The proceeds from this exercise aggregated $265,000.

Funding of Increase in Company's Equity Interest in
---------------------------------------------------
 Green Food Peregrine Joint Venture
-----------------------------------

On May 2, 1998, the Company approved and ratified an agreement between the 
Company and China National Green Food for the increase of the Company's 
equity interest in Green Food Peregrine from 70% (assuming the approval of 
the Amer-China transfer) to 76.92%.  This change in the ownership ratio 
will take place upon the payment of an additional US $1,500,000 in 
registered capital by the Company over an eighteen month period.  Since 
Chinese government regulations require approval of this change of the 
investment ratio by the Ministry of Foreign Trade and Economic Cooperation, 
the Company has agreed to an interim loan of US $500,000 to Green Food 
Peregrine, with the conversion of that loan to registered capital upon 
obtaining the required governmental approval.  To fund this equity 
increase, commencing on October 21, 1998, the Company initiated a limited 
public offering of its Series C Convertible Preferred Stock, pursuant to 
Rule 504 of Regulation D.  On November 19, 1998, the Company issued 83,334 
shares of its Series C Convertible Preferred Stock, plus a like number of 
Warrants, at a price of $3.00 per share (including the Warrants) to Utah 
Resources International, Inc., a sophisticated investor, resulting in 
proceeds of $250,000.  Subsequently, on December 29, 1998, this Rule 504 
limited public offering was amended to offer and issue 50,000 shares of 
like Series D Convertible Preferred Stock, plus nine Warrants per share, at 
a price of $3.00 per share (including Warrants), to Explorer Fund 
Management, Inc., a sophisticated investor, resulting in proceeds of 
$150,000.  The aggregate proceeds received from this initial and amended 
Rule 504 limited public offering, which closed January 4, 1999, amounted to 
$400,000.  In addition, the exercise of all Warrants at the exercise price 
would result in an additional $533,334 in proceeds applied toward the 
Company's purchase of additional registered capital in Green Food 
Peregrine.

PART II

ITEM 6 - MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND OPERATIONS

GENERAL

The following discussion and analysis of the Company's financial condition 
and operations should be read in conjunction with the information which 
follow, as well as the Report On Audited Consolidated Financial Statements 
For The Years Ended December 31, 1996 and 1997, and December 31, 1998. 
Since, for reporting purposes, a "reverse" acquisition occurred in March of 
1997, between the Company and China Peregrine Enterprise, whereby the 
Company became an operating entity, the discussion and analysis of the 
periods prior to March of 1997 pertains to the financial condition and 
operation of China Peregrine Enterprises. The following discussion contains 
trend information and other forward looking statements that involve a 
number of risks and uncertainties.  The Company's actual future results 
could differ materially from its historical results of operations and those 
discussed in the forward looking statements.

Overview
--------

The Company and its subsidiary, Green Food Peregrine, engage in the 
business of the processing, marketing and distribution of dairy products in 
the People's Republic of China.  Presently, the Company's primary business 
activities are in the Shanghai market.  The business of the Company also 
involves the acquisition or construction of other dairy processing plants 
in cities located in the People's Republic of China having a population of 
at least two million.  While the Company has purchased a controlling equity 
interest in an existing joint venture located in Hangzhou, which produces, 
markets and distributes dairy products, the approval of the Board of 
Directors of that joint venture just recently occurred on July 31, 1998.  
In conjunction with its Chinese partner in that joint venture and the 
former majority equity holder, the Company has installed a new management 
team in the Hangzhou facility. Accordingly, except with respect to the 
potential future operations in Hangzhou, the following historical 
discussion and analysis does not include the Hangzhou Meilijian operation.

In addition, in conjunction with its Chinese partner in the Green Food 
Peregrine joint venture, the Company is exploring and negotiating the 
potential acquisition of four additional dairy processing facilities, which 
presently are state owned.  Owing to the fact that insufficient information 
is available on a current basis with respect to the historical operation of 
these state owned dairies, the potential impact of such acquisitions is not 
included in the following discussion, except as may be set forth in the 
"trends" section below.

Trends
------

In addition to the matters discussed above, the following are important 
factors that could cause actual results or events to differ materially from 
those contained in any forward looking statement made by the Company.

Operating Strategy
------------------

The Company's ability to increase revenues of its existing operation and 
other facilities which may be acquired will be affected by various factors, 
including customer demand, and our ability to market our products 
effectively.  The Company's marketing plan requires a continued emphasis on 
the qualitative differences of our products and competitive products, and 
the development of other marketing programs necessary to attract new 
customers in existing markets.  There can be no assurance that our 
operating strategies will be successful or that the Company will be able to 
generate cash flow adequate to support its operations and internal growth.  

In addition, management of the Company's China operation has embarked on 
several cost cutting and efficiency directed programs in an effort to 
reduce the costs of sales and general and administrative expenses.  While 
the Company believes those cost efficient methods of production and 
distribution, such as more stringent operating controls, can be 
implemented, there is no guaranty that these measures will result in 
profitability.

Availability of Acquisition Financing
-------------------------------------

The ability of the Company to acquire additional dairy processing 
facilities at affordable prices, to integrate new operations into our 
overall strategy, and to grow such operations in a profitable fashion will 
depend upon the availability of additional capital.  The consideration for 
potential acquisitions will be cash, which the Company will be required to 
raise through the sale of its equity interests.  If we are not successful 
in raising additional capital, the Company may be limited in its ability to 
continue its acquisition strategy.  

                   YEARS ENDED DECEMBER 31, 1997 AND 1998

FINANCIAL CONDITION

General
-------

At December 31, 1998, the Company had an accumulated deficit of US 
$7,031,046.  As of December 31, 1998, the Company had cash on hand of 
US $748,590 and reported total shareholders' equity of US $2,014,991. 

RESULTS OF OPERATIONS

On July 31, 1998, the Company purchased certain assets of American Flavors 
China, Inc., consisting of that company's equity interest in and to a Sino-
American joint venture in Hangzhou, People's Republic of China, known as 
Hangzhou Meilijian Dairy Products Co., Ltd. (Hangzhou Meilijian).  For 
financial reporting purposes, Hangzhou Meilijian is considered the 
subsidiary of the Company as of that date, and the operations of Hangzhou 
Meilijian  for the last five months of 1998 have been integrated in the 
financial reporting of the Company for the fiscal year 1998 consolidated 
financial statements of the Company.  As of July 31, 1998, Hangzhou 
Meilijian had total assets of $6,512,950, with total current assets of 
$1,928,336.  Total liabilities amounted to $3,544,961, with total current 
liabilities of $2,870,890.  In addition, the joint venture company had 
total equity of $2,967,989, with total revenues of $2,831,255.

Year Ended December 31, 1998
----------------------------

For the fiscal year ending December 31, 1998, the Company had net sales of 
$2,870,714 and had a gross profit of $11,020.  In addition to the 
$2,859,694 cost of goods sold, the Company had selling expenses of 
$523,465, and general and administrative expenses of $2,106,641.  After 
interest expenses of $299,735 and other net expenses of $97,327, the 
Company had a net loss before income tax of $3,016,148. Since the Company 
does not own 100% of the equity interest in its subsidiaries, its share of 
the loss before income taxes amounted to $2,461,829 resulting in a basic 
loss per share of $0.40.

As noted above, general and administrative expenses have been and are 
projected to be a significant percentage of revenue at this stage of the 
Company's existence.  We anticipate that as revenue increases through 
marketing efforts in Shanghai, and with the acquisition of the Hangzhou 
Meilijian joint venture, and through other potential acquisitions, general 
and administrative expenses will increase in total but decrease as a 
percentage of revenue.

The loss from operations for 1998 continued to result from the high level 
of expense associated with the continuing attempts to penetrate an emerging 
market with a product whose qualitative virtues were largely unknown to the 
ultimate consumer.

In addition, the Company experienced significant general and administrative 
expenses in connection with the approval of the acquisition of Hangzhou 
Meilijian.  The Company also spent certain resources to negotiate the 
acquisition of certain of the assets of American Flavors China, Inc. (its 
majority interest in the Hangzhou Meilijian joint venture), and two fund 
raising exercises in 1998.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
---------------------------------------------------------------------

Revenues increased almost 300% to $2,870,714 in 1998 from $730,195 in 1997.  
The increase was due to the continuing marketing efforts to penetrate the 
sophisticated Shanghai market and the increase in sales volume of 1 Liter 
milk, and the inclusion of the sales of Hangzhou Meilijian for the last 
five months of 1998 in the financial statements of he Company.

Cost of goods sold increased approximately 235% to $2,859,694 in 1998 from 
$852,277 in 1997. In addition to the Hangzhou Meilijian operations, the 
increase was due mainly to a higher level of revenue that required a 
corresponding increase in cost of goods sold.  However, cost of goods sold 
accounting for a percentage of revenue decreased to 99% in 1998 from 117% 
in 1997.  Consequently, the gross profit ratio was increased to .3% in 1998 
from negative 17% in 1997.  The reason for the mininal profit was that the 
production volume was still under the necessary volume that would bring the 
Company's Shanghai operation to a break-even level.

Selling expenses increased approximately 37% to $523,465 in 1998 from 
$380,836 in 1997.  The increase was due mainly to the continuing efforts to 
penetrate Shanghai market and the inclusion if the Hangzhou Meilijian 
operation.  As a percentage of revenues, selling expense decreased to 18% 
in 1998 from 52% in 1997. This decrease was the result of a profitable 
operation in Hangzhou and greater efficiencies in the Shanghai operation.

General and administrative expenses increased approximately 12% to 
$2,106,641 in 1998 from $1,873,360 in 1997.  This increase reflects two 
1998 fund raising exercises, the acquisition of some of the assets of 
American Flavors China, Inc. (its majority equity interest in the Hangzhou 
Meilijian joint venture), and the preparation and filing of a Form 10-SB by 
the Company.. As a percentage of the total revenue, the general and 
administrative expenses decreased to 73% in 1998 from 256% in 1997. 

Interest expense increased approximately 27% to $299,735 in 1998 from 
$234,517 in 1997.  The increase in interest expense largely was a result of 
the debt associated with the Hangzhou Meilijian operation.

Consequently, the net loss of the Company increased approximately 19% to 
$2,461,829 in 1998 from $2,098,588 in 1997.  The net loss applicable to the 
Company as a percentage of revenue decreased to 89% in 1998 from 285% in 1997.

Based on the results of operations, the Company reported a loss per share 
of $0.59 in 1997 and $0.40 in 1998.  The decrease in the loss per share was 
due to the new issuance of common shares and the effect of the Hangzhou 
Meilijian operations..  As of December 31, 1997, there were 5,289,000 
shares of common stock outstanding while as of December 31, 1998 there were 
7,717,957 shares of common stock outstanding.  Due to the timing of 
issuance of new shares, however, the weighted average number of shares of 
common stock outstanding in 1998 was 36,430,337.  The loss per share in 
1998 decreased by approximately 47% compared with 1997.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 1997, the Company reported that net cash used in 
operating activities was $1,929,803, net cash used in investing activities 
was $128,727, and net cash provided by financial activities was $2,430,506 
with the effect of changes in exchange rates at $5,468.

As of December 31, 1998, the Company reported that net cash used in 
operating activities was $1,205,398, net cash used in investing activities 
was $322,337, and net cash provided by financing activities was $1,787,287 
with the effect of changes in exchange rates at $53,409.

Net cash used in operating activities decreased approximately 58% to 
$1,205,399 in 1998 from $1,929,803 of net cash used by operating 
activities in 1997.  The decrease in negative cash flow in operating 
activities reflects the profitable Hangzhou Meilijian operations and 
efficiencies implemented in the Shanghai operation.

Net cash used in investing activities increased approximately 51% to 
$322,337 in 1998 from $128,265 in 1997.  The increase mainly was due to the 
acquisition of a majority interest in Hangzhou Meilijian.

Net cash provided by financing activities decreased 41% to $1,787,287 in 
1998 from $2,430,506 in 1997. While fund raising continued in 1998, such 
activities were less intense than in 1997, which were necessitated by the 
restructuring of the Company in early 1997.  In addition, the Company was 
not required to raise additional capital to fund the Hangzhou Meilijian 
operations, which was profitable at December 31, 1998.

The Company's primary requirements for cash (other than for acquisition 
activities) consist of (1) purchasing transportation equipment for 
distribution of its products; (2) expenses related to product development, 
marketing and advertising in Shanghai and, to a lesser extent, in Hangzhou; 
and (3) repayment of loans to state-owned Chinese banks in the aggregate 
amount of approximately US $2,572,868.  The Company estimates that net cash 
provided by current operating activities together with cash on hand will 
enable the Company to meet the anticipated cash requirements for the first 
two quarters of 1999. The Company believes that it needs to have additional 
injection of equity or debt capital to meet the Company's anticipated capital 
expenditures for the balance of 1999, and the Company actively is seeking to 
raise such additional capital through equity or debt financing.

Management's plan for profitable growth has focused on three areas: (1) the 
need for additional capital, (2) the broadening of the product base, and 
(3) the development of a comprehensive marketing campaign.

(1)  Additional Capital.  Management has viewed the ability of the Company 
to raise funds sufficient to implement new product and marketing strategies 
as dependent upon the status of the Company as "public" company.  In 
November 1998, the Company filed a Form 10-SB with the Securities Exchange 
Commission and became a fully reporting company on January 6, 1999.  The 
Company's ability to attract a broader potential investor base has been 
achieved as a result of this filing. In addition to closing a $1,000,000 
financing transaction ($500,000 in proceeds received, with an additional 
$500,000 committed upon the filing and effective date of a Form SB-2 
registration statement) on March 9, 1999, the Company has negotiated a 
private offering for additional equity financing having maximum proceeds of 
$2,500,000.  That offering will involve the issuance of a new class of 
convertible preferred at a purchase price of $2.50 per share.  On April 9, 
1999, the Company received a "term sheet" for this transaction, which has 
been approved by management.  The Company has been informed that the 
transaction can be closed by the end of May 1999.

(2)  Product Base.  For the past 8 to 10 months, the Company has engaged in 
a series of marketing studies and taste tests to develop new products for 
introduction in 1999.  That development has now been complete and, 
commencing in July of this year, the Company will introduce a new line of 
premium flavored milk (orange, vanilla, pineapple and strawberry - in 
addition to plain and chocolate) as well as flavored drinkable yogurt.  
These new products will be introduced as part of a comprehensive marketing 
campaign in conjunction with Warner Bros.' introduction of its "Looney 
Tunes" TM marketing campaign in mainland China.

