UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-K





x
            ANNUAL
      REPORT UNDER PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934
              
              FOR
      THE FISCAL YEAR ENDED DECEMBER 31, 2009o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
              
              FOR
      THE TRANSITION PERIOD FROM ______________ TO
  ______________





Commission
File Number: 000-52133





EMERALD ACQUISITION
CORPORATION


(Exact
name of small business issuer as specified in its charter)





Cayman
      Islands
            
            N/A(State
      or other jurisdiction of
              incorporation
      ororganization)
            
            (IRS
      Employer
              Identification
      No.)





No. 48 South Qingshui
Road


Laiyang
City,Shandong265200


People’s Republic ofChina


(Address
of principal executive offices)





+86 (535)
729-6152


(Registrant’s
telephone number, including area code)





SECURITIES
REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:NONE





SECURITIES
REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:


Common
Stock, Par Value $0.001 Per Share


(Title of
Class)




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





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes o     No x





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 x    NO
o





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




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference Part III of this Form 10-K or
any amendment to this Form 10-K.   x




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




Large
      accelerated filer
            o
            
            Accelerated
      filer
            oNon-accelerated
      filer
              (Do
      not check if a smaller reporting company)
            o
            
            Smaller
      reporting company
            x





As of the
last business day of the registrant’s most recently completed second fiscal
quarter, there was no public trading market for our common stock.





As of
March 26, 2010, there are 27,491,171 ordinary shares issued and
outstanding.





Documents Incorporated by
Reference:


None.










TABLE OF CONTENTS





Item
      Number and Caption
            
            PagePART
      IItem
      1.
            
            Business
            
            1Item
      1A.
            
            Risk
      Factors
            
            14Item
      2.
            
            Properties
            
            25Item
      3.
            
            Legal
      Proceedings
            
            26PART
      IIItem
      5.
            
            Market
      for Registrant’s Common Equity, and Related Stockholder Matters and Issuer
      Purchases of Equity Securities
            
            26Item
      6.
            
            Selected
      Financial Data
            
            27Item
      7.
            
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            
            27Item
      7A.
            
            Quantitative
      and Qualitative Disclosures About Market RiskItem
      8.
            
            Financial
      Statements and Supplementary Data
            
            38Item
      9.
            
            Changes
      in and Disagreements With Accountants on Accounting and Financial
      DisclosureItem 9A(T).
            
            Controls
      and Procedures
            
            38PART
      IIIItem
      10.
            
            Directors,
      Executive Officers, Promoters and Corporate Governance
            
            39Item
      11.
            
            Executive
      Compensation
            
            40Item
      12.
            
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
            
            41Item
      13.
            
            Certain
      Relationships and Related Transactions, and Director
      Independence
            
            42Item
      14.
            
            Principal
      Accountant Fees and Services
            
            44PART
      IVItem
      15.
            
            Exhibits,
      Financial Statement Schedules
            
            44SIGNATURES
            
            
            
            46











PART I





ITEM 1. BUSINESS.





Emerald
Acquisition Corp. (“we” or the “Company”) is the only Laiyang Pear juice
concentrate producer and distributor in the Peoples’ Republic of China, which we
refer to as China or the PRC.  We have been granted by the Laiyang
government as the exclusive producer of Laiyang Pear juice concentrate. Our
products are mainly used in pharmaceutical, health supplement, and food and
beverage industries. Laiyang Pear contains 46 kinds of organic acids, vitamin
B1, B2, vitamin C, nicotinic acid, carotene, and minerals such as calcium,
phosphorus and iron. Therefore, the Laiyang Pear juice concentrate we produce is
known for its exceptional taste, nutritional and medical benefits. Our products
are mainly distributed in Shandong, Guangdong, Liaoning and Jiangsu
provinces.





Our Corporate History and Structure





We were
incorporated under the laws of Cayman Islands on March 10, 2006.  On
May 31, 2006, we completed a private placement offering by selling 177,500
ordinary shares to 355 offshore private investors for $35,500. On July 18, 2006,
we sold an additional 54,000 shares to 108 offshore private investors for
$10,800. On October 22, 2009, we acquired Merit Times in a reverse acquisition
transaction, which involved a financing transaction and a share exchange
transaction which are more fully described below.





We own
all of the issued and outstanding capital stock of Merit Times International
Limited (“Merit Times”), which in turn owns 100% of the outstanding capital
stock of Shandong MeKeFuBang Food Limited (the “WFOE” or “MeKeFuBang”). On June
10, 2009, MeKeFuBang entered into a series of contractual agreements with
Shandong Longkang Juice Co., Ltd., a limited liability company under the laws of
China (“Longkang Juice”), and its five shareholders, in which MeKeFuBang
effectively assumed management of the business activities of Longkang Juice and
has the right to appoint all executives and senior management and the members of
the board of directors of Longkang Juice. The contractual arrangements are
comprised of a series of agreements, including a Consulting Services Agreement,
Operating Agreement, Proxy Agreement, and Option Agreement, through which
MeKeFuBang has the right to advise, consult, manage and operate Longkang Juice
for an annual fee in the amount of Longkang Juice’s yearly net profits after
tax. Additionally, Longkang Juice’s Shareholders have pledged their rights,
titles and equity interest in Longkang Juice as security for MeKeFuBang to
collect consulting and services fees provided to Longkang Juice through an
Equity Pledge Agreement. In order to further reinforce MeKeFuBang’s rights to
control and operate Longkang Juice, Longkang Juice’s shareholders have granted
MeKeFuBang the exclusive right and option to acquire all of their equity
interests in Longkang Juice through an Option Agreement, which is also known as
Present Incentive Option Agreement as described below.





On June
10, 2009, the Chairman of Longkang Juice, Mr. Zhide Jiang, as a PRC citizen,
entered into a call option agreement, which we refer to as the Original
Incentive Option Agreement, with Mr. Chee Fung Tang, a Hong Kong passport holder
and the Merit Times Shareholders. Under the Original Incentive Option Agreement,
Mr. Jiang shall serve as CEO, director or other officer of Merit Times for a
certain period of time; and in anticipation of Mr. Jiang’s continuance
contributions to the companies including Merit Times and Longkang Juice, if the
companies meet certain thresholds of the revenue conditions, Mr. Jiang shall
have rights and options to be transferred the shares of Merit Times at a nominal
price. In addition, Original Incentive Option Agreement also provides that Mr.
Tang shall not dispose any of the shares of Merit Times without Mr. Jiang’s
consent.





On August
5, 2009, Mr. Chee Fung Tang, a Hong Kong resident and the sole shareholder of
Proud Glory Limited (a British Virgin Islands company, which became the major
shareholder of Merit Times after Merit Times recapitalized), entered into a new
Incentive Option Agreement, which we refer to as the Present Incentive Option
Agreement, with Mr. Jiang. Pursuant to Present Incentive Option Agreement, the
Original Incentive Option Agreement will be terminated on the effective date of
Present Incentive Option Agreement. The effective date of Present Incentive
Option Agreement is October 22, 2009.





Under the
Present Incentive Option Agreement, Mr. Jiang shall serve as managing director
or other officer of Merit Times for not less than 3 year period of time; and in
anticipation of Mr. Jiang’s continuance contributions to the group including
Merit Times, MeKeFuBang and Longkang Juice, if the group meets certain
thresholds of the revenue conditions, Mr. Jiang shall have rights and options to
be transferred up to 100% shares of Proud Glory Limited at a nominal price
within the next three years (the “Option”). In addition, the Present Incentive
Option Agreement also provides that Mr. Tang shall not dispose any of the shares
of Proud Glory Limited without Mr. Jiang’s consent.





Mr. Chee
Fung Tang owns 10,000 shares, which represent 100% of the issued and outstanding
shares of Proud Glory Limited (the “Option Shares”). Under the terms of the
Present Incentive Option Agreement, the Option shall vest and become exercisable
and Mr. Zhide Jiang shall have the right to receive the Option Shares upon
exercise of the Option subject to the fulfillment of the following
conditions:




1





34% of
the Option Shares subject to the Option shall vest and become exercisable on the
date of fulfillment of the 2009 revenue of a minimum of ¥6,000,000 RMB (equal to
approximately $879,018), 33% of the Option Shares subject to the Option shall
vest and become exercisable on the date of fulfillment of the 2010 revenue of a
minimum of ¥20,000,000 RMB (equal to approximately $2,930,060) and 33% of the
Option Shares subject to the Option shall vest and become exercisable on the
date of fulfillment of the 2011 revenue of a minimum of ¥30,000,000 RMB (equal
to approximately $4,395,090). The Option is exercisable at an exercise price of
$0.10 per share for a period of five years from the date of the
Option.





The
following chart reflects our organizational structure as of the date of this
Form 10-K.









Contractual
Arrangements between MeKeFuBang, Longkang Juice and its
stockholders





Our
relationships with the Longkang Juice and its stockholders are governed by a
series of contractual arrangements between MeKeFuBang, and Longkang Juice, which
is our operating company in the PRC. Under PRC laws, Longkang Juice is an
independent legal person and is not exposed to liabilities incurred by the other
parties.  On June 10, 2009, MeKeFuBang entered into a series of
contractual agreements with Longkang Juice and its five shareholders, in which
MeKeFuBang effectively assumed management of the business activities of Longkang
Juice and has the right to appoint all executives and senior management and the
members of the board of directors of Longkang Juice.





Details
of these contractual arrangements are as follows:





(1) Consulting Services
Agreement. Pursuant to the exclusive consulting services agreement
between MeKeFuBang and Longkang Juice, MeKeFuBang has the exclusive right to
provide to Longkang Juice general business operation services, including advice
and strategic planning, as well as consulting services related to the
technological research and development of the Longkang Juice’s products (the
“Services”). Under this agreement, MeKeFuBang owns the intellectual property
rights developed or discovered through research and development, in the course
of providing the Services, or derived from the provision of the Services.
Longkang Juice shall pay a quarterly consulting service fees in Renminbi (“RMB”)
to MeKeFuBang that is equal to all of Longkang Juice’s profits for such
quarter.  The term of this agreement is 20 years from June 10, 2009
and may be extended only upon MeKeFuBang’s written confirmation prior to the
expiration of the this agreement, with the extended term to be mutually agreed
upon by the parties.




2





(2) Operating
Agreement. Pursuant to the operating agreement among MeKeFuBang, Longkang
Juice and all shareholders of Longkang Juice, MeKeFuBang provides guidance and
instructions on Longkang Juice’s daily operations, financial management and
employment issues. Longkang Juice shareholders must designate the candidates
recommended by MeKeFuBang as their representatives on the boards of directors of
Longkang Juice. MeKeFuBang has the right to appoint senior executives of
Longkang Juice. In addition, MeKeFuBang agrees to guarantee Longkang Juice’s
performance under any agreements or arrangements relating to Longkang Juice’s
business arrangements with any third party. Longkang Juice, in return, agrees to
pledge their accounts receivable and all of their assets to MeKeFuBang.
Moreover, Longkang Juice agrees that without the prior consent of MeKeFuBang,
Longkang Juice will not engage in any transactions that could materially affect
its assets, liabilities, rights or operations, including, without limitation,
incurrence or assumption of any indebtedness, sale or purchase of any assets or
rights, incurrence of any encumbrance on any of its assets or intellectual
property rights in favor of a third party or transfer of any agreements relating
to its business operation to any third party. The term of this agreement shall
commence from the effective and shall last for the maximum period of time
permitted by law unless terminated early in accordance with certain provision or
by any other agreements reached by all parties, with any extended term to be
mutually agreed upon by the parties. Longkang Juice shall not terminate this
agreement.





(3) Equity Pledge
Agreement. Under the equity pledge agreement between Longkang Juice’s
shareholders and MeKeFuBang, Longkang Juice’s shareholders pledged all of their
equity interests in Longkang Juice to MeKeFuBang to guarantee Longkang Juice’s
performance of its obligations under the consulting services agreement. If
Longkang Juice or its shareholders breaches their respective contractual
obligations, MeKeFuBang, as pledgee, will be entitled to certain rights,
including the right to sell the pledged equity interests. Longkang Juice’s
shareholders also agreed that upon occurrence of any event of default,
MeKeFuBang shall be granted an exclusive, irrevocable power of attorney to take
actions in the place and stead of the Longkang Juice’s shareholders to carry out
the security provisions of the equity pledge agreement and take any action and
execute any instrument that MeKeFuBang may deem necessary or advisable to
accomplish the purposes of the equity pledge agreement. Longkang Juice’s
shareholders agreed not to dispose of the pledged equity interests or take any
actions that would prejudice MeKeFuBang’s interest. The equity pledge agreement
will expire two (2) years after Longkang Juice’s obligations under the
consulting services agreements have been fulfilled.





(4) Option Agreement.
Under the option agreement between Longkang Juice’s
shareholders and MeKeFuBang, Longkang Juice’s shareholders irrevocably granted
MeKeFuBang or its designated person an exclusive option to purchase, to the
extentpermitted under PRC law, all or part of the
equity interests in Longkang Juice for the cost of the initial contributions to
the registered capital or the minimum amount of consideration permitted by
applicable PRC law. MeKeFuBang or its designated person has sole discretion to
decide when to exercise the option, whether in part or in full. The term of this
agreement shall last for the maximum period of time permitted by law unless
terminated in accordance with this agreement. As disclosed in the Risk Factors
section on page 15, the acquisition of equity interests in Longkang Juice by us
may be deemed as direct or indirect acquisition of a PRC domestic company by an
offshore company controlled by a PRC natural person, therefore the approval of
PRC Ministry of Commerce is required during the period when Mr. Zhide Jiang has
substantial interest in our company.  To date, Mr. Zhide Jiang has not
obtained relevant approval or registration from the PRC government.





(5) Proxy Agreement.
Pursuant to the proxy agreement between the Longkang Juice’s stockholders and
MeKeFuBang, the Longkang Juice stockholders agreed to irrevocably grant a person
to be designated by MeKeFuBang with the right to exercise the Longkang Juice
stockholders’ voting rights and their other rights, including the attendance at
and the voting of Longkang Juice’s stockholders’ shares at stockholders’
meetings (or by written consent in lieu of such meetings) in accordance with
applicable laws and its articles of association, including but not limited to
the rights to sell or transfer all or any of his equity interests of Longkang
Juice, and appoint and vote for the directors and chairman as the authorized
representative of the stockholders of Longkang Juice. The proxy agreement may be
terminated by joint consent of the parties or upon 30-day written
notice.








2
            Mr.
      Zhide Jiang is the Executive Director of Proud Glory Limited, which is our
      majority shareholder. Pursuant to the Incentive Option Agreement between
      Mr. Zhide Jiang and Mr. Chee Fung Tang, the record owner of Proud Glory
      Limited, Mr. Zhide Jiang has the right and opportunity to acquire up to
      100% equity interest of Proud Glory Limited subject to certain
      contingencies as set forth therein within three years starting from
      October 22, 2009.





3
            It
      includes the original shareholders from Emerald Acquisition Corporation
      before the share exchange that completed on October 22, 2009, and the
      shareholders of Merit Times who received the shares pursuant to the share
      exchange for their cash or services provided
  previously.





3





Acquisition
of Merit Times and Related Financing





On
October 22, 2009, we acquired Merit Times in a reverse acquisition transaction,
which involved a financing transaction and a share exchange transaction. In
accordance with a Share Exchange Agreement dated October 22, 2009, which we
refer to as the Exchange Agreement, by and among us, Merit Times, and the
shareholders of Merit Times (the “Merit Times Shareholders”), we acquired 100%
of the issued and outstanding shares of Merit Times in exchange for 21,333,332
shares or 97.77% of our ordinary shares issued and outstanding after the closing
of the share exchange transaction, thereby making Merit Times our wholly owned
subsidiary. Pursuant to the terms of the Exchange Agreement, Access America
Fund, LP (“Access America”), the principal shareholder of the Company, cancelled
a total of 794,000 ordinary shares of the Company. Further, the prior officers
and directors of the Company resigned and Mr. Zhide Jiang was appointed as the
sole director and officer of the Company.





In the
related financing transaction, on October 22, 2009, and November 2, 2009, we
completed a private placement of investment units (the “Units”) for a total of
$17,011,014, each Unit consisting of fifty thousand (50,000) ordinary shares and
five-year warrants to purchase twenty five thousand (25,000) ordinary shares of
the Company, at an exercise price of $6.00 per share (the “Investor Warrants”).
In the aggregate, we issued 5,670,339 ordinary shares and Investor Warrants to
purchase a total of 2,835,177 ordinary shares in this financing. Grandview
Capital, Inc. (“Grandview”), the lead placement agent, and Rodman & Renshaw,
LLC (“Rodman”), the co-placement agent, were our placement agents (the
“Placement Agents”) in connection with the financing transaction. For the
placement agent services, we paid a cash commission equal to 7% of the aggregate
gross proceeds of the Units sold and issued five-year warrants to purchase
567,035 ordinary shares (“Agent Warrants”, together with the “Investor
Warrants,” collectively refer to as the “Warrants”), which equal 10% of the
number of ordinary shares sold in the above financing transaction, exercisable
at any time at a price equal to $6.00 per share




In
connection with the financing, Proud Glory Limited and the Company entered
into an escrow agreement with the investors in which Proud Glory Limited agreed
to a “make good” obligation and to place into escrow a total of 4,600,000
ordinary shares of the Company. The escrowed shares will become subject to
disbursement to Proud Glory Limited or to the private placement investors based
upon our financial performance in the fiscal years ended 2009 and
2010.




Under the
“make good” arrangement, minimum net income thresholds of $14,000,000 and
$18,000,000 with a 10% allowable variation were established for the 2009 and
2010 fiscal years, respectively. If, in a given fiscal year, the applicable
minimum net income threshold is not met, escrowed shares, on a pro-rata basis,
in an amount equal to the percentage of variation from the net income threshold
times the total number of escrow shares, are required to be disbursed to
the private placement investors. If any escrow shares are distributed to
investors resulting from the Company not attaining the 2009 net income
thresholds, Proud Glory Limited will place an additional amount of shares into
escrow so that the escrow shares total 4,600,000.  If the net income
equals or exceeds $12,600,000 in 2009 and $16,200,000 million in 2010, then the
applicable thresholds will be deemed met and all escrow shares will be disbursed
to Proud Glory Limited.





Notwithstanding
the above, Mr. Zhide Jiang is the beneficial owner of the shares held by Proud
Glory Limited. As described above under the corporate structure, on August 5,
2009, Mr. Zhide Jiang entered into an Incentive Option Agreement with Mr. Chee
Fung Tang, the record stockholder of Proud Glory Limited, pursuant to which Mr.
Zhide Jiang shall have rights and options to acquire up to 100% shares of Proud
Glory Limited at nominal price within the next three years if he continues
serving as chief executives of our affiliated companies for no less than three
year period of time and if such companies meet certain thresholds of the revenue
conditions. As a result, if the Company fails to meet the minimum net income
threshold under the “make good” arrangement, Mr. Zhide Jiang’s equity interest
in Proud Glory Limited will be disbursed to the private placement
investors.




Additionally,
our majority shareholder, Proud Glory Limited, of which our sole officer and
director Mr. Zhide Jiang is the managing director (the “Lock-Up Shareholder”),
entered into a Lock-Up Agreement with us whereby the Lock-Up Shareholder agreed
it will not, offer, pledge, sell or otherwise dispose of any ordinary shares or
any securities convertible into or exercisable or exchangeable for ordinary
shares during the period beginning on and including the date of the final
closing of the aforementioned financing transaction for a period of eighteen
(18) months.




Business
Overview





We are a
holding company that operates through our PRC operating company Longkang Juice,
the only producer of Laiyang Pear juice concentrate in the PRC. Longkang Juice
was incorporated as a limited liability company on November 22, 2004 under the
laws of China. As of its incorporation, the name of Longkang Juice was Laiyang
Tianfu Juice Co., Ltd. and it changed its name to Shandong Longkang Juice Co.,
Ltd. on January 14, 2008. We are mainly engaged in developing, producing,
marketing and distributing Laiyang Pear juice concentrate. We are the exclusive
producer of Laiyang Pear juice concentrate as granted by Laiyang government. Our
product, Laiyang Pear juice concentrate, is known for its exceptional taste,
nutritional and medical benefits, and applications in health supplements,
pharmaceuticals, and food and beverage industries. Our products are distributed
in Shandong, Guangdong, Liaoning and Jiangsu provinces in China.




4




Laiyang
Pear juice concentrate is the most significant source of revenue for the
Company. During fiscal year of 2009 and 2008, Laiyang Pear juice concentrate
represented 88.9% and 90.2% of net revenues and 91.1% and 92.6% of sales volume,
respectively. In comparison, apple juice concentrate contributed 8.2% and 10.0%
of revenue in fiscal year 2009 and 2008, while strawberry juice concentrate
contributed 2.9% and 2.8% of revenues, respectively. Apple and Strawberry juices
are mainly produced during the off-season when Laiyang Pear is not being
produced.  Laiyang Pear has been registered as a trademark by the Laiyang
city government. Longkang has been granted by the Laiyang government as the
exclusive producer of Laiyang Pear juice concentrate beginning in January 2009
for a period of 30 years. No other producer can use the trademark or enter into
the Laiyang Pear juice concentrate business until the exclusive right of our
company has been expired. While Laiyang Pear juice concentrate will remain
our main source of revenue, we plan to further diversify our product mix and
increase the processing volume of other fruits types such as berries.  We
also intend to develop and produce bio animal feed as a byproduct of pear juice
concentrate and fruit puree products to further diversify our product mix and
increase our revenue.


Industry
Overview




According
to a report on China’s fruit processing industry issued by Beijing Business
& Intelligence Consulting Co. Ltd. (“BBIC,” and such report is hereinafter
referred to as the “BBIC Report”), an independent market research firm, China’s
fruit processing industry has grown significantly in the past several years. The
total output of fruit processed products in China grew from $16.8 billion in
2005 to $27.5 billion in 2007, representing a compound annual growth rate
(“CAGR”) of 27.94%. The sales value of fruit processed products in China grew
from $17.0 billion in 2005 to $26.1 billion in 2007, representing a CAGR of
27.72%.





BBIC
projected that the total sales value and net income of fruit processed products
in China will reach $37.2 billion and $2.5 billion in 2010, or a growth of
42.52% and 66.67%, respectively, during the four-year period from 2007 to 2010.
 The table below sets forth the sales and net income of fruit processing
industry in China from 2005 to 2010 and projected sales and net income of fruit
processing industry in China from 2008 to 2010.




Sales
and Projected Sales and Net Income of Fruit Processing Industry in China,
2005-2010




(in Billions of U.S. $)
            
            2005
            
            
            2006
            
            
            2007
            
            
            2008
            
            
            2009
            
            
            2010Sales
            
            
            16.0
            
            
            
            21.0
            
            
            
            26.1
            
            
            
            28.5
            
            
            
            32.9
            
            
            
            37.2Net
      Income
            
            
            0.9
            
            
            
            1.2
            
            
            
            1.5
            
            
            
            1.8
            
            
            
            2.2
            
            
            
            2.5




Source:
2006-2008 Fruit processing industry research report, Beijing Business &
Intelligence Consulting Co. Ltd.




China’s
economy has grown significantly in recent years. According to the National
Bureau of Statistics of China (the “NBS”), China’s gross domestic product (the
“GDP”) has increased from RMB12.0 trillion ($1.6 trillion) in 2002 to RMB25.0
trillion ($3.4 trillion) in 2007. The International Monetary Fund also estimated
that China’s real GDP should grow at an annual growth rate of 10.0% in 2008.
China’s economic growth has resulted in a significant increase in household
disposable income in China. According to the NBS, between 2002 and 2007, urban
household disposable income per capita increased from RMB7,703 ($1,055) to
RMB13,786 ($1,887), or a CAGR of 17.4%, and rural household disposable income
per capita increased from RMB2,476 ($339) to RMB4,140 ($557), or a CAGR of
12.1%.  We believe that as GDP and disposable income increase, fruit
processed products will become more affordable and consumers will generally
spend an increasing portion of their disposable income on healthy nutritional
products, such as our premium specialty fruit based products.




With
approximately one quarter of the world’s population, China represents a key
growth driver for the global fruit food market.  According to Euromonitor,
an independent research firm, although China is the largest producer of apples,
third largest producer of oranges, and one of the top producers of pears and
peaches in the world, per capita fruit juice consumption in China is currently
well below that of major developed countries.





Due to
low labor costs and an abundant supply of fruit, most notably apples, pears, and
kiwifruit, China is a large fruit juice concentrate producer and the largest
apple juice concentrate producer in the world. The export of fruit products is
also a growing aspect of the fruit processing industry in China.  With
improvements in the quality and quantity of the production, marketing, and
transportation technologies, China has strengthened its position in the world
market. According to the BBIC Report, processed fruit export sales are expected
to reach $10.9 billion in 2010, representing a 42.72% growth over that in
2007.  Although we do not presently export any of our products, we may
wish to do so in the future.





We
believe that improved living standards and growing household disposable income
have led to greater health awareness among the population.  As people
become more affluent, we believe that their spending on quality healthy and
nutritional products, like our products, will increase.




5





Therefore,
we anticipate that China’s fruit concentrate industry will continue to
grow.




Products





We
currently produce three types of fruit juice concentrate: Laiyang Pear, apple
and strawberry with Laiyang Pear juice concentrate accounting for 91.1% of
overall sales volume and 88.9% of total revenue for 2009.  We are the
only producer of Laiyang Pear juice concentrate, which is known for its
exceptional taste, nutritional and medical benefits; and applications in health
supplement and pharmaceutical products and mainly used in pharmaceutical and
health supplement industries. The annual sales volume of fruit juice concentrate
for fiscal year 2009 is 35,891 metric tons (“MT”) in China. Our current capacity
is 35,000 tons of fruit juice concentrate with a utilization rate of 95% during
peak seasons and 70% on an annual average. The production season of Laiyang
Pear juice concentrate is from August to February each year.





We have
been granted an exclusive producer license for producing Laiyang Pear juice
concentrate which is issued by Laiyang agriculture committee beginning January
2009 for a period of 30 years.





Current
product portfolio





Laiyang
Pear juice concentrate is the most significant source of revenue for the
Company. During the fiscal year of 2009 and 2008, Laiyang Pear juice concentrate
represented 88.9% and 90.2% of net revenues and 91.1% and 92.6% of sales volume,
respectively. In comparison, apple juice concentrate contributed 8.2% and 10.0%
of revenue in fiscal year 2009 and 2008, while strawberry juice concentrate
contributed 2.9% and 2.8% of revenues, respectively.   Apple and
Strawberry are primarily produced during the off-season for Laiyang Pear
production.





Laiyang
Pear juice concentrate uses Laiyang Pear as its main raw material. We have
imported equipment from United States and Europe to produce Laiyang Pear juice
concentrate. The product maintains Laiyang Pear’s nutritional and medical
benefits. Our products are mainly sold to health supplement, pharmaceutical,
food and beverage industries. In 2009 the percentages of our products sold to
such industries are 54%, 35%, 7% and 4% respectively. Due to the climate and
environmental benefits in Laiyang city, the Laiyang Pear only grows in Laiyang
City, Shandong Province in China and has been doing so for over 1600
years.





Laiyang
Pear has high sugar content, mainly fructose, glucose, sucrose and other soluble
sugar, and contains a variety of organic acids, vitamin B1, B2, vitamin C,
nicotinic acid, protocatechuic acid, carotene, and minerals such as calcium,
phosphorus and iron. The fruit is both low in sodium and high in
potassium.





We have
been working with colleges and institutions to study Laiyang Pear producing
technology, and we have developed applications through new technology that
reduces browning of the produce and that helps to maintain Laiyang Pear’s
nutritional and medical benefits by storing the concentrate at a low
temperature. We have also developed a filtration process through which we are
able to achieve higher quality juice concentrate by separating various sediment
substances from the crude juice.  After the undesirable sediments are
removed, a clarified crude juice of increased quality and shelf-life is obtained
and turned into juice concentrate. Although our production facilities are
running at full capacity, there is an increasingly high demand for Laiyang Pear
juice extract.





Expanding
Product Mix





We intend
to maintain our leadership in the production of Laiyang Pear juice concentrate,
and at the same time, diversify into other agricultural products to mitigate
risk. Specifically, we intend to increase investment in high margin products,
for example, on average, berry concentrates’ gross margin is approximately 40%;
and to expand fruit selection such as blueberry, raspberry, blackberry, apricot
and yellow peach. We also plan to produce bio animal feed, which is a byproduct
of pear juice concentrate. We are going to add two new production lines for the
juice concentrate and puree, and for the bio animal feed.  The
production line for juice concentrate and puree will be imported from Italy by
June 2010. The production line for bio animal fee will be purchased from a
Chinese manufacturer by June 2010. We plan to install and test both production
lines in July and start to produce products in August 2010. These products will
be distributed to the market in September 2010.





We intend
to enter into new markets as follows:





Puree Products: Puree
consumption is growing 10% per annum in China. In addition, about half of all
fruit puree consumed in Japan is imported from China. The major customers in
puree products are fruit distributors and baked goods companies. The gross
margin for pear puree, apple puree and strawberry puree are 30%, 25% and 40%
respectively.




Bio Animal Feed: We
have received increased interest for high-quality bio feed after the 2008
scandals with tainted milk products in China. The major customers in bio animal
feed are livestock and poultry companies. If we enter into the bio animal feed
industry, no additional raw materials will be required for us as we can use the
residue from our juice concentrate processing. There is a total of 500,000 MT of
fruit and vegetable waste in Laiyang area.




6





Through
our research with China Agriculture University, Laiyang Pear wastes, as the main
raw material for bio animal feed described above, consist of Laiyang Pear pulp,
Laiyang Pear seeds, and Laiyang Pear stalks which account for 96.2%, 3.1% and
0.7% respectively. They contain various nutritional compositions such as crude
protein, crude fiber, crude fat, non-nitrogen extract, calcium, digestible
energy, metabolizable energy, phosphorus, potassium, iron, manganese, sulfur and
many other mineral substances and trace elements, of which the iron content in
Laiyang Pear wastes is 4.9 times that of corn; lysine, methionine and arginine
content is 1.7 times, 1.2 times and 2.75 times that of corn; vitamin B2 is 3.5
times that of corn, and more than 15% total sugar in nitrogen-free extract.
Other fruit and vegetable wastes, which are rich in sugar, vitamin C and starch,
can also be used as raw materials for bio feed. However, such other raw
materials are required to be fresh, clean and free of debris or
sediment.





We will
use fermenter, inoculated cans, vacuum pumps, fermentation tanks, stainless
steel pumps, ozone machines, laboratories, and laboratory equipments to produce
bio animal feed in accordance with the quality standard “China Feedstuff
Sanitation Standard” and “Chinese Feedstuff Quality Control New Technology
Standard.” The shelf life of the bio animal feed product is 12
months.





The
bio-feed, which we produce through fermenting fruit and vegetable wastes,
utilizes microorganisms and complex enzymes as zymophytes so as to convert the
raw materials into the bio-fermented feed comprised of  mycoproteins,
bioactive amino acids of small- peptides,  micro-bio-active probiotics
and complex enzymes. The four-strain high-protein bacteria applied for bio
animal feed production can effectively transform the carbohydrates in the fruit
wastes, such as organic acids, tartaric acids and hemicelluloses into various
proteins and accordingly enhance the overall protein content  in fruit
wastes. Our bio feed product is also featured with rich content
of  nutritional components,  various probiotics, over 20
kinds of amino acids, a wide variety of vitamins as well as microelements. It
also contains varied organic acids including oligose, citric acid, tartaric acid
and more.





Modern
medical experts worldwide have proved through scientific research efforts that
amino acids, vitamins, microelements and oligose are all indispensable nutrients
for all animal lives, i.e., protein. Protein is the foundation of life and amino
acids can maintain normal operation of physiological function, antibody and
metabolism of animals. Shortage of protein will result in deteriorating
physique, slower development, weakened immunity, anemia and hypodynamia, up to
edema or fatal threat to life. Vitamins play an important regulatory role in
substance metabolism and help improve the metabolism; microelements can regulate
the homeostasis of animals, benefit metabolism of blood fat and prevent
arteriosclerosis. Oligose is a natural immunopotentiator, whose active
constituents are B-1.3/1.6 glycogen-accumulating organisms and mannitose and
helpful to reproductive assimilation of beneficial bacterium in animal
bodies.





Therefore,
the bio animal feed we intend to produce has higher protein content and nutrient
content than other average feeds. As such, long-term use of bio animal feed will
improve dairy cattle’s immune system and disease resistance.





In
connection with the technology used to produce bio animal feed, we are under
application of a patent with the State Intellectual Property Office of P.R.
China to protect our technology. The application number is 200910015442.2. Such
technology and production method is owned by Zhide Jiang, the Chief Executive
Officer of Longkang Juice.





Features of animal feed
products:





In 2007,
Longkang and China Agriculture University worked together and developed animal
feed production technology by fermenting fruit and vegetable waste. The main
features of animal feed product are:





·
            Low
      cost: While the normal feed price is approximately 2500RMB/MT, the price
      at which we estimate we can sell our bio-animal feed is approximately
      1600RMB/MT.  In our production, we can utilize residue from
      Laiyang Pear juice concentrate production, therefore there is no
      incremental raw material cost for
production.





·
            High
      milk production: The protein content of our product will be 15% which is
      5% higher than normal animal feed. Our research shows that the dairy
      cattle have higher milk production after taking the bio-feed
      product.





·
            Reduced
      waste: The residue from production has historically needed to be disposed
      of as waste.  By utilizing the waste to produce bio-feed, waste
      shall be reduced.





·
            Improves
      dairy cattle’s immune system and disease resistance: Bio-feed can be used
      as feed attractant before and after weaning calves in order to support
      their immune system.




7




Production





Production
facility





Our
primary production facility is located in Laiyang city, Shandong province in
PRC. We have two production lines with combined production capacity of 35,000 MT
and occupy approximately 5,272 acres of plantation fields.  One
production line has two pressers from which provide a total capacity of 80MT per
hour with capacities of 20MT per hour and 60MT per hour, respectively. The
enrichment equipment is imported from APV UK with 18MT concentration capacity
per hour. The supporting facilities of plate heat exchanger and tubular
sterilization machine are from Shanghai Beverage Machinery Factory with capacity
of 20MT per hour, and we are also equipped with a vertical filter from Nanjing
Gaoyou filter factory.





Production
process & technology





When we
produce fruit juice concentrate, we usually crush and beat fresh fruits into
mashes, and press fruit mashes until fruit juice comes out. We then mix raw
fruit juice with proper amount of compound enzyme to remove pectin and starch.
Finally, we filter concentrate fruit juice in concentrators to achieve the
target content of soluble solids, acidity and other quality standards. We have
recently adopted a number of new technologies for our production processes. One
example is that we have been introducing a secondary precipitation process which
gives us 10% more juice concentrate from the same input by separating various
sediment substances from the crude juice.  After the undesirable
sediments are removed, a clarified crude juice of increased quality and
shelf-life is obtained and turned into juice concentrate. We estimate that this
will reduce costs in the amount of approximately 416RMB/ton. In addition, we
have developed technology that reduces browning of the produce and that helps to
maintain Laiyang Pear’s nutritional and medical benefits by storing the
concentrate at a low temperature.





Quality
Control





We place
primary importance on quality.  Our production facility has ISO 9001 and
HACCP series qualifications. We have established a quality control and food
safety management system for the purchase of raw materials, fruit processing,
packaging, storage and distribution.  We have also adopted internal quality
standards that we believe are stricter than the standards mandated by the PRC
government.




Specifically,
our requirements for the light transmittance, turbidity, sourness and hygienic
criteria of Laiyang Pear juice concentrate are all higher than the national
standard in PRC. As juice has a high turbidity and low light transmittance, the
acidophilic heat-resistant bacteria in the juice are more likely to reproduce
and metabolize when the juice concentrate is diluted to commodity juice,
producing chemical compound, bromophenesic acid, which worsens the flavor of
juice or even results in white sediment on the bottom of inner package. Our
Laiyang Pear juice concentrate product is free of this problem because it is
produced following the quality requirements higher than the national standard.
In addition, the higher the sourness, the higher the content of vitamin C and
other nutrients would be, which is beneficial to the human body.  By
implementing quality criteria higher than the national standard, we make our
products more competitive in the market.




High
quality raw materials are crucial to the production of quality fruit products.
Therefore, we rigorously examine and test fresh fruits arriving at our plant.
Any fruits that fail to meet our quality standard will be rejected. We perform
routine product inspections and sample testing at our production facility and
adhere to strict hygiene standards. All of our products undergo inspection at
each stage of the production process, as well as post production inspections and
final checking before distribution for sales. Products in storage or in the
course of distribution are also subject to regular quality testing.





Raw
Materials and Suppliers





Laiyang
Pear, iron drums and coal are our major raw materials.





Our
headquarters and manufacturing facilities are strategically located in close
proximity to the Laiyang Pear orchards on the Jiaodong Peninsula, providing easy
access to the only supply of Laiyang Pear in the world. We maintain effective
costs through cooperative agreements with local farmers and through receiving
government support.





There are
two kinds of cooperative agreements: (i) five years cooperative agreements with
local farmers pursuant to which Longkang Juice shall send technical managers to
these local farmers for technical guidance and follow-up service during the
production process. Thereafter, Longkang Juice shall purchase all the qualified
Laiyang Pear from contract farmers at the higher of (a) the minimum guarantee
price of 750 RMB per ton (equal to approximately $110 per ton) or (b) the market
price. If Longkang Juice and the contract farmers have cooperated for more than
5 years, the unit price of the qualified raw fruits will increase approximately
$3.4 per ton; and (ii) five years cooperative agreements with local farmers
pursuant to which Longkang Juice subcontracts the orchards to these farmers for
1200 RMB per mu (equal to approximately $1055 per acre) each year. In connection
with the minimum guaranteed price paid to farmer at the time of the purchase, we
do not have any other price guarantees to adjust the price of previously
purchased pears. In addition, the Laiyang government exempted agriculture and
forestry specialty tax on us of 260 RMB per mu (equal to approximately $228 per
acre). This is conditioned on that we shall implement our development plan, as
describe below, to develop an additional 3,295 acres of Laiyang Pear plantation
per year. By doing so, we will actively help to increase the income of local
farmers and boost the development of the Laiyang Pear industry.




8





We have
also secured our supply of Laiyang Pear by acquiring land use rights to 500
acres of Laiyang Pear orchards with plans to acquire additional land use rights
in the future to develop green-certified products. These supply arrangements
provide us with advantages in terms of product quality, and stability and
reliability of delivery.
  Green
certified products in China refer to a specific mode of production, identified
by the specialized agencies, licensing the use of clean green food logo safety
trademark on high-quality and nutritious food. Green certified products have two
standards: AA-and A grade. AA grade refers to the process of food production
that does not use any harmful synthetic substances; A-grade refers to the
production process that allows limited use of qualified synthetic substances. In
short, green certified products are safe, healthy and nutritious.
  The
Laiyang Pear has a history of nearly 1,600 years of known production. The oldest
Laiyang Pear tree still producing the pears is more than 400 years
old.  The fields for growing Laiyang Pear total approximately 82,372
acres, and result in total production of approximately 1.5 million tons of
Laiyang Pear.  Longkang has contracted fields of approximately 5,272
acres. Longkang currently uses approximately 350,000 tons of Laiyang Pear, which
is approximately 23% of the total Laiyang Pear production. In addition, in 2009,
the China Agriculture Ministry decided to develop 164,745 acres of Laiyang Pear
plantations which will be managed by the Laiyang city government. Laiyang city
government will implement such order by developing 16,475 acres of Laiyang Pear
plantation each year, among which Longkang Juice will develop our own plantation
amounting to 3,295 acres each year, so as to ensure enough raw materials to
increase capacity. Thus, we plan to develop 3,295 acres of Laiyang Pear
plantation per year. We are therefore confident that there will be enough raw
materials to meet the increased capacity for our company following the
expansion.


Other
main suppliers are Qixia Fangyuan Co., Ltd, Laiyang Dali Co., Ltd, Yingwei Yu,
Zuwei Jiang, and Lijun Wang.





·
            Qixia Fangyuan Co.,
      Ltd. is located at Qixia
      Industrial Zone. It produces 400,000 iron drums every year, of which we
      need about 120,000 drums to package the juice concentrate products. The
      iron drums are produced in accordance with international standards and we
      have had no quality or supply problems with this company in the last few
      years.




·
            Laiyang Dali Co., Ltd.
      is located in Laiyang city and it supplies coal throughout the year. We
      signed a long term contract with Laiyang Dali Co., Ltd. for approximately
      20,000 tons of coal per year. There have been no quality problems with
      this company in the last few years.





·
            Yingwei Yu, Zuwei Jiang and
      Lijun Wang have been working in the fruit buying and transportation
      business for many years. They have many branch stations which allow us to
      harvest a high volume of pears during harvest season. They have
      specialists and equipment required to test the quality of our
      pears.





Research
& Development





Our
research and development activities are driven by changing consumer tastes and
preferences, the need to develop high margin product segments, adapting to
healthy lifestyle demands, utilizing all components of the raw materials, and
growing demand for green products.





There are
40 skilled food specialists in our company which guarantees the product quality
as well as possibility of new product development. We also work with outside
institutions to get their support. For instance, in 2005, through the
efforts of the experts from South Korea/Italy and the Chinese Research Institute
of Fruit as well as our specialists, issues such as the difficulty of storage of
Laiyang Pear; the issue of Laiyang Pear easily turning brown and the issue
that Laiyang Pears were difficult to transport were all resolved, which made
Laiyang Pear juice concentrate successfully produced.





In recent
years, we continue to work with third party institutions and research institutes
for technical support and cooperation. We established long-term relationships
with the China Agricultural University; Laiyang Agricultural College; Shandong
Institute of Light Industry and China Research Institute of Fruit, so that we
can timely update and achieve better understanding in technology, information
and human resource for the China and international markets.





We also
invested in advanced laboratory equipment, including chromatography, precision
scales, spectrophotometer, high-speed centrifuges, small tube sterilization
machine, membrane filter and relevant equipment of fruit juice production
testing, as well as the sterile laboratories which can be used for precise
analysis in comprehensive study.




9





Below are
the summaries of our current research projects:




We
cooperate with Laiyang Agricultural College commencing from January 2005 to work
on a research project regarding Laiyang Pear juice decolorization to develop
natural honey. The project was completed in December 2009 and the total cost of
the project was $1,025,055.


In 2006,
we entered into an agreement Project of High Tech Bio Feed Stuff from Fruit and
Vegetable Waste with China Agriculture College. The research began in January
2006 and was completed at December 2009. The project cost
$879,000.  We use vacuum pump and a set of straw, a set of steam
warming pipe, stainless steel pump and a set of straw, 4 of high intensity
plastic, one piece of cover (the size depends on the size of fermentation pond),
ozone developer, 4 of long sensor thermometer, fermentation tank, a set of
pre-processing machinery, a set of lab facility and conduct the research at the
laboratory of China Agriculture College. All the production of this research
project will belong to our company. In connection with the technology used to
produce bio animal feed, we are under application of a patent with the State
Intellectual Property Office of P.R. China to protect our technology. The
application number is 200910015442.2. Such technology and production method is
owned by Zhide Jiang, the Chief Executive Officer of Longkang
Juice.
  In
addition, we cooperate with Fruit Research Institute of China commencing from
January 2005 to work on a research project regarding abstract preservatives and
oil from seeds and waste from after juice concentrate production for use in
cosmetic skin care products and natural preservatives. The project was completed
in December 2009 and the total cost of the project was $585,745.
 
 Together
with Fruit Research Institute of China, we also worked on a research project
regarding secondary precipitation to increase production yield of Laiyang Pear
juice concentrate commencing from January 2005 and ending in December 2009. The
total cost of the project was $585,745.


On March
1, 2010, we entered into a cooperative R&D contract with the Preclinical
Medicine Research Laboratory of Shandong Medicine Academy to develop the
applications of immunoregulation and antitumor effects of Laiyang Pear juice
concentrate. This R&D project is expected to be completed by early 2012 and
the total cost of the project is $732,500.





Marketing,
Sales & Distribution





Currently,
our products are only sold in the PRC, and we utilize distributors for the sale
of our products. We have a total of seven (7) distributors, some of which are
also the end users of the product. Our customers pick up the products from our
factory directly using refrigerated trucks.





We
anticipate beginning to sell our products through direct sales to the
pharmaceuticals and health supplement manufacturers in the second half year of
2010, and we have begun direct marketing to the end users. In our direct
marketing efforts, we have collected information lists about potential end users
who are mainly in the pharmaceutical or healthcare industry. We have contacted
these potential end users to introduce our products, and free samples are sent
upon request. Once we negotiate purchase terms and execute the contract with the
customer, our factories will begin producing with customer specifications. We
intend to visit our major customers periodically to make sure that they are
satisfied with our product and service.





Customer
Concentration





The
Company’s customers are in the health supplement, pharmaceutical, fruit juice,
and other food product industries in Shandong, Guangdong, Liaoning and Jiangsu
provinces in the PRC. Below is a chart indicates the geographic distribution in
2008 and 2009:




piechart1
            piechart2




10




Currently
we have seven (7) customers. Our customers and sales for 2009 & 2008 are as
follows:





Customers
            
            2009(US)
            
            
            2008(US)
            
            Applied
      MarketShandong
      Zhanhua Haohua Fruit Juice Co., Ltd.
            
            $
            10,887,161
            
            
            $
            17,344,300
            
            This
      customer uses juice concentrate as an ingredient in their own beverage
      products.Qingdao
      Dongxu Xinshen Trading Co.
            
            
            14,121,668
            
            
            
            11,878,235
            
            This
      customer sells juice concentrate to Chinese medicine and juice beverage
      suppliers.Yantai
      Jinyuan Food Co., Ltd.
            
            
            11,504,347
            
            
            
            11,415,522
            
            This
      customer uses juice concentrate as a sweetener for their export
      products.Xintai
      Hengxin Trading Co.
            
            
            11,775,909
            
            
            
            9,180,354
            
            This
      customer sells to bakery, candy, fruit juice and other
      producers.Guangzhou
      Huaqing Trading Co., Ltd.
            
            
            10,584,740
            
            
            
            9,111,255
            
            This
      customer sells to food additive, fruit juice and export
      companies.Dandong
      Jinwang Trading Limited
            
            
            10,757,553
            
            
            
            8,787,622
            
            This
      customer distributes to pharmaceutical and health supplement
      manufacturers.Dongtai
      Hongda Company
            
            
            12,928,518
            
            
            
            6,413,590
            
            This
      customer distributes to pharmaceutical and health supplement
      manufacturers.





According
to our development strategies, in 2009 we modulated the sales policies to
emphasize and enhance sales strength to the customers in the pharmaceutical and
health supplement industries, so as to increase the revenue proportion
of  the customers that produce end-products in pharmaceutical and
health supplement industries versus those in the food and beverage
industries.  We plan to increase the revenue percentage in the
pharmaceutical and health supplement industries to more than 90% by the end of
2010.





Due to
the higher profit margin as well as more pricing power of our product sold to
pharmaceutical and health supplement industries and on the other hand, the
limitation of our production capacity, we negotiated with our customers to
accept the adjusted supply proportion for different industries.  As a
result, as compared with the year ended December 31, 2008, for the year ended
December 31, 2009 our sales to Shandong Zhanhua Haohua Fruit Juice Co., Ltd.,
which mainly use our products for food and beverage products, decreased
significantly by 59.3%, whereas the sales to Qingdao Dongxu Xinshen Trading Co.,
Dandong Jinwang Trading Limited, and Dongtai Hongda Company, which mainly use
our products for pharmaceutical and healthy supplement products and are our most
important sales targets, increased significantly by 18.9%,  22.4% and
101.6%, respectively.





Overall,
54% of our products are sold to health supplement companies, 35% to Chinese
medicine companies, 7% to fruit juice producers and 4% to food
producers.




Pursuant
to our sales contracts with the above customers, in 2008 and 2009, our Laiyang
Pear juice concentrate were sold from $2,570 to $2,710 per ton and primarily, we
receive a cash payment when the products are delivered to the customers. We also
entered into supplemental agreement with certain customers that, as a sales
incentive, we provided our customers a 1% sales revenue rebate if our customers
made their orders in first quarter of 2009 and paid us within three months after
the sales were made. We do not plan to offer such rebate again in the
future.




Growth
Strategy





We are
committed to enhancing profitability and cash flows through the following
strategies:





Increase
production capacity.Our existing two production lines have been running at close to
full capacity while the market demand for our existing products keeps
increasing.  We also have an abundant supply of source fruits to support
the expansion of our business. We plan to add one new production line for the
processing of juice concentrate and puree products by June 2010: the production
capacity of this new production line will be 30 MT per hour.  This
production line will include raw material transfer and fruit crushing
facilities; a primary and secondary presser system; puree/juice purification
system; filtration system; concentration system; steam cleaning system; aseptic
packing system, etc. We also plan to add a refrigerated warehouse to store our
products.





Further
strengthen our raw materials procurement network. We believe that a
secure supply of principal raw materials is crucial to our future success.
Hence, we intend to further strengthen our existing cooperative relationship
with existing local farmers and contract growers. Currently, we have 5,272 acres
(6.4% of the overall field area of the Laiyang Pear in Laiyang city) of
cooperative plantation according to cooperative agreements with contract
farmers. In addition, we have exclusive land leases from the Laiyang city
government of approximately 500 acres of land and will continue to expand
our plantation fields. These land leases all have a thirty (30) year term and
executed in either 2007 or 2008 for a price range from 1121 RMB to 1206 RMB per
mu (equal to approximately $985 to $1060 per acre) per year.  We aim
to produce our own Laiyang Pear, to maintain the quality of the Laiyang Pear and
to reduce raw material costs.




Further expand
our distribution network to increase the prevalence of our products
nationwide.Our current sales depend heavily on our regional distributors and
their network. To support our rapid growth in sales, we plan to further expand
our distribution network by adding more new distributors in the next few years.
In addition, we also plan to expand upon our customer base by developing new
relationships with end users in markets we have not yet penetrated.




11




Continue to
diversify our product portfolio to satisfy different customer
preferences.Wecurrently produce three
types of fruit juice concentrate: Laiyang Pear, apple and strawberry. We
constantly evaluate our products and seek to adapt to changing market conditions
by updating our products to reflect new trends in consumer preferences.  We
have finished research and development for our new product berries. We also
intend to develop and produce bio animal feed as byproduct of pear juice
concentrate and fruit puree products to further diversify our product mix and
increase our revenue. We will analyze the market trends and customer preference
to decide which products to be launched.





Create brand
awareness. We believe that as
we continue our expansion efforts we will be able to increase brand awareness
among consumers and among the pharmaceutical and medical community. In addition,
as Laiyang Pear has been registered as a trademark by the Laiyang government,
and we have been authorized as the exclusive producer of Laiyang Pear juice
concentrate until January 2039, we plan to work with other product manufacturers
to include the “Laiyang Pear” trademark on products that include our Laiyang
Pear juice concentrate. This may develops Laiyang Pear into a brand name and
increase our sales.




Competition





Our main
product is Laiyang Pear juice concentrate and we face little direct competition
due to the following reasons: we are the only producer of Laiyang Pear juice
concentrate. Laiyang Pear only grows on both sides of Five Dragon River in
Laiyang city due to unique climate and environmental factors. The Laiyang Pear
trademark is a registered trademark of the Laiyang city government. We have been
granted by the Laiyang government as the exclusive producer of Laiyang Pear
juice concentrate beginning in January 2009 for a period of 30 years. No other
producer can use the trademark or enter into the Laiyang Pear juice concentrate
business until the exclusive rights held by the Company have
expired. Additionally, we are authorized to use the trademark and can
develop our brand name as the exclusive producer.





There are
no other producers of Laiyang Pear juice concentrate, however, there are
currently a number of well-established companies producing other kinds of fruit
concentrate that compete directly with our product offerings, and some of those
competitors have significantly more financial and other resources than we
possess. We anticipate that our competitors will continue to improve their
products and to introduce new products with competitive price and performance
characteristics. Therefore, we plan to enter into puree market and bio animal
feed industry to diverse the market risk to our current products.





Competitive
Advantages





We
believe that our success to date and potential for future growth can be
attributed to a combination of our strengths, including the
following:





Only Laiyang Pear
juice concentrate producer in China.We are the only Laiyang Pear
juice concentrate producer in China and we enjoy a strong geographic advantage
due to its proximity to the Laiyang Pear growing orchards. The use of premium
quality raw materials provides our products with a high concentration of fruit.
“Laiyang Pear” as a trademark has been registered by the Laiyang city
government. We have been granted by the Laiyang government as the exclusive
producer of Laiyang Pear juice concentrate beginning January 2009 for a period
of 30 years. No other producer can use the trademark or enter into the Laiyang
Pear juice concentrate business until the exclusive right of our company has
been expired.




Established raw
material procurement network.We are in a location in the
temperate zone with the ideal climate condition for fruit farming, especially
apples and Laiyang Pears. It is also ideal for transporting to other parts of
China as well as for exporting overseas. It has traditionally been a major fruit
production area and the key fruit farming and processing base for Chinese as
well as international companies. In Laiyang City alone, the current apple
plantation is about 86,580 hectare with annual production of 3 Million MT and
Laiyang Pear plantation of 33,300 hectare with the annual production of 1.5
million metric tons (“MT”). We also have our own dedicated plantation for
Laiyang Pear of 5,772 acres with annual yield of 105,000 MT. We maintain
effective costs through cooperative agreements with local farmers of the Laiyang
Pear in Laiyang city. We have also secured our supply of Laiyang Pear mainly
through contract growers, and to a lesser degree, through purchase from the open
market. In addition, we have exclusive land leases from the Laiyang city
government and have started growing our own orchards with plans to expand in the
future to develop green-certified products. These supply chain arrangements
provide us with advantages in terms of product quality, and stability and
reliability of delivery.





Emphasis on
quality control and food safety.  We emphasize quality
and safety and have quality control and food safety management systems for all
stages of our business, including raw materials sourcing, production, packaging
and storage of our products.  We apply and adhere to internal quality
standards that we believe are stricter than the PRC national standards. Our
processing facility possesses ISO9001 and HACCP series
qualifications.




12




Intellectual
Property





To date,
we do not have any trademark registration for our technologies. However, we rely
on trade secret protection and confidentiality agreements to protect our
proprietary information and know-how and have entered into non-disclosure
agreements with certain of our key employees and executives to protect our trade
secrets. In connection with the technology used to produce bio animal feed, we
are under application of a patent with the State Intellectual Property Office of
P.R. China to protect our technology. The application number is 200910015442.2.
Such technology and production method is owned by Zhide Jiang, the Chief
Executive Officer of Longkang Juice.





Regulation




The food
industry, of which fruit based products form a part, is subject to extensive
regulation in China. This following summarizes the most significant PRC
regulations governing our business in China.




Food
Hygiene and Safety Laws and Regulations




As a
producer of food products in China, we are subject to a number of PRC laws and
regulations governing food safety and hygiene, including:





·
            the
      PRC Product Quality Law;·
            the
      PRC Food Hygiene Law;





·
            the
      Implementation Rules on the Administration and Supervision of Quality and
      Safety in Food Producing and Processing Enterprises (trail
      implementation);·
            the
      Regulation on the Administration of Production Licenses for Industrial
      Products;





·
            the
      General Measure on Food Quality Safety Market Access
      Examination;·
            the
      General Standards for the Labeling of Prepackaged
  Foods;





·
            the
      Standardization Law;·
            the
      Regulation on Hygiene Administration of Food
  Additive;





·
            the
      Regulation on Administration of Bar Code of Merchandise;
    and·
            the
      PRC Metrology Law.





These
laws and regulations set out safety and hygiene standards and requirements for
various aspects of food production, such as the use of additives, production,
packaging, handling, labeling and storage, as well as facilities and equipment.
Failure to comply with these laws and regulations may result in confiscation of
our products and proceeds from the sales of non-compliant products, destruction
of our products and inventory, fines, suspension of production and operation,
product recalls, revocation of licenses, and, in extreme cases, criminal
liability.




Environmental
Regulations




We are
subject to various governmental regulations related to environmental protection.
The major environmental regulations applicable to us include:





·
            the
      Environmental Protection Law of the PRC;·
            the
      Law of PRC on the Prevention and Control of Water
    Pollution;





·
            Implementation
      Rules of the Law of PRC on the Prevention and Control of Water
      Pollution;·
            the
      Law of PRC on the Prevention and Control of Air
  Pollution;





·
            Implementation
      Rules of the Law of PRC on the Prevention and Control of Air
      Pollution;·
            the
      Law of PRC on the Prevention and Control of Solid Waste Pollution;
      and





·
            the
      Law of PRC on the Prevention and Control of Noise
    Pollution.





We have
obtained all permits and licenses required for production of our products and
believe we are in material compliance with all applicable laws and
regulations.





Environment
Protection





Our
manufacturing facilities are subject to various pollution control regulations
with respect to noise, water and air pollution and the disposal of waste and
hazardous materials. We are also subject to periodic inspections by local
environmental protection authorities.  We have sewage treatment
equipment used for biological treatment. The Laiyang Environmental Protection
Agency samples our waste water discharge on a regular basis to make sure the
waste water satisfies all environmental requirements. To date, we have not
been advised of any violations of any environmental regulations. We are not
currently subject to any pending actions alleging any violations of applicable
PRC environmental laws.




13




Properties





Our
corporate office is located at No. 48 South Qingshui Road, Laiyang City,
Shandong 265200 People’s Republic of China. The Company has two production lines
with combined production capacity of 35,000 MT. Currently, we have 5,272 acres
(6.4% of the overall field area of the Laiyang Pear in Laiyang city) of
cooperative plantation according to cooperative agreements with contract
farmers. In addition, we have exclusive land leases from the Laiyang city
government of approximately 500 acres of land and will continue to expand
our plantation fields. These land leases all have a thirty (30) year term and
executed in either 2007 or 2008 for a price range from 1121 RMB to 1206 RMB per
mu (equal to approximately $985 to $1060 per acre) per year.  We aim
to produce our own Laiyang Pear, to maintain the quality of the Laiyang Pear and
to reduce raw material costs.  There is no private ownership of land
in China. Land is owned by the government and the government grants land use
rights for specified terms. The Company’s land use rights, which consist of
approximately 500 acres of pear orchards and land for our production facilities
and offices, have terms that expire in December 2037 through December
2054.




Employees




As of the
date hereof, we have approximately 170 full-time employees. Our employees are
not represented by any collective bargaining agreement, and we have never
experienced a work stoppage. We believe we have good relations with our
employees.





Insurance




We have
property insurance for our facility located in Laiyang city.  We believe
our insurance coverage is customary and standard for companies of comparable
size in comparable industries in China.




We do not
have any business liability, interruption or litigation insurance coverage for
our operations in China. Insurance companies in China offer limited business
insurance products. While business interruption insurance is available to a
limited extent in China, we have determined that the risks of interruption, cost
of such insurance and the difficulties associated with acquiring such insurance
on commercially reasonable terms make it impractical for us to have such
insurance.  Therefore, we are subject to business and product liability
exposure.  See “Risk Factors – We do not presently maintain product
liability insurance, and our property and equipment insurance does not cover the
full value of our property and equipment, which leaves us with exposure in the
event of loss or damage to our properties or claims filed against
us.”




Litigation




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





ITEM
1A. RISK FACTORS.





You
should carefully consider the risks described below together with all of the
other information included in this Form 10-K before making an investment
decision with regard to our securities.  The statements contained in
or incorporated herein that are not historic facts are forward-looking
statements that are subject to risks and uncertainties that could cause actual
results to differ materially from those set forth in or implied by
forward-looking statements. If any of the following risks actually occurs, our
business, financial condition or results of operations could be harmed. In that
case, you may lose all or part of your investment.




Risks Relating to Our
Business




SUBSTANTIALLY
ALL OF OUR BUSINESS, ASSETS AND OPERATIONS ARE LOCATED IN PRC.




Substantially
all of our business, assets and operations are located in PRC. The economy of
PRC differs from the economies of most developed countries in many respects. The
economy of PRC has been transitioning from a planned economy to a
market-oriented economy. However, a substantial portion of productive assets in
PRC is still owned by the PRC government. In addition, the PRC government
continues to play a significant role in regulating industry by imposing
industrial policies. It also exercises significant control over PRC’s economic
growth through the allocation of resources, controlling payment of foreign
currency-denominated obligations, setting monetary policy and providing
preferential treatment to particular industries or companies. Some of these
measures may have a negative effect on us.




14





THE
CONSULTING AGREEMENT BETWEEN MEKEFUBANG AND LONGKANG JUICE MAY BE TERMINATED IF
CIRCUMSTANCES ARISE WHICH MATERIALLY AND ADVERSELY AFFECT THE PERFORMANCE OR THE
OBJECTIVES OF SUCH AGREEMENT, AND WE MIGHT NOT BE ABLE TO COLLECT AND OWN ALL OF
THE NET PROFITS OF LONGKANG JUICE, WHICH WILL ADVERSELY AFFECT OUR OPERATION AND
PERFORMANCE.