(3)  Marketing Campaign.  In January 1999, the Company signed a Master 
Licensing Agreement with Warner Brothers Consumer Products Co. and obtained 
the right to utilize Warner Brothers' "Looney Tunes"TM character images and 
names in the Shanghai and Hangzhou greater metropolitan areas.  This 
licensing agreement gives the Company exclusive rights with respect to such 
images and names in the defined geographic regions for use in connection 
with specified categories of products sold by the Company's subsidiaries in 
those areas.  The Company will introduce these "Looney Tunes"TM products in 
the Shanghai and Hangzhou markets in the summer of 1999.

                               DEBT STRUCTURE

On December 27, 1993, Green Food Peregrine entered into a loan agreement 
with a state owned commercial bank in China and obtained a loan of 
approximately US $905,819 (RMB7,500,000). This loan matured on December 26, 
1996 and bore an interest rate of 12.24% per annum.  The loan, which was 
guaranteed by China National Green Food, contained an increased interest 
rate penalty if repayments were not made on a timely basis.  On December 
26, 1996, Green Food Peregrine failed to pay off the principal and interest 
then due on the loan; the bank thereafter imposed a penalty interest rate 
of 16.43% per annum on the unpaid accumulated interest due at December 31, 
1997.  As of that date, Green Food Peregrine had accrued interest payable 
of approximately US $257,856 (RMB2,135,000), in addition to the principal 
of the loan.

In June, 1998, we renegotiated this loan and obtained a new repayment 
schedule, with approximately US $125,606 now becoming due on December 31, 
1998, and an additional US $1,038,069 becoming due on December 31, 1999.  
The bank further agreed that, as long as Green Food Peregrine completes 
this repayment schedule in a timely fashion, the bank will waive the 
penalty interest imposed upon the interest calculation.  The Company met 
its obligations under the renegotiated payment schedule with respect to the 
December 31, 1998 payment.

On December 1, 1994, Green Food Peregrine entered into a second loan 
agreement with another state owned commercial bank in China and obtained a 
loan of approximately US $325,300 (RMB2,700,000).  This loan will mature on 
December 31, 2001, and bears an interest rate of 9.9% per annum.  This 
interest rate is variable and can change in accordance with an annual 
notice from the China Central Bank.  In December, 1997, Green Food 
Peregrine failed to pay off the regular interest and principal then due.  
As such, the bank imposed a penalty interest rate of 12.43% per annum on 
the interest calculation.  As of that date, Green Food Peregrine had 
accrued interest payable of approximately US $122,346 (RMB1,013,000) and a 
current portion of principal payable of approximately US $120,776 
(RMB1,000,000).

In June, 1998, we renegotiated this loan and established a new repayment 
schedule with the bank which called for payment of approximately US $90,582 
(RMB750,000) by September 20, 1998, and additional payments of 
approximately US $50,726 (RMB420,000) at three month intervals through 
December 20, 1999.  The balance remaining on this loan, if any, is payable 
on December 31, 1999.  The bank has agreed that, as long as Green Food 
Peregrine completes this payment plan in a timely fashion, the bank will 
release the penalty interest rate imposed on the interest calculation.  The 
Company is current with this renegotiated payment schedule.

During the organization period of Green Food Peregrine and in April of 
1996, China National Green Food loaned the aggregate amount of RMB8,600,000 
to Green Food Peregrine.  These shareholder loans were converted to paid in 
capital in 1997 to satisfy the registered capital requirements of China 
National Green Food pursuant to the Green Food Peregrine Articles of 
Association.  In addition, interest payable of RMB882,721 likewise has been 
converted to paid in capital.

In April and November, 1996, China National Green Food loaned an additional 
RMB350,000 and RMB200,000, respectively, to Green Food Peregrine to finance 
working capital.  An interest rate of 12.4% per annum was applied to these 
loans.  Both of these loans were paid in full in September and October, 
1997, respectively.

In January, 1997, the major limited partner of China Peregrine Enterprises 
loaned US $200,000 to that limited partnership in order for China Peregrine 
Enterprises to meet interim registered capital requirements of the Green 
Food Peregrine Articles of Association and Joint Venture Contract.  In 
March, 1997, three shareholders of the Company together provided a loan of 
US $1,315,000 to pay China Peregrine Enterprises' final registered capital 
requirement to Green Food Peregrine.  This last capital contribution was 
set by the Board of Directors of Green Food Peregrine as a condition 
precedent to the approval of the Company's acquisition of the interest of 
China Peregrine Enterprises in and to the Green Food Peregrine joint 
venture.  These two loans were paid off during May and June, 1997, 
utilizing the proceeds from a Rule 504 regulation D offering by the 
Company.

In March, 1997, a holder of the majority of the partnership interests in 
China Peregrine Enterprises (and a major stockholder in the Company), 
together with two other investors in the Company, assumed a US $1,260,000 
outstanding line of credit owed by the limited partnership to a Tennessee-
based financial institution.  On March 15, 1997, the Company issued 
1,260,000 shares of its Series B preferred stock to these shareholders in 
consideration for this assumption. The line of credit was paid in full in 
October, 1997.

While the above described related party loans have been paid in full, there 
can be no assurance that the Company will have the ability to meet the 
newly negotiated payment schedule to retire the obligations owing to the 
two state owned banks in China, either by utilizing its capital resources 
or from the generation of cash flows adequate to support the repayment 
schedules.

With respect to the Hangzhou Meilijian operation, that joint venture 
company obtained revolving lines of credit from major state-owed commercial 
banks in China for working capital purposes.  These lines of credit allowed 
the Company to borrow money up to RMB13 million (approximately US$1,570,000 
as of December 31, 1998).  These lines of credit have terms ranging from 
three months to seven months with a floating interest rate at July 31, 1998 
ranging from 7.5% to 10% per annum subject to change based on notice from 
the central bank, People's Bank of China.  In China, these lines of credit 
are generally renewable as long as Hangzhou Meilijian pays all interest on 
a timely basis.

During the process of acquiring from American Flavor China, Inc. the 52% of 
equity interest in and to Hangzhou Meilijian, the Company issued a 
promissory note to assume the American Flavor's debt owed to a supplier.  
The face value of that note was $282,637.53 at interest rate of 10.5% per 
annum without any collateral attached.  The note has a monthly installment 
payment of $7,250 with 23 payments and a balloon payment of $159,862.38 
when the note will be due on July 15, 2000.  The minimum cash payments are 
$87,000 in 1999 and approximately $203,462 in 2000.  The note has a late 
charge article that the Company shall be charged by 3% of overdue principal 
and interest installment if the note holder does not receive the payment 
within 15 days of due dates.

In the course of setting up the Hangzhou Meilijian joint venture, HDC 
contributed fixed assets with a value in excess of its required capital 
contribution amount.  Based on an agreement signed by the Chinese and 
American investors, the excess portion was treated as a fixed asset loan 
from HDC at an interest 8% per annum.  The balance of this loan at December 
31, 1998 was $560,080.

On January 1, 1994, HDC provided the Company with the use of its trademark, 
which was valued at RMB500,000 (approximately US$60,245).  The Company 
recorded this trademark value as a part of deferred assets and a 
shareholder loan.  The Company recorded amortization of RMB50,000 
(approximately US$6,025) per year for trademark and paid cash of RMB50,000 
to HDC per year against the shareholder loan.  The balance of this loan at 
December 31, 1998 was $36,238.  Accumulated interest on these loans 
amounted to $81,265.

                            EFFECTS OF INFLATION

The Company believes that inflation has not had material effect on its net 
sales and results of operations.

               EFFECT OF FLUCTUATION IN FOREIGN EXCHANGE RATES

The Company's operating subsidiary, Green Food Peregrine, is located in 
China.  It buys and sells products in China using Chinese renminbi as 
functional currency.  Based on Chinese government regulation, all foreign 
currencies under the category of current account are allowed to freely 
exchange with hard currencies.  During the past two years of operation, 
there were no significant changes in exchange rates.  However, there is no 
assurance that there will be no significant change in exchange rates in the 
near future.

                              FUTURE OPERATIONS

Since the Company's acquisition of a majority interest in the Hangzhou 
Meilijian joint venture has recently occurred, the results of operations 
for Hangzhou Meilijian have not been incorporated herein. We anticipate, 
however, that the inclusion of the Hangzhou Meilijian operation will have a 
significant impact on the financial reporting of the Company in the future.  
For example, as of December 31, 1997, Hangzhou Meilijian reported 
approximately US $6,240,000 in revenues. Since an audit of the financial 
statements of that joint venture under US GAAP and GAAS has not been 
completed, however, there can be no assurances that the Hangzhou Meilijian 
joint venture will be profitable.

In addition, if the Company is able to raise additional capital to finance 
its acquisition of a majority interest in one or more of the state owned 
dairies presently under consideration with the Ministry of Agriculture, 
both the revenue reports and the profitability of the Company may be 
affected materially.

Finally, there can be no assurances of the success of the strategic 
marketing plan of the Company with respect to its Shanghai operations, or 
the ability to fund that marketing strategy.  The successful implementation 
of the planned marketing strategy for the Shanghai market could result in a 
profitable Shanghai operation within a twelve month period.  The success of 
the planned marketing strategy, in addition to the above stated factors, 
involves the continued focus on consumer acceptance of the qualitative 
differences between the products being offered by Green Food Peregrine and 
its competitors.

                  NEW ACCOUNTING STANDARDS NOT ADOPTED YET

In June 1997, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" 
(SFAS No. 130), which establishes standards for reporting and display of 
comprehensive income, its components and accumulated balances.  
Comprehensive income is defined to include all changes in equity except 
those resulting from investments by owners and distributions to owners.  
Among other disclosures, SFAS No. 130 requires that all items that are 
required to be recognized under current accounting standards as components 
of comprehensive income be reported in a financial statements that is 
displayed with the same prominence as other financial statements.

Statement of Financial Accounting Standards No. 131, "Disclosure about 
Segments of an Enterprise and Related Information" (SFAS No. 131), which 
supersedes SFAS No. 14, "Financial Reporting for Segments of a Business 
Enterprise," establishes standards for the way that public enterprises 
report information about operating segments in interim financial statements 
issued to the public.  It also establishes standards for disclosures 
regarding products and services, geographic areas and major customers.  
SFAS No. 131 defines operating segments as components of an enterprise 
about which separate financial information is available that is evaluated 
regularly by the chief operating decision maker in deciding how to allocate 
resources and in assessing performance.

Both of these new standards are effective for financial statements for 
periods beginning after December 15, 1997 and require comparative 
information for earlier years to be restated.  Due to the recent issuance 
of these standards, management has been unable to fully evaluate the 
impact, if any, they may have on future financial statement disclosures.

Statement of Financial Accounting Standards No. 132, "Employer's 
Disclosures about Pensions and Other Postretirement Benefits" (SFAS No. 
132) is effective for financial statements with fiscal years ending 
beginning after December 15, 1997; earlier application is permitted.  The 
new standard revises employers' disclosures about pension and other 
postretirement benefit plans but does not change the measurement or 
recognition of those plans.  SFAS No. 132 standardizes the disclosure 
requirements for pensions and other postretirement benefits to the extent 
practicable, requires additional information on changes in the benefit 
obligations and fair values of plan assets that will facilitate financial 
analysis, and eliminates certain disclosures previously required when no 
longer useful.  The Company does not expect the adoption of SFAS No. 132 to 
have a material effect, if any, on its financial position or results of 
operations.

Statement of Financial Standards No. 133, "Accounting for Derivative 
Instruments and Hedging Activities" (SFAS No. 133) requires companies to 
recognize all derivatives contracts as either assets or liabilities in the 
balance sheet and to measure them at fair value.  If certain conditions are 
met, a derivative may be specifically designated as a hedge, the objective 
of which is to match the timing of gain or loss recognition on the hedging 
derivative with the recognition of (i) the changes in the fair value of the 
hedged asset or liability that are attributable to the hedged risk or (ii) 
the earnings effect of the hedged forecasted transaction.  For a derivative 
not designated as a hedging instrument, the gain or loss is recognized in 
income in the period of change.  SFAS No. 133 is effective for all fiscal 
quarters of fiscal years beginning after June 15, 1999.

Historically, the Company has not entered into derivative contracts either 
to hedge existing risks or for speculative purposes.  Accordingly, the 
Company does not expect adoption of the new standard on January 1, 2000 to 
affect its financial statements.

The Accounting Standards Executive Committee issued Statement of Position 
("SOP") 98-5 "Reporting on the Costs of Start-Up Activities" which will be 
effective for financial statements for fiscal years after December 15, 1998 
and requires that costs of start-up activities, including organization 
costs, be expensed as incurred.  In accordance with SOP 98-5, the Company 
expects to write off start up costs in its subsidiary in 1999.

YEAR 2000 STATEMENT

We are currently in the process of identifying, evaluating and implementing 
changes to computer systems in the United States and the Green Food 
Peregrine facility in Shanghai, People's Republic of China, as necessary.  
This issue affects computer systems that have date sensitive software 
programs or chipsets that may not recognize the year 2000.  Systems that do 
not recognize such information properly could generate erroneous data or 
cause a system to fail, resulting in an interruption of normal business 
activities.

We have arranged with a third party vendor the performance of a 
comprehensive analysis of the Company's in house computers with respect to 
potential Year 2000 problems.  Our internal analysis has revealed the 
existence of one micro computer which , owing to its age, bears a high risk 
of date sensitive operation.  We anticipate the completion of the third 
party analysis prior to the end of the 1999 second quarter, and immediate 
remediation, if necessary, owing to the small number of micro computers 
(less than 10) utilized by the Company and its subsidiaries. Given the 
benefit to the Company of utilizing technology more advanced than exists in 
its present computers, and the utilization of readily available "off the 
shelf" hardware and software, the Company is prepared to upgrade or replace 
all problem computers immediately, where appropriate.

We have been informed that the cost of the third party analysis and report 
will be less than $2,000.  Even assuming the need to replace all present 
computers and software, we estimate the cost of such replacement to be less 
than $30,000.

The Company utilizes computers in its United States operation in a fashion 
that is non-essential to the day to day business of the Company.  The 
computers at the North Palm Beach, FL corporate offices function as word 
processors for communication purposes and contain some database 
information, which is duplicative of files kept by outside legal, 
accounting and transfer agent affiliates.  In the Shanghai and Hangzhou 
facilities, basic record keeping is both manual and computer assisted.  As 
such, while downtime owing to date sensitive problems would present an 
inconvenience to operations, it would not affect the ability of the 
Company's subsidiaries to function appropriately on a day to day basis.

Neither the Company nor its subsidiaries rely upon third parties who are 
computer dependent for their respective business functions.  As such, we do 
not believe that Year 200 problems that may be experienced by such third 
parties will have any material effect on our operations in the United 
States or in China.

Since we utilize readily available hardware and software in our business, 
we believe the cost of modifying or replacing all systems to be Year 2000 
compliant will be minimal, and the Company will modify or replace computers 
experiencing such problems immediately, without an appreciable interruption 
in its operations, financial condition or results of operations.