Presently
all of our business operations are carried out by Shandong Longkang Juice Co.,
Ltd., a limited liability company under the laws of China. We do not own any
equity interests in Longkang Juice, but control and receive the economic
benefits of its business operations through contractual arrangements. One of the
contractual agreements is a Consulting Services Agreement, by and between
MeKeFuBang and Longkang Juice through which MeKeFuBang has the right to
advise, consult, manage and operate Longkang Juice, and collect and own all of
the net profits of Longkang Juice. Pursuant to Section 7.2.4 of the Consulting
Services Agreement, either party may terminate such agreement if circumstances
arise which materially and adversely affect the performance or the objectives of
this agreement. If circumstances that materially affect our performance do arise
in the future and if either party decides to terminate this agreement, we might
not be able to control and receive the economic benefits of Longkang Juice and
it will adversely affect our operation and performance.





THE
CONTRACTUAL AGREEMENTS THROUGH WHICH WE HAVE ESTABLISHED CONTROL OF LONGKANG
JUICE MAY NOT BE AS EFFECTIVE IN PROVIDING OPERATIONAL CONTROL AS DIRECT
OWNERSHIP OF LONGKANG JUICE. BECAUSE WE RELY ON LONGKANG JUICE FOR OUR REVENUE,
ANY TERMINATION OF OR DISRUPTION TO THESE CONTRACTUAL ARRANGEMENTS COULD
DETRIMENTALLY AFFECT OUR BUSINESS.





Presently
all of our business operations are carried out by Longkang Juice, a limited
liability company under the laws of China. We do not own any equity interests in
Longkang Juice, but control and receive the economic benefits of its business
operations through contractual arrangements. The contractual arrangements are
between Longkang Juice, its owners, MeKeFuBang and Merit Times, our wholly-owned
subsidiary in the PRC. The contractual arrangements are comprised of a series of
agreements, including: (1) a Consulting Services Agreement, (2) an Operating
Agreement, (3) a Proxy Agreement, (4) an Option Agreement, and (5) an Equity
Pledge Agreement. Through these contractual arrangements, we have the ability to
substantially influence the daily operations and financial affairs of Longkang
Juice, as we are able to appoint its senior executives and approve all matters
requiring stockholder approval. Accordingly, we consolidate Longkang Juice’s
results, assets and liabilities in our financial statements.





However,
these contractual agreements may be terminated under certain circumstances. In
addition, these agreements are governed by the PRC laws and regulations. PRC
laws and regulations concerning the validity of the contractual arrangements are
uncertain, as many of these laws and regulations are relatively new and may be
subject to change, and their official interpretation and enforcement by the PRC
government may involve substantial uncertainty. Further, our contractual
arrangements are governed by PRC laws and provide for the resolution of disputes
through arbitration proceedings pursuant to PRC laws. If Longkang Juice or its
stockholders fail to perform the obligations under the contractual arrangements,
we may have to rely on legal remedies under PRC laws, including seeking specific
performance or injunctive relief, and claiming damages, and there is a risk that
we may be unable to obtain these remedies. Therefore our contractual
arrangements may not be as effective in providing control over Longkang Juice as
direct ownership. Because we rely on Longkang Juice for our revenue, any
termination of or disruption to these contractual arrangements could
detrimentally affect our business.





OUR PLANS
TO EXPAND OUR PRODUCTION AND TO IMPROVE AND UPGRADE OUR INTERNAL CONTROL AND
MANAGEMENT SYSTEM WILL REQUIRE CAPITAL EXPENDITURES IN 2010.




Our plans
to expand our production and to improve and upgrade our internal control and
management system will require capital expenditures in 2010. We may also need
further funding for working capital, investments, potential acquisitions and
joint ventures and other corporate requirements. Cash generated from our
operations may not be sufficient to fund these development plans, and our actual
capital expenditures and investments may significantly exceed our current
planned amounts. If either of these conditions arises, we may have to seek
external financing to satisfy our capital needs. We may not be able to obtain
external financing at reasonable costs. Failure to obtain sufficient external
funds for our development plans could adversely affect our plan to expand our
production and to improve an upgrade our internal control and management
system.




BECAUSE
WE EXPERIENCE SEASONAL FLUCTUATIONS IN OUR SALES, OUR QUARTERLY RESULTS WILL
FLUCTUATE AND OUR ANNUAL PERFORMANCE WILL DEPEND LARGELY ON RESULTS FROM TWO
QUARTERS.




Our
business is highly seasonal, reflecting the harvest season of our primary source
fruits during the months from June through February of the following
year.  Typically, a substantial portion of our revenues are earned
during our first, third and fourth quarters. We generally experience lower
revenues during our second quarter. If sales in the first, third and fourth
quarters are lower than expected, our operating results would be adversely
affected, and it would have a disproportionately large impact on our annual
operating results.




15





WEATHER
AND OTHER ENVIRONMENTAL FACTORS AFFECT OUR RAW MATERIAL SUPPLY AND A REDUCTION
IN THE QUALITY OR QUANTITY OF OUR FRESH FRUIT SUPPLIES MAY HAVE MATERIAL ADVERSE
CONSEQUENCES ON OUR FINANCIAL RESULTS.





Our
business may be adversely affected by weather and environmental factors beyond
our control, such as adverse weather conditions during the squeezing season. We
cannot assure you that the necessary raw materials will continue to be available
to us in quantities and at prices currently in effect or acceptable to us. The
prices for and availability of these raw materials have varied significantly and
may affect the quantity and profitability of our products.  A
significant reduction in the quantity or quality of fresh fruits harvested
resulting from adverse weather conditions, disease or other factors could result
in increased per unit processing costs and decreased production, with adverse
financial consequences to the Company.





WE DEPEND
ON A CONCENTRATION OF CUSTOMERS, THE LOSS OF ONE OR MORE OF WHICH COULD
MATERIALLY ADVERSELY AFFECT OUR OPERATIONS AND REVENUES.




Our
revenue is dependent in large part on significant orders from a limited number
of customers. We depend on seven primary customers to purchase our
product.   Sales to our five largest customers accounted for
approximately 73.7% and 79.46% of our net sales during the years ended December
31, 2009 and 2008, respectively. Customer demand depends on a variety of factors
including, but not limited to, our customers’ financial condition and general
economic conditions. If our sales to any of our customers are reduced for any
reason, such reduction may have a material adverse effect on our business,
financial condition and results of operations.





WE DERIVE
SUBSTANTIALLY ALL OF OUR REVENUES FROM SALES IN THE PRC AND ANY DOWNTURN IN THE
CHINESE ECONOMY COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND
FINANCIAL CONDITION.




Substantially
all of our revenues are generated from sales in the PRC. We anticipate that
revenues from sales of our products in the PRC will continue to represent the
substantial portion of our total revenues in the near future. Our sales and
earnings can also be affected by changes in the general economy since purchases
of juice products are generally discretionary for consumers. Our success is
influenced by a number of economic factors which affect disposable consumer
income, such as employment levels, business conditions, interest rates, oil and
gas prices and taxation rates. Adverse changes in these economic factors, among
others, may restrict consumer spending, thereby negatively affecting our sales
and profitability.





CONCERNS
OVER FOOD SAFETY AND PUBLIC HEALTH MAY AFFECT OUR OPERATIONS BY INCREASING OUR
COSTS AND NEGATIVELY IMPACTING DEMAND FOR OUR PRODUCTS.




We could
be adversely affected by diminishing confidence in the safety and quality of
certain food products or ingredients, even if our practices and procedures are
not implicated. As a result, we may also elect or be required to incur
additional costs aimed at increasing consumer confidence in the safety of our
products. For example, a crisis in China over melamine-contaminated milk in 2008
has adversely impacted overall Chinese food exports since October 2008 as
reported by the Chinese General Administration of Customs, even though most
foods exported from China were not implicated in these issues. We believe that
the contaminated milk crisis also had a negative effect on sales of our
concentrated juices in fiscal year 2008.  Our success depends on our
ability to maintain the product quality of our existing products and new
products.  Product quality issues, real or imagined, or allegations of
product contamination, even if false or unfounded, could tarnish the image of
the affected brands and may cause consumers to choose other
products.





WE DO NOT
PRESENTLY MAINTAIN PRODUCT LIABILITY INSURANCE, AND OUR PROPERTY AND EQUIPMENT
INSURANCE DOES NOT COVER THE FULL VALUE OF OUR PROPERTY AND EQUIPMENT, WHICH
LEAVES US WITH EXPOSURE IN THE EVENT OF LOSS OR DAMAGE TO OUR PROPERTIES OR
CLAIMS FILED AGAINST US.





We
currently do not carry any product liability or other similar insurance. Unlike
the United States and many other countries, product liability claims and
lawsuits in the PRC are rare. However, we cannot guaranty that we would not face
liability in the event of the failure of any of our products. Furthermore, we
cannot guaranty that product liability exposures and litigation will not become
more commonplace in the PRC or that we will not face product liability exposure
or actual liability as we expand our sales into international markets, like the
United States, where product liability claims are more prevalent.




We may be
required from time to time to recall products entirely or from specific
co-packers, markets or batches.  Product recalls could adversely affect our
profitability and our brand image.  We do not maintain recall
insurance.




While we
have not experienced any credible product liability litigation to date, there is
no guaranty that we will not experience such litigation in the future.  In
the event we do experience product liability claims or a product recall, our
financial condition and business operations could be materially adversely
affected.




16





GOVERNMENTAL
REGULATIONS AFFECTING THE IMPORT OR EXPORT OF PRODUCTS COULD NEGATIVELY AFFECT
OUR REVENUES.





The
United States and various foreign governments have imposed controls, export
license requirements, and restrictions on the export of some of our
products.  We do not currently export the Company’s concentrated fruit
juice directly or indirectly out of the PRC. However, if we were to begin
exporting our products in the future, governmental regulation of exports, or our
failure to obtain required export approval for our products, could harm our
international and domestic sales and adversely affect our
revenues.  In addition, failure to comply with such regulations could
result in penalties, costs, and restrictions on export privileges.





WE MAY
EXPERIENCE MAJOR ACCIDENTS IN THE COURSE OF OUR OPERATIONS, WHICH MAY CAUSE
SIGNIFICANT PROPERTY DAMAGE AND PERSONAL INJURIES.




We may
experience major accidents in the course of our operations, which may cause
significant property damage and personal injuries. Significant industry-related
accidents and natural disasters may cause interruptions to various parts of our
operations, or could result in property or environmental damage, increase in
operating expenses or loss of revenue. The occurrence of such accidents and the
resulting consequences may not be covered adequately, or at all, by the
insurance policies we carry. In accordance with customary practice in China, we
do not carry any business interruption insurance or third party liability
insurance for personal injury or environmental damage arising from accidents on
our property or relating to our operations other than our automobiles. Losses or
payments incurred may have a material adverse effect on our operating
performance if such losses or payments are not fully insured.





OUR
PLANNED EXPANSION AND TECHNICAL IMPROVEMENT PROJECTS COULD BE DELAYED OR
ADVERSELY AFFECTED BY, AMONG OTHER THINGS, DIFFICULTIES IN OBTAINING SUFFICIENT
FINANCING, TECHNICAL DIFFICULTIES, OR HUMAN OR OTHER RESOURCE
CONSTRAINTS.




Our
planned expansion and technical improvement projects could be delayed or
adversely affected by, among other things, difficulties in obtaining sufficient
financing, technical difficulties, or human or other resource constraints.
Moreover, the costs involved in these projects may exceed those originally
contemplated. Costs savings and other economic benefits expected from these
projects may not materialize as a result of any such project delays, cost
overruns or changes in market circumstances. Failure to obtain intended economic
benefits from these projects could adversely affect our business, financial
condition and operating performances.




WE WILL
ENCOUNTER SUBSTANTIAL COMPETITION IN OUR BUSINESS AND ANY FAILURE TO COMPETE
EFFECTIVELY COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.




Although
there are no other producers of Laiyang Pear juice concentrate, there are
currently a number of well-established companies producing other kinds of fruit
concentrate that compete directly with our product offerings, and some of those
competitors have significantly more financial and other resources than we
possess. We anticipate that our competitors will continue to improve their
products and to introduce new products with competitive price and performance
characteristics. Aggressive marketing or pricing by our competitors or the
entrance of new competitors into our markets could have a material adverse
effect on our business, results of operations and financial
condition.





Currently,
we have been granted as the exclusive producer of Laiyang Pear juice concentrate
until January 2039. However, if the Laiyang city government rescinds our right
as the exclusive producer of Laiyang Pear juice concentrate, we could face
increasing competition although we have the advantages in technology and sales
network to produce and sell Laiyang Pear juice concentrate.





OUR
LIMITED OPERATING HISTORY MAY NOT SERVE AS AN ADEQUATE BASIS TO JUDGE OUR FUTURE
PROSPECTS AND RESULTS OF OPERATIONS.





Our
limited operating history in the fruit product industry may not provide a
meaningful basis for evaluating our business. Longkang Juice entered into its
current line of business in November 2004. Although our revenues have grown
rapidly since its inception, we cannot guaranty that we will maintain
profitability or that we will not incur net losses in the future. We will
continue to encounter risks and difficulties that companies at a similar stage
of development frequently experience, including the potential failure
to:





·
            obtain
      sufficient working capital to support our
  expansion;





·
            maintain
      or protect our intellectual
property;





·
            maintain
      our proprietary technology;




17




·
            expand
      our product offerings and maintain the high quality of our
      products;





·
            manage
      our expanding operations and continue to fill customers’ orders on
      time;





·
            maintain
      adequate control of our expenses allowing us to realize anticipated
      revenue growth;





·
            implement
      our product development, marketing, sales, and acquisition strategies and
      adapt and modify them as
needed;





·
            successfully
      integrate any future acquisitions;
and





·
            anticipate
      and adapt to changing conditions in the fruit product industry resulting
      from changes in government regulations, mergers and acquisitions involving
      our competitors, technological developments and other significant
      competitive and market dynamics.




If we are
not successful in addressing any or all of the foregoing risks, our business may
be materially and adversely affected.





WE NEED
TO MANAGE GROWTH IN OPERATIONS TO MAXIMIZE OUR POTENTIAL GROWTH AND ACHIEVE OUR
EXPECTED REVENUES AND OUR FAILURE TO MANAGE GROWTH WILL CAUSE A DISRUPTION OF
OUR OPERATIONS RESULTING IN THE FAILURE TO GENERATE REVENUE AT LEVELS WE
EXPECT.




In order
to maximize potential growth in our current and potential markets, we believe
that we must expand our producing and marketing operations. This expansion will
place a significant strain on our management and our operational, accounting,
and information systems. We expect that we will need to continue to improve our
financial controls, operating procedures, and management information systems. We
will also need to effectively train, motivate, and manage our employees. Our
failure to manage our growth could disrupt our operations and ultimately prevent
us from generating the revenues we expect.





WE CANNOT
ASSURE YOU THAT OUR ORGANIC GROWTH STRATEGY WILL BE SUCCESSFUL WHICH MAY RESULT
IN A NEGATIVE IMPACT ON OUR GROWTH, FINANCIAL CONDITION, RESULTS OF OPERATIONS
AND CASH FLOW.




One of
our strategies is to grow organically through constructing additional production
facilities and increasing the distribution and sales of our products by
penetrating existing markets in PRC and entering new geographic markets in PRC.
However, many obstacles to entering such new markets exist including, but not
limited to, established companies in such existing markets in the PRC. We
cannot, therefore, assure you that we will be able to successfully overcome such
obstacles and establish our products in any additional markets. Our inability to
implement this organic growth strategy successfully may have a negative impact
on our growth, future financial condition, results of operations or cash
flows.





WE MAY
NOT BE ABLE TO SUCCESSFULLY INTRODUCE NEW PRODUCTS, WHICH COULD DECREASE OUR
PROFITABILITY.





Our
future business and financial performance depends, in part, on our ability to
successfully respond to consumer preference by introducing new products and
improving existing products. We incur significant development and marketing
costs in connection with the introduction of new products. Successfully
launching and selling new products puts pressure on our sales and marketing
resources, and we may fail to invest sufficient funds in order to market and
sell a new product effectively.  If we are not successful in marketing
and selling new products, our results of operations could be materially
adversely affected.





IF WE
NEED ADDITIONAL CAPITAL TO FUND OUR GROWING OPERATIONS, WE MAY NOT BE ABLE TO
OBTAIN SUFFICIENT CAPITAL AND MAY BE FORCED TO LIMIT THE SCOPE OF OUR
OPERATIONS.





If
adequate additional financing is not available on reasonable terms, we may not
be able to undertake plant expansion, purchase additional machinery and purchase
equipment for our operations and we would have to modify our business plans
accordingly. There is no assurance that additional financing will be available
to us.




In
connection with our growth strategies, we may experience increased capital needs
and accordingly, we may not have sufficient capital to fund our future
operations without additional capital investments. Our capital needs will depend
on numerous factors, including (i) our profitability; (ii) the release of
competitive products by our competition; (iii) the level of our investment in
research and development; and (iv) the amount of our capital expenditures,
including acquisitions. We cannot assure you that we will be able to obtain
capital in the future to meet our needs.




18





In recent
years, the securities markets in the United States have experienced a high level
of price and volume volatility, and the market price of securities of many
companies have experienced wide fluctuations that have not necessarily been
related to the operations, performances, underlying asset values or prospects of
such companies. For these reasons, our ordinary shares can also be expected to
be subject to volatility resulting from purely market forces over which we will
have no control. If we need additional funding we will, most likely, seek such
funding in the United States (although we may be able to obtain funding in the
P.R.C.) and the market fluctuations affect on our stock price could limit our
ability to obtain equity financing.




If we
cannot obtain additional funding, we may be required to: (i) limit our plant
expansion; (ii) limit our marketing efforts; and (iii) decrease or eliminate
capital expenditures.




Such
reductions could materially adversely affect our business and our ability to
compete.




Even if
we do find a source of additional capital, we may not be able to negotiate terms
and conditions for receiving the additional capital that are favorable to us.
Any future capital investments could dilute or otherwise materially and
adversely affect the holdings or rights of our existing shareholders. In
addition, new equity or convertible debt securities issued by us to obtain
financing could have rights, preferences and privileges senior to the
Units.




NEED FOR
ADDITIONAL EMPLOYEES.





The
Company’s future success also depends upon its continuing ability to attract and
retain highly qualified personnel. Expansion of the Company’s business and the
management and operation of the Company will require additional managers and
employees with industry experience, and the success of the Company will be
highly dependent on the Company’s ability to attract and retain skilled
management personnel and other employees. There can be no assurance that the
Company will be able to attract or retain highly qualified personnel.
Competition for skilled personnel in our industry is significant. This
competition may make it more difficult and expensive to attract, hire and retain
qualified managers and employees.





THE LOSS
OF THE SERVICES OF OUR KEY EMPLOYEES, PARTICULARLY THE SERVICES RENDERED BY
ZHIDE JIANG, OUR CHIEF EXECUTIVE OFFICER AND DIRECTOR, COULD HARM OUR
BUSINESS.





Our
success depends to a significant degree on the services rendered to us by our
key employees.  If we fail to attract, train and retain sufficient
numbers of these qualified people, our prospects, business, financial condition
and results of operations will be materially and adversely affected. In
particular, we are heavily dependent on the continued services of Zhide Jiang,
our Chief Executive Officer and Director. We do not have employment agreements
with any of the members of our senior management team, each of whom may
voluntarily terminate his employment with us at any time. Following any
termination of employment, these employees would not be subject to any
non-competition covenants. The loss of any key employee, including members of
our senior management team, and our inability to attract highly skilled
personnel with sufficient experience in our industry could harm our
business.




WE MAY
INCUR SIGNIFICANT COSTS TO ENSURE COMPLIANCE WITH UNITED STATES CORPORATE
GOVERNANCE AND ACCOUNTING REQUIREMENTS.




We may
incur significant costs associated with our public company reporting
requirements, costs associated with newly applicable corporate governance
requirements, including requirements under the Sarbanes-Oxley Act of 2002 and
other rules implemented by the Securities and Exchange Commission. We expect all
of these applicable rules and regulations to significantly increase our legal
and financial compliance costs and to make some activities more time consuming
and costly. We also expect that these applicable rules and regulations may make
it more difficult and more expensive for us to obtain director and officer
liability insurance and we may be required to accept reduced policy limits and
coverage or incur substantially higher costs to obtain the same or similar
coverage. As a result, it may be more difficult for us to attract and retain
qualified individuals to serve on our board of directors or as executive
officers. We are currently evaluating and monitoring developments with respect
to these newly applicable rules, and we cannot predict or estimate the amount of
additional costs we may incur or the timing of such costs.





WE MAY
NOT BE ABLE TO MEET THE ACCELERATED FILING AND INTERNAL CONTROL REPORTING
REQUIREMENTS IMPOSED BY THE SECURITIES AND EXCHANGE COMMISSION RESULTING IN A
POSSIBLE DECLINE IN THE PRICE OF OUR ORDINARY SHARES AND OUR INABILITY TO OBTAIN
FUTURE FINANCING.





As
directed by Section 404 of the Sarbanes-Oxley Act, as amended by SEC Release No.
33-8934 on June 26, 2008, the Securities and Exchange Commission adopted rules
requiring each public company to include a report of management on the company’s
internal controls over financial reporting in its annual reports.  In
addition, the independent registered public accounting firm auditing a company’s
financial statements must also attest to and report on management’s assessment
of the effectiveness of the company’s internal controls over financial reporting
as well as the operating effectiveness of the company’s internal controls.
Commencing with its annual report for the year ending December 31, 2010, we will
be required to include a report of management on its internal control over
financial reporting.  The internal control report must include a
statement





·
            Of
      management’s responsibility for establishing and maintaining adequate
      internal control over its financial
reporting;




19




·
            Of
      management’s assessment of the effectiveness of its internal control over
      financial reporting as of year end;
and





·
            Of
      the framework used by management to evaluate the effectiveness of our
      internal control over financial
reporting.





Furthermore,
in the following year, our independent registered public accounting
firm is required to file its attestation report separately on our
internal control over financial reporting on whether it believes that we have
maintained, in all material respects, effective internal control over financial
reporting.





While we
expect to expend significant resources in developing the necessary documentation
and testing procedures required by Section 404 of the Sarbanes-Oxley Act, there
is a risk that we may not be able to comply timely with all of the requirements
imposed by this rule.  In the event that we are unable to receive a
positive attestation from our independent registered public accounting firm with
respect to our internal controls, investors and others may lose confidence in
the reliability of our financial statements and our stock price and ability to
obtain equity or debt financing as needed could suffer.





In
addition, in the event that our independent registered public accounting firm is
unable to rely on our internal controls in connection with its audit of our
financial statements, and in the further event that it is unable to devise
alternative procedures in order to satisfy itself as to the material accuracy of
our financial statements and related disclosures, it is possible that we would
be unable to file our Annual Report on Form 10-K with the Securities and
Exchange Commission, which could also adversely affect the market price of our
ordinary shares and our ability to secure additional financing as
needed.




THE
TRANSACTION INVOLVED A REVERSE MERGER OF A FOREIGN COMPANY INTO A FOREIGN SHELL
COMPANY, SO THAT THERE IS NO HISTORY OF COMPLIANCE WITH UNITED STATES SECURITIES
LAWS AND ACCOUNTING RULES.




In order
to be able to comply with United States securities laws, the Company’s
operating company prepared its financial statements for the first time
under U.S. generally accepted accounting principles and recently had its initial
audit of its financial statements in accordance with Public Company
Accounting Oversight Board (United States). As the Company does not
have a long term familiarity with U.S. generally accepted accounting
principles, it may be more difficult for it to comply on a timely basis with SEC
reporting requirements than a comparable domestic company.





OUR
PRODUCTS ARE SOLD THROUGH A FEW DOMESTIC DEALERS. IT MAY CREATE BUSINESS RISK
DUE TO THE DEPENDENCE ON THESE CUSTOMERS.





Our
marketing model is to sell our products through domestic Chinese dealers. We
rely on a few major customers and the loss of any of these customers could
adversely affect our revenues. As we are dependent on these customers, we cannot
timely adjust our marketing strategy and maintain or expand our market share
according to the changes of customer demand. This may adversely affect our
financial condition and operation performance.





CERTAIN
OF OUR EXISTING STOCKHOLDERS HAVE SUBSTANTIAL INFLUENCE OVER OUR COMPANY, AND
THEIR INTERESTS MAY NOT BE ALIGNED WITH THE INTERESTS OF OUR OTHER
STOCKHOLDERS.




Zhide
Jiang, our sole officer and director, beneficially owns approximately 41.13% of
our issued and outstanding ordinary shares. Therefore, he can exercise
significant control us and control the election of our directors and officers.
This concentration of ownership may also have the effect of discouraging,
delaying or preventing a future change of control, which could deprive our
stockholders of an opportunity to receive a premium for their shares as part of
a sale of our company and might reduce the price of our shares.





MR. ZHIDE
JIANG, OUR PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD OF
DIRECTORS, HAS A CONTROLLING INFLUENCE IN EMERALD ACQUISITION CORPORATION, ITS
SUBSIDIARIES AND LONGKANG JUICE, WHICH ENABLES HIM IN DETERMINING THE OUTCOME OF
ANY CORPORATE TRANSACTION OR OTHER MATTERS SUBMITTED TO OUR SHAREHOLDERS FOR
APPROVAL. WE CANNOT ASSURE YOU THAT MR. ZHIDE JIANG WILL ALWAYS ACT IN THE BEST
INTEREST OF THE COMPANY OR ITS SHAREHOLDERS.





Mr. Zhide
Jiang is currently the President, Chief Executive Officer and Chairman of the
Board of Directors of Emerald Acquisition Corporation. Mr. Zhide Jiang is also
the Executive Director of Merit Times International Limited and the Executive
Director of MeKeFuBang. Mr. Zhide Jiang is the 60% stockholder and the Executive
Director of Longkang Juice. In addition, Mr. Zhide Jiang is the Executive
Director of Proud Glory Limited, which is our majority shareholder. Pursuant to
the Incentive Option Agreement between Mr. Zhide Jiang and Mr. Chee Fung Tang,
the record owner of Proud Glory Limited, Mr. Zhide Jiang has the right and
opportunity to acquire up to 100% equity interest of Proud Glory Limited subject
to certain contingencies as set forth therein within three years starting from
October 22, 2009.  Therefore, Mr. Zhide Jiang has a controlling
influence in determining the outcome of any corporate transaction or other
matters submitted to our shareholders for approval, including mergers,
consolidations and the sale of all or substantially all of our assets, election
of directors, and other significant corporate actions. Mr. Zhide Jiang may also
have the power to prevent or cause a change in control. In addition, without the
consent of Mr. Zhide Jiang, we could be prevented from entering into
transactions that could be beneficial to us. Therefore we cannot assure you that
Mr. Zhide Jiang will always act in the best interest of the Company or its
shareholders.




20





OUR
MANAGEMENT HAS NO EXPERIENCE IN MANAGING AND OPERATING A PUBLIC COMPANY. ANY
FAILURE TO COMPLY OR ADEQUATELY COMPLY WITH FEDERAL SECURITIES LAWS, RULES OR
REGULATIONS COULD SUBJECT US TO FINES OR REGULATORY ACTIONS, WHICH MAY
MATERIALLY ADVERSELY AFFECT OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL
CONDITION.





Our
current management has no experience managing and operating a public company and
relies in many instances on the professional experience and advice of third
parties including its consultants, attorneys and accountants. Failure to comply
or adequately comply with any laws, rules, or regulations applicable to our
business may result in fines or regulatory actions, which may materially
adversely affect our business, results of operation, or financial
condition.





Risks
Relating to the People’s Republic of China




CERTAIN
POLITICAL AND ECONOMIC CONSIDERATIONS RELATING TO THE PRC COULD ADVERSELY AFFECT
OUR COMPANY.




The PRC
is transitioning from a planned economy to a market economy. While the PRC
government has pursued economic reforms since its adoption of the open-door
policy in 1978, a large portion of the PRC economy is still operating under
five-year plans and annual state plans. Through these plans and other economic
measures, such as control on foreign exchange, taxation and restrictions on
foreign participation in the domestic market of various industries, the PRC
government exerts considerable direct and indirect influence on the economy.
Many of the economic reforms carried out by the PRC government are unprecedented
or experimental, and are expected to be refined and improved. Other political,
economic and social factors can also lead to further readjustment of such
reforms. This refining and readjustment process may not necessarily have a
positive effect on our operations or future business development. Our operating
results may be adversely affected by changes in the PRC’s economic and social
conditions as well as by changes in the policies of the PRC government, such as
changes in laws and regulations (or the official interpretation thereof),
measures which may be introduced to control inflation, changes in the interest
rate or method of taxation, and the imposition of restrictions on currency
conversion in addition to those described below.





THE
RECENT NATURE AND UNCERTAIN APPLICATION OF MANY PRC LAWS APPLICABLE TO US CREATE
AN UNCERTAIN ENVIRONMENT FOR BUSINESS OPERATIONS AND THEY COULD HAVE A NEGATIVE
EFFECT ON US.




The PRC
legal system is a civil law system. Unlike the common law system, the civil law
system is based on written statutes in which decided legal cases have little
value as precedents. In 1979, the PRC began to promulgate a comprehensive system
of laws and has since introduced many laws and regulations to provide general
guidance on economic and business practices in the PRC and to regulate foreign
investment. Progress has been made in the promulgation of laws and regulations
dealing with economic matters such as corporate organization and governance,
foreign investment, commerce, taxation and trade. The promulgation of new laws,
changes of existing laws and the abrogation of local regulations by national
laws could have a negative impact on our business and business
prospects.





For
example, Chinese laws and regulations concerning the validity of the contractual
arrangements are uncertain, as many of these laws and regulations are relatively
new and may be subject to change, and their official interpretation and
enforcement by the Chinese government may involve substantial uncertainty.
Additionally, our contractual arrangements are governed by Chinese laws and
provide for the resolution of disputes through arbitration proceedings pursuant
to Chinese laws. If Longkang Juice or its stockholders fail to perform the
obligations under the contractual arrangements, we may have to rely on legal
remedies under PRC laws, including seeking specific performance or injunctive
relief, and claiming damages, and there is a risk that we may be unable to
obtain these remedies. The legal environment in China is not as developed as in
other jurisdictions. As a result, uncertainties in the legal system could limit
our ability to enforce the contractual arrangements. Therefore our contractual
arrangements may not be as effective in providing control over Longkang Juice as
direct ownership. Due to such uncertainty, we may have to take such additional
steps in the future as may be permitted by the then applicable law and
regulations in China to further strengthen our control over or toward actual
ownership of Longkang Juice or its assets. Because we rely on Longkang Juice for
our revenue, any termination of or disruption to these contractual arrangements
could detrimentally affect our business.




21




CURRENCY
CONVERSION COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION.




The PRC
government imposes control over the conversion of Renminbi into foreign
currencies. Under the current unified floating exchange rate system, the
People’s Bank of China publishes an exchange rate, which we refer to as the PBOC
exchange rate, based on the previous day’s dealings in the inter-bank foreign
exchange market. Financial institutions authorized to deal in foreign currency
may enter into foreign exchange transactions at exchange rates within an
authorized range above or below the PBOC exchange rate according to market
conditions.




Pursuant
to the Foreign Exchange Control Regulations of the PRC issued by the State
Council which came into effect on April 1, 1996, and the Regulations on the
Administration of Foreign Exchange Settlement, Sale and Payment of the PRC which
came into effect on July 1, 1996, regarding foreign exchange control, conversion
of Renminbi into foreign exchange by Foreign Investment Enterprises, or FIEs,
for use on current account items, including the distribution of dividends and
profits to foreign investors, is permissible. FIEs are permitted to convert
their after-tax dividends and profits to foreign exchange and remit such foreign
exchange to their foreign exchange bank accounts in the PRC. Conversion of
Renminbi into foreign currencies for capital account items, including direct
investment, loans, and security investment, is still under certain restrictions.
On January 14, 1997, the State Council amended the Foreign Exchange Control
Regulations and added, among other things, an important provision, which
provides that the PRC government shall not impose restrictions on recurring
international payments and transfers under current account items.




Enterprises
in the PRC (including FIEs) which require foreign exchange for transactions
relating to current account items, may, without approval of the State
Administration of Foreign Exchange, or SAFE, effect payment from their foreign
exchange account or convert and pay at the designated foreign exchange banks by
providing valid receipts and proofs.





Convertibility
of foreign exchange in respect of capital account items, such as direct
investment and capital contribution, is still subject to certain restrictions,
and prior approval from the SAFE or its relevant branches must be
sought.





Furthermore,
the Renminbi is not freely convertible into foreign currencies nor can it be
freely remitted abroad. Under the PRC’s Foreign Exchange Control Regulations and
the Administration of Settlement, Sales and Payment of Foreign Exchange
Regulations, Foreign Invested Enterprises are permitted either to repatriate or
distribute its profits or dividends in foreign currencies out of its foreign
exchange accounts, or exchange Renminbi for foreign currencies through banks
authorized to conduct foreign exchange business. The conversion of Renminbi into
foreign exchange by Foreign Invested Enterprises for recurring items, including
the distribution of dividends to foreign investors, is permissible. The
conversion of Renminbi into foreign currencies for capital items, such as direct
investment, loans and security investment, is subject, however, to more
stringent controls.





Our
operating company is a FIE to which the Foreign Exchange Control Regulations are
applicable. Accordingly, we will have to maintain sufficient foreign exchange to
pay dividends and/or satisfy other foreign exchange requirements.





EXCHANGE
RATE VOLATILITY COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION.





Since
1994, the exchange rate for Renminbi against the United States dollar has
remained relatively stable, most of the time in the region of approximately
RMB8.28 to $1.00. However, in 2005, the Chinese government announced that it
would begin pegging the exchange rate of the Chinese Renminbi against a number
of currencies, rather than just the U.S. dollar and, the exchange rate for the
Renminbi against the U.S. dollar became RMB8.02 to $1.00. If we decide to
convert Chinese Renminbi into United States dollars for other business purposes
and the United States dollar appreciates against this currency, the United
States dollar equivalent of the Chinese Renminbi we convert would be reduced.
There can be no assurance that future movements in the exchange rate of Renminbi
and other currencies will not have an adverse effect on our financial
condition.





SINCE
MOST OF OUR ASSETS ARE LOCATED IN PRC, ANY DIVIDENDS OF PROCEEDS FROM
LIQUIDATION IS SUBJECT TO THE APPROVAL OF THE RELEVANT CHINESE GOVERNMENT
AGENCIES.




Our
assets are predominantly located inside PRC. Under the laws governing Foreign
Invested Enterprises in PRC, dividend distribution and liquidation are allowed
but subject to special procedures under the relevant laws and rules. Any
dividend payment will be subject to the decision of the board of directors and
subject to foreign exchange rules governing such repatriation. Any liquidation
is subject to the relevant government agency’s approval and supervision as well
as the foreign exchange control. This may generate additional risk for our
investors in case of dividend payment and liquidation.




IT MAY BE
DIFFICULT TO AFFECT SERVICE OF PROCESS AND ENFORCEMENT OF LEGAL JUDGMENTS UPON
OUR COMPANY AND OUR OFFICERS AND DIRECTORS BECAUSE THEY RESIDE OUTSIDE THE
UNITED STATES.




As our
operations are presently based in PRC and our director and officer resides in
PRC, service of process on our company and such director and officer may be
difficult to effect within the United States. Also, our main assets are located
in PRC and any judgment obtained in the United States against us may not be
enforceable outside the United States.




22





AN
OUTBREAK OF AVIAN INFLUENZA, THE H1N1 “SWINE-FLU” VIRUS, A REOCCURRENCE OF
SEVERE ACUTE RESPIRATORY SYNDROME (“SARS”), OR ANOTHER WIDESPREAD PUBLIC HEALTH
PROBLEM, COULD ADVERSELY AFFECT OUR OPERATIONS.




A more
widespread outbreak of the H1N1 virus, avian influenza or a renewed outbreak of
SARS or any other widespread public health problem in the PRC, where all of our
operations are conducted, could have an adverse effect on our operations. If
such an outbreak were to occur, our operations may be impacted by a number of
health-related factors, including quarantines or closures of some of our
offices, that would adversely disrupt our operations.




PRC SAFE
REGULATIONS REGARDING OFFSHORE FINANCING ACTIVITIES BY PRC RESIDENTS HAVE
UNDERTAKEN CONTINUOUS CHANGES WHICH MAY INCREASE THE ADMINISTRATIVE BURDEN WE
FACE AND CREATE REGULATORY UNCERTAINTIES THAT COULD ADVERSELY AFFECT OUR
BUSINESS.





Recent
regulations promulgated by SAFE, regarding offshore financing activities by PRC
residents have undergone a number of changes which may increase the
administrative burden we face. The failure by our stockholders and affiliates
who are PRC residents, including Mr. Jiang, to make any required applications
and filings pursuant to such regulations may prevent us from being able to
distribute profits and could expose us and our PRC resident stockholders to
liability under PRC law.





In 2005,
SAFE promulgated regulations in the form of public notices, which require
registrations with, and approval from, SAFE on direct or indirect offshore
investment activities by PRC resident individuals. The SAFE regulations require
that if an offshore company directly or indirectly formed by or controlled by
PRC resident individuals, known as “SPC,” intends to acquire a PRC company, such
acquisition will be subject to strict examination by the SAFE. Without
registration, the PRC entity cannot remit any of its profits out of the PRC as
dividends or otherwise. This could have a material adverse effect on us given
that we expect to be a publicly listed company in the U.S.





Mr. Zhide
Jiang, our President, Chief Executive Officer, Chairman of the Board of
Directors and also a PRC resident individual, may be required to register at
SAFE when he receives stocks of Proud Glory Limited under SAFE regulations if
SAFE considers such acquisition will constitute a directly or indirectly
controlling over a SPV having substantial interest in a PRC company and
therefore constitutes a “round-trip investment”. Failure for Mr. Zhide Jiang to
get such approval or registration from SAFE may limit our PRC subsidiary’s
ability to collect Longkang Juice’s profit or remit any of our PRC subsidiary’s
profits out of the PRC as dividends or otherwise. It may have a material adverse
effect on us. To date, Mr. Zhide Jiang has not obtained relevant approval or
registration from SAFE as the conditions for him to acquire the stocks of Proud
Glory Limited have not yet been satisfied.





ALTHOUGH
LONGKANG JUICE’S SHAREHOLDERS HAVE GRANTED MEKEFUBANG THE EXCLUSIVE RIGHT AND
OPTION TO ACQUIRE ALL OF THEIR EQUITY INTERESTS IN LONGKANG JUICE THROUGH THE
OPTION AGREEMENT, THE EXERCISE OF SUCH OPTION MAY REQUIRE APPROVAL OF PRC
MINISTRY OF COMMERCE UNDER RELEVANT PRC LAWS.





On August
8, 2006, six PRC regulatory agencies, including the State Administration for
Foreign Exchange (“SAFE”), Ministry of Commerce (“MOC”) and the China Securities
Regulatory Commission (“CSRC”), promulgated the Rules on Acquisition of Domestic
Enterprises by Foreign Investors (“M&A Rules” or “Circular 10”), a new
regulation with respect to the mergers and acquisitions of domestic enterprises
by foreign investors that became effective on September 8, 2006. Pursuant to
Section 11 of M&A Rules, where a PRC domestic company, enterprise, or
natural person proposes to acquire an affiliated PRC domestic company in the
name of an offshore company established or controlled by such domestic company,
enterprises, or natural person, such acquisition shall be subject to examination
and approval of PRC Ministry of Commerce. Relevant parties are not allowed to
circumvent this provision by domestic investment by the foreign-funded
enterprises or otherwise.





Since Mr.
Zhide Jiang is a PRC natural person and Longkang Juice is his affiliated PRC
domestic company, acquisition of equity interests in Longkang Juice by us may be
deemed as direct or indirect acquisition of a PRC domestic company by an
offshore company controlled by a PRC natural person, therefore the approval of
PRC Ministry of Commerce is required during the period when Mr. Zhide Jiang has
substantial interest in our company. Although all stockholders of Longkang Juice
have granted MeKeFuBang the exclusive right and option to acquire all of their
equity interests in Longkang Juice through the option agreement, we can not
assure you that we will certainly get such approval at the time MeKeFuBang
decides to exercise such option since interpretation and implementation of
relevant laws and regulations in China are uncertain as described in the risk
factor above.




23





DUE TO
VARIOUS RESTRICTIONS UNDER PRC LAWS ON THE DISTRIBUTION OF DIVIDENDS BY OUR PRC
OPERATING COMPANIES, WE MAY NOT BE ABLE TO PAY DIVIDENDS TO OUR
STOCKHOLDERS.





The
Wholly-Foreign Owned Enterprise Law (1986), as amended and The Wholly-Foreign
Owned Enterprise Law Implementing Rules (1990), as amended and the Company Law
of the PRC (2006) contain the principal regulations governing dividend
distributions by wholly foreign owned enterprises. Under these regulations,
wholly foreign owned enterprises may pay dividends only out of their accumulated
profits, if any, determined in accordance with PRC accounting standards and
regulations. Additionally, such companies are required to set aside a certain
amount of their accumulated profits each year, if any, to fund certain reserve
funds. These reserves are not distributable as cash dividends except in the
event of liquidation and cannot be used for working capital purposes. The PRC
government also imposes controls on the conversion of RMB into foreign
currencies and the remittance of currencies out of the PRC. We may experience
difficulties in completing the administrative procedures necessary to obtain and
remit foreign currency for the payment of dividends from the Company’s
profits.





Furthermore,
if our subsidiaries or affiliates in China incur debt on their own in the
future, the instruments governing the debt may restrict its ability to pay
dividends or make other payments. If we or our subsidiaries are unable to
receive all of the revenues from our operations through these contractual or
dividend arrangements, we may be unable to pay dividends on our ordinary
shares.




THE
CHINESE GOVERNMENT EXERTS SUBSTANTIAL INFLUENCE OVER THE MANNER IN WHICH WE MUST
CONDUCT OUR BUSINESS ACTIVITIES.





We are
dependent on our relationship with the local government in the province in which
we operate our business. Chinese government has exercised and continues to
exercise substantial control over virtually every sector of the Chinese economy
through regulation and state ownership. Our ability to operate in China may be
harmed by changes in its laws and regulations, including those relating to
taxation, environmental regulations, land use rights, property and other
matters. We believe that our operations in China are in material compliance with
all applicable legal and regulatory requirements. However, the central or local
governments of these jurisdictions may impose new, stricter regulations or
interpretations of existing regulations that would require additional
expenditures and efforts on our part to ensure our compliance with such
regulations or interpretations. Accordingly, government actions in the future,
including any decision not to continue to support recent economic reforms and to
return to a more centrally planned economy or regional or local variations in
the implementation of economic policies, could have a significant effect on
economic conditions in China or particular regions thereof, and could require us
to divest ourselves of any interest we then hold in Chinese
properties.





Future
inflation in China may inhibit our ability to conduct business in China. In
recent years, the Chinese economy has experienced periods of rapid expansion and
high rates of inflation. Rapid economic growth can lead to growth in the money
supply and rising inflation. If prices for our products rise at a rate that is
insufficient to compensate for the rise in the costs of supplies, it may have an
adverse effect on profitability. These factors have led to the adoption by
Chinese government, from time to time, of various corrective measures designed
to restrict the availability of credit or regulate growth and contain inflation.
High inflation may in the future cause Chinese government to impose controls on
credit and/or prices, or to take other action, which could inhibit economic
activity in China, and thereby harm the market for our products.





We have
exclusive license as the only Laiyang Pear juice concentrate producer until 2039
and exclusive land leases from the Laiyang city government. If the government
rescinds our exclusive producer’s right, we may face increasing competitions. In
addition, we need to comply with certain food hygiene and safety laws and
regulations and environmental regulations. Although we currently are in
compliance with the above laws, we can not provide assurance if we can meet the
standard if these laws and regulations become stricter in the
future.





IF OUR
LAND USE RIGHTS ARE REVOKED, WE WOULD HAVE NO OPERATIONAL
CAPABILITIES.





Under
Chinese law land is owned by the state or rural collective economic
organizations. The state issues to tenants the rights to use property. Use
rights can be revoked and the tenants forced to vacate at any time when
redevelopment of the land is in the public interest. The public interest
rationale is interpreted quite broadly and the process of land appropriation may
be less than transparent. Each of our operating subsidiaries rely on these land
use rights as the cornerstone of their operations, and the loss of such rights
would have a material adverse effect on our company.




Risks
Associated with Our Securities





IN ORDER
TO RAISE SUFFICIENT FUNDS TO CONTINUE OPERATIONS, WE MAY HAVE TO ISSUE
ADDITIONAL SECURITIES AT PRICES WHICH MAY RESULT IN SUBSTANTIAL DILUTION TO OUR
SHAREHOLDERS.





If we
raise additional funds through the sale of equity or convertible debt, our
current stockholders’ percentage ownership will be reduced. In addition, these
transactions may dilute the value of ordinary shares outstanding. We may have to
issue securities that may have rights, preferences and privileges senior to our
ordinary shares. We cannot provide assurance that we will be able to raise
additional funds on terms acceptable to us, if at all. If future financing is
not available or is not available on acceptable terms, we may not be able to
fund our future needs, which would have a material adverse effect on our
business plans, prospects, results of operations and financial
condition.




24




RESTRICTED
SECURITIES; LIMITED TRANSFERABILITY.





Our
securities should be considered a long-term, illiquid investment. Our ordinary
shares have not been registered under the Securities Act, and cannot be sold
without registration under the Securities Act or any exemption from
registration. In addition, our ordinary shares are not registered under any
state securities laws that would permit their transfer. Because of these
restrictions and the absence of an active trading market for the securities, a
shareholder will likely be unable to liquidate an investment even though other
personal financial circumstances would dictate such liquidation.





WE ARE
NOT LIKELY TO PAY CASH DIVIDENDS IN THE FORESEEABLE FUTURE.




We
currently intend to retain any future earnings for use in the operation and
expansion of our business. Accordingly, we do not expect to pay any cash
dividends in the foreseeable future, but will review this policy as
circumstances dictate. Should we determine to pay dividends in the future, our
ability to do so will depend upon the receipt of dividends or other payments
from Merit Times. Merit Times may, from time to time, be subject to restrictions
on its ability to make distributions to us, including restrictions on the
conversion of RMB into U.S. dollars or other hard currency and other regulatory
restrictions.





WE MAY BE
SUBJECT TO THE PENNY STOCK RULES WHICH WILL MAKE THE OUR ORDINARY SHARES MORE
DIFFICULT TO SELL.





If we are
able to obtain a listing of our ordinary shares on a national securities
exchange, we may be subject in the future to the SEC’s “penny stock” rules if
our ordinary shares sell below $5.00 per share. Penny stocks generally are
equity securities with a price of less than $5.00. The penny stock rules require
broker-dealers to deliver a standardized risk disclosure document prepared by
the SEC which provides information about penny stocks and the nature and level
of risks in the penny stock market. The broker-dealer must also provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson, and monthly account
statements showing the market value of each penny stock held in the customer’s
account. The bid and offer quotations, and the broker-dealer and salesperson
compensation information must be given to the customer orally or in writing
prior to completing the transaction and must be given to the customer in writing
before or with the customer’s confirmation.





In
addition, the penny stock rules require that prior to a transaction, the broker
dealer must make a special written determination that the penny stock is a
suitable investment for the purchaser and receive the purchaser’s written
agreement to the transaction. The penny stock rules are burdensome and may
reduce purchases of any offerings and reduce the trading activity for our
ordinary shares. As long as our ordinary shares are subject to the penny stock
rules, the holders of such ordinary shares may find it more difficult to sell
their securities.





OUR
ORDINARY SHARES HAVE NOT BEEN LISTED FOR TRADING ON THE OTC BULLETIN BOARD OR ON
ANY STOCK EXCHANGE AND THERE CAN BE NO ASSURANCE THAT THERE WILL BE A MARKET
DEVELOPED FOR OUR ORDINARY SHARES IN THE FUTURE.





Our
ordinary shares have not been quoted or listed for trading on the OTC Bulletin
Board or on any stock exchange. Although our management will apply to a senior
exchange for listing of our ordinary shares, there can be no assurance that a
public market for our shares will be developed. Consequently, investors may not
be able to liquidate their investment or liquidate it at a price that reflects
the value of the business. Even if a public market should develop, the price may
be highly volatile. Because there may be a low price for our ordinary shares,
many brokerage firms may not be willing to effect transactions in the
securities. Even if an investor finds a broker willing to effect a transaction
in our ordinary shares, the combination of brokerage commissions, transfer fees,
taxes, if any, and any other selling costs may exceed the selling price.
Further, many lending institutions will not permit the use of such ordinary
shares as collateral for any loans.




ITEM 2. PROPERTIES.




Our
corporate office is located at No. 48 South Qingshui Road, Laiyang City,
Shandong 265200 People’s Republic of China. The Company has two production lines
with combined production capacity of 35,000 MT.  Currently, we have
5,272 acres (6.4% of the overall field area of the Laiyang Pear in Laiyang city)
of cooperative plantation according to cooperative agreements with contract
farmers. In addition, we have exclusive land leases from the Laiyang city
government of approximately 500 acres of land and will continue to expand
our plantation fields. These land leases all have a thirty (30) year term and
executed in either 2007 or 2008 for a price range from 1121 RMB to 1206 RMB per
mu (equal to approximately $985 to $1060 per acre) per year.  We aim
to produce our own Laiyang Pear, to maintain the quality of the Laiyang Pear and
to reduce raw material costs.




25





There is
no private ownership of land in China. Land is owned by the government and the
government grants land use rights for specified terms. The Company’s land use
rights, which consist of approximately 500 acres of pear orchards and land for
our production facilities and offices, have terms that expire in December 2037
through December 2054.





ITEM 3. LEGAL
PROCEEDINGS.





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




PART
II




ITEM 5. MARKET FOR REGISTRANT’S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES.





Market
information





Our
ordinary shares have not been listed for trading on the OTC Bulletin Board or on
any stock exchange and therefore there is no public trading market for our
ordinary shares.





Holders





As the
date hereof, there are 27,491,171 ordinary shares issued and
outstanding.  There are approximately 500 shareholders of our ordinary
shares.




Transfer
Agent and Registrant





Our
transfer agent is Continental Stock Transfer & Trust Co., at the address of
17 Battery Place 8th floor, New York, NY 10004. Its telephone number is
(212)509-4000.




Dividend
Policy





Since
inception we have not paid any dividends on our ordinary shares. We currently do
not anticipate paying any cash dividends in the foreseeable future on our
ordinary shares. Although we intend to retain our earnings, if any, to finance
the exploration and growth of our business, our Board of Directors will have the
discretion to declare and pay dividends in the future. Payment of dividends in
the future will depend upon our earnings, capital requirements, and other
factors, which our Board of Directors may deem relevant.





In
addition, due to various restrictions under PRC laws on the distribution of
dividends by our PRC operating companies, we may not be able to pay dividends to
our shareholders.  The Wholly-Foreign Owned Enterprise Law (1986), as
amended and The Wholly-Foreign Owned Enterprise Law Implementing Rules (1990),
as amended and the Company Law of the PRC (2006) contain the principal
regulations governing dividend distributions by wholly foreign owned
enterprises. Under these regulations, wholly foreign owned enterprises may pay
dividends only out of their accumulated profits, if any, determined in
accordance with PRC accounting standards and regulations. Additionally, such
companies are required to set aside a certain amount of their accumulated
profits each year, if any, to fund certain reserve funds. These reserves are not
distributable as cash dividends except in the event of liquidation and cannot be
used for working capital purposes. The PRC government also imposes controls on
the conversion of RMB into foreign currencies and the remittance of currencies
out of the PRC. Therefore, we may experience difficulties in completing the
administrative procedures necessary to obtain and remit foreign currency for the
payment of dividends from the Company’s profits. Furthermore, if our
subsidiaries and affiliates in China incur debt on their own in the future, the
instruments governing the debt may restrict its ability to pay dividends or make
other payments. If we or our subsidiaries and affiliates are unable to receive
all of the revenues from our operations through the current contractual
arrangements, we may be unable to pay dividends on our ordinary
shares.





Securities Authorized for Issuance
Under Equity Compensation Plans





We
presently do not have any equity based or other long-term incentive programs. In
the future, we may adopt and establish an equity-based or other long-term
incentive plan if it is in the best interest of the Company and our stockholders
to do so.




26




ITEM 6. SELECTED FINANCIAL
DATA





Not
applicable because we are a smaller reporting company.





ITEM 7.  MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION.





The
following discussion and analysis of the results of operations and financial
condition of Emerald Acquisition Corporation for the fiscal years ended December
31, 2009 and 2008, should be read in conjunction with the Emerald Acquisition
Corporation financial statements. Our discussion includes forward-looking
statements based upon current expectations that involve risks and uncertainties,
such as our plans, objectives, expectations and intentions. Actual results and
the timing of events could differ materially from those anticipated in these
forward-looking statements as a result of a number of factors, including those
set forth under the Risk Factors, Special Note Regarding Forward-Looking
Statements and Business sections in this prospectus. We use words such as
“anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,”
and similar expressions to identify forward-looking statements.





COMPANY
OVERVIEW





We engage
in the production of fruit juice concentrate in the PRC and are primarily
focused on processing, producing and distributing Laiyang Pear fruit juice
concentrate. Our subsidiary, Merit Times, owns 100% of the issued and
outstanding capital stock of MeKeFuBang, a wholly foreign owned enterprise
incorporated under the laws of the PRC.  On June 10, 2009, MeKeFuBang
entered into a series of Contractual Arrangements with Longkang Juice, a company
incorporated under the laws of the PRC, and its five shareholders, in which
MeKeFuBang effectively assumed management of the business activities of Longkang
Juice and has the right to appoint all executives and senior management and the
members of the board of directors of Longkang Juice. The contractual
arrangements are comprised of a series of agreements, including a Consulting
Services Agreement, Operating Agreement, Proxy Agreement, and Option Agreement,
through which MeKeFuBang has the right to advise, consult, manage and operate
Longkang Juice for an annual fee in the amount of Longkang Juice’s yearly net
profits after tax. Additionally, Longkang Juice’s Shareholders have pledged
their rights, titles and equity interest in Longkang Juice as security for
MeKeFuBang to collect consulting and services fees provided to Longkang Juice
through an Equity Pledge Agreement. In order to further reinforce MeKeFuBang’s
rights to control and operate Longkang Juice, Longkang Juice’s shareholders have
granted MeKeFuBang the exclusive right and option to acquire all of their equity
interests in Longkang Juice through an Option Agreement. As all of the companies
are under common control, this has been accounted for as a reorganization of
entities and the financial statements have been prepared as if the
reorganization had occurred retroactively. The Company has consolidated
Longkang’s operating results, assets and liabilities within its financial
statements.





Through
MeKeFuBang, Merit Times operates and controls Longkang Juice through the
Contractual Arrangements. Merit Times used the Contractual Arrangements to
acquire control of Longkang Juice, instead of using a complete acquisition of
Longkang Juice’s assets or equity to make Longkang Juice a wholly-owned
subsidiary of Merit Times. This is because we have not yet raised
sufficient fund to fully acquire direct ownership of Longkang Juice as required
under PRC law.  We have decided to exercise our right and option to acquire
all of the equity interests in Longkang Juice pursuant to the Option Agreement
within one year from this public offering. Existing shareholders of
Longkang Juice have understood our position and passed relevant shareholders’
meeting to approve such plan.





CRITICAL
ACCOUNTING POLICIES AND ESTIMATES





While our
significant accounting policies are more fully described in Note 1 to our
consolidated financial statements for the year ended December 31, 2009, we
believe that the following accounting policies are the most critical to aid you
in fully understanding and evaluating this management discussion and
analysis.





Our
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and liabilities. We
continually evaluate our estimates, including those related to bad debts,
inventories, recovery of long-lived assets, income taxes, and the valuation of
equity transactions. We base our estimates on historical experience and on
various other assumptions that we believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Any future changes to these estimates and assumptions could cause
a material change to our reported amounts of revenues, expenses, assets and
liabilities. Actual results may differ from these estimates under different
assumptions or conditions. We believe the following critical accounting policies
affect our more significant judgments and estimates used in the preparation of
the financial statements.




27





Variable
Interest Entities





Pursuant
to Financial Accounting Standards Board accounting standards, we are required to
include in our consolidated financial statements the financial statements of
variable interest entities (“VIEs”).  The accounting standards require
a VIE to be consolidated by a company if that company is subject to a majority
of the risk of loss for the VIE or is entitled to receive a majority of the
VIE’s residual returns. VIEs are those entities in which we, through contractual
arrangements, bear the risk of, and enjoy the rewards normally associated with
ownership of the entity, and therefore we are the primary beneficiary of the
entity.





Longkang
Juice is considered a VIE, and we are the primary beneficiary.  We conduct
our operations in China through our PRC operating company Longkang Juice.
 On October 22, 2009, we entered into agreements with Longkang pursuant to
which we shall receive 100% of Longkang’s net income. In accordance with these
agreements, Longkang shall pay consulting fees equal to 100% of its net income
to our wholly-owned subsidiary, MeKeFuBang.  MeKeFuBang shall supply
the technology and administrative services needed to service
Longkang.





The
accounts of Longkang are consolidated in the accompanying financial statements.
As a VIE, Longkang sales are included in our total sales, its income from
operations is consolidated with our, and our net income includes all of
Longkang’s net income, and its assets and liabilities are included in our
consolidated balance sheet. The VIEs do not have any non-controlling interest
and accordingly, did not subtract any net income in calculating the net income
attributable to us. Because of the contractual arrangements, we have pecuniary
interest in Longkang that require consolidation of Longkang’s financial
statements with our financial statements.





Accounts
receivable





We have a
policy of reserving for uncollectible accounts based on our best estimate of the
amount of probable credit losses in our existing accounts
receivable.  We periodically review our accounts receivable and other
receivables to determine whether an allowance is necessary based on an analysis
of past due accounts and other factors that may indicate that the realization of
an account may be in doubt.  Account balances deemed to be
uncollectible are charged to the allowance after all means of collection have
been exhausted and the potential for recovery is considered remote.





As a
basis for accurately estimating the likelihood of collection has been
established, we consider a number of factors when determining reserves for
uncollectable accounts.   We believe that we use a reasonably
reliable methodology to estimate the collectability of our accounts receivable.
We review our allowances for doubtful accounts on at least a quarterly basis. We
also consider whether the historical economic conditions are comparable to
current economic conditions. If the financial condition of our customers or
other parties that we have business relations with were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances may be required.




Inventories





Inventories,
consisting of raw materials and finished goods related to our products are
stated at the lower of cost or market utilizing the weighted average method. An
allowance is established when management determines that certain inventories may
not be saleable. If inventory costs exceed expected market value due to
obsolescence or quantities in excess of expected demand, we will record
additional reserves for the difference between the cost and the market value.
These reserves are recorded based on estimates.  We review inventory
quantities on hand and on order and record, on a quarterly basis, a provision
for excess and obsolete inventory, if necessary. If the results of the review
determine that a write-down is necessary, we recognize a loss in the period in
which the loss is identified, whether or not the inventory is retained. Our
inventory reserves establish a new cost basis for inventory and are not reversed
until we sell or dispose of the related inventory. Such provisions are
established based on historical usage, adjusted for known changes in demands for
such products, or the estimated forecast of product demand and production
requirements.





Property
and equipment





Property
and equipment are stated at cost less accumulated
depreciation.  Depreciation is computed using straight-line method
over the estimated useful lives of the assets. The estimated useful lives of the
assets are as follows:





Useful
      LifeBuilding
      and building improvements
            
            10
      - 20
            
            YearsManufacturing
      equipment
            
            10
            
            YearsOffice
      equipment and furniture
            
            10
            
            YearsVehicle
            
            10
            
            Years





The cost
of repairs and maintenance is expensed as incurred; major replacements and
improvements are capitalized. When assets are retired or disposed of, the cost
and accumulated depreciation are removed from the accounts, and any resulting
gains or losses are included in income in the year of disposition.




28





We
examine the possibility of decreases in the value of fixed assets when events or
changes in circumstances reflect the fact that their recorded value may not be
recoverable. We recognize an impairment loss when the sum of expected
undiscounted future cash flows is less than the carrying amount of the asset.
The amount of impairment is measured as the difference between the asset’s
estimated fair value and its book value.





Included
in property and equipment is construction-in-progress which consists of a
deposit on a factory under construction and machinery pending installation and
includes the costs of construction, machinery and equipment, and any interest
charges arising from borrowings used to finance these assets during the period
of construction or installation. No provision for depreciation is made on
construction-in-progress until such time as the relevant assets are completed
and ready for their intended use.





Land
use rights





There is
no private ownership of land in China. Land is owned by the government and the
government grants land use rights for specified terms.  In 2008, we
acquired land use rights for cash of 78,550,010 RMB (approximately $11,300.000)
for 500 acres of plantation fields in Laiyang, China. The land contains Laiyang
Pear plantations and will be used to supply Liayang Pear to us for production.
Our land use rights have terms that expire in December 2037 through December
2054.  We amortize these land use rights over the term of the
respective land use right. The lease agreement does not have any renewal option
and we have no further obligations to the lessor. In 2009 and 2008, the Laiyang
Pear orchards on this land did not produce any Laiyang Pear and we do not expect
to yield any pears that can be used in production until September
2010.  Accordingly, we included the amortization of the respective
land use rights in general and administrative expenses until such time that it
yields pears from the orchards. Upon the use of pears from the orchards in the
production process, we will reflect the amortization of these land use rights in
cost of sales.





Revenue
recognition





The
Company recognizes revenue when persuasive evidence of an arrangement exists,
delivery has occurred or services have been rendered, the purchase price is
fixed or determinable and collectability is reasonably assured. The Company
recognizes revenues from the sale of juice concentrate upon shipment and
transfer of title.