PART II

ITEM 7 - FINANCIAL STATEMENTS (audited)
         FOR YEAR ENDED DECEMBER 31, 1998



               CHINA PEREGRINE FOOD CORPORATION AND SUBSIDIARY



                        ____________________________




             REPORT ON AUDITED CONSOLIDATED FINANCIAL STATEMENTS

               FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1998



                        ____________________________



               China Peregrine Food Corporation and Subsidiary


                 Index to Consolidated Financial Statements

Report of Independent Certified Public Accountants         F-3

Consolidated Financial Statements
  Balance Sheets                                           F-4
  Statements of Operations and Comprehensive Loss          F-6
  Statement of Shareholders' Equity                        F-7
  Statements of Cash Flows                                 F-8
  Summary of Accounting Policies                           F-10
  Notes to Financial Statements                            F-15


Report of Independent Certified Public Accountants



To the Board of Directors 
China Peregrine Food Corporation and Subsidiary

We have audited the accompanying consolidated balance sheets of China 
Peregrine Food Corporation (a Delaware corporation) and subsidiary as of 
December 31, 1997 and 1998, and the related consolidated statements of 
operations and comprehensive loss, shareholders' equity and cash flows for 
each of the two years in the period ended December 31, 1998.  These 
consolidated financial statements are the responsibility of the Company's 
management.  Our responsibility is to express an opinion on these 
consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above 
present fairly, in all material respects, the financial position of China 
Peregrine Food Corporation and subsidiary as of December 31, 1997 and 1998, 
and the results of their operations and their cash flows for each of the two 
years in the period ended December 31, 1998 in conformity with generally 
accepted accounting principles in the United States.



/s/ BDO Seidman, LLP

Los Angeles, California
March 31, 1999


               CHINA PEREGRINE FOOD CORPORATION AND SUBSIDIARY

                         CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                               December 31,
                                                                         -------------------------
                                                                            1997           1998
                                                                         -------------------------

<S>                                                                      <C>            <C>
Assets (Note 3)

Current assets
  Cash and cash equivalents                                              $  435,630     $  748,590
  Accounts receivable, less allowances for doubtful
   accounts of $20,546 and $848,116                                         390,132        509,717
  Subscription receivable                                                         -        235,000
  Other receivable                                                           18,135         73,963
  Inventory (Note 1)                                                         77,547        868,238
  VAT refund receivable                                                      31,525         51,069
  Prepaid expenses                                                          119,611         84,877
  Deposits                                                                   24,693         19,727
                                                                         -------------------------
Total current assets                                                      1,097,273      2,597,181
Property, plant and equipment, net (Notes 2 and 3)                        1,692,141      5,806,767
Construction in progress                                                    138,501         55,735
Goodwill                                                                          -        293,096
Trademark and other deferred expenses                                             -        119,827
Proprietary technology, net                                                  60,593         52,242
Start up costs, net                                                         428,389        248,732
                                                                         -------------------------

Total assets                                                             $3,416,897     $9,173,580
                                                                         =========================

Liabilities and Shareholders' Equity

Current liabilities
  Bank loans in Meilijian (Note 3)                                       $        -     $1,425,345
  Bank loans in GFP (Note 3)                                                905,819      1,147,523
  Current portion of long-term bank loan in GFP (Note 3)                    120,776              -
  Current portion of note payable                                                 -         58,104
  Accounts payable                                                          215,381        868,760
  Accrued liabilities                                                       800,064      1,178,563
  Accrued payroll                                                                 -         39,162
  Advances from customers                                                    10,681        241,354
  Dividends payable                                                          85,050        200,667
                                                                         -------------------------
Total current liabilities                                                 2,137,771      5,159,478

Note payable, less current portion (Note 4)                                       -        192,741
Long term bank loan in GFP, less current portion (Note 3)                   205,319              -
Long-term related party loan (Note 4)                                             -        677,583
                                                                         -------------------------
Total liabilities                                                         2,343,090      6,029,802
Minority interest                                                           265,831      1,128,787

Commitments and contingencies (Note 1 and 10)

Shareholders' Equity (Notes 8 and 9):
  Series A convertible preferred stock, par value $0.001 per share,
   500,000 shares authorized, 500,000 shares issued and 
   outstanding                                                                  500            500
  Series B convertible, 9% cumulative, and redeemable preferred
   Stock, stated value $1.00 per share, 1,260,000 shares authorized,
   1,260,000 shares issued and outstanding, redeemable at 
   $1,260,000                                                             1,260,000      1,260,000
  Series C convertiable, 8% cummulative and redeemable
   Preferred stock, stated value $3.00 per share, 83,334
   Shares issued and outstanding                                                  -        250,000
  Common stock, par value $0.001 per share, 20,000,000 shares
   Authorized, 5,289,000 and 7,717,957 shares issued and
   Outstanding                                                                5,289          7,718
  Stock subscribed                                                                -        235,000
  Additional paid-in capital                                              4,075,130      7,427,082
  Accumulated deficit                                                    (4,370,266)    (7,031,046)
  Accumulated other comprehensive loss                                     (162,677)      (134,263)
                                                                         -------------------------

Total shareholders' equity                                                  807,976      2,014,991
                                                                         -------------------------

Total liabilities and shareholders' equity                               $3,416,897     $9,173,580
                                                                         =========================
</TABLE>


  See accompanying summary of accounting policies and notes to consolidated 
                            financial statements.

               CHINA PEREGRINE FOOD CORPORATION AND SUBSIDIARY

                    CONSOLIDATED STATEMENTS OF OPERATIONS

                           AND COMPREHENSIVE LOSS

<TABLE>
<CAPTION>
                                                                     Years ended December 31,
                                                                    ---------------------------
                                                                       1997            1998
                                                                    ---------------------------

<S>                                                                 <C>             <C>
Net sales                                                           $   730,195     $ 2,870,714

Cost of goods sold                                                      852,277       2,859,694
                                                                    ---------------------------

Gross margin (loss)                                                    (122,082)         11,020

Selling expense                                                         380,836         523,465
General and administrative expense                                    1,873,360       2,106,641
                                                                    ---------------------------

Loss from operations                                                 (2,376,278)     (2,619,086)

Other (income) expense:
  Interest expense, net                                                 234,517         299,735
  Other - net                                                           (58,200)         97,327
                                                                    ---------------------------

Loss before income taxes                                             (2,552,595)     (3,016,148)

Income taxes (Note 6)                                                         -               -
                                                                    ---------------------------

Loss before minority interest                                        (2,552,595)     (3,016,148)

Less loss of subsidiaries attributable to minority interest            (474,007)       (554,319)
                                                                    ---------------------------

Net loss                                                             (2,078,588)     (2,461,829)

Dividends accrued for Series B preferred stock                           85,050         113,400
Dividends accrued for Series C preferred stock                                -          85,551
                                                                    ---------------------------

Net loss applicable to common shares                                $(2,163,638)    $(2,660,781)
                                                                    ===========================

Loss per share                                                      $     (0.59)    $     (0.41)
                                                                    ===========================

Weighted average number of common shares outstanding                  3,681,827       6,430,337
                                                                    ===========================

Comprehensive loss and its components consist of the following:

Net loss                                                            $(2,078,588)    $(2,461,829)

Foreign currency translation adjustment                                   1,839          28,414
                                                                    ---------------------------

Comprehensive loss                                                  $(2,076,749)    $(2,433,415)
                                                                    ===========================
</TABLE>


  See accompanying summary of accounting policies and notes to consolidated 
                            financial statements.


               CHINA PEREGRINE FOOD CORPORATION AND SUBSIDIARY

               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
               FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1998

<TABLE>
<CAPTION>
                                                                                                        Accumulated 
                                                                    Additional                             Other 
                                                                     Paid-In   Accumulated    Stock    Comprehensive
                               Shares     Amount    Shares   Amount  Capital     Deficit    Subscribed     Loss         Total
---------------------------------------------------------------------------------------------------------------------------------

<S>                           <C>       <C>        <C>       <C>    <C>        <C>           <C>        <C>          <C>
Balance, December 31, 1996            - $        - 1,040,000  1,040    908,115  (2,206,628)              (164,516)    (1,461,989)

Recapitalization                500,000        500 1,285,000  1,285                                                        1,785
Issuance of Series B 
 preferred stock              1,260,000  1,260,000                                                                     1,260,000
Assumption of CPEL's accrued
 legal fees                                          200,000    200    199,800                                           200,000
Issuance of stock for legal
 fees for fund raising                                15,000     15     14,985                                            15,000
Issuance of stock for stock
 promotion service                                   100,000    100     99,900                                           100,000
Issuance of stock for
 finder's fees                                        35,000     35     34,965                                            35,000
Rule 504 Regulation D
 issuance                                            975,000    975    974,025                                           975,000
Issuance of stock for
 finders' fee                                         10,000     10      9,990                                            10,000
Rule 144 issuance                                  1,320,000  1,320  1,318,680                                         1,320,000
Issuance of stock for
 consulting service                                   24,000     24     23,976                                            24,000
Issuance of stock for
 accounting service                                   15,000     15     14,985                                            15,000
Rule 144 issuance                                    200,000    200    199,800                                           200,000
Issuance of stock for
 consulting service                                   25,000     25     24,975                                            25,000
Issuance of stock for a
 director's fee                                       25,000     25     24,975                                            25,000
Issuance of stock for travel
 expense                                              20,000     20     19,980                                            20,000
Net loss                                                                        (2,078,588)                           (2,078,588)
Compensation due to issuance
 of options                                                            205,979                                           205,979
Preferred stock dividends
 accrued                                                                           (85,050)                              (85,050)
Translation adjustments                                                                                     1,839          1,839
---------------------------------------------------------------------------------------------------------------------------------

Balance, December 31, 1997    1,760,000 $1,260,500 5,289,000 $5,289 $4,075,130 $(4,370,266)             $(162,677)   $   807,976
=================================================================================================================================

Issuance of stock in 
 exchange for stock
 promotion service                                    50,000     50     49,950                                           50,000
Issuance of stock to acquire
 2.4% interest in GFP                                120,000    120    119,880                                          120,000
Issuance of stock to in
 exchange for furniture
 purchases                                             5,272      5     11,857                                           11,862
Rule 506 Regulation D
 issuance                                            557,000    557  1,391,943                                        1,392,500
Issuance of stock to acquire
 52% interest in Meilijian                         1,531,685  1,532  1,530,153                                        1,531,685
Issuance of stock for
 warrants exercised                                  165,000    165    164,835               100,000                    265,000
Issuance of Series C
 preferred to Utah Resource
 International, Inc.             83,334    250,000                                                                      250,000
Deemed dividends                                                        83,334     (83,334)                                   0
Stock subscribed                                                                             135,000                    135,000
Net loss                                                                        (2,461,829)                          (2,461,829)
Series B preferred stock
 dividends                                                                        (113,400)                            (113,400)
Series C preferred stock
 dividends                                                                          (2,217)                              (2,217)
Translation adjustments                                                                                    28,414        28,414

Balance, December 31, 1998    2,010,000 $1,510,500 7,717,957 $7,718 $7,427,802 $(7,031,046)  235,000    $(134,263)   $2,014,991
                              =================================================================================================
</TABLE>


               CHINA PEREGRINE FOOD CORPORATION AND SUBSIDIARY

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
              Increase (Decrease) in Cash and Cash Equivalents

<TABLE>
<CAPTION>
                                                               Years ended December 31,
                                                             -----------------------------
                                                                 1997             1998
                                                             -----------------------------

<S>                                                          <C>              <C>
Cash flows from operating activities:
  Net loss                                                   $(2,163,638)     $(2,461,829)
  Adjustments to reconcile net loss to net cash
   provided by (used in) operating activities:
    Depreciation and amortization                                398,261          732,684
    Provision for bad debts                                        7,362           16,178
    Inventory provision                                                -           37,291
    Loss on disposal of fixed assets                                 869          108,459
    Stock issuance in exchange for services and expenses         269,000           66,862
    Directors compensation for options granted                   205,979                -
    Minority interest                                           (474,007)         862,957
    Increase (decrease) from changes in:
      Accounts receivable                                       (146,986)        (732,544)
      Other receivable                                            11,976         (255,441)
      Inventory                                                  (28,216)        (746,725)
      VAT refund receivable                                       (4,366)         (25,543)
      Prepaids and other assets                                 (124,126)           8,734
      Accounts payable                                          (153,644)         691,402
      Advances from customers                                          -          230,673
      Accrued liabilities                                        186,683          261,444
      Dividends payable                                           85,050                 
                                                             -----------------------------

Net cash provided by (used in) operating activities           (1,929,803)      (1,205,398)
                                                             -----------------------------

Cash flows from investing activities
  Purchase of equipment and machinery                           (128,727)         (81,787)
  Additions to construction in progress                                -           (3,570)
  Acquisition American Flavors interest                                -         (236,980)
                                                             -----------------------------

Net cash used in investing activities:                          (128,727)        (322,337)
                                                             -----------------------------

Cash flows from financing activities:
  Proceeds of related party loans                              1,515,000                -
  Repayment of related party loan                             (1,581,279)               -
  Repayment on notes payable                                           -          (32,000)
  Increase in related party loan                                       -           16,787
  Proceeds of Series A preferred stock                               500                -
  Proceeds of issuance to founders                                 1,285                -
  Proceeds from Rule 504 offering                                975,000                -
  Proceeds from Rule 144 offering                              1,520,000                -
  Proceeds from Rule 506 offering                                      -        1,387,500
  Proceeds of Series C preferred stock                                 -          250,000
  Proceeds from warrants exercised                                     -          165,000
                                                             -----------------------------

Net cash provided by financing activities                      2,430,506        1,787,287
                                                             -----------------------------

Effect of exchange rate changes on cash                            5,468           53,409
                                                             -----------------------------

Net increase in cash and cash equivalents                        377,444          312,960

Cash and cash equivalents, beginning of year                      58,186          435,630
                                                             -----------------------------

Cash and cash equivalents, end of year                       $   435,630      $   748,590
                                                             =============================

Cash paid during the year:
  Interest                                                   $   211,096      $   265,523
</TABLE>


Supplemental Disclosure of Non-Cash Activities:

In 1997 the Company issued 1,260,000 shares of Series B preferred stock at 
a stated value of $1.00 per share to three shareholders in consideration 
for their assumption of the obligation to repay $1,260,000 of a line of 
credit utilized by CPEL for operations during 1995 and 1996.

In 1997, the Company issued a total of 469,000 shares of common stock at 
$1.00 per share to various individuals and entities in connection with the 
assumption of the obligation to repay accrued legal expense of $200,000 
incurred by CPEL and the payment of various services or expense aggregating 
$269,000.  Please see details in Note 9.