Research
and development





Research
and development costs are expensed as incurred. These costs primarily consist of
fees paid to third parties and cost of material used and salaries paid for
the development of our products..





Income
taxes





We
account for income taxes pursuant to the accounting standards that requires the
recognition of deferred tax assets and liabilities for both the expected impact
of differences between the financial statements and the tax basis of assets and
liabilities, and for the expected future tax benefit to be derived from tax
losses and tax credit carry forwards.  Additionally, the accounting
standards require the establishment of a valuation allowance to reflect the
likelihood of realization of deferred tax assets. Realization of deferred tax
assets, including those related to the timing difference from the deduction of
imputed interest and related depreciation expenses for income tax purposes as
compared to financial statement purposes, are dependent upon future earnings.
Accordingly, prior to 2009, the net deferred tax asset related to the timing
differences was fully offset by a valuation allowance. The Company’s operating
affiliate is governed by the Income Tax Law of the People’s Republic of China.
The Company and our wholly-owned subsidiary, Merit Times were incorporated
in the Cayman Islands and British Virgin Islands (“BVI”), respectively. Under
the current laws of the Cayman Islands and BVI, the two entities are not subject
to income taxes. Accordingly, we have not established a provision for current or
deferred taxes for these jurisdictions.




Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. Prior to 2009, we had recognized a
valuation allowance for those deferred tax assets for which it is more likely
than not that realization will not occur. The Company’s deferred tax asset
relates to the temporary difference from the depreciation of certain property
and equipment for financial statement purposes as compared the depreciation of
the related property and equipment for tax purposes.  In 2008, the
deferred tax asset had been fully reserved with a valuation allowance as
management of the Company had not determined if realization of these assets
would occur in the future. Prior to 2009, management believed that the
realization of income tax benefits from a temporary difference arising from the
depreciation of certain property and equipment for financial statement purposes
over the period from 2004 to 2009 as compared to the depreciation of the related
property and equipment over 20 years for income tax purposes appeared not more
than likely due to the Company’s limited operating history, the fact that prior
to 2007, the Company had no cooperative agreements for the acquisition of raw
materials, and the Company had a limited number  of
customers.




29





Accordingly,
we had provided a 100% valuation allowance on the deferred tax asset benefit to
reduce the asset to zero. In 2009, after analysis, management concluded that the
realization of the deferred tax asset is probable and accordingly, reversed the
valuation allowance and will reflect a deferred tax asset.  Our
decision was based on the fact that 1) we have several years of operating
history with increasing net income; 2) In 2007, we signed cooperative agreements
with farmers for the supply of raw materials. In 2008, we acquired additional
land use rights for the production of pears, our main raw material; 3) In
October 2009, we entered into a financing agreement for the sale of our ordinary
shares for net proceeds of approximately $15,100,000; and 4) we have begun our
plans to diversify its product line to include the sale of animal bio-feed
products.





Foreign
currency translation





The
reporting currency of the Company is the U.S. dollar. The functional currency of
the parent company is the U.S. dollar and the functional currency of the
Company’s operating subsidiaries and affiliates is the Chinese Reminbi (“RMB”).
For the subsidiaries and affiliates whose functional currencies are the RMB,
results of operations and cash flows are translated at average exchange rates
during the period, assets and liabilities are translated at the unified exchange
rate at the end of the period, and equity is translated at historical exchange
rates. Translation adjustments resulting from the process of translating the
local currency financial statements into U.S. dollars are included in
determining comprehensive income.  Transactions denominated in foreign
currencies are translated into the functional currency at the exchange rates
prevailing on the transaction dates. Assets and liabilities denominated in
foreign currencies are translated into the functional currency at the exchange
rates prevailing at the balance sheet date with any transaction gains and losses
that arise from exchange rate fluctuations on transactions denominated in a
currency other than the functional currency are included in the results of
operations as incurred. All of the Company’s revenue transactions are transacted
in the functional currency. The Company does not enter any material transaction
in foreign currencies and accordingly, transaction gains or losses have not had,
and are not expected to have, a material effect on the results of operations of
the Company.




Asset and
liability accounts at December 31, 2009 and 2008 were translated at 6.8372 RMB
to $1.00 and at 6.8542 RMB to $1.00, respectively. Equity accounts were stated
at their historical rate. The average translation rates applied to the
statements of income for the year ended December 31, 2009 and 2008 were 6.84088
RMB and 6.96225 RMB to $1.00, respectively. Cash flows from the Company’s
operations are calculated based upon the local currencies using the average
translation rate. As a result, amounts related to assets and liabilities
reported on the statement of cash flows will not necessarily agree with changes
in the corresponding balances on the balance sheets.





Accumulated
other comprehensive income




Comprehensive
income is comprised of net income and all changes to the statements of
stockholders’ equity, except those due to investments by stockholders, changes
in paid-in capital and distributions to stockholders. For the Company,
comprehensive income for the years ended December 31, 2009 and 2008 included net
income and unrealized gains from foreign currency translation
adjustments.





Recent
Accounting Pronouncements





In
June 2009, FASB established Accounting Standards Codification
(“Codification”) as the single source of authoritative accounting principles
recognized by the FASB in the preparation of financial statements in conformity
with the GAAP. The Codification will supersede all then-existing non-SEC
accounting and reporting standards. All other non-grandfathered non-SEC
accounting literature not included in the Codification will become
non-authoritative. The Codification is effective for financial statements issued
for interim and annual periods ending after September 15, 2009. Adoption of
the Codification had no impact on our results of operations or financial
position.





We
adopted FASB ASC 815-10-65, which amends and expands previously existing
guidance on derivative instruments to require tabular disclosure of the fair
value of derivative instruments and their gains and losses. This ASC also
requires disclosure regarding the credit-risk related contingent features in
derivative agreements, counterparty credit risk, and strategies and objectives
for using derivative instruments. The adoption of this ASC did not have a
material impact on our consolidated financial statements.





We
adopted FASB ASC 810-10-65 which amends previously issued guidance to establish
accounting and reporting standards for the non-controlling interest in a
subsidiary and for the deconsolidation of a subsidiary. It clarifies that a
non-controlling interest in a subsidiary, which is sometimes referred to as
minority interest, is an ownership interest in the consolidated entity that
should be reported as equity. Among other requirements, this Statement requires
that the consolidated net income attributable to the parent and the
non-controlling interest be clearly identified and presented on the face of the
consolidated income statement.  The adoption of the provisions in this
ASC did not have a material impact on our consolidated financial
statements.




30





We
adopted FASB ASC 805-10, which establishes principles and requirements for how
an acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, any non-controlling interest in an
acquiree and the goodwill acquired.  In addition, the provisions in this
ASC require that any additional reversal of deferred tax asset valuation
allowance established in connection with fresh start reporting on January
7, 1998 be recorded as a component of income tax expense rather than as a
reduction to the goodwill established in connection with the fresh start
reporting. We will apply ASC 805-10 to any business combinations subsequent to
adoption.





We
adopted FASB ASC 805-20, which amends ASC 805-10 to require that an acquirer
recognize at fair value, at the acquisition date, an asset acquired or a
liability assumed in a business combination that arises from a contingency if
the acquisition-date fair value of that asset or liability can be determined
during the measurement period. If the acquisition-date fair value of such an
asset acquired or liability assumed cannot be determined, the acquirer should
apply the provisions of ASC Topic 450, Contingences, to determine
whether the contingency should be recognized at the acquisition date or after
such date. The adoption of ASC
805-20 did not have a material impact on our consolidated financial
statements.





We
adopted FASB ASC 825-10-65, which amends previous guidance to require
disclosures about fair value of financial instruments for interim reporting
periods of publicly traded companies as well as in annual financial statements.
The adoption of FASB ASC 825-10-65 did not have a material impact on our
consolidated financial statements.





In
April 2009, the FASB updated the accounting standards for the recognition
and presentation of other-than-temporary impairments. The standard amends
existing guidance on other-than-temporary impairments for debt securities and
requires that the credit portion of other-than-temporary impairments be recorded
in earnings and the noncredit portion of losses be recorded in other
comprehensive income. The standard requires separate presentation of both the
credit and noncredit portions of other-than-temporary impairments on the
financial statements and additional disclosures. This standard is effective for
interim and annual reporting periods ending after June 15, 2009, with early
adoption permitted for periods ending after March 15, 2009. At the date of
adoption, the portion of previously recognized other-than-temporary impairments
that represent the noncredit related loss component shall be recognized as a
cumulative effect of adoption with an adjustment to the opening balance of
retained earnings with a corresponding adjustment to accumulated other
comprehensive income. The adoption of this standard did not have a material
effect on the preparation of our consolidated financial statements.




In April
2009, the FASB updated the accounting standards to provide guidance on
estimating the fair value of a financial asset or liability when the trade
volume and level of activity for the asset or liability have significantly
decreased relative to historical levels. The standard requires entities to
disclose the inputs and valuation techniques used to measure fair value and any
changes in valuation inputs or techniques. In addition, debt and equity
securities as defined by GAAP shall be disclosed by major category. This
standard is effective for interim and annual reporting periods ending after
June 15, 2009, with early adoption permitted for periods ending after March 15,
2009, and is to be applied prospectively. The adoption did not have a material
effect on our results of operations and financial condition.





In
May 2009, FASB issued FAS No. 165, “Subsequent Events,” which was
subsequently codified within ASC 855, “Subsequent Events”. The standard
establishes general standards of accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued. An entity should apply the requirements of ASC 855
to interim or annual financial periods ending after June 15, 2009. Adoption
of this standard does not have a material impact on our results of operations or
financial position.





In
June 2009, FASB updated the accounting standards related to the
consolidation of variable interest entities (“VIEs”). The standard amends
current consolidation guidance and requires additional disclosures about an
enterprise’s involvement in VIEs. The standard shall be effective as of the
beginning of each reporting entity’s first annual reporting period that begins
after November 15, 2009, for interim periods within the first annual
reporting period, and for interim and annual reporting periods thereafter.
Earlier application is prohibited. We do not expect the adoption to have a
material impact on our results of operations or financial position.





In August
2009, the FASB updated the accounting standards to provide additional guidance
on estimating the fair value of a liability in a hypothetical transaction where
the liability is transferred to a market participant. The standard is effective
for the first reporting period, including interim periods, beginning after
issuance. We do not expect the adoption to have a material effect on our
consolidated results of operations and financial condition.





In
October 2009, the FASB concurrently issued the following ASC
Updates:





·           ASU
No. 2009-14 - Software (Topic 985): Certain Revenue
Arrangements That Include Software Elements(formerly EITF Issue No.
09-3). This standard removes tangible products from the scope of software
revenue recognition guidance and also provides guidance on determining whether
software deliverables in an arrangement that includes a tangible product, such
as embedded software, are within the scope of the software revenue
guidance.




31





·           ASU
No. 2009-13 - Revenue
Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements(formerly EITF Issue No. 08-1).  This standard modifies the
revenue recognition guidance for arrangements that involve the delivery of
multiple elements, such as product, software, services or support, to a customer
at different times as part of a single revenue generating
transaction.  This standard provides principles and application
guidance to determine whether multiple deliverables exist, how the individual
deliverables should be separated and how to allocate the revenue in the
arrangement among those separate deliverables. The standard also expands the
disclosure requirements for multiple deliverable revenue
arrangements.





These
Accounting Standards Updates should be applied on a prospective basis for
revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010, with earlier application
permitted.  Alternatively, an entity can elect to adopt these
standards on a retrospective basis, but both these standards must be adopted in
the same period using the same transition method.  We expect to apply
this standard on a prospective basis for revenue arrangements entered into or
materially modified beginning January 1, 2011.  The Company is
currently evaluating the potential impact these standards may have on its
financial position and results of operations.





RESULTS
OF OPERATIONS





Results
of Operations for the Year ended December 31, 2009 Compared to the Year ended
December 31, 2008





The
following tables set forth key components of our results of operations for the
years indicated, in dollars, and key components of our revenue for the years
indicated, in dollars. The discussion following the table is based on these
results.





For the Years Ended
              December 31,2009
            
            
            2008NET
      REVENUES
            
            $
            82,627,335
            
            
            $
            74,232,226COST
      OF SALES
            
            
            59,566,445
            
            
            
            54,897,949GROSS
      PROFIT
            
            
            23,060,890
            
            
            
            19,334,277OPERATING
      EXPENSES:Selling
            
            
            456,024
            
            
            
            686,724Research
      and development
            
            
            1,408,501
            
            
            
            256,283General
      and administrative
            
            
            1,929,938
            
            
            
            1,710,215Total
      Operating Expenses
            
            
            3,794,463
            
            
            
            2,653,222INCOME
      FROM OPERATIONS
            
            
            19,266,427
            
            
            
            16,681,055OTHER
      INCOME (EXPENSE):Interest
      income
            
            
            62,512
            
            
            
            50,251Interest
      expense
            
            
            (335,560
            )
            
            
            (976,204
            )Total
      Other Income (Expense)
            
            
            (273,048
            )
            
            
            (925,953
            )INCOME
      BEFORE INCOME TAXES
            
            
            18,993,379
            
            
            
            15,755,102(PROVISION
      FOR) BENEFIT FROM INCOME TAXESCurrent
            
            
            (4,817,299
            )
            
            
            (4,196,701
            )Deferred
            
            
            894,789
            
            
            
            -TOTAL
      PROVISION FOR INCOME TAXES
            
            
            (3,922,510
            )
            
            
            (4,196,701
            )NET
      INCOME
            
            $
            15,070,869
            
            
            $
            11,558,401COMPREHENSIVE
      INCOME:NET
      INCOME
            
            $
            15,070,869
            
            
            $
            11,558,401OTHER
      COMPREHENSIVE INCOME:Unrealized
      foreign currency translation gain
            
            
            75,088
            
            
            
            1,304,006COMPREHENSIVE
      INCOME
            
            $
            15,145,957
            
            
            $
            12,862,407





32




Revenues. For the year ended
December 31, 2009, we had net revenues of $82,627,335, as compared to net
revenues of $74,232,226 for the year ended December 31, 2008, an increase of
11.3%. Revenue and changes for each product line is summarized as
follows:





2009
            
            
            2008
            
            
            Increase
      (Decrease)
            
            
            Percentage
      ChangePear juice concentrate
            
            $
            73,369,847
            
            
            $
            64,565,458
            
            
            $
            8,804,389
            
            
            
            13.6
            %Apple
      juice concentrate
            
            
            6,800,563
            
            
            
            7,454,906
            
            
            
            (654,343
            )
            
            
            (8.8
            )%Strawberry
      juice concentrate
            
            
            2,389,486
            
            
            
            2,087,970
            
            
            
            301,516
            
            
            
            14.4
            %Other
            
            
            67,439
            
            
            
            123,892
            
            
            
            (56,453
            )
            
            
            (45.6
            )%Total
      net revenues
            
            $
            82,627,335
            
            
            $
            74,232,226
            
            
            $
            8,395,109
            
            
            
            11.3
            %





During
the year ended December 31, 2009, we continued to see strong demand for our pear
juice concentrate products. As discussed elsewhere in this annual report,
Laiyang Pear as a trademark has been registered by the Laiyang city government.
Longkang has been granted by the Laiyang government as the exclusive producer of
Laiyang Pear juice concentrate beginning January 2009 for a period of 30 years.
No other producer can use the trademark or enter into the Laiyang Pear juice
concentrate business until the exclusive right of our company has been
expired. In 2009, our revenues from pear juice concentrate increased by
13.6% with approximately 83.2% of the pear concentrate increased revenue
attributable to an increase in volume and 16.8% attributable to an increase in
sales price subject to market conditions. Revenues from Laiyang Pear juice
concentrate have increased due toincreasing market demands
from the pharmaceutical and health supplement products.  The decrease
in revenues from the sale of apple juice concentrate of 8.8% was primarily
attributable to a decrease in production of apple juice concentrate. The
increase in revenues from the sale of strawberry juice concentrate of 14.4% was
attributable to our increase in production of strawberry juice
concentrate.  The production of apple and strawberry juice concentrate
is dependent upon the season and production requirements of our pear juice
concentrate and may vary depending on the capacity of our limited production
lines. Generally, we only produce apple and strawberry juice concentrate when we
are not producing pear juice concentrate.





Cost ofsales. Cost of sales
increased by $4,668,496, or 8.5%, from $54,897,949 for the year ended December
31, 2008 to $59,566,445 for the year ended December 31, 2009 and was
attributable to the increase in our net revenue.





Gross profit and gross
margin. Our gross
profit was $23,060,890 for year ended December 31, 2009 as compared to
$19,334,277 for the year ended December 31, 2008 representing gross margins of
27.9% and 26.0%, respectively. The increase in our gross margin percentage was
primarily attributable to the increased usage in production capacity and the
increase in gross margin percentage related to pear juice concentrate and apple
juice concentrate offset by the decrease in gross margin percentage related to
strawberry juice concentrate. The increase in gross margin
percentages related to pear juice concentrate was from 23.8% in the fiscal 2008
to 26.2% in fiscal 2009 and was mainly attributed to the increase
in sales price. While revenues from the sale of apple juice concentrate
decreased in 2009 as compared to the revenues from the sale of apple juice
concentrate in 2008, the gross margin percentages related to apple juice
concentrate increased from 44.1% in 2008 to 46.3% in 2009. The increase in gross
margin percentages related to apple juice concentrate from 44.1% in 2008 to
46.3% in 2009 is primarily due to an increase in our sales price. Specifically,
the high margin level of apple juice concentrate for the fiscal year ended
December 31, 2008 and December 31 2009, respectively, is due to the sales
contract we signed with an infant food company. This contract was entered into
in 2007 and ended in 2009. This infant food customer is a relatively small
company and not likely to buy big volume of our apple products in the future.
Since it won’t become our long-term strategic customer, we reasonably increased
the sales price compared with the other apple juice concentrate customers. As
this customer bought our product to produce infant food, it specifically
required us to use the best quality apples strictly selected from our own
orchards, and to apply the highest level quality standards and refrigeration
storage. Therefore, we had more pricing power and charged a higher price for
this customer.There is nominimum
guaranteed price that we must pay for apples. Gross margin percentages can vary
from period to period based on the price of raw materials such as pears, apples
and strawberries and can also fluctuate based on market conditions such as
demand and selling price, We expect gross margins to improve as we become more
efficient and begin using pears produced on our pear orchards that we have
rights to use for a period of 30 years. Gross margin percentages by product
line are as follows:




For the Year ended
              December 31, 2009
            
            
            For the Year ended
              December 31, 2008Pear juice concentrate
            
            
            26.2
            %
            
            
            23.8
            %Apple
      juice concentrate
            
            
            46.3
            %
            
            
            44.1
            %Strawberry
      juice concentrate
            
            
            26.1
            %
            
            
            28.8
            %Other
            
            
            100.0
            %
            
            
            57.2
            %Overall
      gross profit %
            
            
            27.9
            %
            
            
            26.0
            %




33




Selling expenses. Selling
expenses were $456,024 for the year ended December 31, 2009 and $686,724 for the
comparable year in 2008.  Selling expenses consisted of the
following:





2009
            
            
            2008Compensation
      and related benefits
            
            $
            185,076
            
            
            $
            119,154Shipping
      and handling
            
            
            151,486
            
            
            
            337,333Advertising
            
            
            99,622
            
            
            
            209,701Other
            
            
            19,840
            
            
            
            20,536$
            456,024
            
            
            $
            686,724





·
            Compensation
      and related benefits increased by $65,922 or 55.3% due to an increase in
      salaries and related benefits of approximately $25,000 paid to sales staff
      and an increase in commissions of approximately $41,000 paid on increased
      revenues.





·
            Shipping
      and handling decreased by $185,847 or 55.1% due to a decrease in our
      shipping expenses which were substantially paid by our customers in fiscal
      2009 but  were mainly paid by us in fiscal 2008 offset by an
      increase in our handling expenses incurred by the increased
      revenues.





·
            Advertising
      expense decreased by $110,079 or 52.5%. During the last quarter of fiscal
      2008, we attended many national juice products conferences in order to
      enhance our visibility. We did not have corresponding expenses in fiscal
      2009. Accordingly, advertising expenses
  decreased.





·
            Other
      expense decreased by $696, or 3.4% due to a decrease in exhibition fees
      paid.





Research and development
expenses. Research and development expenses amounted to $1,408,501 for
the year ended December 31, 2009, as compared to $256,283 for the same period in
2008, an increase of $1,152,218 or 449.6%.  The increase was primarily
attributable to an increase in a research and development contracts with third
parties which were fulfilled in fiscal 2009. Accordingly, we accrued all of
expenses related to the research and development contracts. In future periods,
we expect research and development expenses to fluctuate depending on the
nature, timing and costs of third party contracts.





General and administrative expenses.
General and administrative expenses amounted to $1,929,938 for the year
ended December 31, 2009, as compared to $1,710,215 for the same period in 2008,
an increase of $219,723 or 12.8%. General and administrative expenses consisted
of the following:





2009
            
            
            2008Compensation
      and related benefits
            
            $
            528,785
            
            
            $
            265,818Depreciation
            
            
            209,532
            
            
            
            282,403Amortization
      of land use rights
            
            
            547,750
            
            
            
            538,202Other
            
            
            643,871
            
            
            
            623,792$
            1,929,938
            
            
            $
            1,710,215




·
            For
      the year ended December 31, 2009, compensation and related benefits
      increased by $262,967 or 98.9% as compared to the year ended December 31,
      2008 and was attributable to the increased accrual of a discretionary
      bonus to employees of approximately $262,000.·
            For
      the year ended December 31, 2009, depreciation expense decreased by
      $72,871 or 25.8% as compared to the year ended December 31,
      2008.





·
            For
      the year ended December 31, 2009, amortization of land use rights
      increased by $9,548 or 1.8% as compared to the year ended December 31,
      2008. Currently, we include the amortization of the respective land use
      rights in general and administrative expenses until such time that we
      yield pears from the orchards on the land. Upon the use of pears from the
      orchards in the production process, we will reflect the amortization of
      these land use rights in cost of
sales.





·
            Other
      general and administrative expenses which consist of professional fees,
      entertainment, utilities, office maintenance, travel expenses, pension,
      miscellaneous taxes, office supplies and telephone increased by $20,079 or
      3.2% for the year ended December 31, 2009 as compared with the same period
      in 2008.In 2010, we expect professional fees to increase related to our
      status as a publicly traded
company.




34




Income from operations. For
the year ended December 31, 2009, income from operations was $19,266,427, as
compared to $16,681,055 for the year ended December 31, 2008, an increase of
$2,585,372 or 15.5%.





Other income (expenses). For
the year ended December 31, 2009, other expense amounted to $273,048 as
compared to other expenses of $925,953 for the same period in
2008.  For the years ended December 31, 2009 and 2008, other income
(expense) included:




·
            Interest
      expense decreased by $640,644 or 65.6%.  In connection with the
      acquisition of the net assets of the Company, which occurred in 2004, we
      assumed a loan payable to a third party related to the original
      construction of the our factory. The loan was non-interest bearing. Since
      the agreement did not have a stated interest rate, we used an imputed
      interest rate of interest of 6.12% based on PRC central bank five year and
      up loan rate effective October 2004.  For the year ended
      December 31, 2009 and 2008, imputed interest expense related to this loan
      amounted to $335,560 and $976,204, respectively. During the year ended
      December 31, 2009, we repaid loans of approximately $13,808,000, which
      reduced interest expense for the year. The loan we repaid in full prior to
      December 31, 2009 and accordingly, we do not expect to incur any interest
      expense in the near future.





·
            Interest
      income increased by $12,261 or 24.4% and related to an increase in funds
      in interest bearing accounts.





Income tax expense. Income
tax expense decreased by $274,191, or 6.5%, for the year ended December 31, 2009
as compared to the comparable period in 2008 which was primarily attributed to a
deferred income tax benefit of approximately $895,000 generated in fiscal 2009
offset by the increase in provision for income taxes of approximately $621,000
as a result of the increase in taxable income generated by our operating
entities. Prior to 2009, we had recognized, a valuation allowance for those
deferred tax assets for which it is more likely than not that realization will
not occur. Our deferred tax asset relates to the timing difference from the
amortization of imputed interest for financial statement purposes as compared
the amortization of the related equipment for tax purposes.  Prior to
2009, management believed that the realization of income tax benefits from a
timing difference arising from the amortization of imputed interest for
financial statement purposes over the period from 2004 to 2009 as compared to
the these amortization of the related asset over 20 years for income tax
purposes appeared not more than likely due to the Company’s limited operating
history, the fact that prior to 2007, the Company had no cooperative agreements
for the acquisition of raw materials, and the Company had a limited
number  of customers. Accordingly, we had provided a 100% valuation
allowance on the deferred tax asset benefit to reduce the asset to zero. In
2009, after analysis, management concluded that the realization of the deferred
tax asset is probable and accordingly, reversed the valuation allowance in the
amount of approximately $895,000 and will reflect a deferred tax asset on our
balance sheet.





Net income. As a result of
the factors described above, our net income for the year ended December 31, 2009
was $15,070,869, or $0.67 per ordinary share (basic and diluted). For the year
ended December 31, 2008, we had net income of $11,558,401, or $0.54 per ordinary
share (basic and diluted)..





Foreign currency translation
gain. The functional currency of our subsidiaries operating in the PRC is
the Chinese Yuan or Renminbi (“RMB”). The financial statements of our
subsidiaries are translated to U.S. dollars using period end rates of exchange
for assets and liabilities, and average rates of exchange (for the period) for
revenues, costs, and expenses. Net gains and losses resulting from foreign
exchange transactions are included in the consolidated statements of operations.
As a result of these translations, which are a non-cash adjustment, we reported
a foreign currency translation gain of $75,088 for the year ended December 31,
2009 as compared to $1,304,006 for the same period year 2008. This non-cash gain
had the effect of increasing our reported comprehensive income.




Comprehensive income. For the
year ended December 31, 2009, comprehensive income of $15,145,957 is derived
from the sum of our net income of $15,070,869 plus foreign currency translation
gains of $75,088.





LIQUIDITY
AND CAPITAL RESOURCES





As of
December 31, 2009, our balance of cash and cash equivalents was $26,574,338,
comparing to $2,028,858 as of December 31, 2008. These funds were located in
financial institutions located in China.




Our
primary uses of cash have been for selling and marketing expenses, employee
compensation, new product development and working capital. All funds received
have been expended in the furtherance of growing the business, establishing
brand portfolios. The following trends are reasonably likely to result in a
material decrease in our liquidity over the near to long term:




·
            An
      increase in working capital requirements to finance higher level of
      inventories,




·
            Addition
      of administrative and sales personnel as the business
    grows,




35




·
            Increases
      in advertising, public relations and sales promotions for existing and new
      brands as the company expands within existing markets or enters new
      markets,





·
            Development
      of new products in the bio-animal feed industry to complement our current
      products,





·
            The
      cost of being a public company and the continued increase in costs due to
      governmental compliance activities, and·
            Capital
      expenditures to add production
lines.




We plan
to add one new production line for the processing of juice concentrate and puree
products by June 2010 and we will add one new production line for the processing
of bio animal feed as a byproduct of pear juice concentrate and fruit puree
products to further diversify our product mix and increase our revenues. The
estimate that the new production line for the processing of juice concentrate
and puree products the new production line for the processing of bio animal feed
will cost approximately $17,000,000. As discussed below, in November 2009, we
sold investment units for a total of $ 17,011,014, which will along with
proceeds from operations be used to fund our production line expansion. As
outlined below, we used substantial cash to pay off loans and acquisition
payables. We currently plan on using net cash provided by operating activities
to fund our internal growth and fund an expansion of our distribution
channels.  Additionally, we intend to raise additional funds in the
near future for one bigger new production line for the processing of juice
concentrate and puree products and one bigger new production line for the
processing of bio animal feed. We estimated that the addition of these
production lines will cost approximately $20,000,000 and will be from funds
using future funding. However there are no assurances that we will be able to
raise additional funds in the near future.





Changes
in our working capital position are summarized as follows:





December 31,
            
            
            Increase2009
            
            
            2008
            
            
            (Decrease)Current
      assets
            
            $
            42,649,780
            
            
            $
            24,148,906
            
            
            $
            18,500,874Current
      liabilities
            
            
            (6,784,193
            )
            
            
            (14,750,708
            )
            
            
            (7,966,515
            )Working
      capital
            
            $
            35,865,587
            
            
            $
            9,398,198
            
            
            $
            26,467,389





Our
working capital increased $26,467,389 to $35,865,587 at December 31, 2009 from
working capital of $9,398,198 at December 31, 2008. This increase in working
capital is primarily attributable to an increase in cash and restricted cash of
approximately $27,133,000 generated from operations and third parties financing,
the repayment of a current loan payable of approximately $10,213,000 and a
decrease in accounts payable of approximately $510,000 offset by the reduction
in accounts receivable of approximately $5,103,000 due to collection efforts,
the reduction of inventories of approximately $2,244,000 attributable to the
timing of production and sale of our products, a decrease in prepaid value-added
taxes on purchase of approximately $433,000, a decrease in prepaid expenses and
other current assets of approximately $912,000, an increase in accrued expenses
of approximately $1,122,000 and an increase in income taxes payable of
approximately $2,454,000.




During
2009, we received payment upon delivery of our products. We have been able to
collect our accounts receivable balances in advance of the delivery.
Subsequently, as of December 31, 2009, we had no accounts receivable. In the
future, we expect to continue to collect payments in advance of
delivery.




Cash
flows from the Company’s operations are calculated based upon the local
currencies using the average translation rate. As a result, amounts related to
assets and liabilities reported on the statement of cash flows will not
necessarily agree with changes in the corresponding balances on the balance
sheets.





The
following summarizes the key components of the Company’s cash flows for the year
ended December 31, 2009 and 2008:




Years EndedDecember 31,
            
            
            December 31,2009
            
            
            2008Net
      cash provided by operating activities
            
            $
            27,500,838
            
            
            $
            13,573,941Cash
      flows used in investing activities
            
            $
            (863,047
            )
            
            $
            (11,285,512
            )Cash
      flows used in financing activities
            
            $
            (2,097,174)
            
            
            $
            (9,925,998
            )Effect
      of exchange rate on cash
            
            $
            4,863
            
            
            $
            494,982Net
      increase (decrease) in cash and cash equivalents
            
            $
            24,545,480
            
            
            $
            (7,142,587)




36




Net cash
flow provided by operating activities was $27,500,838 for the year ended
December 31, 2009 as compared to net cash flow provided by operating activities
of $13,573,941 for the year ended December 31, 2008, an increase of $13,926,897.
Net cash flow provided by operating activities for the year ended December 31,
2009 was mainly due to net income of $15,070,869, the add back of non-cash items
such as $948,579 of depreciation, and the amortization of land use rights of
$547,750, a decrease in accounts receivable of $5,112,699, a decrease in
inventories of $2,282,001, a decrease in prepaid and other current assets of
$996,118, a decrease in prepaid VAT on purchases of $351,682, an increase in
accrued expenses of $1,120,405 and an increase in income taxes payable of
$2,446,481 offset by an increase in deferred income taxes asset of $894,789 and
a decrease in accounts payable of $512,258. Net cash flow provided by operating
activities for the year ended December 31, 2008 was mainly due to net income of
$11,558,401, the add back of non-cash items such as $930,720 of depreciation,
and the amortization of land use rights of $538,202, a decrease in inventories
of $5,568,816 and, an increase in accrued expenses of $880,768 offset by an
increase in accounts receivable of $3,397,094 and a decrease in income taxes
payable of $2,498,796.