In 1997, the Company granted to four non-employee directors 1,638,828 
options to purchase common stock.  According to SFAS 123, the Company 
recognized compensation expense of $205,979 by adding the same amount to 
additional paid-in capital.

In January 1998, the Company issued 50,000 shares of common stock at $1.00 
per share in exchange for stock promotion services provided by a capital 
service company.

On February 2, 1998, the Company issued 5,272 shares of common stock at 
$2.25 per share to an individual in exchange for his services in connection 
with the furnishing of the Company's corporate office.

On February 19, 1998 the Company issued 120,000 shares of common stock at 
$1.00 per share to Amer-China Partners, Limited (ACPL) pursuant to a signed 
agreement dated October 1, 1997 to acquire all of ACPL's interest and rights 
(2.4%) in and to the Green Food Peregrine Children's Food Co. Ltd.

On May 2, 1998, as part of a Rule 506 Regulation D offering, the Company 
issued 2,000 shares of common stock at $2.50 per share in exchange for 
accounting services provided by two existing shareholders.

On August 8, 1998 the Company issued 1,531,685 shares of common stock at 
$1.00 per share as consideration for 52% of American Flavor China's interest 
in and rights to Hangzhou Meilijian Dairy Products Co. Ltd.

On December 29, 1998, the Company sold 50,000 shares of Series C preferred 
stock to an institutional investor at $3.00 per share with 450,000 warrants 
attached at an exercise price of $1.00 per share expiring at April 30, 1999.  
Accordingly, the Company recorded a stock subscription of $135,000, net of 
expense of $15,000 as of December 31, 1998.  The Company received the 
proceeds of $135,000 on January 4, 1999.

On October 1998, the Board of Directors of the Company decided to reduce 
the exercise price of  warrants issued during the Rule 504, Regulation D 
offering in 1997 from $5.00 to $1.00.  Subsequently, certain holders of 
265,000 warrants exercised their warrants at $1.00 per share.  The Company 
issued 165,000 shares of common stock in December and recorded $100,000 of 
stock subscribed as of December 31, 1998, which has been fully collected in 
February 1999.


  See accompanying summary of accounting policies and notes to consolidated 
                            financial statements.


               CHINA PEREGRINE FOOD CORPORATION AND SUBSIDIARY

                       SUMMARY OF ACCOUNTING POLICIES

Basis of Presentation

China Peregrine Food Corporation (formerly Shakespeare Holding, Inc.) (the 
Company) was incorporated under the laws of the State of Delaware on April 
26, 1996.  Shakespeare Holdings, Inc. was a shell company without any 
substantial assets and operating activities until it merged with China 
Peregrine Enterprises, Ltd. in March, 1997.

In February, 1997, the Company issued 25,000 shares of common stock to 
acquire a 100% equity interest in Manor Products Corp. (Manor), a Delaware 
company, established on January 26, 1996.  Manor was a shell company with 
331 shareholders.

On March 5, 1997, the Company issued 1,040,000 shares of its common stock 
in exchange for a 100% equity interest in China Peregrine Enterprise, 
Limited (CPEL).  CPEL was a Texas limited partnership, which was created 
for the sole purpose of controlling the operation of a joint venture in 
Shanghai, China known as Green Food Peregrine Children's Food Co. Ltd. 

Green Food Peregrine Children's Food Co. Ltd. (GFP) is a foreign investment 
equity joint venture with registered capital of US$5 million and 
established under the law of People's Republic of China on July 3, 1993.  
The Company accounted for 67.6%, China National Green Food Corporation 
accounted for 30%, and  Amer-China, an Illinois limited partnership, 
accounted for 2.4% of the GFP's equity interest as of December 31, 1997.  
GFP has been focusing on providing better nutrition for infants and 
children in China through the development of advanced food technology and 
marketing expertise from the West.  Currently, GFP is manufacturing and 
distributing dairy products in Shanghai, China and is developing a number 
of new and non-carbonated beverages for infants and school age children.  
GFP has intentions to operate in the cities with a population more than 2 
million throughout China.

On May 2, 1998, the Company approved and ratified an agreement between the 
Company and China National Green Food Corporation to satisfy the need for 
additional capital for GFP by the contribution of $1,500,000 by the Company 
over the next 18 months.  This contribution will constitute an increase in 
the registered capital in GFP attributed to the Company and a commensurate 
increase in the equity holding of the Company in GFP from 70% (after the 
approval of the Company's acquisition of ACPL's equity interest) to 76.92%.  
In addition, the right to match this additional capital contribution to 
maintain the status quo of the investment has been waived by China National 
Green Food Corporation.

In line with Chinese government regulations, the change of investment ratio 
in GFP must be approved by the Ministry of Foreign Trade and Economic 
Cooperation (MOFTEC) in China.  Therefore, the Company has agreed to 
provide an interim loan of $500,000 in traunches to GFP and convert this 
loan into registered capital upon obtaining MOFTEC's approval.

This issuance of the Company's common stock to the former CPEL's partners 
made the Company become an active operating entity.  Generally accepted 
accounting principles requires that the company whose stockholders retain 
the majority interest in a combined business be treated as the acquirer for 
accounting purpose, therefore, this transaction has been accounted for as a 
"reverse acquisition" for financial reporting purposes.  The relevant 
acquisition process utilizes the capital structure of Shakespeare Holdings, 
Inc. and the assets and liabilities of CPEL and its subsidiary are recorded 
at their historical cost.

CPEL is the continuing operating entity for financial reporting purposes 
and the financial statements prior to March 5, 1997 represent CPEL's 
financial position and results of operations.  The assets of $1,785 and 
shareholders' equity of $1,785 of Shakespeare Holdings, Inc. are included 
as of March 5, 1997.  Although CPEL is deemed to be the acquiring company 
for financial accounting and reporting purpose, the legal status of the 
Company as the surviving corporation does not change.

Concurrent with the reverse acquisition, the Company changed its corporate 
name from Shakespeare Holdings, Inc. to China Peregrine Food Corporation 
with headquarters located in West Palm Beach, Florida.

On June 18, 1998, the Company entered into a definitive agreement with 
American Flavor China, Inc. a U.S. based entity to acquire its 52% equity 
interest in Hangzhou Meilijian Dairy Products, Co. Ltd. (HMDP)  This 
acquisition transaction was effective on August 1, 1998.  The terms of this 
acquisition are as follows: 1) to assume $285,637 of debt of American 
Flavor China, Inc., 2) to pay cash of $210,000, and 3) to issue 1,531,685 
shares of the Company's common stock at $1 per share.  As a result of this 
acquisition transaction, the Company recognized goodwill of $319,741, which 
will be amortized over a period of five years on a straight-line basis. 

The Company has suffered recurring losses from operations and had negative 
working capital.  Management of the Company has taken and continues to take 
various steps to raise necessary funds for its operational activities and 
improve its operating efficiency.  In January 1999, the Company signed a 
Master Licensing Agreement with Warner Brothers Consumer Products Co.. and 
obtained the right to utilize Warner Brothers' "Looney Tunes"TM character 
images and names in the Shanghai and Hangzhou greater metropolitan areas.  
This licensing agreement gives the Company exclusive rights with respect to 
such images and names in the defined geographic regions for use in 
connection with specified categories of products sold by the Company's 
subsidiaries in those areas.  The Company will introduce these "Looney 
Tunes"TM products in the Shanghai and Hangzhou markets in the summer of 
1999.  In addition, the Company has negotiated a private offering for 
additional equity financing having maximum proceeds of $2,500,000.  That 
offering will involve the issuance of a new class of convertible preferred 
at a purchase price of $2.50 per share.  During 1999, the Company received 
a "term sheet" for this transaction, which has been approved by management.  
The Company has been informed that the transaction can be closed by the end 
of May 1999.  See fund raising activities disclosed in Note 9 and Note 11.

Basis of Accounting

The consolidated financial statements are prepared in accordance with 
accounting principles generally accepted in the United States of America 
which include the accounts of the Company and its subsidiary.  All 
significant inter-company accounts and transactions have been eliminated in 
consolidation.  The minority interests in the two Chinese joint ventures 
has been reported as a separate line item on the consolidated balance 
sheet.  The consolidated financial statements are presented in U.S. 
dollars.

Revenue Recognition

The Company recognizes revenue when the risk of loss for the product sold 
passes to the customer which is generally when goods are shipped.

Cash and Cash Equivalents

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

Inventory Valuation

Inventory is stated at the lower of cost or market.  Costs are determined 
on a first-in and first-out basis.

Foreign Currency Translation and Transactions

The financial position and results of operations of the Company's foreign 
subsidiary are determined using local currency as the functional currency.  
Assets and liabilities of this subsidiary are translated at the prevailing 
exchange rate in effect at each year end.  Contributed capital accounts are 
translated using the historical rate of exchange when capital is injected.  
Income statement accounts are translated at the average rate of exchange 
during the year.  Translation adjustments arising from the use of different 
exchange rates from period to period are included in the cumulative 
translation adjustment account in shareholders' equity.  Gains and losses 
resulting from foreign currency transactions are included in operations. 

Property, Plant and Equipment

Property, plant and equipment are stated at cost.  Depreciation is computed 
primarily utilizing the straight-line method over the estimated useful 
lives of the assets as follows: 

<TABLE>
<CAPTION>
                                            Estimated Useful
                                                  Life
                                               (in years)
                                            ----------------

<S>                                                <C>
Plant and building                                 20
Machinery and equipment                            10
Computer, office equipment and furniture            5
Vehicles                                            5
</TABLE>


Maintenance, repairs and minor renewals are charged directly to expenses as 
incurred. Additions and betterment to property and equipment are 
capitalized.  When assets are disposed of, the related cost and accumulated 
depreciation thereon are removed from the accounts and any resulting gain 
or loss is included in the statement of income.

VAT Refund Receivable

The Company's subsidiary in China, GFP, is subject to value added tax (VAT) 
imposed by the Chinese government on its domestic sales.  The output VAT is 
17% for sales of chocolate milk and 13% for sales of fresh milk.  The input 
VAT is paid when GFP purchases raw materials.  According to the relevant 
government regulation, the input VAT can be offset against output VAT.  The 
VAT payable account balance is the amount of output VAT reduced by the 
amount of input VAT on a cumulative basis.  VAT refund receivable is the 
excess of input VAT over output VAT.

Construction in Progress

Construction in progress represents another plant in Beijing, China.  The 
construction in progress is stated at cost.  All direct costs relating to 
the construction of the plant are capitalized as long-term assets.

Proprietary Technology

The proprietary technology is composed mainly of patents and recipes for 
various milk products and other drinking products.  The proprietary 
technology is being amortized over a period of ten years starting from 
April 1995, when GFP began its commercial production in China.

Goodwill

Goodwill represents the excess of acquisition cost over the net assets 
acquired in business combinations in 1998.  Goodwill is amortized on a 
straight line basis over five years.

Periodically, the Company reviews the recoverability of goodwill as 
required by SFAS No. 121, "Accounting for the Impairment of Long-Lived 
Assets and for Long-Lived Assets to Be Disposed Of."  The measurement of 
possible impairment is based primarily on the undiscounted future operating 
cash flows without interest charges of the acquired entity over the remaining 
amortization period.  Based upon its most recent analysis, the Company 
believes that no material impairment exists at December 31, 1998.  The 
assessed recoverability of goodwill will be impacted if estimated future 
operating cash flows are not achieved.  The amortization expense for the 
year ended December 31, 1998 was $26,645.

Start Up Costs

Start up costs represents costs incurred in setting up the GFP headquarters 
and its plants in order to operate on a commercial basis.  Such costs are 
capitalized and amortized over a period of five years from the date of 
commencement of business.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally 
accepted accounting principles requires management to make estimates and 
assumptions that affect the reported amounts of assets and liabilities and 
disclosure of contingent assets and liabilities at the date of financial 
statements and the reported amounts of revenue and expenses during the 
reporting period.  Among the more significant estimates included in these 
financial statements are the estimated allowance for doubtful accounts 
receivable and the deferred income tax asset allowance.  Actual results 
could differ from those estimates.

Accounts Receivable and Concentration of Credit Risk

The Company's main business are manufacturing and distribution.  During the 
normal course of business, the Company extends unsecured credit to its 
customers located in Shanghai area.  The Company reviews its accounts 
receivable on a regular basis to determine if the bad debt allowance is 
adequate at each year end.  The Company maintains its cash accounts in high 
quality financial institution.

Fair Value of Financial Instruments

The carrying amount of cash, trade accounts receivable, notes receivable, 
trade accounts payable, accrued payable and notes payable are reasonable 
estimates of their fair value because of the short maturity of these items.  
The carrying amounts of the Company's credit facilities approximate fair value 
because the interest rates on these instruments are subject to change with 
market interest rates.

Income Taxes

The Company accounts for income taxes using the liability method, which 
requires an entity to recognize deferred tax liabilities and assets.  
Deferred income taxes are recognized based on the differences between the 
tax bases of assets and liabilities and their reported amounts in the 
financial statements which will result in taxable or deductible amounts in 
future years.  Further, the effects of enacted tax laws or rate changes are 
included as part of deferred tax expenses or benefits in the period that 
covers the enactment date.  A valuation allowance is recognized if it is 
more likely than not that some portion, or all of, a deferred tax asset 
will not be realized.

Accounting for the Impairment of Long Lived Assets and of the long-lived 
Assets to Be Disposed of

Statement of the Financial Accounting Standards No. 121 "Accounting for the 
Impairment of Long-Lived Assets and for the Long-Lived Assets to be 
Disposed Of" (SFAS 121) establishes new guidelines regarding when 
impairment losses on long-lived assets, which include plant and equipment, 
and certain identifiable intangible assets, should be recognized and how 
impairment losses should be measured.  The Company has adopted this 
accounting standard and its effects on the financial position and the 
results of operations were immaterial.

Earnings (Loss) Per Share

Effective December 31, 1997, the Company adopted Statement of Financial 
Accounting Standards No. 128, "Earnings per Share" ("SFAS 128").  The 
statement replaces the calculation of primary and fully diluted earnings 
(loss) per share with basic and diluted earnings (loss) per share.  Basic 
earnings (loss) per share includes no dilution and is computed by dividing 
income (loss) available to common shareholders by the weighted average 
number of shares outstanding during the period.  Diluted earnings (loss) 
per share reflects the potential dilution of securities that could share in 
the earnings of an entity, similar to fully diluted earnings (loss) per 
share.  All earnings (loss) per share amounts have been restated to conform 
to the requirements of SFAS 128.  For the years ended December 31, 1997 and 
1998, total stock options and stock warrants of 4,029,553 and 4,945,867 were 
not included in the computation of diluted earnings per share owing to their 
antidilutive effect.