Net cash
flow used in investing activities was $863,047 for the year ended December 31,
2009 as compared to net cash used in investing activities of $11,285,512 for the
year ended December 31, 2008. During the year ended December 31, 2009, we used
cash of $863,047 for the purchase of property and equipment. During the year
ended December 31, 2008, we used cash of $11,282,274 to acquire land use rights
to pear plantations. We intend to use the pears harvested for our
production.  Additionally, we used cash of $3,238 for the purchase of
property and equipment.





Net cash
flow used in financing activities was $2,097,174 for the year ended
December 31, 2009 as compared to net cash flow used in financing activities of
$9,925,998 for the year ended December 31, 2008. During the year ended
December 31, 2009, we received gross proceeds from the sale of common stock of
$17,011,014 and proceeds from subscription receivable of $50,000 and we used
cash to increase restricted cash balancer by $2,587,917, we used cash for the
repayment of loans of $13,808,178, the payment of offering costs of $1,909,936
and the payment of acquisition payables of $852,157. During the year ended
December 31, 2008, we used cash for the repayment of loans of $4,769,114 and the
repayment of acquisition payables of $5,156,884.





The
Company currently generates its cash flow through operations which it believes
will be sufficient to sustain current level operations for at least the next
twelve months.





Recent
Offering





On
October 22, 2009, pursuant to a Subscription Agreement (the “Subscription
Agreement”) between the Company and certain investors (the “Investors”) named in
the Subscription Agreement, we completed an offering (the “Offering”) of the
sale of investment units (the “Units”) for gross proceeds of $15,096,011, each
Unit consisting of 50,000 Ordinary Shares, par value $0.001 per share (the
“Ordinary Shares”) and five-year warrants to purchase 25,000 of the Ordinary
Shares of the Company, at an exercise price of $6.00 per share (the
“Warrants”).  Additionally, on November 2, 2009, we entered into and
closed on the second and final round of a private placement by raising gross
proceeds of $1,915,003 through the sale of Units pursuant to a Subscription
Agreement between the Company and certain Investors named in the Subscription
Agreement. Together with the first closing on October 22, 2009, we raised
aggregate gross proceeds of $17,011,014 from the Offering, and issued 5,670,339
Ordinary Shares and 2,835,177 Warrants to Investors.





Additionally,
our majority shareholder, Proud Glory Limited, of which our sole officer and
director Mr. Zhide Jiang is the managing director (the “Lock-Up Shareholder”),
entered into a Lock-Up Agreement with the Company whereby the Lock-Up
Shareholder agreed it will not, offer, pledge, sell or otherwise dispose of any
Ordinary Shares or any securities convertible into or exercisable or
exchangeable for Ordinary Shares during the period beginning on and including
the date of the final Closing of the Offering for a period of eighteen (18)
months.





Pursuant
to an Investor Relations Escrow Agreement, amongst us, Grandview Capital, Inc.
(“Grandview”), Access America and Anslow & Jaclin, LLP as escrow agent,
dated October 22, 2009 (the “Investor Relations Escrow Agreement”), we placed a
total of $120,000 in an escrow account with our counsel to be used for the
payment of investor relation fees. Further, pursuant to a Holdback Escrow
Agreement, amongst us, Grandview, Access America and Anslow & Jaclin, LLP as
escrow agent, dated October 22, 2009 (the “Holdback Escrow Agreement”), we
placed escrow funds equal to ten percent (10%) of the Offering proceeds, with
our counsel to be held in escrow until such time as a qualified chief financial
officer has been approved and appointed as an officer of
Emerald.  Finally, pursuant to a Going Public Escrow Agreement,
amongst us, Grandview, Access America and Anslow & Jaclin, LLP as escrow
agent, dated October 22, 2009 (the “Going Public Escrow Agreement”), we placed a
total of $1,000,000 from the Offering proceeds with our counsel to be used for
the payment of fees and expenses related to becoming a public company and
listing its Ordinary Shares on a senior exchange. Pursuant to each of the
Investor Relations Escrow Agreement, Holdback Escrow Agreement and Going Public
Escrow Agreement, in the event that the proceeds of such escrow accounts have
not been fully distributed within two years from the date thereof, the balance
of such escrow proceeds shall be returned to us. At December 31, 2009, we had
restricted cash held in escrow of $2,588,000. In January 2010, we hired a chief
financial officer and $1,509,600 was released from escrow to us.




37





Contractual
Obligations





The
following tables summarize our contractual obligations as of December 31, 2009
(dollars in thousands), and the effect these obligations are expected to have on
our liquidity and cash flows in future periods.





Payments Due by
      PeriodTotal
            
            Less than
              1
    year
            
            1-3
Years
            
            3-5Years
            
            5 Years
              +Contractual
      Obligations :Construction
      contract (1)
            
            $
            2,020
            
            
            
            2,020
            
            
            
            -
            
            
            
            -
            
            
            
            -Total
      Contractual Obligations:
            
            $
            2,020
            
            
            $
            2,020
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -







(1)
            On
      December 24, 2009, as part of our expansion plans to add additional
      production capacity, we entered into a construction contract for the
      construction of a new manufacturing facility and office
      space.  The construction project and all payments are expected
      to be completed in the second quarter of
2010.





OFF-BALANCE
SHEET ARRANGEMENTS





There are
no off-balance sheet arrangements between us and any other entity that have, or
are reasonably likely to have, a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to stockholders.





ITEM 8.  FINANCIAL
STATEMENTS




The
financial statements begin on page F-1.





ITEM 9A(T). CONTROLS AND
PROCEDURES




Evaluation
of Disclosure Controls and Procedures





Pursuant
to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”),
the Company carried out an evaluation, with the participation of the Company’s
management, including the Company’s Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”) (the Company’s principal financial and accounting
officer), of the effectiveness of the Company’s disclosure controls and
procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the
end of the period covered by this report. Based upon that evaluation, the
Company’s CEO and CFO concluded that the Company’s disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that the Company files or submits under the Exchange
Act, is recorded, processed, summarized and reported, within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to the Company’s management, including the Company’s CEO and
CFO, as appropriate, to allow timely decisions regarding required
disclosure.





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





The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting for the
Company.  Our internal control system was designed to, in general,
provide reasonable assurance to the Company’s management and board regarding the
preparation and fair presentation of published financial statements, but because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.





Our
management assessed the effectiveness of the Company’s internal control over
financial reporting as of December 31, 2009.  The framework used by
management in making that assessment was the criteria set forth in the document
entitled “ Internal Control – Integrated Framework” issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on that assessment,
our management has determined that as of December 31, 2009, the Company’s
internal control over financial reporting was effective for the purposes for
which it is intended.





This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the Company’s registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Company to provide only management’s report
in this annual report.




38




Changes
in Internal Control over Financial Reporting





No change
in our system of internal control over financial reporting occurred during the
period covered by this report, fourth quarter of the fiscal year ended December
31, 2009 that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.




PART
III




ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE.




Directors
and Executive Officers




The
following table sets forth the name, age, and position of our executive officers
and sole director. Executive officers are elected annually by our Board of
Directors.  Each executive officer holds his office until he resigns,
is removed by the Board, or his successor is elected and
qualified.  Directors are elected annually by our stockholders at the
annual meeting.  Each director holds his office until his successor is
elected and qualified or his earlier resignation or removal.





NAME
            
            AGE
            
            POSITIONZhide
      Jiang
            
            52
            
            President,
      Chief Executive Officer and Chairman of the Board of
    DirectorsLarry
      X. Chin
            
            43
            
            Chief
      Financial Officer





Zhide
Jiang, President, President, Chief Executive Officer and Chairman





Mr. Jiang
is the founder and chairman of the board of directors of Shandong Longkang Juice
Co., Ltd since November 2004. Mr. Jiang served as Chairman for Laiyang Starch
Factory, Laiyang Second Alcohol Brewing Co., Ltd. from April 1984 to October
2004. He was an engineer in Laiyang Agricultural Machinery Co., Ltd. from
September 1976 to March 1984. He graduated from Wuxi University in
1976.





Mr. Larry X. Chin, Chief Financial
Officer




Larry
Chin has over 15 years experience in financial analysis and investment banking
services.  From January 2009 to date, Mr. Chin has been working as the
vice president of Broadline Capital, a global private equity firm primarily
focused on building a portfolio of companies in China.  Over the past
several years, Mr. Chin has also been extensively involved in providing
strategic consulting to Chinese companies and helping them going public and
raising capitals in the United States with a total of over $100 million
financing for these Chinese companies.  Today, several of these
companies are listed on the NASDAQ stock market with over $100 million market
caps.





Before
joining Broadline Capital, Mr. Chin co-founded CapLink Financial Group LLC in
September of 2007, a fully integrated global investment banking and advisory
firm specializing in connecting Chinese companies with the US capital
markets.  From February 2006 to September 2007, Mr. Chin was a Senior
Analyst with Kuhn Brothers where he assisted Chinese companies in building
financial models and published research reports.  From December 2004
through February 2006, Mr. Chin served as the vice president of New York Global
Securities where he assisted various Chinese companies in the process of going
public in the United States.





Mr. Chin
started his career at Bankers Trust, later Deutsche Bank, as an
analyst.  Mr. Chin is fluent in both Chinese (Mandarin &
Shanghainese) and English.  Mr. Chin graduated with a MBA from the
Stern School of Business at New York University. He is also a Chartered
Financial Analyst (CFA) and a Licensed International Financial Analyst
(LIFA).





Employment
Agreements





On
January 12, 2010, Mr. Chin entered into an employment agreement (the “Employment
Agreement”) with the Company for the appointment as the Chief Financial Officer
of the Company for a term of five (5) years. Pursuant to the Employment
Agreement, Mr. Chin will receive base salary of $66,000 per year, payable
in equal monthly installments. Upon completion of an underwritten initial public
offering, such base salary shall be increased to $86,000. From the second year
of the employment term, the Board of Directors of the Company may increase the
base salary and issue certain warrants to Mr. Chin based on the annual
assessment of his performance. The Board of Directors approved the Employment
Agreement on January 27, 2010.




39





Committees
and Meetings





The board
of directors is currently composed of only 1 person. All board action requires
the approval of our sole director. We intend to increase the size of our board
of directors in 2010.




We
currently do not have standing audit, nominating or compensation committees. Our
board of directors handles the functions that would otherwise be handled by each
of the committees. We intend, however, to establish an audit committee, a
nominating committee and a compensation committee of the board of directors as
soon as practicable. We envision that the audit committee will be primarily
responsible for reviewing the services performed by our independent auditors,
evaluating our accounting policies and our system of internal controls. The
nominating committee would be primarily responsible for nominating directors and
setting policies and procedures for the nomination of directors. The nominating
committee would also be responsible for overseeing the creation and
implementation of our corporate governance policies and procedures. The
compensation committee will be primarily responsible for reviewing and approving
our salary and benefit policies (including equity plans), including compensation
of executive officers.





Upon the
establishment of an audit committee, the board will determine whether any of the
directors qualify as an audit committee financial expert.





Family
Relationships





There are
no family relationships between our director and executive
officers.




Involvement
in Certain Legal Proceedings




To the
best of our knowledge, our sole director and officer has not been convicted in a
criminal proceeding, excluding traffic violations or similar misdemeanors, nor
has been a party to any judicial or administrative proceeding during the past
five years that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to, federal
or state securities laws, or a finding of any violation of federal or state
securities laws, except for matters that were dismissed without sanction or
settlement. Except as set forth in our discussion below in “Certain
Relationships and Related Transactions,” our sole director and officer has not
been involved in any transactions with us or any of our affiliates or associates
which are required to be disclosed pursuant to the rules and regulations of the
SEC.





Code
of Ethics





We
currently do not have a code of ethics that applies to our officers, employees
and director, including our Chief Executive Officer, however, we intend to adopt
one in the near future.




ITEM 11. EXECUTIVE
COMPENSATION.




Summary
Compensation Table— Fiscal Years Ended December 31, 2009, 2008 and
2007





The
following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid to the named persons for services
rendered in all capacities during the noted periods.




Name and
              Principal
              Position (1)
            
            Year
              Ended
              June 30
            
            Salary
              ($)
            
            Bonus ($)
            
            Stock
              Awards
              ($)
            
            Option
              Awards
              ($)
            
            Non-Equity
              Incentive Plan
              Compensation
              Earnings
              ($)
            
            Non-
              Qualified
              Deferred
              Compensation
              Earnings
              ($)
            
            All Other
              Compensation
              ($)
            
            Total
              ($)Joseph
      R. Rozelle,
            
            2007
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0former
      CEO and
            
            2008
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0Director
      (1)
            
            2009
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0David
      Richardson,
            
            2007
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0former
      Director (1)
            
            2008
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            02009
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0Zhide
      Jiang,
            
            2007
            
            5,010
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            5,010President,
      CEO and
            
            2008
            
            5,010
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            5,010Director
      (2)
            
            2009
            
            4,768
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            4,768Larry
      X. ChinCFO
      (3)
            
            2009
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0







(1)
            On
      October 22, 2009, Joseph R. Rozelle and David Richardson tendered their
      resignations from all offices held in the Company, effective immediately,
      and from the board of directors effective November 7, 2009, which is 10
      days upon filing of an information statement required by Rule 14f-1
      promulgated under the Exchange Act.




40




(2)
            On
      October 22, 2009, Zhide Jiang was elected as the President and Chief
      Executive Officer of the Company effective immediately. He was also
      appointed as Chairman of the Board of Director of the Company effective
      November 7, 2009, which is 10 days upon filing of an information statement
      required by Rule 14f-1 promulgated under the Exchange
  Act.(3)
            On
      January 27, 2010, Larry X. Chin was appointed as the Company’s Chief
      Financial Officer.





Outstanding
Equity Awards at Fiscal Year End





None of
our executive officers received any equity awards, including, options,
restricted stock or other equity incentives during the fiscal year ended
December 31, 2009.





Compensation
of Directors





During
the 2007, 2008 and 2009 fiscal years, no member of our board of directors
received any compensation solely for service as a director. Our directors will
not receive a fee for attending each board of directors meeting or meeting of a
committee of the board of directors. All directors will be reimbursed for their
reasonable out-of-pocket expenses incurred in connection with attending board of
director and committee meetings.





Compensation
Committee Interlocks and Insider Participation




During
the last fiscal year we did not have a standing Compensation Committee. Our
board of directors was responsible for the functions that would otherwise be
handled by the compensation committee.





Indemnification
of Directors and Executive Officers and Limitation of Liability





Cayman
Islands law does not limit the extent to which a company’s articles of
association may provide for indemnification of officers and directors, except to
the extent any such provision may beheld by the Cayman Islands courts to be
contrary to public  policy, such as to provide indemnification against
civil fraud or the consequences of committing a crime.  Our articles
of association provide for indemnification of our officers and directors for any
liability incurred in their capacities as such, except through their own willful
negligence or default.





Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling us pursuant to the
foregoing provisions, we have been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is theretofore
unenforceable.




ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.




The
following table sets forth certain information as of the date hereof with
respect to the beneficial ownership of our ordinary shares, the sole outstanding
class of our voting securities, by (i) each stockholder known to be the
beneficial owner of 5% or more of the outstanding ordinary shares of the
Company, (ii) each executive officer and director, and (iii) all executive
officers and directors as a group.





Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. ordinary shares subject to options, warrants or
convertible securities exercisable or convertible within 60 days as of the date
hereof are deemed outstanding for computing the percentage of the person or
entity holding such options, warrants or convertible securities but are not
deemed outstanding for computing the percentage of any other person and is based
on 27,491,171 ordinary shares issued and outstanding on a fully converted basis
as of the date hereof.




41





Amount and Nature
              of Beneficial OwnershipName and Address of Beneficial Owners (1) (2)
            
            # of Shares
            
            
            % of
              Class(3)Zhide
      Jiang (4)(5)
              No.
      48 South Qingshui Road
              Laiyang
      City, Shandong 265200
              People’s
      Republic of China
            
            
            11,306,666
            
            
            
            41.13
            %Larry
      X. Chin
              No.
      48 South Qingshui Road
              Laiyang
      City, Shandong 265200
              People’s
      Republic of China
            
            
            0
            
            
            
            0Access
      America Fund LP (6)
              11200
      Westheimer #508
              Houston
      TX 77042
            
            
            2,114,004
            
            
            
            7.52
            %Chen
      Han Qing (7)
              40
      Hao Tai Hu Hong Qiao Hua Yuan
              Wu
      Xi Shi, Jiang Su Province, 241000
              People’s
      Republic of China
            
            
            1,500,000
            
            
            
            5.36
            %All
      Executive Officers and Directors as a group (two (2)
    persons)
            
            
            11,306,000
            
            
            
            41.13
            %







(1)
            Pursuant
      to Rule 13d-3 under the Exchange Act, a person has beneficial ownership of
      any securities as to which such person, directly or indirectly, through
      any contract, arrangement, undertaking, relationship or otherwise has or
      shares voting power and/or investment power or as to which such person has
      the right to acquire such voting and/or investment power within 60
      days.





(2)
            Unless
      otherwise stated, each beneficial owner has sole power to vote and dispose
      of the shares.





(3)
            Applicable
      percentage of ownership is based on 27,491,171 ordinary shares outstanding
      as of the date hereof together with securities exercisable or convertible
      into ordinary shares within sixty (60) days as of the date hereof for each
      stockholder.





(4)
            The
      11,306,666 shares are held in the name of Proud Glory Limited, of which
      Mr. Jiang is the Managing Director.





(5)
            The
      Company’s management have agreed that, without the prior written consent
      of Investors, they will not, offer, pledge, sell or otherwise dispose of
      any ordinary shares or any securities convertible into or exercisable or
      exchangeable for ordinary shares during the period beginning on November
      2, 2009 for a period of eighteen (18)
months.





(6)
            The
      number of shares beneficially owned by Access America includes (i) 206,000
      ordinary shares retained in connection with the share exchange transaction
      dated October 22, 2009, (ii) 920,667 ordinary shares and Warrants to
      purchase 460,334 ordinary shares issued in the Financing directly owned by
      Access America, and (iii) 351,335 ordinary shares and Warrants to purchase
      175,668 ordinary shares issued in the Financing indirectly owned through
      AAI Global Longkang Pear Juice Acquisition, LLC.  Access America
      has voting and investment discretion over securities held by AAI Global
      Longkang Pear Juice Acquisition, LLC. Mr. Christopher Efird,
      President of Access America, has voting control over Access
      America.





(7)
            The
      number of shares beneficially owned by Chen Han Qing includes Warrants to
      purchase 500,000 ordinary shares at $6.00 per
  share.




ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE.





Reorganization
Related Transactions





Merit
Times owns 100% of the issued and outstanding capital stock of
MeKeFuBang.  On June 10, 2009, MeKeFuBang entered into a series of
contractual agreements with Longkang Juice, and its five shareholders, in which
MeKeFuBang effectively assumed management of the business activities of Longkang
Juice and has the right to appoint all executives and senior management and the
members of the board of directors of Longkang Juice. The contractual
arrangements are comprised of a series of agreements, including a Consulting
Services Agreement, Operating Agreement, Proxy Agreement, and Option Agreement,
through which MeKeFuBang has the right to advise, consult, manage and operate
Longkang Juice for an annual fee in the amount of Longkang Juice’s yearly net
profits after tax. Additionally, Longkang Juice’s Shareholders have pledged
their rights, titles and equity interest in Longkang Juice as security for
MeKeFuBang to collect consulting and services fees provided to Longkang Juice
through an Equity Pledge Agreement. In order to further reinforce MeKeFuBang’s
rights to control and operate Longkang Juice, Longkang Juice’s shareholders have
granted MeKeFuBang the exclusive right and option to acquire all of their equity
interests in Longkang Juice through an Option Agreement, which is also known as
Present Incentive Option Agreement as described below.





On June
10, 2009, the Chairman and the major shareholder of Shandong Longkang Juice Co.,
Ltd, Mr. Zhide Jiang, as a PRC citizen, entered into a call option agreement
(“Original Incentive Option Agreement”) with Mr. Chee Fung Tang, a Hong Kong
passport holder (“Hong Kong Resident”) and the Merit Times Shareholders. Under
the Original Incentive Option Agreement, Mr. Jiang shall serve as CEO, director
or other officer of Merit Times for a certain period of time; and in
anticipation of Mr. Jiang’s continuance contributions to the companies including
Merit Times and Longkang Juice, if the companies meet certain thresholds of the
revenue conditions, Mr. Jiang shall have rights and options to be transferred
the shares of Merit Times at a nominal price. In addition, Original Incentive
Option Agreement also provides that Mr. Tang shall not dispose any of the shares
of Merit Times without Mr. Jiang’s consent.




42





On August
5, 2009, Mr. Tang, a Hong Kong resident and the sole shareholder of Proud Glory
Limited (a BVI company, which became the major shareholder of Merit Times after
Merit Times recapitalized), entered into a new Incentive Option Agreement
(“Present Incentive Option Agreement”) with Mr. Jiang.





Pursuant
to Present Incentive Option Agreement, the Original Incentive Option Agreement
will be terminated on the effective date of Present Incentive Option Agreement.
The effective date of Present Incentive Option Agreement is October 22,
2009.





Under the
Present Incentive Option Agreement, Mr. Jiang shall serve as managing director
or other officer of Merit Times for not less than 3 year period of time; and in
anticipation of Mr. Jiang’s continuance contributions to the group including
Merit Times, MeKeFuBang and Longkang Juice, if the group meets certain
thresholds of the revenue conditions, Mr. Jiang shall have rights and options to
be transferred up to 100% shares of Proud Glory Limited at a nominal price
within the next three years (the “Option”).





In
addition, the Present Incentive Option Agreement also provides that Mr. Tang
shall not dispose any of the shares of Proud Glory Limited without Mr. Jiang’s
consent.





Policies
and Procedures for Review, Approval or Ratification of Transactions with Related
Persons




We are in
the process of adopting a written related-person transactions policy that sets
forth our policies and procedures regarding the identification, review,
consideration and approval or ratification of “related-persons transactions.”
For purposes of our policy only, a “related-person transaction” will be a
transaction, arrangement or relationship (or any series of similar transactions,
arrangements or relationships) in which we and any “related person” are
participants involving an amount that exceeds $50,000. Transactions involving
compensation for services provided to us as an employee, director, consultant or
similar capacity by a related person will not be covered by this policy. A
related person will be any executive officer, director or a holder of more than
five percent of our ordinary shares, including any of their immediate family
members and any entity owned or controlled by such persons.




Under the
policy, we expect that where a transaction has been identified as a
related-person transaction, management must present information regarding the
proposed related-person transaction to our audit committee (or, where approval
by our audit committee would be inappropriate, to another independent body of
our board of directors) for consideration and approval or ratification. The
presentation will be expected to include a description of, among other things,
the material facts, and the direct and indirect interests of the related
persons, the benefits of the transaction to us and whether any alternative
transactions are available. To identify related-person transactions in advance,
we will rely on information supplied by our executive officers, directors and
certain significant stockholders. In considering related-person transactions,
our audit committee will take into account the relevant available facts and
circumstances including, but not limited to:





·
            the
      risks, costs and benefits to us;





·
            the
      impact on a director’s independence in the event the related person is a
      director, immediate family member of a director or an entity with which a
      director is affiliated;





·
            the
      terms of the transaction;





·
            the
      availability of other sources for comparable services or products;
      and





·
            the
      terms available to or from, as the case may be, unrelated third parties or
      to or from our employees generally.




In the
event a director has an interest in the proposed transaction, the director must
excuse himself or herself form the deliberations and approval. Our policy will
require that, in determining whether to approve, ratify or reject a
related-person transaction, our audit committee must consider, in light of known
circumstances, whether the transaction is in, or is not inconsistent with, the
best interests of our company and our stockholders, as our audit committee
determines in the good faith exercise of its discretion. We did not previously
have a formal policy concerning transactions with related persons.





Promoters
and Certain Control Persons




We did
not have any promoters at any time during the past five fiscal
years.




43




Other
than stated above, none of the following persons has any direct or indirect
material interest in any transaction to which we are a party since our
incorporation or in any proposed transaction to which we are proposed to be a
party:





(A)
            Any
      of our directors or officers;(B)
            Any
      proposed nominee for election as our
director;





(C)
            Any
      person who beneficially owns, directly or indirectly, shares carrying more
      than 10% of the voting rights attached to our ordinary shares;
      or(D)
            Any
      relative or spouse of any of the foregoing persons, or any relative of
      such spouse, who has the same house as such person or who is a director or
      officer of any parent or subsidiary of our
  company.





ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND
SERVICES.




(1)
Audit Fees




The
aggregate fees paid for each of the last two fiscal years for professional
services rendered by the principal accountant for the audit of the Company’s
annual financial statements and review of financial statements included in the
Company’s Form 10-K or 10-Q or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for those fiscal years was $75,000for the fiscal year
ended December 31, 2008 and $75,000for the fiscal year
ended December 31, 2009.




(2)
Audit-Related Fees




There
were no fees billed in each of the last two fiscal years for assurance and
related services by the principal accountant that are reasonably related to the
performance of the audit or review of the Company’s financial
statements.




(3)
Tax Fees




There
were no fees billed in each of the last two fiscal years for professional
services rendered by the principal accountant for tax compliance, tax advice,
and tax planning.




(4)
All Other Fees




There
were no other fees billed in each of the last two fiscal years for products and
services provided by the principal accountant, other than the services reported
above.




(5)
Pre-Approval Policies and Procedures




Before
the accountant is engaged by the issuer to render audit or non-audit services,
the engagement is approved by the Company’s the board of directors acting as the
audit committee.




ITEM 15. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES.




(a) The
following documents are filed as part of this report:





(1)Financial Statements and
Report of Independent Registered Public Accounting Firm, which are set forth in
the index to Consolidated Financial Statements on pages F-1
through F-25 of this report.





Report
      of Independent Registered Public Accounting Firm—Sherb
      & Co., LLP
            
            F-2Consolidated
      Balance Sheets
            
            F-3Consolidated
      Statements of Income and Comprehensive Income
            
            F-4Consolidated
      Statements of Shareholders' Equity
            
            F-5Consolidated
      Statements of Cash Flows
            
            F-6Notes
      to Consolidated Financial Statements
            
            F-7
      to F-25





(2) Financial Statement Schedule: None.




44





(3) Exhibits





Exhibit
              No.
            
            Description2.1
            
            Share
      Exchange Agreement by and between the Company and Merit Times
      International Limited, dated October 22, 2009 (2)3.1
            
            Memorandum
      of Association (1)3.2
            
            Amended
      and Restated Memorandum of Association (1)3.3
            
            Articles
      of Association (1)4.1
            
            Form
      of Warrant (2)10.1
            
            Consulting
      Services Agreement, dated June 10, 2009 (2)10.2
            
            Operating
      Agreement, dated June 10, 2009 (2)10.3
            
            Proxy
      Agreement, dated June 10, 2009 (2)10.4
            
            Option
      Agreement, dated June 10, 2009 (2)10.5
            
            Option
      Agreement, dated August 5, 2009 (2)10.6
            
            Equity
      Pledge Agreement, dated June 10, 2009 (2)10.7
            
            Fund
      Escrow Agreement, amongst the Company, Grandview Capital, Inc., Access
      America Fund, LP and American Stock Transfer & Trust Company as escrow
      agent, dated October 22, 2009 (2)10.8
            
            Investor
      Relations Escrow Agreement, amongst the Company, Grandview Capital, Inc.,
      Access America Fund, LP and Anslow & Jaclin, LLP as escrow agent,
      dated October 22, 2009 (2)10.9
            
            Holdback
      Escrow Agreement, amongst the Company, Grandview Capital, Inc., Access
      America Fund, LP and Anslow & Jaclin, LLP as escrow agent, dated
      October 22, 2009 (2)10.10
            
            Going
      Public Escrow Agreement, amongst the Company, Grandview Capital, Inc.,
      Access America Fund, LP and Anslow & Jaclin, LLP as escrow agent,
      dated October 22, 2009 (4)10.11
            
            Make
      Good Escrow Agreement, amongst the Company, Make Good Shareholder, Access
      America Fund, LP and Anslow & Jaclin, LLP as escrow agent, dated
      October 22, 2009 (4)10.12
            
            Lock-Up
      Agreement, by and between the Company and Lockup Stockholder, dated
      October 22, 2009 (2)10.13
            
            Translation
      of Land Lease with Yejiabo Village, Zhaowangzhuang Town of Laiyang City
      (4)10.14
            
            Translation
      of Land Lease with Dongwulong Village, Zhaowangzhuang Town of Laiyang City
      (4)10.15
            
            Translation
      of Land Lease with JiadianVillage, Bolinzhuang Town of Laiyang City
      (4)10.16
            
            Translation
      of Land Lease with Beixiaoping Village, Bolinzhuang Town of Laiyang City
      (4)10.17
            
            Translation
      of Land Lease with Zhaojiabuzi Village, Heluo Town of Laiyang City
      (4)10.18
            
            Translation
      of Land Lease with Luergang Village, Zhaowangzhuang Town of Laiyang City
      (4)10.19
            
            Translation
      of sales agreement with Shandong Zhanhua Haohua Fruit Juice Co., Ltd.
      (4)10.20
            
            Translation
      of sales agreement with Qingdao Dongxu Xinshen Trading Co.
    (4)10.21
            
            Translation
      of sales agreement with Yantai Jinyuan Food Co., Ltd.
  (4)10.22
            
            Translation
      of Cooperative Agreement – Contract of Orchard Contracting and Management
      (4)10.23
            
            Translation
      of Cooperative Agreement (4)10.24
            
            Construction
      contract dated December 25, 2009 *21.1
            
            List
      of subsidiaries of the Registrant (3)31.1
            
            Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002 *31.2
            
            Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002 *32.1
            
            Certification
      of Chief Executive Officer of the Company, pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
      *32.2
            
            Certification
      of Chief Financial Officer of the Company, pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
      *99.1
            
            Translation
      of Exclusive producer license from Laiyang city government
    (4)







(1)
            Incorporated
      herein by reference to the Form 10 Registration Statement filed on July
      14, 2006.(2)
            Incorporated
      herein by reference to the current report Form 8-K filed on October 27,
      2009.(3)
            Incorporated
      herein by reference to the registration statement on Form S-1 filed on
      November 20, 2009.(4)
            Incorporated
      herein by reference to the registration statement on Form S-1 filed on
      January 20, 2010.*
            Filed
      herein.