Stock-based Compensation

The Company has adopted Statement of Financial Accounting Standards No. 
123, "Accounting for Stock-based Compensation" (SFAS No. 123).  The Company 
adopts the intrinsic value method of accounting for employee stock options 
and disclose the pro forma impact on net income and earnings per share as 
if the fair value based method had been applied.  For equity instruments, 
including stock options issued to non-employee, including directors, the 
fair value of the equity instruments or the fair value of the consideration 
received, whichever is more readily determinable, is used to determine the 
value of services or goods received and the corresponding charge to 
operations.

Reclassifications

Certain reclassifications have been made to the prior year consolidated 
financial statements to conform with the 1998 presentation.

Comprehensive Income (Loss)

During the year ended January 1, 1999 the Company adopted Statement of 
Financial Accounting Standard No. 130, "Reporting Comprehensive Income," 
("SFAS 130") issued by the FASB is effective for financial statements with 
fiscal years beginning after December 15, 1997.  SFAS 130 establishes 
standards for reporting and presentation of comprehensive income (loss) and 
its components in a full set of general-purpose financial statements.  The 
Company has chosen to report comprehensive income (loss) in the statements 
of operations.  Comprehensive income (loss) is comprised of net income and 
all changes to stockholders' equity except those due to investments by 
owners and distributions to owners.  Adoption of SFAS 130 did not have a 
material impact on the Company's financial position or results of 
operations.

New Accounting Standards Not Yet Adopted

Statement of Financial Accounting Standards No. 132, "Employer's 
Disclosures about Pensions and Other Postretirement Benefits" (SFAS No. 
132) is effective for financial statements with fiscal years ending 
beginning after December 15, 1997; earlier application is permitted.  The 
new standard revises employers' disclosures about pension and other 
postretirement benefit plans but does not change the measurement or 
recognition of those plans.  SFAS No. 132 standardizes the disclosure 
requirements for pensions and other postretirement benefits to the extent 
practicable, requires additional information on changes in the benefit 
obligations and fair values of plan assets that will facilitate financial 
analysis, and eliminates certain disclosures previously required when no 
longer useful.  The Company does not expect the adoption of SFAS No. 132 to 
have a material effect, if any, on its financial position or results of 
operations.

Statement of Financial Standards No. 133, "Accounting for Derivative 
Instruments and Hedging Activities" (SFAS No. 133) requires companies to 
recognize all derivatives contracts as either assets or liabilities in the 
balance sheet and to measure them at fair value.  If certain conditions are 
met, a derivative may be specifically designated as a hedge, the objective 
of which is to match the timing of gain or loss recognition on the hedging 
derivative with the recognition of (i) the changes in the fair value of the 
hedged asset or liability that are attributable to the hedged risk or (ii) 
the earnings effect of the hedged forecasted transaction.  For a derivative 
not designated as a hedging instrument, the gain or loss is recognized in 
income in the period of change.  SFAS No. 133 is effective for all fiscal 
quarters of fiscal years beginning after June 15, 1999.

Historically, the Company has not entered into derivatives contracts either 
to hedge existing risks or for speculative purposes.  Accordingly, the 
Company does not expect adoption of the new standard on January 1, 2000 to 
affect its financial statements.

The Accounting Standards Executive Committee issued Statement of Position 
("SOP") 98-5 "Reporting on the Costs of Start-Up Activities" which will be 
effective for financial statements for fiscal years after December 15, 1998 
and requires that costs of start-up activities, including organization 
costs, be expensed as incurred.  In accordance with SOP 98-5, the Company 
expects to write off start up costs in its subsidiaries in the first 
quarter of 1999, the effect will be $248,732.

Note 1.  Inventory

Inventory consists of:

<TABLE>
<CAPTION>
                        December 31,
                    -------------------
                     1997        1998
                    -------------------

<S>                 <C>        <C>
Raw materials       $69,678    $554,069
Finished goods        7,869     314,169
                    -------------------
Total               $77,547    $868,238
                    ===================
</TABLE>


Note 2.  Property, Plant and Equipment

Property, plant and equipment consists of:

<TABLE>
<CAPTION>
                                                     December 31,
                                              --------------------------
                                                 1997           1998
                                              --------------------------

<S>                                           <C>            <C>
Plant and buildings                           $  495,661     $ 1,774,021
Machinery                                      1,306,070       5,203,059
Computer, office equipment and furniture         172,100         494,835
Vehicles                                         236,567         307,155
                                              --------------------------

                                               2,210,398       7,779,071
Accumulated depreciation and amortization       (518,257)     (1,972,303)
                                              --------------------------
Property, plant and equipment, net            $1,692,141      $5,806,767
                                              ==========================
</TABLE>


Note 3.  Bank Loans

The balances of the short-term bank loans in Meilijian consists of:

<TABLE>
<CAPTION>
                                              December 31,
                                                 1998
                                              ------------

      <S>                                      <C>
      Bank of China                            $1,244,157
      Construction Bank of China                  181,188
      Industry and Commerce Bank of China               -
                                               ----------
      Total                                    $1,425,345
                                               ==========
</TABLE>


The Company obtained revolving lines of credit from major state-owed 
commercial banks in China for working capital purposes.  In the aggregate, 
these lines of credit allowed the Company to borrow money up to RMB13 million 
(approximately US$1,570,000 as of December 31, 1998).  These lines of 
credit have terms ranging from three months to seven months with a floating 
interest rate at December 31, 1998 ranging from 7.5% to 10% per annum subject 
to change based on notice from the central bank, People's Bank of China.  
In China, these lines of credit are generally renewable as long as 
Meilijian pays all interest on a timely basis.

All these lines of credit were guaranteed by Hangzhou AOYIPOLLEN 
Pharmaceutical Co. Ltd., a related party to Hangzhou United Dairy Company.  
At December 31, 1998, all the lines of credits from Bank of China were 
collateralized by substantially all the fixed assets of Hangzhou Meilijian, 
in addition to the guarantee provided by Hangzhou AOYIPOLLEN Pharmaceutical 
Co., Ltd.

The balances of the bank loans in GFP consists of:

<TABLE>
<CAPTION>
                                                              December 31,
                                                        -------------------------
                                                           1997           1998
                                                        -------------------------

      <S>                                               <C>            <C>
      Construction Bank of China - short term           $  905,819     $  881,781
      Development Bank of China - short term               120,776        265,742
      Development Bank of China - long term portion        205,319
                                                        -------------------------
      Total                                             $1,231,914     $1,147,523
                                                        =========================
</TABLE>


The repayment of these two loans was delayed as of December 31, 1997.  In 
June 1998, GFP entered into an agreement with the above two banks, 
respectively, regarding the repayment of these two loans.  The agreement 
specifies that GFP would make payment of approximately $50,000 quarterly 
to each bank beginning September 1998 and that all the remaining balance 
due to each bank would be paid off as of December 31, 1999.  As of December 
31, 1998, GFP's repayment is current.

Note 4.  Long-Term Debt

During the process of acquiring from American Flavor China, Inc. the 52% of 
equity interest in and to Meilijian, the Company issued a promissory note 
to assume the American Flavor's debt owed to a supplier.  The face value of 
that unsecured note was $282,637.53 at an interest rate of 10.5% per annum.  
The balance at December 31, 1998 was $250,845.  The note has a monthly 
installment payment of $7,250 with 23 payments and a balloon payment of 
$159,862.38 on July 15, 2000.  The minimum cash payments are $87,000 in 1999 
and 203,462 in 2000.  The note has a late charge article that the Company 
will be charged 3% of overdue principal and interest if the note holder does 
not receive the payment within 15 days of the monthly due dates.  

Long Term Related Party Loan

Related party loan consisted of:

<TABLE>
<CAPTION>
      December 31,                                   1998
                                                     ----

      <S>                                          <C>
      Shareholder loans-Fixed assets               $560,080
      Shareholder loans-Trademark                    36,238
      Shareholder loans - Interest accumulated       81,265
                                                   --------
      Long-term related party loans                $677,583
                                                   ========
</TABLE>


In the course of setting up Hangzhou Meilijian, the Chinese investor, 
Hangzhou United Dairy Co. (HDC), contributed fixed assets with a value 
in excess of its required capital contribution amount.  Based on an agreement 
signed by the Chinese and American investors, the excess portion was treated 
as a fixed asset loan from HDC at an interest 8% per annum.

On January 1, 1994, HDC provided the Company with the use of its trademark, 
which was valued at RMB500,000 (approximately US$60,245).  The Company 
recorded this trademark value as a part of deferred assets and a 
shareholder loan.  The Company recorded amortization of RMB50,000 
(approximately US$6,025) per year for trademark and paid cash of RMB50,000 
to HDC per year against the shareholder loan.

Note 5.  Related Party Transactions

a)  Related Party Loans from China National Green Food Company

During the organization period of GFP, China National Green Food 
Corporation, one of the three partners of GFP, wired RMB6,600,000 
(approximate US$795,353) in the form of shareholder's loan to GFP to 
finance its activities.  In April, 1996, China National Green Food 
Corporation wired another RMB2,000,000 (approximately US$241,016) in the 
form of shareholder's loan to GFP.  All these shareholder's loans have been 
converted to paid-in capital to satisfy the registered capital requirements 
contained in the Article of Association of GFP.  To date, a total of 
interest payable of RMB882,721 (approximately US$106,375) has been 
converted into paid-in capital as part of the registered capital under the 
name of China National Green Food Corporation.  

In April and November 1996, China National Green Food Corporation loaned 
RMB350,000 (approximately US$42,178) and RMB200,000 (approximately 
US$24,101), respectively, to GFP to finance its working capital.  An 
interest rate of 12.4% per annum was applied to determine relevant interest 
accrual.  These two loans were being paid off in September and October, 
1997, respectively.

c)  Related Party Loans from Shareholders of the Company

In January and March, 1997, one shareholder and three shareholders together 
provided loan of US$200,000 and US$1,315,000, respectively, to satisfy 
registered capital needs of GFP by the end of March, 1997.  These two loans 
were paid off during May and June 1997 by using the proceeds of various 
stock offerings.

d)  Related party purchase

Meilijian purchased from ranches owned by Hangzhou United Dairy Company raw 
milk of  US$2,933,221 and US$1,480,528 for the period ended December 31, 
1997 and 1998. 

Note 6.  Income Taxes

For federal income tax purpose, income tax expense in 1996 for CPEL was 
passed through to the individual partners.  From January 1 to March 5, 
1997, CPEL did not have any operating activities.

The Company's subsidiaries, GFP and HMDP, are operating in China and 
subject to the Chinese Foreign Investment Enterprise Income Tax at the rate 
of 33%, of which 30% is attributed to central government and 3% to 
provincial government.  In line with relevant income tax law, a foreign 
investment enterprise with an operating period of more than ten years is 
entitled to have a 100% income tax credit for two years and a 50% income 
tax credit for three years starting from the first profit-making year and 
the net operating losses can be carried forward for five years.  The 
following tables reflect the consolidated income tax provision for the 
Company.  

<TABLE>
<CAPTION>
                                 Years ended December 31,
                                 ------------------------
                                     1997         1998
                                 ------------------------
<S>                                <C>          <C>
Current
  Federal                          $      -     $      -
  Foreign                                 -            -
                                   ---------------------
                                   $      -     $      -
                                   =====================
</TABLE>


The components of the net deferred tax assets and liabilities are as 
follows:

<TABLE>
<CAPTION>
                                                 December 31,
                                         ----------------------------
                                            1997             1998
                                         ----------------------------

<S>                                      <C>              <C>
The U.S. Company
  Deferred tax assets:                   $   298,161      $   902,832
    Net operating loss carryforwards        (298,161)        (902,832)
                                         ----------------------------
    Valuation allowance                            0                0
                                         ----------------------------

Foreign (China)
  Deferred tax assets:                             0           12,304
    Inventory allowance                        6,780          281,259
    Bad debt allowance                     1,303,234        1,770,201
                                         ----------------------------
    Net operating loss carryforwards      (1,310,014)      (2,063,764)
                                         ----------------------------
    Valuation allowance                            0                0
                                         ----------------------------
                                         $         0      $        
                                         ============================
</TABLE>


Management is unable to determine whether the realization of the net deferred 
tax asset is more likely than not, therefore, a 100% valuation allowance has 
been established.

The difference between the effective tax rate and that computed under the 
federal statutory rate is as follows:

<TABLE>
<CAPTION>
                                         December 31,
                                      -------------------
                                       1997        1998
                                      -------------------

<S>                                   <C>         <C>
Federal statutory rate                (34.0)%     (34.0)%
Utilization of net operating loss      34.0%       34.0%
                                      -----------------
                                        0.0%        0.0%
                                      =================
</TABLE>


At December 31, 1998, the Company had net operating loss carryforwards of 
approximately $2,600,000 with expirations through 2019 in the U.S. and 
approximately $5,400,000 with expirations through 2004 in China.

Note  7.  Commitments and Contingencies

Commitments

The Company leases office space at its corporate offices in Florida under 
operating leases expiring in February, 2004.

The Company's subsidiary in China, GFP, has leased the plant land and 
office building in Shanghai under operating leases expiring at June 30, 
2043 and a month to month tenancy, respectively.

The Company's subsidiary in China, Hangzhou Meilijian Dairy Company, has 
leased the plant land from the City of Hangzhou under operating leases 
expiring at December 31, 2013.  

Future minimum rental payments required under operating leases that have an 
initial or a remaining lease term in excess of one year at December 31, 
1998 are as follows:

<TABLE>
<CAPTION>
Year ending December 31,            Amount
------------------------          ----------

       <C>                        <C>
       1999                       $   95,175
       2000                           76,611
       2001                           76,611
       2002                           76,611
       2003                           76,611
       Thereafter                  1,164,730
                                  ----------
                                  $1,566,349
                                  ==========
</TABLE>


Rental expense for the years ended December 31, 1997 and 1998 was 
approximately $82,728 and $112,396, respectively.

Note 8.  Reorganizations and Recapitalization

(a)  In February, 1997, the Company reorganized its members of the founding 
group.  As a result, the total founders increased from one entity to three 
individuals and two entities.  Consequently, 788,000 shares of common stock 
and 500,000 shares of preferred stock with a par value of $0.001 per share 
were issued to the newly joined founders.

      Each share of Series A preferred stock entitles its holder to receive 
dividends at the same rate paid to common shareholders.  Unless the Company 
pays or declares dividends with respect to common shares, the Company has 
no obligation to declare or pay dividends with respect to Series A 
preferred stock.  Each share of Series A preferred stock is convertible 
into one share of common stock, as adjusted, for such things as stock 
split, stock dividends and other similar dilutive occurrence.  At any time 
subsequent to December 31, 1997 the holder of each share of Series A 
preferred stock is allowed to convert all or part of the Series A preferred 
shares into corresponding shares of common stock.

(b)  On March 5, 1997, the Company issued 1,040,000 shares of common stock 
in exchange for a 100% equity of China Peregrine Enterprises, Limited 
(CPEL).  CPEL was, a Texas limited partnership, set up to manage its 
interest in the China operation conducted by a Chinese joint venture known 
as Green Food Peregrine Children's Food Co. Ltd. (GFP).  As the two major 
partners of CPEL were members of the founding group of the reorganized 
Company, this reverse acquisition was reported as a related party 
transaction and accounted for in a manner similar to a pooling of interest.

The following table presents all outstanding shares of common stock and 
Series A preferred stock before the reverse acquisition transaction closed:

<TABLE>
<CAPTION>
                                                 Series A 
                                              Preferred Stock        Common Stock        Additional
                                             -----------------    -------------------     Paid-in 
                                             Shares     Amount    Shares       Amount     Capital      Total
                                             ----------------------------------------------------------------

<S>                                          <C>         <C>      <C>          <C>         <C>         <C>
Beginning balance at January 1, 1997               -     $  -       472,000    $  472      $    -      $  472

Issuance of Series A Preferred Stock         500,000      500             -         -           -         500

Issuance of common stock to new founders           -        -       788,000       788           -         788

Issuance of common stock to acquire Manor
 Products Corp.                                    -        -        25,000        25           -          25
                                             ----------------------------------------------------------------
Total shareholders' equity                   500,000     $500     1,285,000    $1,285      $    -      $1,785
                                             ================================================================
</TABLE>


Note 9.  New Issuance of Common Stock and Preferred Stock 

(a)  On March 15, 1997, the Company issued 1,260,000 shares of Series B 
preferred stock with a stated value $1.00 per share to three shareholders 
after they assumed the Company's obligation to repay approximately 
$1,260,000 for an outstanding line of credit owed by CPEL to a Tennessee-
based financial institution.  The outstanding line of credit was incurred 
during 1995 and 1996 in connection with operation of CPEL and was paid off 
in full in October, 1997.

      The shares of Series B preferred stock have three features.  First, 
each share of Series B preferred stock is convertible into one share of 
common stock, as adjusted, for such things as stock split, stock dividends 
and other similar dilutive occurrence.  At any time subsequent to December 
31, 1998 the holder of each share of Series B preferred stock, is allowed 
to convert all of part of the Series B preferred shares into corresponding 
shares of common stock.  Second, each share of Series B preferred stock 
entitles its holder to accumulate dividends at 9% per annum even if the 
dividends are payable only upon dissolution and liquidation of the Company 
and redemption called by the Company.  However, each share of Series B 
preferred stock entitles its holder to receive dividends at the same rate 
paid to common shareholders if the Company declares or pays dividends to 
common shareholders.  Third, the shares of Series B preferred stock are 
redeemable at $1.00 per share totaling $1,260,000 called by the Company any 
time after December 31, 1998.

(b)  On May 31, 1997, the Company closed a Rule 504, Regulation D limited 
public offering of 975,000 units (each unit consisting of one share of 
common stock and a warrant for one share of common stock) at $1.00 per 
unit.  The net proceeds of this offering amounted to $975,000.  These funds 
were utilized to repay shareholders' loans to the Company, the proceeds of 
which were utilized to satisfy the registered capital requirements of GFP.  

(c)  Subsequent to the Rule 504, Regulation D offering in 1997, the Company 
conducted a Section 4(2) private placement to issue 1,520,000 shares of 
common stock at $1.00 per share.  The investor group involved in this Rule 
144 offering was made up largely of the same investor group involved with the 
Rule 504, Regulation D offering.  The total proceeds from this private 
placement amounted to $1,520,000. 

(d)  During 1997, the Company incurred consulting, legal and accounting 
expenses relating to these two fund raising activities, and other 
directors' fees and travel expenses.  In order for the Company to pay these 
expenses and discharge the obligation to pay the legal expenses incurred in 
1995 and 1996 by CPEL, it issued a total of 469,000 shares of common stock 
at $1.00 per share.  These non-cash transactions are presented as follows:

<TABLE>
<CAPTION>
                                                                  Common Stock        Additional
                                                               ------------------      Paid-in
                                                    Date       Shares      Amount      Capital       Total
                                                  ----------------------------------------------------------

<S>                                               <C>          <C>          <C>        <C>          <C>
Assumption of CPEL's accrued legal fees           03/15/97     200,000      $200       $199,800     $200,000

Issuance of stock for legal fees relating to
 fund raising                                     03/30/97      15,000        15         14,985       15,000

Issuance of stock for stock promotion service     04/15/97     100,000       100         99,900      100,000

Issuance of stock for stock promotion service     05/01/97      35,000        35         34,965       35,000

Issuance of stock for stock promotion service     06/01/97      10,000        10          9,990       10,000

Issuance of stock for consulting service          07/01/97      24,000        24         23,976       24,000

Issuance of stock for accounting service          10/01/97      15,000        15         14,985       15,000

Issuance of stock for consulting service          10/15/97      25,000        25         24,975       25,000

Issuance of stock for a directors' fee            11/01/97      25,000        25         24,975       25,000

Issuance of stock for travel expense              11/17/97      20,000        20         19,980       20,000
                                                  ----------------------------------------------------------
                                                               469,000      $469       $468,531     $469,000
                                                  ==========================================================
</TABLE>


e)  On January 15, 1998, the Company issued 50,000 shares of common stock 
at $1.00 per share in exchange for stock promotion services provided by a 
capital service company.

f)  On February 2, 1998, the Company issued 5,272 shares of common stock at 
$2.25 per share to an individual in exchange for his services in connection 
with the furnishing of the Company's corporate office.

g)  On May 2, 1998, the Company issued 557,000 units (each unit composed of 
one share of common stock and one warrant to purchase one share of common 
stock) at a price of $2.50 per unit, pursuant to a private offering in 
accordance with the exemption provided in Rule 506, Regulation D.  The net 
proceeds of this offering were $1,387,500.  Among the 557,000 shares 
issued, 2,000 shares valued at $5,000 were issued in exchange for accounting 
service.  The holders of such warrants are entitled to purchase, from time to 
time, up to 557,000 shares of common stock, par value $0.001 per share, at an 
exercise price of $1.00 per share, at any time after June 30, 1998 and through 
and including June 30, 2003. 

h)  On February 19, 1998, the Company issued 120,000 shares of common stock 
at a price of $1.00 per share to Amer-China Partners, Limited (ACPL) 
pursuant to a signed agreement dated October 1, 1997 to acquire ACPL's 
entire interest and right (2.4%) in and to the Green Food Peregrine 
Children's Food Co. Ltd. 

i)  On July 31, 1998, the Company issued 1,531,685 shares of common stock 
to American Flavor China, Inc. to acquire its 52% of equity interest in and 
to Hangzhou Meilijian Dairy Products Co. Ltd. at $1.00 per share.


      This transaction was accounted for a purchase and the operation 
results of Meilijian are included as of the date of acquisition.

      The unaudited pro forma results of operations presented below reflect 
the Company's operations as though the acquisition had taken place at the 
beginning of each period presented. The pro froma results have been 
prepared for comparative purposes only, and are not necessarily indicative 
of what the actual result of operations would have been had such 
acquisitions occurred at the beginning of the periods presented, or what 
results of operations will be in the future.

<TABLE>
<CAPTION>
                                                 Years ended December 31,
                                               ---------------------------
                                                   1997            1998
                                                   ----            ----

<S>                                            <C>             <C>
Revenues                                       $ 6,874,882     $ 5,702,139
Operating income (loss)                         (2,548,983)     (2,637,030)
Net loss                                        (2,254,484)     (3,020,240)
Basic loss per share                                  (.45)          (0.45)
Diluted loss per share                                (.45)          (0.41)
Basic average number of common shares
 outstanding                                     3,213,512       7,345,152
Diluted average number of common shares
 outstanding                                     5,213,512       7,345,152
</TABLE>


j)  In October 1998, the Board of Directors of the Company decided to 
reduce the exercise price of  warrants issued during the Rule 504, 
Regulation D offering in 1997 from $5.00 to $1.00.  Subsequently, certain 
holders of 265,000 warrants exercised their warrants at $1.00 per share.  
The Company issued 165,000 shares of common stock in December and recorded 
$100,000 of stock subscribed as of December 31, 1998, which was fully 
collected in February 1999.

k)  On November 19, 1998 the Company conducted a Rule 504 Regulation D 
offering to sell Series C preferred stock to two institutional investors 
in order for the Company to raise funds to increase its equity capital 
interest in GFP in 1999.  One institutional investor purchased on November 
19, 1998, 83,334 shares of Series C preferred stock at $3.00 per share with 
83,334 warrants attached at an exercise price of $1.00 per share.  The other 
institutional investor purchased on December 29, 1998 another 50,000 shares 
of Series C preferred stock at $3.00 per share with 450,000 warrants 
attached at an exercise price of $1.00 per share and the relevant proceeds 
were received on January 4, 1999.  The total net proceeds of the Rule 504 
offering was $385,000, net of offering expenses of approximately $15,000.

Each share of Series C preferred stock has the following features: 1) 
stated value of $3 per share, 2) dividend accrued at 8% per annum and 
payable in cash of common stock at the Company's option and upon 
conversion, at the option of the holder, or redemption, 3) no voting right, 
and 4) convertible into common stock.  

The conversion feature is specified in the offering memorandum as follows: 
the number of shares of common stock issuable upon conversion of each share 
of Series C preferred stock shall equal (i) the sum of (A) the stated value 
per share and (B) at the holder's election accrued and unpaid dividends on 
such share, divided by (ii) the conversion price.  The conversion price for 
each share of Series C convertible preferred stock in effect on any 
conversion date shall be the lesser of (a) 75% of the average per share 
market price on the date of the applicable holder conversion notice or (b) 
$3.00 per share, provided that, during the period from November 1, 1998 
through February 29, 1999, the conversion price shall not be less than 
$1.00 for each share of underlying common stock (the price floor), which 
price floor shall be applicable to the aggregate number of issued and 
outstanding Series C preferred stock held by any one holder, as follows: 
100% during November 1998; 75% during December 1998; 50% during January 
1999; 25% during February 1999; and no applicable price floor thereafter.  

On November 19, 1998, the Company recognized a deemed dividend of $83,334 
because of the beneficial built in conversion feature which allows each share 
of preferred stock to be converted into each share of common stock at 75% of 
market price at issuing date.  As a result of implementing the accrued 
dividend policy for the Series C preferred stock, the Company recognized 
$2,217 of dividends payable to the 83,334 shares of Series C preferred 
stock. 

Note 10.  Stock Warrants and Options

In 1997, the Company issued warrants for 975,000 shares of common stock as 
part of the units sold in the Rule 504, Regulation D limited public offering.  
These warrants may be exercised at any time after May 31, 1998, and from 
time to time thereafter through and including March 31, 1999.  

During 1997, the Company signed a total of four stock options agreements 
with certain shareholders and non-employee directors.  These warrants and 
four stock option agreements are summarized as follows:

<TABLE>
<CAPTION>
                                              Warrants/
                                  Grant        Options       Exercise      Vesting      Expiration
                                   Date        Granted        Price        Period          Date

<S>                              <C>          <C>             <C>         <C>           <C>
Warrants issued in Rule 504
 Regulation D offering            5/31/97     $  975,000      $1.00       12 months       3/31/99
Warrants issued in Rule 506,
 Regulation D offering             6/2/98        557,000       1.00         None        6/30/2003
Warrants issued with Series C
 Preferred Stock                 11/19/98         83,334       1.00         None          5/10/99
Warrants exercised               12/15/98       (165,000)      1.00         None                -
Warrants issued with Series C
 Preferred Stock                 12/29/98        450,000       1.00         None          4/30/99
                                              ----------
Total outstanding warrants                     1,900,334

Agreement One                     4/29/97     $1,005,533      $1.00         None        4/28/2002
Agreement Two                     4/30/97      2,000,000       1.00         None        4/29/2002
Agreement Three                   10/1/97         25,000       1.00         None        9/30/2002
Agreement Four                    10/1/97         15,000       1.00         None        9/30/2002
                                              ----------

Total options outstanding at
 December 31, 1998                             3,045,533
</TABLE>


The Company adopted FAS 123 to account for its stock warrants and options 
granted during 1997 and 1998.  Accordingly, a compensation cost of $205,979 
has been recognized for the options granted to non-employee directors 
during 1997. 

A summary of the status of the Company's stock options and warrants as of 
December 31, 1997 and 1998 with changes during the year then ended are 
presented below:

<TABLE>
<CAPTION>
                                                                              Weighted Average
                                                                 Shares        Exercise Price
                                                                ------------------------------

<S>                                                             <C>                <C>
Outstanding at January 1, 1997                                          -              -
Total Granted                                                   4,020,553          $1.00
                                                                ------------------------

Total warrants and options outstanding and exercisable 
 at December 31, 1997                                           4,020,553          $1.00

Warrants exercised in 1998                                       (165,000)
Warrants granted in 1998                                        1,090,334
                                                                ------------------------

Total warrants and options outstanding and exercisable at 
 December 31, 1998                                              4,945,867          $1.00
                                                                ========================

Weighted average fair value of options and warrants
 granted during 1998                                            4,945,867          $1.00
                                                                ========================
</TABLE>


The following table summarizes information about stock options and warrants 
outstanding at December 31, 1998:

<TABLE>
<CAPTION>
                         Warrants/Options Outstanding             Options Exercisable
                   ----------------------------------------     ------------------------
                                    Weighted
                                     Average       Weighted                     Weighted
                                    Remaining      Average                      Average
                     Number        Contractual     Exercise       Number        Exercise
Exercise Price     Outstanding        Life          Price       Exercisable      Price
                   ---------------------------------------------------------------------

    <S>             <C>             <C>             <C>          <C>              <C>
    $1.00           3,045,533       3.34 Yrs.       $1.00        3,045,533        $1.00
    $1.00           1,900,334        .29 Yrs.       $1.00        1,900,334        $1.00
                    ---------                                    ---------

                    4,945,867       2.21            $1.00        4,945,867        $1.00
                    =========                                    =========
</TABLE>


Note 11.  Subsequent Events

a)  New issuance of Convertible Preferred Stock in 1999

On March 9, 1999, the Company conducted a Rule 506 Regulation D offering to 
sell Convertible Series D preferred stock to three institutional investors 
in order for the Company to raise working capital for its operations in 
1999.  On that date, the Company sold 50,000 units (each unit composed of 
one share of Series D Convertible Preferred Stock and one warrant to 
purchase shares of the Company's common stock at $2.96 per share expiring 
at March 9, 2002) at a price of $10.00 per unit.  