45




SIGNATURES




In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.




EMERALD
      ACQUISITION CORPORATIONDate:
      March 31, 2010
            By:
            /s/
      Zhide JiangZhide
      JiangChief
      Executive Officer, President and
              Chairman
      of the Board of Directors




Date:
      March 31, 2010
            By:
            /s/
      Larry X. ChinLarry
      X. ChinChief
      Financial Officer andPrincipal
      Accounting Officer




In
accordance with the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.





Name
            
            Title
            
            Date/s/ Zhide Jiang
            
            Chief
      Executive Officer, President and
            
            March
      31, 2010Zhide
      Jiang
            
            Chairman
      of the Board of Directors/s/ Larry X. Chin
            
            Chief
      Financial Officer and
            
            March
      31, 2010Larry
      X. Chin
            
            Principal
      Accounting Officer





46




EMERALD
ACQUISITION CORPORATION AND SUBIDIARIES


CONSOLIDATED
FINANCIAL STATEMENTS


December
31, 2009 and 2008










EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES


INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2009 and 2008




CONTENTS





Report
      of Independent Registered Public Accounting Firm
            
            
            F-2Consolidated
      Financial Statements:Consolidated
      Balance Sheets –  As of December 31, 2009 and
    2008
            
            
            F-3Consolidated
      Statements of Income and Comprehensive Income –  For the Years
      ended December 31, 2009 and 2008
            
            
            F-4Consolidated
      Statements of Shareholders’ Equity – For the Years Ended December 31, 2009
      and 2008
            
            
            F-5Consolidated
      Statements of Cash Flows –  For the Years ended December 31,
      2009 and 2008
            
            
            F-6Notes
      to Consolidated Financial Statements
            
            F-7
      to F-25




F-1




REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the
Board of Directors


Emerald
Acquisition Corporation and Subsidiaries


Laiyang,
China




We have audited the accompanying
consolidated balance sheets of Emerald Acquisition Corporation and Subsidiaries
as of December 31, 2009 and 2008 and the related consolidated statements of
income, changes in shareholders’ equity, and cash flows for the years ended
December 31, 2009 and 2008.  These consolidated financial statements
are the responsibility of the Company’s management.  Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.





We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United
States).  Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement.  The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over financial
reporting.  Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purposes of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting.  Accordingly, we express no such opinion.  An
audit includes examining on a test basis, evidence supporting the amount and
disclosures in the combined financial statements.  An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.





In
our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Emerald Acquisition
Corporation and Subsidiaries as of December 31, 2009 and 2008, and the results
of their operations and their cash flows for the years ended December 31, 2009
and 2008, in conformity with accounting principles generally accepted in the
United States of America.




/s/ Sherb & Co.,
      LLPCertified
      Public AccountantsNew
      York, New YorkMarch
      15, 2010
  F-2


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 CONSOLIDATED
BALANCE SHEETS
 December
      31,2009
              
              
              2008ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
              
              $
              26,574,338
              
              
              $
              2,028,858Cash
      - restricted
              
              
              2,587,916
              
              
              
              -Accounts
      receivable, net of allowance for doubtful accounts and sales
      discount
              
              
              -
              
              
              
              5,102,763Inventories,
      net of reserve for obsolete inventory
              
              
              13,345,511
              
              
              
              15,589,977Prepaid
      VAT on purchases
              
              
              82,330
              
              
              
              433,109Prepaid
      expenses and other current assets
              
              
              -
              
              
              
              994,199Deferred
      income taxes
              
              
              59,685
              
              
              
              -Total
      Current Assets
              
              
              42,649,780
              
              
              
              24,148,906PROPERTY
      AND EQUIPMENT - net
              
              
              7,397,661
              
              
              
              7,464,680OTHER
      ASSETS:Land
      use rights, net
              
              
              15,779,542
              
              
              
              16,287,091Deferred
      income taxes - net of current portion
              
              
              835,586
              
              
              
              -Total
      Assets
              
              $
              66,662,569
              
              
              $
              47,900,677LIABILITIES
      AND SHAREHOLDERS' EQUITYCURRENT
      LIABILITIES:Current
      portion of loan payable
              
              $
              -
              
              
              $
              10,212,716Accounts
      payable
              
              
              540,830
              
              
              
              1,050,806Accrued
      expenses
              
              
              1,392,155
              
              
              
              270,474Acquisition
      payables
              
              
              -
              
              
              
              850,501Income
      taxes payable
              
              
              4,819,891
              
              
              
              2,366,211Other
      taxes payable
              
              
              31,317
              
              
              
              -Total
      Current Liabilities
              
              
              6,784,193
              
              
              
              14,750,708LONG-TERM
      LIABILITIES:Loan
      payable, net of current portion
              
              
              -
              
              
              
              3,568,628Total
      Liabilities
              
              
              6,784,193
              
              
              
              18,319,336COMMITMENTSHAREHOLDERS'
      EQUITY:Preference
      shares ($0.001 par value; 1,000,000 shares authorized,none
      issued and outstanding at December 31, 2009 and 2008,
      respectively)
              
              
              -
              
              
              
              -Ordinary
      shares ($0.001 par value; 50,000,000 shares authorized, 27,491,171
      and21,333,332
      shares issued and outstanding at December 31, 2009 and 2008,
      respectively)
              
              
              27,492
              
              
              
              21,333Additional
      paid-in capital
              
              
              16,331,315
              
              
              
              1,236,396Subscription
      receivable
              
              
              -
              
              
              
              (50,000
              )Retained
      earnings
              
              
              38,080,824
              
              
              
              23,009,955Statutory
      and non-statutory reserves
              
              
              2,949,814
              
              
              
              2,949,814Accumulated
      other comprehensive income - cumulative foreign currency translation
      adjustment
              
              
              2,488,931
              
              
              
              2,413,843Total
      Shareholders' Equity
              
              
              59,878,376
              
              
              
              29,581,341Total
      Liabilities and Shareholders' Equity
              
              $
              66,662,569
              
              
              $
              47,900,677
  See notes
to consolidated financial statements
  F-3
  EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 For
      the Years EndedDecember
      31,2009
                
                
                2008NET
      REVENUES
                
                $
                82,627,335
                
                
                $
                74,232,226COST
      OF SALES
                
                
                59,566,445
                
                
                
                54,897,949GROSS
      PROFIT
                
                
                23,060,890
                
                
                
                19,334,277OPERATING
      EXPENSES:Selling
                
                
                456,024
                
                
                
                686,724Research
      and development
                
                
                1,408,501
                
                
                
                256,283General
      and administrative
                
                
                1,929,938
                
                
                
                1,710,215Total
      Operating Expenses
                
                
                3,794,463
                
                
                
                2,653,222INCOME
      FROM OPERATIONS
                
                
                19,266,427
                
                
                
                16,681,055OTHER
      INCOME (EXPENSE):Interest
      income
                
                
                62,512
                
                
                
                50,251Interest
      expense
                
                
                (335,560
                )
                
                
                (976,204
                )Total
      Other Income (Expense)
                
                
                (273,048
                )
                
                
                (925,953
                )INCOME
      BEFORE PROVISION FOR INCOME TAXES
                
                
                18,993,379
                
                
                
                15,755,102(PROVISION
      FOR) BENEFIT FROM INCOME TAXES:Current
                
                
                (4,817,299
                )
                
                
                (4,196,701
                )Deferred
                
                
                894,789
                
                
                
                -Total
      Provision for Income Taxes
                
                
                (3,922,510
                )
                
                
                (4,196,701
                )NET
      INCOME
                
                $
                15,070,869
                
                
                $
                11,558,401COMPREHENSIVE
      INCOME:NET
      INCOME
                
                $
                15,070,869
                
                
                $
                11,558,401OTHER
      COMPREHENSIVE INCOME:Unrealized
      foreign currency translation gain
                
                
                75,088
                
                
                
                1,304,006COMPREHENSIVE
      INCOME
                
                $
                15,145,957
                
                
                $
                12,862,407NET
      INCOME PER ORDINARY SHARE:Basic
                
                $
                0.67
                
                
                $
                0.54Diluted
                
                $
                0.67
                
                
                $
                0.54WEIGHTED
      AVERAGE ORDINARY SHARES OUTSTANDING:Basic
                
                
                22,495,050
                
                
                
                21,333,332Diluted
                
                
                22,495,050
                
                
                
                21,333,332
  See notes
to consolidated financial statements
  F-4
  EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF SHAREHOLDERS' EQUITY For the
Years Ended December 31, 2009 and 2008
 Ordinary
                
                
                
                
                
                
                
                
                
                
                
                Statutory
                
                
                AccumulatedShares
                
                
                Additional
                
                
                
                
                
                
                
                
                and
                
                
                Other
                
                
                TotalNumber
      of
                
                
                
                
                
                Paid-in
                
                
                Subscription
                
                
                Retained
                
                
                Non-Statutory
                
                
                Comprehensive
                
                
                Shareholders'Shares
                
                
                Amount
                
                
                Capital
                
                
                Receivable
                
                
                Earnings
                
                
                Reserves
                
                
                Income
                
                
                EquityBalance,
      December 31, 2007
                
                
                21,333,332
                
                
                $
                21,333
                
                
                $
                1,236,396
                
                
                $
                (50,000
                )
                
                $
                12,710,564
                
                
                $
                1,690,804
                
                
                $
                1,109,837
                
                
                $
                16,718,934Adjustment
      to non-statutory reserves
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,259,010
                )
                
                
                1,259,010
                
                
                
                -
                
                
                
                -Comprehensive
      income:Net
      income for the year
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                11,558,401
                
                
                
                -
                
                
                
                -
                
                
                
                11,558,401Foreign
      currency translation adjustment
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,304,006
                
                
                
                1,304,006Total
      comprehensive income
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                12,862,407Balance,
      December 31, 2008
                
                
                21,333,332
                
                
                
                21,333
                
                
                
                1,236,396
                
                
                
                (50,000
                )
                
                
                23,009,955
                
                
                
                2,949,814
                
                
                
                2,413,843
                
                
                
                29,581,341Reorganization
      of Company
                
                
                487,500
                
                
                
                488
                
                
                
                (488
                )
                
                
                50,000
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                50,000Sale
      of ordinary shares
                
                
                5,670,339
                
                
                
                5,671
                
                
                
                17,005,343
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                17,011,014Offering
      costs
                
                
                -
                
                
                
                -
                
                
                
                (1,909,936
                )
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,909,936
                )Comprehensive
      income:Net
      income for the year
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                15,070,869
                
                
                
                -
                
                
                
                -
                
                
                
                15,070,869Foreign
      currency translation adjustment
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                75,088
                
                
                
                75,088Total
      comprehensive income
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                15,145,957Balance,
      December 31, 2009
                
                
                27,491,171
                
                
                $
                27,492
                
                
                $
                16,331,315
                
                
                $
                -
                
                
                $
                38,080,824
                
                
                $
                2,949,814
                
                
                $
                2,488,931
                
                
                $
                59,878,376
  See notes
to consolidated financial statements
  F-5
  EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 For
      the Years EndedDecember
      31,2009
                
                
                2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
                
                $
                15,070,869
                
                
                $
                11,558,401Adjustments
      to reconcile net income from operations to net cashprovided
      by operating activities:Depreciation
                
                
                948,579
                
                
                
                930,720Amortization
      of land use rights
                
                
                547,750
                
                
                
                538,202Increase
      in reserve for inventory obsolescence
                
                
                -
                
                
                
                30,055Deferred
      income taxes
                
                
                (894,789
                )
                
                
                -Changes
      in assets and liabilities:Accounts
      receivable
                
                
                5,112,699
                
                
                
                (3,397,094
                )Inventories
                
                
                2,282,001
                
                
                
                5,568,816Prepaid
      and other current assets
                
                
                996,118
                
                
                
                (33,778
                )Prepaid
      VAT on purchases
                
                
                351,682
                
                
                
                -Accounts
      payable
                
                
                (512,258
                )
                
                
                (3,353
                )Accrued
      expenses
                
                
                1,120,405
                
                
                
                880,768Other
      taxes payable
                
                
                31,301
                
                
                
                -Income
      taxes payable
                
                
                2,446,481
                
                
                
                (2,498,796
                )NET
      CASH PROVIDED BY OPERATING ACTIVITIES
                
                
                27,500,838
                
                
                
                13,573,941CASH
      FLOWS FROM INVESTING ACTIVITIES:Acquisition
      of land use rights
                
                
                -
                
                
                
                (11,282,274
                )Purchase
      of property and equipment
                
                
                (863,047
                )
                
                
                (3,238
                )NET
      CASH USED IN INVESTING ACTIVITIES
                
                
                (863,047
                )
                
                
                (11,285,512
                )CASH
      FLOWS FROM FINANCING ACTIVITIES:Gross
      proceeds from sale of common stock
                
                
                17,011,014
                
                
                
                -Increase
      in cash - restricted
                
                
                (2,587,917
                )
                
                
                -Payment
      of offering costs
                
                
                (1,909,936
                )
                
                
                -Proceeds
      from subscription receivable
                
                
                50,000
                
                
                
                -Payment
      on loan payable
                
                
                (13,808,178
                )
                
                
                (4,769,114
                )Payment
      on acquisition payables
                
                
                (852,157
                )
                
                
                (5,156,884
                )NET
      CASH USED IN FINANCING ACTIVITIES
                
                
                (2,097,174
                )
                
                
                (9,925,998
                )EFFECT
      OF EXCHANGE RATE ON CASH
                
                
                4,863
                
                
                
                494,982NET
      INCREASE (DECREASE) IN CASH
                
                
                24,545,480
                
                
                
                (7,142,587
                )CASH  -
      beginning of year
                
                
                2,028,858
                
                
                
                9,171,445CASH
      - end of year
                
                $
                26,574,338
                
                
                $
                2,028,858SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Cash
      paid for:Interest
                
                $
                335,560
                
                
                $
                976,204Income
      taxes
                
                $
                2,370,618
                
                
                $
                6,695,497NON-CASH
      INVESTING AND FINANCING ACTIVITIES:Unappropriated
      retained earnings allocated to statutory reserve
                
                $
                -
                
                
                $
                1,259,010
  See notes
to consolidated financial statements.
  F-6
  EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008





NOTE 1 –
ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Organization





Emerald
Acquisition Corporation (the ‘Company”) was formed under the laws of the Cayman
Islands on March 10, 2006.  On October 22, 2009, the Company acquired Merit
Times International Limited (“Merit Times”) in a reverse acquisition
transaction. Merit Times was established on February 8, 2008, under the laws of
British Virgin Islands. Merit Times was established as a “special purpose
vehicle” for foreign fund raising. Pursuant to a share exchange agreement in
this reverse acquisition transaction, the Company issued an aggregate of
21,333,332 ordinary shares to the shareholders of Merit Times, their designees
or assigns in exchange for all of the issued and outstanding capital stock of
Merit Times.  On October 22, 2009, the Share Exchange closed and Merit
Times became the Company’s wholly-owned subsidiary.





Presently all
of the Company’s business operations are carried out by Shandong Longkang Juice
Co., Ltd., a limited liability company under the laws of China (“Longkang
Juice”). The Company does not own any equity interests in Longkang Juice, but
control and receive the economic benefits of its business operations through a
series of contractual arrangements (the “Contractual Arrangements”) dated June
10, 2009. The Contractual Arrangements are between Longkang Juice and its
owners, on the one hand, and Shandong MeKeFuBang Food Limited (the “WFOE” or
“MeKeFuBang”) a wholly foreign owned enterprise incorporated on June 9, 2009
under the laws of the People’s Republic of China (PRC), Merit Times’
wholly-owned subsidiary in the PRC, on the other hand. The contractual
arrangements are comprised of a series of agreements, including: (1) a
Consulting Services Agreement, through which the MeKeFuBang has the right to
advise, consult, manage and operate Longkang Juice, and collect and own all of
the net profits of Longkang Juice; (2) an Operating Agreement, through which
MeKeFuBang has the right to recommend director candidates and appoint the senior
executives of Longkang Juice, approve any transactions that may materially
affect the assets, liabilities, rights or operations of Longkang Juice, and
guarantee the contractual performance by Longkang Juice of any agreements with
third parties, in exchange for a pledge by Longkang Juice of its accounts
receivable and assets; (3) a Proxy Agreement, under which the five owners
of Longkang Juice have vested their collective voting control over the
Operating Entity to MeKeFuBang and will only transfer their respective equity
interests in Longkang Juice to MeKeFuBang or its designee(s); (4) an Option
Agreement, under which the owners of Longkang Juice have granted MeKeFuBang the
irrevocable right and option to acquire all of their equity interests in
Longkang Juice; and (5) an Equity Pledge Agreement, under which the owners of
Longkang Juice have pledged all of their rights, titles and interests in
Longkang Juice to MeKeFuBang to guarantee Longkang Juice’s performance of its
obligations under the Consulting Services Agreement. Through these
contractual arrangements, the Company has the ability to substantially influence
the daily operations and financial affairs of Longkang Juice, since the Company
is able to appoint its senior executives and approve all matters requiring
stockholder approval. As a result of these Contractual Arrangements, which
enables the Company to control Longkang Juice and to receive, through its
subsidiaries, all of its profits, the Company is considered the primary
beneficiary of Longkang Juice, which is deemed its variable interest entity
(“VIE”). Accordingly, the Company consolidates Longkang Juice’s results, assets
and liabilities in its financial statements.





Prior to
the Exchange Agreement, there were 1,281,500 Ordinary Shares issued and
outstanding. Pursuant to the terms of the Exchange Agreement, a shareholder of
the Company cancelled a total of 794,000 Ordinary Shares of the
Company.  Following the combination prior to the Offering, there are
21,820,832 Ordinary Shares of the Company issued and outstanding.





The
Company, through its subsidiaries and variable interest entity, engages in the
production of fruit juice concentrate in the PRC, specializing in processing,
producing and distributing Laiyang Pear fruit juice concentrate. The Company is
the only producer of Laiyang Pear fruit juice concentrate, which contains 46
kinds of Organic Acid, Vitamin B1, B2, Vitamin C, Nicotinic Acid, Protocatechuic
Acid, Carotene and mineral substances such as Calcium, Phosphorus and Iron,
etc., and therefore is known for its taste, nutritional and medical benefits,
and application in health supplements, pharmaceuticals, and the food and
beverage industries.





F-7


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008





NOTE 1 –
ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




Basis of
presentation




Management
acknowledges its responsibility for the preparation of the accompanying
financial statements which reflect all adjustments, consisting of normal
recurring adjustments, considered necessary in its opinion for a fair statement
of its financial position and the results of its operations for the years
presented. The accompanying financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America (“U.S.
GAAP”). This basis differs from that used in the statutory accounts of our
subsidiaries in China, which were prepared in accordance with the accounting
principles and relevant financial regulations applicable to enterprises in the
PRC. All necessary adjustments have been made to present the financial
statements in accordance with U.S. GAAP.





The
Company’s consolidated financial statements include the financial statements of
its wholly-owned subsidiary, Merit Times International Limited, MeKeFuBang, as
well as the financial statements of Longkang.  All significant
intercompany accounts and transactions have been eliminated in
consolidation.





Longkang
is considered a variableinterestentity (“VIE”), and the Company is the primary
beneficiary.  The Company’s relationships with Longkang and its
shareholders are governed by a series of contractual arrangements between
MeKeFuBang, the Company’s wholly foreign-owned enterprise in the PRC, and
Longkang, which is the operating company of the Company in the PRC. Under PRC
laws, each of MeKeFuBang and Longkang is an independent legal entity and none of
them are exposed to liabilities incurred by the other party.
The contractual arrangements constitute valid and binding obligations of
the parties of such agreements. Each of the contractual arrangements and the
rights and obligations of the parties thereto are enforceable and valid in
accordance with the laws of the PRC. On June 10, 2009, the Company entered into
the following contractual arrangements with Longkang.





Operating Agreement -
Pursuant to the operating agreement among MeKeFuBang, Longkang and all
shareholders of Longkang (the “Longkang Shareholders”), MeKeFuBang provides
guidance and instructions on Longkang’s daily operations, financial management
and employment issues. Longkang Shareholders must designate the candidates
recommended by MeKeFuBang as their representatives on the boards of directors of
Longkang. MeKeFuBang has the right to appoint senior executives of Longkang. In
addition, MeKeFuBang agrees to guarantee Longkang’s performance under any
agreements or arrangements relating to Longkang’s business arrangements with any
third party. Longkang, in return, agrees to pledge their accounts receivable and
all of their assets to MeKeFuBang. Moreover, Longkang agrees that without the
prior consent of MeKeFuBang, Longkang will not engage in any transactions that
could materially affect its assets, liabilities, rights or operations,
including, without limitation, incurrence or assumption of any indebtedness,
sale or purchase of any assets or rights, incurrence of any encumbrance on any
of its assets or intellectual property rights in favor of a third party or
transfer of any agreements relating to its business operation to any third
party. The term of this agreement shall commence from the effective and shall
last for the maximum period of time permitted by law unless terminated early in
accordance with certain provision or by any other agreements reached by all
parties, with any extended term to be mutually agreed upon by the parties.
Longkang shall not terminate this agreement.





F-8


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008





NOTE 1 –
ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





Consulting Services
Agreement -Pursuant to the exclusive consulting services agreement
between MeKeFuBang and Longkang, MeKeFuBang has the exclusive right to provide
to Longkang general business operation services, including advice and strategic
planning, as well as consulting services related to the technological research
and development of the Longkang’s products (the “Services”). Under this
agreement, MeKeFuBang owns the intellectual property rights developed or
discovered through research and development, in the course of providing the
Services, or derived from the provision of the Services. Longkang shall pay a
quarterly consulting service fees in Renminbi (“RMB”) to MeKeFuBang that is
equal to all of Longkang’s profits for such quarter.





Equity Pledge
Agreement - Under the equity pledge agreement between Longkang’s
shareholders and MeKeFuBang, Longkang’s Shareholders pledged all of their equity
interests in Longkang to MeKeFuBang to guarantee Longkang’s performance of its
obligations under the consulting services agreement. If Longkang or Longkang’s
Shareholders breaches their respective contractual obligations, MeKeFuBang, as
pledgee, will be entitled to certain rights, including the right to sell the
pledged equity interests. Longkang’s Shareholders also agreed that upon
occurrence of any event of default, MeKeFuBang shall be granted an exclusive,
irrevocable power of attorney to take actions in the place and stead of the
Longkang’s Shareholders to carry out the security provisions of the equity
pledge agreement and take any action and execute any instrument that MeKeFuBang
may deem necessary or advisable to accomplish the purposes of the equity pledge
agreement. Longkang’s Shareholders agreed not to dispose of the pledged equity
interests or take any actions that would prejudice MeKeFuBang’s interest. The
equity pledge agreement will expire two (2) years after Longkang’s obligations
under the consulting services agreements have been fulfilled.





Option Agreement
-Under the option
agreement between Longkang’s Shareholders and MeKeFuBang, Longkang’s
Shareholders irrevocably granted MeKeFuBang or its designated person an
exclusive option to purchase, to the extent


permitted under PRC law, all or part of the equity interests
in Longkang for the cost of the initial contributions to the registered capital
or the minimum amount of consideration permitted by applicable PRC law.
MeKeFuBang or its designated person has sole discretion to decide when to
exercise the option, whether in part or in full. The term of this agreement
shall last for the maximum period of time permitted by law unless terminated in
accordance with this agreement.





The
accounts of Longkang are consolidated in the accompanying
consolidated financial statements pursuant to Financial Accounting Codification
Standards Topic 810-10-05 and related subtopics related to the consolidation of
Variable Interest Entities As a VIE,Longkang’s sales
are included in the Company’s total sales, its income from operations is
consolidated with the Company’s, and the Company’s net income includes all ofLongkang’s net income. The Company does not have any
non-controlling interest and accordingly, did not subtract any net income in
calculating the net income attributable to the Company. Because of the
contractual arrangements, the Company had a pecuniary interest inLongkang that require consolidation of the Company’s andLongkang financial statements.





Use of
estimates





The
preparation of the consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues, expenses, and the related disclosures at the date
of the consolidated financial statements and during the reporting period. Actual
results could materially differ from these estimates. Significant estimates in
2009 and 2008 include the allowance for doubtful accounts, the allowance for
obsolete inventory, the useful life of property and equipment and intangible
assets, and assumptions used in assessing impairment of long-term
assets.





F-9


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008


NOTE 1 –
ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





Fair value of financial
instruments





The
Company adopted the guidance of Accounting Standards Codification (“ASC”) 820
for fair value measurements which clarifies the definition of fair value,
prescribes methods for measuring fair value, and establishes a fair value
hierarchy to classify the inputs used in measuring fair value as
follows:





Level
1-Inputs are unadjusted quoted prices in active markets for identical assets or
liabilities available at the measurement date.




Level
2-Inputs are unadjusted quoted prices for similar assets and liabilities in
active markets, quoted prices for identical or similar assets and liabilities in
markets that are not active, inputs other then quoted prices that are
observable, and inputs derived from or corroborated by observable market
data.




Level
3-Inputs are unobservable inputs which reflect the reporting entity’s own
assumptions on what assumptions the market participants would use in pricing the
asset or liability based on the best available information.





The
carrying amounts reported in the balance sheets for cash, accounts receivable,
loans payable, accounts payable and accrued expenses, and advances to suppliers
approximate their fair market value based on the short-term maturity of these
instruments. The Company did not identify any assets or liabilities that are
required to be presented on the balance sheets at fair value in accordance with
the accounting guidance.




ASC
825-10 “Financial
Instruments”, allows entities to voluntarily choose to measure certain
financial assets and liabilities at fair value (fair value option). The fair
value option may be elected on an instrument-by-instrument basis and is
irrevocable, unless a new election date occurs. If the fair value option is
elected for an instrument, unrealized gains and losses for that instrument
should be reported in earnings at each subsequent reporting date. The Company
did not elect to apply the fair value option to any outstanding
instruments.





Cash and cash
equivalents





For
purposes of the consolidated statements of cash flows, the Company considers all
highly liquid instruments purchased with a maturity of three months or less and
money market accounts to be cash equivalents. The Company maintains cash and
cash equivalents with various financial institutions mainly in the PRC and the
U.S. Balances in the U.S are insured up to $250,000 at each
bank.  Balances in banks in the PRC are uninsured.





Cash –
restricted




As at
December 31, 2009, restrictedcashconsisted of cash deposits held with Company counsel (see
Note 10).





Concentrations of credit
risk





The
Company’s operations are carried out in the PRC. Accordingly, the Company’s
business, financial condition and results of operations may be influenced by the
political, economic and legal environment in the PRC, and by the general state
of the PRC’s economy. The Company’s operations in the PRC are subject to
specific considerations and significant risks not typically associated with
companies in North America. The Company’s results may be adversely affected by
changes in governmental policies with respect to laws and regulations,
anti-inflationary measures, currency conversion and remittance abroad, and rates
and methods of taxation, among other things.





F-10


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008





NOTE 1 –
ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





Concentrations of credit
risk (continued)





Financial
instruments which potentially subject the Company to concentrations of credit
risk consist principally of cash and trade accounts receivable. Substantially
all of the Company’s cash is maintained with state-owned banks within the PRC,
and no deposits are covered by insurance. The Company has not experienced any
losses in such accounts and believes it is not exposed to any risks on its cash
in bank accounts. A significant portion of the Company’s sales are cash sales
since the demand for our products exceeds our current supply.





At
December 31, 2009 and 2008, the Company’s cash balances by geographic area were
as follows:





December
      31, 2009
            
            
            December
      31, 2008Country:United
      States
            
            $
            -
            
            
            
            -
            
            
            $
            -
            
            
            
            -China
            
            
            26,574,338
            
            
            
            100.0
            %
            
            
            2,028,858
            
            
            
            100.0
            %Total
      cash and cash equivalents
            
            $
            26,574,338
            
            
            
            100.0
            %
            
            $
            2,028,858
            
            
            
            100.0
            %





Accounts
receivable





Accounts
receivable are presented net of an allowance for doubtful accounts. The Company
maintains allowances for doubtful accounts for estimated losses. The Company
reviews the accounts receivable on a periodic basis and makes general and
specific allowances when there is doubt as to the collectability of individual
balances. In evaluating the collectability of individual receivable balances,
the Company considers many factors, including the age of the balance, customer’s
historical payment history, its current credit-worthiness and current economic
trends. Accounts are written off after exhaustive efforts at collection. At
December 31, 2009 and 2008, the Company has established, based on a review of
its outstanding balances, an allowance for doubtful accounts in the amount of $0
and $41,598, respectively.





Inventories





Inventories,
consisting of raw materials, work in process and finished goods related to the
Company’s products are stated at the lower of cost or market utilizing the
weighted average method. An allowance is established when management determines
that certain inventories may not be saleable. If inventory costs exceed expected
market value due to obsolescence or quantities in excess of expected demand, the
Company will record reserves for the difference between the cost and the market
value. These reserves are recorded based on estimates.  The Company
recorded an inventory reserve of $92,619 and $92,390 at December 31, 2009
and 2008, respectively. Cost of sales represents all direct and indirect costs
associated with the production of products for sale to customers. These costs
include cost of raw materials, direct and indirect labor and benefit costs,
freight in, depreciation, and storage fees.





Property and
equipment





Property
and equipment are carried at cost and are depreciated on a straight-line basis
over the estimated useful lives of the assets. The cost of repairs and
maintenance is expensed as incurred; major replacements and improvements are
capitalized.  When assets are retired or disposed of, the cost and
accumulated depreciation are removed from the accounts, and any resulting gains
or losses are included in income in the year of disposition. The Company
examines the possibility of decreases in the value of fixed assets when events
or changes in circumstances reflect the fact that their recorded value may not
be recoverable.  Included in property and equipment is
construction-in-progress which consists of a deposit on a factory under
construction and machinery pending installation and includes the costs of
construction, machinery and equipment, and any interest charges arising from
borrowings used to finance these assets during the period of construction or
installation. No provision for depreciation is made on construction-in-progress
until such time as the relevant assets are completed and ready for their
intended use.




F-11


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008




NOTE 1 –
ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





Impairment of long-lived
assets





In
accordance with ASC Topic 360, the Company reviews, long-lived assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the assets may not be fully recoverable, or at least
annually. The Company recognizes an impairment loss when the sum of expected
undiscounted future cash flows is less than the carrying amount of the asset.
The amount of impairment is measured as the difference between the asset’s
estimated fair value and its book value. The Company did not record any
impairment charges for the years ended December 31, 2009 and 2008.