Three institutional investors purchased 16,250 shares, 16,250 shares, and 
17,500 shares of Series D convertible preferred stock at $10.00 per unit.

Each share of Series D preferred stock entitles the holder to receive or 
accrue dividends at the rate of 6% simple interest per annum, which is 
payable in cash or common stock quarterly at the Company's option and to 
convert into common stock.  The payment of dividends shall be made first to 
the Series D Convertible preferred stockholders before dividends or other 
distributions are made on any common stock, Series A Preferred Stock, 
Series B Preferred Stock or Series C Preferred Stock.  The Series D 
Preferred Stock has no voting rights.

The number of shares of common stock issuable upon conversion of each share 
of Series D Preferred Stock shall equal (i) the sum of (A) the Stated Value 
per share and (B) at the holder's election accrued and unpaid dividends on 
such share, divided by (ii) the conversion price.  The conversion price 
shall be equal to the lessor of: (i) 100% of the average of the closing bid 
price of the Company's common stock for the trading day immediately 
preceding the date of issuance of the shares of Series D Preferred Stock to 
the holders; or (ii) 80% of the average of the three lowest closing bid 
prices for the 22 trading days immediately preceding the conversion of the 
respective shares of Series D Preferred Stock.  

The aggregate gross proceeds from selling these 50,000 units was $500,000, 
which the Company received  on March 10, 1999, net of expense of $30,000.  
In addition, the three institutional investors have committed to invest 
additional $500,000, which will occur upon the completion of certain 1933 
Act registration events as spelled out in the Subscription Agreement.  The 
Company anticipates to complete filing an SB-2 registration statement on or 
about April 16, 1999.  The finder fees for this fund raising exercise were 
paid in the form of 3,5000 shares of Series D Convertible preferred stock 
and 50,000 warrants to purchase the Company's common stock at exercise 
price of $2.96 expiring at March 9, 2002. 

b)  Additional Financing

During the months of March and April 1999, the Company negotiated a private 
offering for additional equity financing having maximum proceeds of 
$2,500,000.  That offering will involve the issuance of a new class of 
convertible preferred at a purchase price of $2.50 per share.  On April 9, 
1999, the Company received a "term sheet" for this transaction, which has 
been approved by management.  The Company has been informed that the 
attorneys for the investors' agent are in the process of drafting the 
required documentation and that the transaction can be closed by the end of 
May 1999.


PART II

ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT
         ACCOUNTANTS

The Company has not had any changes in or disagreements with its 
independent accountants.


PART III

ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
         PERSONS.

The following table presents directors, executive officers, promoters and 
control persons of the Company as of December  31, 1998; directors serve 
two year terms.


Mr. Charles Beech, Chairman, Chief Executive Officer and Director, Age 56.
Term expires 2000

Mr. Beech has a background of senior level management experience within a 
variety of industries including: consumer products, emerging growth high 
technology, merchant banking and sales and marketing consulting firms. Mr. 
Beech has over 25 years of experience in executive level management, sales 
and marketing, consumer product research and development.  As former 
President of Maybelline Sales Corporation, and following a 17-year career 
in management with Procter & Gamble, Mr. Beech negotiated with the Chinese 
government to establish the Green Food Peregrine Children's Food Company 
joint venture alliance with the Ministry of Agriculture, one of the Chinese 
joint venture businesses presently run by the Company.  Mr. Beech also 
serves as Chairman, CEO and President of Peregrine Enterprises, Inc., a 
multi-national corporation which is parent to several consumer market 
research firms in the United States and in China, including Message 
Factors, Inc., an international consumer market research company which is 
currently ranked (by revenues) in the top 2% of the U.S. market research 
industry.  Mr. Beech is one of the "founders" of the Company as it 
presently exists.


Mr. Robert Cummings, Director, Age 56.
Term expires 1999

Mr. Cummings' work experience includes ten years in purchasing at Ford 
Motor Company. In 1975, he founded and currently operates J & J Production 
Service, Inc., a manufacturing representative business, which is currently 
responsible for over $300 million in annual sales.


Mr. Michael L. Davis, Chief Financial Officer, Age 65.

Entering the securities industry over 35 years ago as a securities and 
special situations analyst with ValueLine, Mr. Davis proceeded to serve as 
a Tactical Planner, General Portfolio Manager and Short Sale Portfolio 
Manager with a number of hedge funds. In 1972, he was a member of the 
Investment Committee at Anchor Corp. which supervised its $2.5 billion 
family of funds, as well as serving as Anchor's Chief Market Analyst. From 
1978 through 1989, Mr. Davis was the Portfolio Manager of Merrill Lynch's 
Special Value Fund.  In addition to his position with China Peregrine, Mr. 
Davis operates a private consulting firm, M.L. Davis Financial Services, 
which advised clients on stock selection and general market timing 
considerations, research and writing of special reports on selected small 
and mid-cap growth companies and in the supervision of an investment 
portfolio for a group of United Arab Emirates investors.


Mr. Paul Downes, Director, Age 37.
Term expires 2000

Mr. Downes currently is a director of the Company and, until his 
resignation in April, 1998, served as Chairman of the Company.  For the 
past 10 years, Mr. Downes has managed a diverse portfolio of international 
investments with concentration in the United Kingdom, Eastern Europe, North 
Africa and Asia. In 1985, he founded a group of nursing homes for the 
elderly in Great Britain that he sold in 1990. Prior to that time, Mr. 
Downes spent several years organizing golf tournaments and international 
golf matches in Malaysia, Singapore, Thailand, Philippines, Indonesia and 
Hong Kong, spending two years living in Southeast Asia. Mr. Downes is one 
of the "founders" of the Company as it presently exists


Mr. George Holdsworth, Director, Age 60.
Term expires 1999

Until May, 1998, Mr. Holdsworth was responsible for the operational aspects 
of the Company's Chinese operations. Mr. Holdsworth is a graduate of the 
University of London with a B.S. in Mathematics and an Associate of the 
London College of Music. He started in business as a manufacturing manager 
in his father's company, Earlsdon Components, Ltd., where he became 
Director of Operations, then owner and Managing Director. In 1993, Mr. 
Holdsworth became owner of Earlsdon Technology, Ltd., a JV Partner of 
Shanghai Earlsdon Valve Company, Ltd., and has lived in Shanghai for the 
last four years, until May, 1998. Mr. Holdsworth sold his interest in 
Shanghai Earlsdon and commenced his duties for the Company in March, 1997.


Michael Lucci, Director, Age 58.
Term expires 1999

Mr. Lucci is a former All Pro linebacker who played for the Detroit Lions 
of the National Football League from 1964 through his retirement from 
professional football in 1973.   Mr. Lucci became associated with Bally's 
Total Fitness Corporation in 1971 and rose through the ranks to become that 
corporation's Vice President of club operations in the mid-west, Senior 
Vice-President, and President and Chief Operating Officer in 1993.  Mr. 
Lucci retired in 1996 and, since that time, has managed a diverse 
investment portfolio for himself.


Mr. John McCormack, Director, Age 40.
Term expires 2000

Mr. McCormack filled the directorship vacated by Mr. Dale Reese in the 
summer of 1997. For over 15 years, Mr. McCormack served as an executive 
with Dean Foods Co., a processor and distributor of a full line of branded 
and private label products, including fluid milk, cottage cheese and ice 
cream. In 1996 and 1997, Mr. McCormack served as Vice President of Sales 
and Marketing for Dean Food's McArthur Dairy in Miami, Florida.  Currently, 
as a Vice President of Dean Foods, he is in charge of Dean Food's mid-
western division out of Chicago, Illinois.


Mr. Phillip Pearce, Director, Age 69.
Term expires 1999

Mr. Pearce is a "retired" member of the securities industry.  Mr. Pearce 
served as Chairman of the NASD during which time he was instrumental in the 
founding of NASDAQ. Additionally, Mr. Pearce was a former Director of E.F. 
Hutton and has served as Governor of the New York Stock Exchange.  Since 
his retirement in 1988, Mr. Pearse has remained active in the securities 
industry as a corporate financial consultant.


Mr. Roy G. Warren, President and Director, Age 43.
Term expires 2000

Mr. Warren has been in charge of the day to day US operations of the 
Company since the summer of 1997.  In addition to his day to day 
operational duties, Mr. Warren continues to develop strategy for the 
Company in growth and external financial matters. From 1981 through 1996, 
Mr. Warren enjoyed an active career in the securities brokerage industry. 
During 1995 and 1996, Mr. Warren was a Registered Representative of a 
satellite office of Southeast Research Partners, Boca Raton, Florida.  From 
1992 to 1994, he was a Partner of Laffer Warren & Company, a small 
independent broker dealer, registered with the NASD, located in North Palm 
Beach, Florida. During the period from 1987 to 1992, Mr. Warren was a an 
executive officer, principal, securities broker, and partner with 
Gulfstream Financial Association, a subsidiary of Kemper Financial 
Companies, and later as Vice President-Sales, of Alex Brown & Sons, West 
Palm Beach, Florida.


As of September 31, 1998, there were no family relationships among the 
directors and executive officers.  Further, no director, executive officer, 
promoter or control person has been involved in any legal proceedings 
during the past five years that are material to an evaluation of the 
ability or integrity of such director, person nominated to become a 
director, executive officer, promoter or control person of the Company.  
None of the individuals listed in this Item 9 has had a bankruptcy petition 
filed by or against any business of which such person was a general partner 
or executive officer either at the time of such bankruptcy, if any, or 
within two years prior to that time.  No director, executive officer, 
promoter or control person was or has been convicted in a criminal 
proceeding or is subject to a pending criminal proceeding or subject to any 
order, judgment, or decree, not subsequently reversed, suspended or 
vacated, of any court of competent jurisdiction, permanently or temporarily 
enjoining, borrowing, or otherwise limiting his or her involvement in any 
type of business, securities or banking activities.  No director, executive 
officer, promoter or control person has been found by a court of competent 
jurisdiction in a civil action to have violated federal or state securities 
or commodities law.

SECTION 16(A)  BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS 

As required under the securities laws of the United States, the Company's 
directors, its executive (and certain other) officers, and any persons 
holding ten percent or more of the Common Shares must report on their 
ownership of the Common Shares and any changes in that ownership to the 
Securities and Exchange Commission and to the National Association of 
Securities Dealers, Inc. Automated Quotation System. Specific due dates for 
these reports have been established. During the year ended December 31, 
1998, the Company did not have a class of securities registered pursuant to 
Section 12 of the Securities Exchange Act of 1934.  Accordingly, no 
securities transaction reports were filed or received by the Company during 
that period, or which relate to such period. 


PART III

ITEM 10 - EXECUTIVE COMPENSATION

Summary Compensation Table
--------------------------

The following table relates to executive compensation paid during 1997 and 1998

<TABLE>
<CAPTION>
                            ------Annual Compensation------     ---Long-Term Compensation---
                                                                   Stock
                                                                   Awards
Name & Position              Salary      Bonus      Total       (Restricted)      Options(1)
                            ----------------------------------------------------------------

<S>                         <C>                    <C>                           <C>
Roy G. Warren               $120,000               $120,000                        410,914
President
[8/15/97 to date]

George Holdsworth
President
[4/20/97 to 8/15/97]
Chief Operating Officer
[4/20/97 to 4/30/98]

Charles Beech                                                                      510,914
Chairman
[4/20/97 to 6/1/97
and 4/30/98 to date]
Chief Executive Officer
[4/20/97 to date]

Dale Reese                                                                         700,000
Chairman/Treasurer
[6/1/97 to 8/15/97]
Paul Downes (2)                                                                  1,383,705
Chairman
[8/15/97 to 4/30/98]

Philip Pearce
Director                                                                            25,000(3)
[4/20/97 to date]

<FN>
<F1>  (1)  The Options listed above were authorized by a Directors' resolution 
           on April 20, 1997.  At that time, a market did not exist for the 
           Company's unrestricted shares, which had a par value of $0.001.  

<F2>  (2)  These options were granted to Tamarind Management, Ltd., an affiliate 
           of Mr. Downes.

<F3>  (3)  Issued in 1997.
</FN>
</TABLE>


Option Grant Table
------------------

<TABLE>
<CAPTION>
                            Securities
                            Underlying     Percentage     Per Share      Expiration
Name & Position             Options(1)      of Total      Exercise $        Date
-----------------------------------------------------------------------------------

<S>                          <C>             <C>            <C>          <C>
Roy G. Warren                160,914          5.30%         $1.00         4-28-02
President                    250,000          8.25%         $1.00         4-29-02
[8/15/97 to date]

Charles Beech                160,914          5.30%         $1.00         4-28-02
Chairman                     350,000         11.54%         $1.00         4-29-02
[4/20/97 to 6/1/97
and 4/30/98 to date]
Chief Executive Officer
[4/20/97 to date]

Dale Reese                   700,000         23.09%         $1.00         4-20-02
Chairman/Treasurer
[6/1/97 to 8/15/97]

Paul Downes (2)              683,705         22.56%         $1.00         4-22-02
Chairman                     700,000         23.09%         $1.00         4-29-02
[8/15/97 to 4/30/98]


<FN>
<F1>  (1)  The Options listed above are exercisable for Common Stock, which has 
           a par value of $0.001.

<F2>  (2)  These options were granted to Tamarind Management, Ltd., an affiliate 
           of Mr. Downes.
</FN>
</TABLE>


Aggregated 1998 Fiscal Year End Option Value Table
--------------------------------------------------


<TABLE>
<CAPTION>
                            Securities Underlying      Value of "In The Money"
Name & Position             Unexercised Options(1)       Unexercised Options
---------------             ----------------------     -----------------------

<S>                               <C>                           <C>
Roy G. Warren                       410,914                     $-0-
President
[8/15/97 to date]

Charles Beech                       510,914                     $-0-
Chairman
[4/20/97 to 6/1/97
and 4/30/98 to date]
Chief Executive Officer
[4/20/97 to date]

Dale Reese                          700,000                     $-0-
Chairman/Treasurer
[6/1/97 to 8/15/97]

Paul Downes (3)                   1,383,705                     $-0-
Chairman
[8/15/97 to 4/30/98]

<FN>
<F1>  (1)  The Options listed above were authorized by a Directors' resolution 
           on April 20, 1997.  At that time, a market did not exist for the 
           Company's unrestricted shares, which had a par value of $0.001.  

<F2>  (2)  On December 31, 1998, the Company's unrestricted common stock was 
           quoted on the NASD Over The Counter Electronic Bulletin Board at a 
           closing price of $1.00; the reported dollar values represent the "in-
           the money" value of the options listed as of the 1998 year end.

<F3>  (3)  These options were granted to Tamarind Management, Ltd., an affiliate 
           of Mr. Downes.
</FN>
</TABLE>


Employment Contracts
--------------------

There are no written employment contracts for the individuals listed in 
this item.


PART III

ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND 
          MANAGEMENT

(a) The following individuals hold 5 % or more of the outstanding voting 
stock of the Company.  No other individual or any group is known to the 
Company to be the beneficial owner of more than 5% of any class of the 
Company's voting securities.  

<TABLE>
<CAPTION>
Title of Class (1)        Name & Address of (2)         Amount & Nature of (3)     Percent of (4)
                            Beneficial owner               Beneficial Owner            Class
-------------------------------------------------------------------------------------------------

<S>                    <C>                                    <C>                      <C>
Common                 Mr. Dale Reese                         3,157,985                22.75%
                       125 Kingston Road
                       Media, PA 19063

Common                 American Flavors China, Inc.           1,531,685                11.03%
                       1007 Chestnut Street
                       Newton, MA 02164

Common                 Tamarind Management., Ltd.             2,202,327                15.87%
                       31 Broad Street
                       P.O. Box 23
                       St. Helier Channel Islands

Common                 Peregrine Enterprises, Inc.            1,070,914                 7.71%
                       5350 Poplar Avenue
                       Memphis, TN 38119

<FN>
<F1>  (1)  While listed as "common," the class of stock includes the shares of 
           common stock underlying warrants, options and convertible preferred 
           stock issued by the Company.

<F2>  (2)  Insofar as Mr. Paul Downes has investment power with respect to the 
           affairs of Tamarind Management, Ltd., the Company's securities held 
           by Mr. Downes and Tamarind are combined in this table.  Similarly, 
           insofar as Mr. Charles Beech has investment power with respect to the 
           affairs of Peregrine Enterprises, Inc., the Company's securities held 
           by Mr. Beech and Peregrine Enterprises are combined in this table.

<F3>  (3)  The following is a breakdown, by beneficial owner and title of class, 
           of the common stock issued and common stock underlying warrants, 
           options and convertible preferred stock which the respective holders 
           have the right to acquire within sixty (60) days:
</FN>

<CAPTION>
Holder                     Type of Security               Number of Shares of
                                                         Common Stock (Issued
                                                     or Capable of Being Acquired)
----------------------------------------------------------------------------------

<S>                   <C>                                      <C>
Mr. Dale Reese        Common                                     840,544
                      Warrants                                   100,000
                      Series A Convertible Pref.                 500,000
                      Series B Convertible Pref.               1,017,441
                      Options                                    700,000

Tamarind              Common                                     687,000
Management, Ltd.      Series B Convertible Pref.                 107,440
                      Options                                  1,383,705

Mr. Paul Downes       Common                                      24,182

Peregrine 
Enterprises, Inc.     Common                                     360,000

Mr. Charles Beech     Common                                     200,000
                      Options                                    510,914

<FN>
<F4>  (4)  Includes issued shares of common stock plus the shares of common 
           stock underlying warrants, options and convertible preferred stock 
           issued by the Company, which can be acquired within sixty (60) days. 
</FN>
</TABLE>

(b) The following includes all who served as directors or executive 
officers in 1998, who hold equity securities of the Company and the total 
held by all directors and executive officers. This table includes issued 
shares of common stock plus the shares of common stock underlying warrants, 
options and convertible preferred stock issued, which can be acquired 
within sixty (60) days, as above. 


<TABLE>
<CAPTION>
Title of Class          Name & Address of          Amount & Nature of      Percent
                        Beneficial Owner           Beneficial Owner(1)     Class
----------------------------------------------------------------------------------

<S>                <C>                                  <C>                <C>
Common             Mr. Dale Reese                       3,157,985          22.75%
                   125 Kingston Road
                   Media, PA 19063

Common             Mr. Paul Downes                      2,202,327          15.87%
                   (Director)
                   5646 Windrift Lane
                   Boca Raton, FL  33433

Common             Mr. Charles Beech                    1,070,914           7.71%
                   (Chairman/CEO/Director)
                   4339 Gwynne Road
                   Memphis, TN 38117

Common             Roy G. Warren                          598,914           4.31%
                   (President/Director)
                   1128 Country Club Road
                   N. Palm Beach, FL 33408

Common             Robert Cummings                        400,000           2.88%
                   (Director)
                   2829 N.E. 44th Street
                   Lighthouse Point, FL 33064

Common             Michael G. Lucci                       410,000           2.73%
                   (Director)
                   49 Spanish River Drive
                   Ocean Ridge, FL 33435

Common             John McCormack                         200,000           1.44%
                   (Director)
                   8750 South Grant
                   Burridge, IL 60521

Common             Phillip Pearce                          25,000           0.18%
                   (Director)
                   6624 Glenleaf Court
                   Charlotte, NC 28270

Common             Michael L. Davis                        25,000           0.18%
                   (CFO)
                   20 Harris Avenue
                   Hamptom Beach, NH 03843

Common             Susan Lurvey                            12,000          0.086%
                   (Treasurer/Secretary)
                   6340 Fox Run Circle
                   Jupiter, FL 33458

Common             All directors and executive          4,914,155          35.40%
                   officers as a group

<FN>
<F1>  (1)  The following is a breakdown, by beneficial owner and title of class, 
           of the common stock issued and common stock underlying warrants, 
           options and convertible preferred stock which the respective holders 
           have the right to acquire within sixty (60) days:
</FN>

<CAPTION>
Holder                         Type of Security              Number of Shares of
                                                             Common Stock (Issued
                                                         or Capable of Being Acquired)
--------------------------------------------------------------------------------------

<S>                       <C>                                      <C>
Mr. Dale Reese            Common                                     840,544
                          Warrants                                   100,000
                          Series A Convertible Pref.                 500,000
                          Series B Convertible Pref.               1,017,441
                          Options                                    700,000

Tamarind                  Common                                     687,000
Management, Ltd.          Series B Convertible Pref.                 107,440
(c/o Mr. Paul Downes)     Options                                  1,383,705
Mr. Paul Downes           Common                                      24,182
(Individually)

Peregrine 
Enterprises, Inc.         Common                                     360,000
(c/o Mr. C. Beech)

Mr. Charles Beech         Common                                     200,000
(Individually)            Options                                    510,914

Roy G. Warren             Common                                     188,000
                          Options                                    410,914

Robert Cummings           Common                                     200,000
                          Warrants                                   200,000

Michael G. Lucci          Common                                     410,000
                          Warrants                                   200,000

John McCormack            Common                                     100,000
                          Warrants                                   100,000

Phillip Pearce            Common                                      25,000

Michael L. Davis          Options                                     25,000

Susan Lurvey              Common                                      12,000
</TABLE>


(c) There currently are no arrangements that may result in a change of 
ownership or control of the Company.


PART III

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS


Loans/Fees
----------

During the organization period of Green Food Peregrine, China National 
Green Food Corporation, one of the three partners of Green Food Peregrine, 
wired RMB6,600,000 in the form of shareholder's loan to Green Food 
Peregrine to finance its activities.  In April, 1996, China National Green 
Food Corporation wired another RMB2,000,000 in the form of shareholder's 
loan to GFP.  All these shareholder's loans have been converted to paid-in 
capital to satisfy the registered capital requirements contained in the 
Article of Association of Green Food Peregrine.  To date, a total of 
interest payable of RMB882,721 has been converted to paid-in capital as the 
registered capital of China National Green Food Corporation.   

In April and November, 1996, China National Green Food loaned an additional 
RMB350,000 and RMB200,000, respectively, to Green Food Peregrine to finance 
working capital.  An interest rate of 12.4% per annum was applied to these 
loans.  Both of these loans were paid in full in September and October, 
1997, respectively.

In 1996, Amer-China, one of three partners of Green Food Peregrine, 
provided Green Food Peregrine with consulting services, such as English 
translation and negotiation supporting services in the U.S., and charged a 
total of $36,000 to Green Food Peregrine.  The charge was accounted for 
consulting expense in Green Food Peregrine's books. 

In February, 1997 the Company issued 25,000 shares of common stock in 
exchange for 100% of equity interest of Manor Products Corp. (Manor).  
Manor was a Delaware company established on January 10, 1996.  In early 
1996, 80% of equity interest of Manor was bought by the principal of the 
initial founding entity of the Company.  Accordingly, this acquisition was 
regarded as a related party transaction.

In January, 1997, the major limited partner of China Peregrine Enterprises 
loaned US $200,000 to that limited partnership in order for China Peregrine 
Enterprises to meet interim registered capital requirements of the Green 
Food Peregrine Articles of Association and Joint Venture Contract.  In 
March, 1997, three shareholders of the Company together provided a loan of 
US $1,315,000 to pay China Peregrine Enterprises' final registered capital 
requirement to Green Food Peregrine.  This last capital contribution was 
set by the Board of Directors of Green Food Peregrine as a condition 
precedent to the approval of the Company's acquisition of the interest of 
China Peregrine Enterprises in and to the Green Food Peregrine joint 
venture.  These two loans were paid off during May and June, 1997, 
utilizing the proceeds from a Rule 504 regulation D offering by the 
Company.  

In March, 1997, a holder of the majority of the partnership interests in 
China Peregrine Enterprises (and a major stockholder in the Company), 
together with two other investors in the Company, assumed a US $1,260,000 
outstanding line of credit owed by the limited partnership to a Tennessee-
based financial institution.  On March 15, 1997, the Company issued 
1,260,000 shares of its Series B preferred stock to these shareholders in 
consideration for this assumption. The line of credit was paid in full in 
October, 1997.

In the course of setting up the Hangzhou Meilijian joint venture, HDC 
contributed fixed assets with a value in excess of its required capital 
contribution amount.  Based on an agreement signed by the Chinese and 
American investors, the excess portion was treated as a fixed asset loan 
from HDC at an interest 8% per annum.  The balance of this loan at December 
31, 1998 was $560,080.

On January 1, 1994, HDC provided the Company with the use of its trademark, 
which was valued at RMB500,000 (approximately US$60,245).  The Company 
recorded this trademark value as a part of deferred assets and a 
shareholder loan.  The Company recorded amortization of RMB50,000 
(approximately US$6,025) per year for trademark and paid cash of RMB50,000 
to HDC per year against the shareholder loan.  The balance of this loan at 
December 31, 1998 was $36,238.  Accumulated interest on these loans 
amounted to $81,265.

Relationships
-------------

Mr. Paul Downes has investment power with respect to the affairs of 
Tamarind Management, Ltd.  Accordingly, the Company's securities held by 
Mr. Downes and Tamarind have been combined in this document for reporting 
purposes.  The Downes/Tamarind ownership of issued and underlying shares of 
common stock, Series B Preferred Stock and Options represents 15.87% of all 
issued and outstanding common stock and shares of common stock underlying 
the Series A and B Preferred plus unexercised options and warrants.  

Similarly, insofar as Mr. Charles Beech has investment power with respect 
to the affairs of Peregrine Enterprises, Inc. The Company's securities held 
by Mr. Beech and Peregrine Enterprises likewise have been combined in this 
document for reporting purposes.  The Beech/Peregrine Enterprises ownership 
of issued and underlying shares of common stock and Options represents 
7.71% of all issued and outstanding common stock and shares of common stock 
underlying the Series A and B Preferred plus unexercised options and 
warrants. 

The Company purchased the assets of China Peregrine Enterprises, Limited 
(China Peregrine Enterprises) in March of 1997, in exchange for 1,040,000 
shares of the common stock of the Company.  At the time of this asset 
purchase, Mr. Dale Reese was the major equity holder in the China Peregrine 
Enterprises limited partnership and Mr. Charles Beech "controlled" the 
activities of China Peregrine Enterprises by virtue of his control of China 
Peregrine International, Inc., the General Partner of China Peregrine 
Enterprises.  At the time of the asset purchase, Messrs. Reese and Beech 
were two of the three directors of the Company.  As noted above, through 
the assumption of a loan in excess of one million dollars owed by China 
Peregrine Enterprises to a Tennessee bank, and by virtue of his position as 
a founder of the Company, and through stock purchases, Mr. Reese presently 
holds a 22.75% interest in the equity of the Company.  Similarly, Mr. 
Beech, directly and through Peregrine Enterprises, Inc., presently holds 
7.71% of such equity.


PART III

ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K

Except as noted, copies of the following documents are incorporated by 
reference to exhibits bearing the same exhibit numbers filed with the 
Company's Form 10K-SB, First Amendment, pursuant to item 601 of Regulation 
S-B.

<TABLE>
<CAPTION>
            SEC
Exhibit     Reference
No.         No.           Title of Document
-------     ---------     -----------------

<C>         <C>           <S>
1a          2             Asset Purchase Agreement
                          China Peregrine Enterprises, Limited

1b          2             Interim Agreement to Operate
                          China Peregrine Project

2a          3(i)          Articles of Incorporation

2b          3(i)          Amended Articles (name change)

3           3(ii)         Restated Bylaws
                          China Peregrine Food Corporation

4a          4             Rights of Equity Holders
                          Common - Articles of Incorporation

4b          4             Preferred, Series A and B Designation

4c          4             Preferred, Series C Designation

5           10            Material Contracts
                          Green Food Joint Venture Contract

6           10            Material Contracts
                          Hangzhou Meilijian Joint 
                          Venture Contract

7a          10            Material Contracts
                          Asset Purchase Agreement
                          American Flavors China, Inc.

7b          10            First Amendment (1-28-98)

7c          10            Second Amendment (6-19-98)

8           21            Subsidiaries
                          Articles of Association
                          Green Food Peregrine

9           21            Subsidiaries
                          Articles of Association
                          Hangzhou Meilijian

10          27            * Financial Data Schedule, 12-31-98

11          99            Hangzhou Meilijian Audited Financial
                          Statements, Years Ending
                          December 31,1996, 1997  & July 30, 1998
<FN>
*     Filed herewith.
</FN>
</TABLE>


In accordance with Section 13 or 15(d) of the Securities Exchange Act of 
1934, China Peregrine Food Corporation has caused this amended report to be 
signed on its behalf by the undersigned, thereunder duly authorized.


                                       CHINA PEREGRINE FOOD CORPORATION

                                       By: /S/ Roy G. Warren, President


In accordance with the Securities Exchange Act of 1934, China Peregrine 
Food Corporation has caused this amended report to be signed on its behalf 
by the undersigned in the capacities and on the dates stated.

<TABLE>
<CAPTION>
Signature                      Title                   Date
---------                      -----                   ----

<S>                     <C>                       <C>
/S/ Charles Beech       Chairman, Director        April 15, 1999

/S/ Roy G. Warren       President, Director       April 15, 1999

/S/ Susan Lurvey        Secretary, Treasurer      April 15, 1999

</TABLE>