Income
taxes




The
Company is governed by the Income Tax Law of the People’s Republic of
China.  The Company accounts for income taxes using the liability
method prescribed by ASC 740 “Income Taxes”. Under this
method, deferred tax assets and liabilities are determined based on the
difference between the financial reporting and tax bases of assets and
liabilities using enacted tax rates that will be in effect in the year in which
the differences are expected to reverse. The Company records a valuation
allowance to offset deferred tax assets if based on the weight of available
evidence, it is more-likely-than-not that some portion, or all, of the deferred
tax assets will not be realized. The effect on deferred taxes of a change in tax
rates is recognized as income or loss in the period that includes the enactment
date.





Pursuant
to accounting standards related to the accounting for uncertainty in income
taxes, the evaluation of a tax position is a two-step process. The first step is
to determine whether it is more likely than not that a tax position will be
sustained upon examination, including the resolution of any related appeals or
litigation based on the technical merits of that position. The second step is to
measure a tax position that meets the more-likely-than-not threshold to
determine the amount of benefit to be recognized in the financial statements. A
tax position is measured at the largest amount of benefit that is greater than
50% likelihood of being realized upon ultimate settlement. Tax positions that
previously failed to meet the more-likely-than-not recognition threshold should
be recognized in the first subsequent period in which the threshold is met.
Previously recognized tax positions that no longer meet the more-likely-than-not
criteria should be de-recognized in the first subsequent financial reporting
period in which the threshold is no longer met. The accounting standard also
provides guidance on de-recognition, classification, interest and penalties,
accounting in interim periods, disclosures, and
transition.





Advances from
customers





Advances
from customers consist of prepayments from customers for merchandise that had
not yet been shipped. The Company recognizes the deposits as revenue as
customers take delivery of the goods, in accordance with its revenue recognition
policy.  Advances from customers at December 31, 2009 and 2008
amounted to $0 and $0, respectively.





Revenue
recognition





Pursuant
to the guidance of ASC Topic 605 and ASC Topic 360, the Company recognizes
revenue when persuasive evidence of an arrangement exists, delivery has occurred
or services have been rendered, the purchase price is fixed or determinable and
collectability is reasonably assured. The Company recognizes revenues from the
sale of juice concentrate upon shipment and transfer of
title.





Shipping
costs





Shipping
costs are included in selling expenses and totaled $151,486 and $337,333 for the
years ended December 31, 2009 and 2008, respectively.





F-12


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008





NOTE 1 –
ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Employee
benefits





The
Company’s operations and employees are all located in the PRC.  The
Company makes mandatory contributions to the PRC government’s health, retirement
benefit and unemployment funds in accordance with the relevant Chinese social
security laws, which is approximately 25% of salaries. For the years ended
December 31, 2009 and 2008, the costs of these payments are charged to
general and administrative expenses in the same period as the related salary
costs and amounted to $83,303 and $56,505, respectively.





Advertising





Advertising
is expensed as incurred and is included in selling expenses on the accompanying
statement of operations. For the years ended December 31, 2009 and 2008,
advertising expense amounted to $99,622 and $209,701, respectively.





Research and
development





Research
and development costs are expensed as incurred. For the years ended December 31,
2009 and 2008, research and development costs amounted to $1,408,501 and
$256,283, respectively.





Foreign currency
translation





The
reporting currency of the Company is the U.S. dollar. The functional currency of
the parent company is the U.S. dollar and the functional currency of the
Company’s operating subsidiaries and affiliates is the Chinese Renminbi (“RMB”).
For the subsidiaries and affiliates whose functional currencies are the RMB,
results of operations and cash flows are translated at average exchange rates
during the period, assets and liabilities are translated at the unified exchange
rate at the end of the period, and equity is translated at historical exchange
rates. Translation adjustments resulting from the process of translating the
local currency financial statements into U.S. dollars are included in
determining comprehensive income.  The cumulative translation
adjustment and effect of exchange rate changes on cash for the years ended
December 31, 2009 and 2008 was $4,862 and $494,982, respectively. Transactions
denominated in foreign currencies are translated into the functional currency at
the exchange rates prevailing on the transaction dates. Assets and liabilities
denominated in foreign currencies are translated into the functional currency at
the exchange rates prevailing at the balance sheet date with any transaction
gains and losses that arise from exchange rate fluctuations on transactions
denominated in a currency other than the functional currency are included in the
results of operations as incurred. All of the Company’s revenue transactions are
transacted in the functional currency. The Company does not enter any material
transaction in foreign currencies and accordingly, transaction gains or losses
have not had, and are not expected to have, a material effect on the results of
operations of the Company.





Asset and
liability accounts at December 31, 2009 and 2008 were translated at 6.8372 RMB
to $1.00 and at 6.8542 RMB to $1.00, respectively. Equity accounts were stated
at their historical rate. The average translation rates applied to the
statements of income for the years ended December 31, 2009 and 2008 were 6.84088
RMB and 6.96225 RMB to $1.00, respectively.  Cash flows from the
Company’s operations are calculated based upon the local currencies using the
average translation rate. As a result, amounts related to assets and liabilities
reported on the statement of cash flows will not necessarily agree with changes
in the corresponding balances on the balance sheets.





Accumulated other
comprehensive income




Comprehensive
income is comprised of net income and all changes to the statements of
stockholders’ equity, except those due to investments by stockholders, changes
in paid-in capital and distributions to stockholders. For the Company,
comprehensive income for the years ended December 31, 2009 and 2008 included net
income and unrealized gains from foreign currency translation
adjustments.




F-13


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008


NOTE 1 –
ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Related
parties





Parties
are considered to be related to the Company if the parties that, directly or
indirectly, through one or more intermediaries, control, are controlled by, or
are under common control with the Company. Related parties also include
principal owners of the Company, its management, members of the immediate
families of principal owners of the Company and its management and other parties
with which the Company may deal if one party controls or can significantly
influence the management or operating policies of the other to an extent that
one of the transacting parties might be prevented from fully pursuing its own
separate interests. The Company shall disclose all related party transactions.
All transactions shall be recorded at fair value of the goods or services
exchanged. Property purchased from a related party is recorded at the cost to
the related party and any payment to or on behalf of the related party in excess
of the cost is reflected as a distribution to related party.





Income per share of ordinary
stock




ASC 260
“Earnings Per Share”,
requires dual presentation of basic and diluted earnings per share (“EPS”) with
a reconciliation of the numerator and denominator of the basic EPS computation
to the numerator and denominator of the diluted EPS computation. Basic EPS
excludes dilution. Diluted EPS reflects the potential dilution that could occur
if securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity.  Basic net income per
ordinary share is computed by dividing net income available to ordinary
shareholders by the weighted average number of shares of ordinary shares
outstanding during the period. Diluted income per ordinary share is computed by
dividing net income by the weighted average number of shares of common stock,
common stock equivalents and potentially dilutive securities outstanding
during each period. Potentially dilutive ordinary shares consist of common stock
warrants (using the treasury stock method).  Common stock warrants were not
included in the following calculation as the effect on net income per ordinary
share was anti-dilutive. The following table presents a reconciliation of basic
and diluted net income per ordinary share:





Years
      Ended December 31,2009
            
            
            2008Net
      income available to ordinary shareholders for basic and diluted net income
      per ordinary share
            
            $
            15,070,869
            
            
            $
            11,558,401Weighted
      average ordinary shares outstanding – basic
            
            
            22,495,050
            
            
            
            21,333,332Effect
      of dilutive securities:Warrants
            
            
            -
            
            
            
            -Weighted
      average ordinary shares outstanding– diluted
            
            
            22,495,050
            
            
            
            21,333,332Net
      income per ordinary share  - basic
            
            $
            0.67
            
            
            $
            0.54Net
      income per ordinary share  - diluted
            
            $
            0.67
            
            
            $
            0.54





The
Company’s aggregate common stock equivalents at December 31, 2009 and 2008
include the following:





2009
            
            
            2008Warrants
            
            
            3,402,212
            
            
            
            -Total
            
            
            3,402,212
            
            
            
            -


F-14


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008


NOTE 1 –
ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Recent accounting
pronouncements





In June
2009, the FASB issued Accounting Standards Update No. 2009-01, “Generally
Accepted Accounting Principles” (ASC Topic 105) which establishes the FASB
Accounting Standards Codification (“the Codification” or “ASC”) as the official
single source of authoritative U.S. generally accepted accounting principles
(“GAAP”). All existing accounting standards are superseded. All other accounting
guidance not included in the Codification will be considered non-authoritative.
The Codification also includes all relevant Securities and Exchange Commission
(“SEC”) guidance organized using the same topical structure in separate sections
within the Codification.  Following the Codification, the Board will
not issue new standards in the form of Statements, FASB Staff Positions or
Emerging Issues Task Force Abstracts. Instead, it will issue Accounting
Standards Updates (“ASU”) which will serve to update the Codification, provide
background information about the guidance and provide the basis for conclusions
on the changes to the Codification. The Codification is not intended to change
GAAP, but it will change the way GAAP is organized and presented. The
Codification was effective for our third-quarter 2009 financial statements and
the principal impact on our financial statements is limited to disclosures as
all references to authoritative accounting literature have been referenced in
accordance with the Codification.





In April
2009, the FASB issued ASC Topic 320-10-65, “Recognition and Presentation of
Other-Than-Temporary Impairments”. This update provides guidance for allocation
of charges for other-than-temporary impairments between earnings and other
comprehensive income. It also revises subsequent accounting for
other-than-temporary impairments and expands required disclosure. The update was
effective for interim and annual periods ending after June 15, 2009. The
adoption of ASC Topic 320-10-65 did not have a material impact on the results of
operations and financial condition.





In April
2009, the FASB issued ASC Topic 320-10-65, “Interim Disclosures About Fair Value
of Financial Instruments”. This update requires fair value disclosures for
financial instruments that are not currently reflected on the balance sheet at
fair value on a quarterly basis and is effective for interim periods ending
after June 15, 2009.  The Company’s financial instruments include cash
and cash equivalents, accounts receivable, accounts payable, accrued expenses
and notes payable.  At December 31, 2009 and 2008, the carrying value
of the Companies financial instruments approximated fair value, due to their
short term nature.





In May
2009, the FASB issued (ASC Topic 855), “Subsequent Events” (ASC Topic 855). This
guidance is intended to establish general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or available to be issued. It is effective for
interim and annual reporting periods ending after June 15, 2009.  The
adoption of this guidance did not have a material impact on our consolidated
financial statements.





In June
2009, the FASB issued ASC Topic 810-10, “Amendments to FASB Interpretation No.
46(R)”. This updated guidance requires a qualitative approach to identifying a
controlling financial interest in a variable interest entity (VIE), and requires
ongoing assessment of whether an entity is a VIE and whether an interest in a
VIE makes the holder the primary beneficiary of the VIE. It is effective for
annual reporting periods beginning after November 15, 2009. The adoption of ASC
Topic 810-10 did not have a material impact on the Company’s results of
operations or financial condition.





F-15


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008


NOTE 1 –
ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





In
October 2009, the FASB issued ASU No. 2009-13, “Multiple-Deliverable Revenue
Arrangements.” This ASU establishes the accounting and reporting guidance for
arrangements including multiple revenue-generating activities. This ASU provides
amendments to the criteria for separating deliverables, measuring and allocating
arrangement consideration to one or more units of accounting. The amendments in
this ASU also establish a selling price hierarchy for determining the selling
price of a deliverable. Significantly enhanced disclosures are also required to
provide information about a vendor’s multiple-deliverable revenue arrangements,
including information about the nature and terms, significant deliverables, and
its performance within arrangements. The amendments also require providing
information about the significant judgments made and changes to those judgments
and about how the application of the relative selling-price method affects the
timing or amount of revenue recognition. The amendments in this ASU are
effective prospectively for revenue arrangements entered into or materially
modified in the fiscal years beginning on or after June 15, 2010. Early
application is permitted. The Company is currently evaluating this new
ASU.





In
October 2009, the FASB issued ASU No. 2009-14, “Certain Revenue Arrangements
That Include Software Elements.” This ASU changes the accounting model for
revenue arrangements that include both tangible products and software elements
that are “essential to the functionality,” and scopes these products out of
current software revenue guidance. The new guidance will include factors to help
companies determine what software elements are considered “essential to the
functionality.” The amendments will now subject software-enabled products to
other revenue guidance and disclosure requirements, such as guidance surrounding
revenue arrangements with multiple-deliverables. The amendments in this ASU are
effective prospectively for revenue arrangements entered into or materially
modified in the fiscal years beginning on or after June 15, 2010. Early
application is permitted. The Company is currently evaluating this new
ASU.





Other
accounting standards that have been issued or proposed by FASB that do not
require adoption until a future date are not expected to have a material impact
on the consolidated financial statements upon adoption.





Subsequent
Events




For
purposes of determining whether a post-balance sheet event should be evaluated
to determine whether it has an effect on the financial statements for the period
ending December 31, 2009, subsequent events were evaluated by the Company as of
March 30, 2010, the date on which the consolidated financial statements at and
for the year ended December 31, 2009, were available to be issued.





NOTE 2 –
ACCOUNTS
RECEIVABLE





At
December 31, 2009 and 2008, accounts receivable consisted of the
following:





2009
            
            
            2008Accounts
      receivable
            
            $
            -
            
            
            $
            5,144,361Less:
      allowance for doubtful accounts
            
            
            -
            
            
            
            (41,598
            )$
            -
            
            
            $
            5,102,763





F-16


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008


NOTE 3 -
INVENTORIES





At
December 31, 2009 and 2008, inventories consisted of the following:





2009
            
            
            2008Raw
      materials
            
            $
            120,990
            
            
            $
            266,581Work
      in process
            
            
            -
            
            
            
            690Finished
      goods
            
            
            13,317,140
            
            
            
            15,415,09613,438,130
            
            
            
            15,682,367Less:
      reserve for obsolete inventory
            
            
            (92,619
            )
            
            
            (92,390
            )$
            13,345,511
            
            
            $
            15,589,977





NOTE 4 -
PROPERTY AND
EQUIPMENT





At
December 31, 2009 and 2008, property and equipment consisted of the
following:




Useful
      Life
              
              
              2009
              
              
              2008Office
      equipment and furniture
              
              10
      Years
              
              
              $
              113,418
              
              
              $
              113,136Manufacturing
      equipment
              
              10
      Years
              
              
              
              7,970,320
              
              
              
              7,950,552Vehicles
              
              10
      Years
              
              
              
              76,490
              
              
              
              76,300Construction
      in progress
              
              
              -
              
              
              
              863,511
              
              
              
              -Building
      and building improvements
              
              10-20
      Years
              
              
              
              3,095,281
              
              
              
              3,087,60512,119,020
              
              
              
              11,227,593Less:
      accumulated depreciation
              
              
              
              
              
              
              (4,721,359
              )
              
              
              (3,762,913
              )$
              7,397,661
              
              
              $
              7,464,680




For the
years ended December 31, 2009 and 2008, depreciation expense amounted to
$948,579 and $930,720, of which $666,176 and $676,540 is included in cost of
sales, and $282,403 and $254,180 is included in general and administrative
expenses, respectively.





NOTE 5 –
LAND USE
RIGHTS





There is
no private ownership of land in China. Land is owned by the government and the
government grants land use rights for specified terms.  In 2008, the
Company acquired land use rights for cash of 78,550,010 RMB (approximately
$11,300.000) for 500 acres of plantation fields in Laiyang, China. The land
contains pear plantations and will be used to supply pears to the Company for
production. The Company’s land use rights have terms that expire in December
2037 through December 2054.  The Company amortizes these land use
rights over the term of the respective land use right. The lease agreement does
not have any renewal option and the Company has no further obligations to the
lessor.  In 2009 and 2008, the pear orchids on this land did not
produce any pears and the Company does not expect to yield any pears that can be
used in production until September 2010.  Accordingly, the Company
included the amortization of the respective land use rights in general and
administrative expenses until such time that it yields pears from the orchards.
Upon the use of pears from the orchids in the production process, the Company
will reflect the amortization of these land use rights in cost of sales. For the
years ended December 31, 2009 and 2008, amortization of land use rights amounted
to $547,750 and $538,202, respectively.  At December 31, 2009 and
2008, land use rights consist of the following:




Useful
      Life
            
            2009
            
            
            2008Land
      Use Rights
            
            30
      - 50 years
            
            $
            17,107,320
            
            
            $
            17,064,890Less:
      Accumulated Amortization
            
            
            
            
            (1,327,778
            )
            
            
            (777,799
            )$
            15,779,542
            
            
            $
            16,287,091




F-17


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008


NOTE 5 –
LAND USE RIGHTS
(continued)





Amortization
of land use rights attributable to future periods is as follows:





Years
      ending December 31:2010
            
            $
            548,0452011
            
            
            548,0452012
            
            
            548,0452013
            
            
            548,0452014
            
            
            548,045Thereafter
            
            
            13,039,317$
            15,779,542




NOTE 6 –
LOAN
PAYABLE





In
connection with the acquisition of the net assets of the Company, which occurred
in 2004, the Company assumed a loan payable to a third party related to the
original construction of the its factory. The loan was due in annual
installments through December 2010 and was non-interest bearing. Since the
agreement did not have a stated interest rate, the Company used an imputed
interest rate of interest of 6.12% based on PRC central bank five year and up
loan rate effective October 2004.  At December 31, 2009 and 2008, loan
payable amounted to $0 and $13,781,344, respectively.  For the year
ended December 31, 2009 and 2008, imputed interest expense related to this loan
amounted to $335,560 and $976,204, respectively.





NOTE 7 –
ACCRUED
EXPENSES





At
December 31, 2009 and 2008, accrued expenses consist of the
following:





December
      31,2009
            
            
            2008Accrued
      research and development costs
            
            $
            877,552
            
            
            $
            -Accrued
      payroll and employees benefit
            
            
            424,208
            
            
            
            196,896Other
            
            
            90,395
            
            
            
            73,578$
            1,392,155
            
            
            $
            270,474




NOTE 8 –
ACQUISITION
PAYABLES





In
connection with the acquisition of the net assets of the Company, which occurred
in 2004, the Company assumed certain accounts payable to third parties. These
payables were payable on demand. At December 31, 2009 and 2008, acquisition
payables amounted to $0 and $850,501, respectively.





NOTE 9 –
INCOME
TAXES





The
Company accounts for income taxes pursuant to the accounting standards that
require the recognition of deferred tax assets and liabilities for both the
expected impact of differences between the financial statements and the tax
basis of assets and liabilities, and for the expected future tax benefit to be
derived from tax losses and tax credit carryforwards.  Additionally,
the accounting standards require the establishment of a valuation allowance to
reflect the likelihood of realization of deferred tax assets. Realization of
deferred tax assets, including those related to the temporary differences from
the deduction of depreciation and related expenses for income tax purposes as
compared to financial statement purposes, are dependent upon future earnings.
Accordingly, prior to 2009, the net deferred tax asset related to the temporary
differences was fully offset by a valuation allowance. The Company’s operating
affiliate is governed by the Income Tax Law of the People’s Republic of China.
The Company and its wholly-owned subsidiary, Merit Times were incorporated in
the Cayman Islands and British Virgin Islands (“BVI”), respectively. Under the
current laws of the Cayman Islands and BVI, the two entities are not subject to
income taxes.  Accordingly, the Company has not established a
provision for current or deferred taxes for these jurisdictions.




F-18


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008


NOTE 9 –
INCOME TAXES
(continued)





Under the
Income Tax Laws of PRC, since January 2008, Chinese companies are generally
subject to an income tax at an effective rate of 25%, on income reported
in the statutory financial statements after appropriate tax
adjustments.





The table
below summarizes the reconciliation of the Company’s income tax provision
(benefit) computed at the China statutory rate and the actual tax
provision:





Year
      Ended December 31,2009
            
            
            2008Income
      tax provision at China statutory rate of 25%
            
            $
            4,748,345
            
            
            $
            3,938,776Permanent
      difference  - Non-deductible CaymanIsland
      and BVI loss
            
            
            44,715
            
            
            
            -Other
            
            
            (1,668
            )
            
            
            26,785(Decrease)
      increase in valuation allowance
            
            
            (868,882
            )
            
            
            231,140Total
      provision for income taxes
            
            $
            3,922,510
            
            
            $
            4,196,701Tax
      provision (benefit):Current
            
            $
            4,817,299
            
            
            $
            4,196,701Deferred
            
            
            (894,789
            )
            
            
            -$
            3,922,510
            
            
            $
            4,196,701





The
Company’s deferred tax assets as of December 31, 2009 and 2008 are as
follows:





December
      31,2009
            
            
            2008Deferred
      tax asset:Temporary
      differences (i)
            
            $
            895,271
            
            
            $
            868,882Total
      gross deferred tax asset
            
            
            895,271
            
            
            
            868,882Less:
      valuation allowance
            
            
            -
            
            
            
            (868,882
            )Net
      deferred tax asset
            
            $
            895,271
            
            
            $
            -Deferred
      tax asset:Current
            
            $
            59,685
            
            
            $
            -Long-term
            
            
            835,586
            
            
            
            -Total
      deferred tax asset
            
            $
            895,271
            
            
            $
            -


(i)         Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. Prior to 2009, the Company had
recognized, a valuation allowance for those deferred tax assets for which it is
more likely than not that realization will not occur. The Company’s deferred tax
asset relates to the temporary difference between the book and tax related to
the depreciation of certain property and equipment.  In 2008, the
deferred tax asset had been fully reserved with a valuation allowance as
management of the Company had not determined if realization of these assets
would occur in the future. Prior to 2009, management believed that the
realization of income tax benefits from a temporary difference arising from the
depreciation of certain property and equipment for financial statement purposes
over the period from 2004 to 2009 as compared to the depreciation of the related
asset over 20 years for income tax purposes appeared not more than likely due to
the Company’s limited operating history, the fact that prior to 2007 the Company
had no cooperative agreements for the acquisition of raw materials, and the
Company had a limited number  of customers.





F-19


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008





NOTE 9 –
INCOME TAXES
(continued)





Accordingly,
the Company had provided a 100% valuation allowance on the deferred tax asset
benefit to reduce the asset to zero. In 2009, after analysis, management
concluded that the realization of the deferred tax asset is probable and
accordingly, reversed the valuation allowance and reflected a deferred tax
asset.  The Company’s decision was based on the fact that 1) the
Company now has several years of operating history with increasing net income;
2) In 2007, the Company signed cooperative agreements with farmers for the
supply of raw materials. In 2008, the Company acquired additional land use
rights for the production of pears, its main raw material; 3) In October 2009,
the Company entered into a financing agreement for the sale of its ordinary
shares for net proceeds of approximately $15,100,000; and 4) the Company has
begun its plans to diversify its product line to include the sale of animal
bio-feed products.





NOTE 10 –
SHAREHOLDERS’
EQUITY





(a)           Common
stock





Recapitalization





On
October 22, 2009, pursuant to a Share Exchange Agreement (See Note 1), the
Company issued 21,333,332 ordinary shares to the shareholders of Merit Times,
their designees or assigns in exchange for all of the issued and outstanding
capital stock of Merit Times. Pursuant to the terms of the Share Exchange
Agreement, a shareholder of the Company cancelled a total of 794,000 Ordinary
Shares of the Company.  Following the combination prior to the
Offering, there are 21,820,832 Ordinary Shares of the Company issued and
outstanding.





Offering





On
October 22, 2009, pursuant to a Subscription Agreement (the “Subscription
Agreement”) between the Company and certain investors (the “Investors”) named in
the Subscription Agreement, the Company completed an offering (the “Offering”)
of the sale of investment units (the “Units”) for gross proceeds of $15,096,011,
each Unit consisting of 50,000 Ordinary Shares, par value $0.001 per share (the
“Ordinary Shares”) and five-year warrants to purchase 25,000 of the Ordinary
Shares of the Company, at an exercise price of $6.00 per share (the
“Warrants”).  Additionally, on November 2, 2009, the Company entered
into and closed on the second and final round of a private placement by raising
gross proceeds of $1,915,003 through the sale of Units pursuant to a
Subscription Agreement between the Company and certain Investors named in the
Subscription Agreement. Together with the first closing on October 22, 2009,
Emerald raised aggregate gross proceeds of $17,011,014 from the Offering, and
issued 5,670,339 Ordinary Shares and 2,835,177 Warrants to
Investors.





Additionally,
the Company’s majority shareholder, Proud Glory Limited, of which the Company’s
sole officer and director Mr. Zhide Jiang is the managing director (the “Lock-Up
Shareholder”), entered into a Lock-Up Agreement with the Company whereby the
Lock-Up Shareholder agreed it will not, offer, pledge, sell or otherwise dispose
of any Ordinary Shares or any securities convertible into or exercisable or
exchangeable for Ordinary Shares during the period beginning on and including
the date of the final Closing of the Offering for a period of eighteen (18)
months.





F-20


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008


NOTE10 –
SHAREHOLDERS’ EQUITY
(continued)





Pursuant
to an Investor Relations Escrow Agreement, amongst the Company, Grandview
Capital, Inc. (“Grandview”), Access America and Anslow & Jaclin, LLP as
escrow agent, dated October 22, 2009 (the “Investor Relations Escrow
Agreement”), the Company placed a total of $120,000 in an escrow account with
its counsel to be used for the payment of investor relation fees. Further,
pursuant to a Holdback Escrow Agreement, amongst the Company, Grandview, Access
America and Anslow & Jaclin, LLP as escrow agent, dated October 22, 2009
(the “Holdback Escrow Agreement”), the Company placed escrow funds equal to ten
percent (10%) of the Offering proceeds, with its counsel to be held in escrow
until such time as a qualified chief financial officer has been approved and
appointed as an officer of Emerald.  Finally, pursuant to a Going
Public Escrow Agreement, amongst the Company, Grandview, Access America and
Anslow & Jaclin, LLP as escrow agent, dated October 22, 2009 (the “Going
Public Escrow Agreement”), the Company placed a total of $1,000,000 from the
Offering proceeds with its counsel to be used for the payment of fees and
expenses related to becoming a public company and listing its Ordinary Shares on
a senior exchange. Pursuant to each of the Investor Relations Escrow Agreement,
Holdback Escrow Agreement and Going Public Escrow Agreement, in the event that
the proceeds of such escrow accounts have not been fully distributed within two
years from the date thereof, the balance of such escrow proceeds shall be
returned to the Company.





In
connection with the Offering, the Company agreed to file a registration
statement on Form S-1 (“Registration Statement”) within 30 days after Closing
(“Required Filing Date”) and use our best efforts to have it declared effective
within 180 days after Closing to register (i) 100% of its Ordinary Shares issued
in this Offering; (ii) 100% of the Ordinary Shares underlying the Warrants and
Agent Warrants issued in this Offering (“Warrant Shares”) (collective, (the
“Registrable Securities”).  If a Registration Statement covering the
registration of the Registrable Securities is not filed with the Commission by
the Required Filing Date, the Company shall issue 200,000 Ordinary Shares to the
Investors, distributed pro rata, per calendar month, or portion thereof, up to a
maximum of 1,000,000 Ordinary Shares of Emerald. The Company filed its
Registration Statement prior to the Required Filing Date.





In
connection with the Offering, the Company and the Company’s management entered
into a Make Good Escrow Agreement, whereby management placed a total of
4,600,000 of management’s Ordinary Shares in escrow (the “Escrow Shares”) and
agreed to transfer the Escrow Shares, in whole or in part as described below, to
the Investors on a pro rata basis in the event that the Company does not meet
certain performance targets for its fiscal years ending December 31, 2009 and
December 31, 2010. Under the “make good” arrangement, minimum net income
thresholds of $14,000,000 and $18,000,000 with a 10% allowable variation
were established for the 2009 and 2010 fiscal years, respectively. If, in a
given fiscal year, the applicable minimum net income threshold is not met,
escrowed shares, on a pro-rata basis, in an amount equal to the percentage of
variation from the net income threshold times the total number of escrow
shares, are required to be disbursed to the private placement
investors. If any escrow shares are distributed to investors resulting
from the Company not attaining the 2009 net income thresholds, Proud Glory
Limited will place an additional amount of shares into escrow so that the escrow
shares total 4,600,000.  If the net income equals or exceeds
$12,600,000 in 2009 and $16,200,000 million in 2010, then the applicable
thresholds will be deemed met and all escrow shares will be disbursed to Proud
Glory Limited.





Currently,
the Company believes that it can reasonably achieve the contracted financial
performance thresholds (the “make-good targets”) for both years of 2009 and
2010. In the case where the Company does achieve the make-good targets and
releases the escrowed shares back to Proud Glory Limited, the Company does not
believe the fair value of the escrowed shares should be recognized as
compensation or an expense. According to SEC Staff Announcement Topic No. D-110,
to overcome the presumption that the release of shares are compensatory, the
Company is required to consider the substance of the arrangement, including
whether the arrangement was entered into for purposes unrelated to, and not
contingent upon, continued employment. For example, as a condition of a
financing transaction, investors may request that specific significant
shareholders, who also may be officers or directors, participate in an escrowed
share arrangement. If the escrowed shares will be released or canceled without
regard to continued employment, specific facts and circumstances may indicate
that the arrangement is in substance an inducement made to facilitate the
transaction on behalf of the company, rather than as compensatory. In such
cases, the Company generally believes that the arrangement should be recognized
and measured according to its nature and reflected as a reduction of the
proceeds allocated to the newly-issued securities.




F-21


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008


NOTE10 –
SHAREHOLDERS’ EQUITY
(continued)





The
Shares Escrow Agreement and Lock-Up Agreement are clearly not entered into for
purposes related to, or contingent upon, continued employment of the key
executive.  The sole reason for the Company and Mr. Jiang to escrow
and lock up the shares is to induce the PIPE investors to close the financing
transaction.  Therefore, the Company believes the fair value of the
escrow shares (determined by the fair market price of the common stock on the
date of the Shares Escrow Agreement), when released back to Proud Glory, should
be recorded as reduction of the financing proceeds.  Such reduction
will be debited to the account of additional paid-in capital and will be fully
offset by the corresponding credit to the additional paid-in capital, resulting
in no change in net equity of the balance sheet.





On the
other hand, if the make good targets are not met and the escrowed shares are
forfeited and delivered to the PIPE investors instead, it will be accounted for
as a recapitalization transaction with the PIPE investors, also resulting in no
income or expense being recognized in the Company’s financial
statements.





Placement
Agent




Grandview,
the lead placement agent, and Rodman & Renshaw, LLC, the co-placement agent,
are the placement agents (the “Placement Agents”) in connection with the
Offering. For the placement agent services, the Company paid a cash commission
equal to 7% of the aggregate gross proceeds of the Units sold and issued
five-year warrants to purchase 567,035 Ordinary Shares, which equal 10% of the
number of Ordinary Shares sold in this Offering, exercisable at any time at a
price equal to $6.00 per share for a five-year period (“Agent
Warrants”).





(b)       
Warrants




Warrant
activity for the year ended December 31, 2009 is summarized as
follows:




Number
      of Warrants
            
            
            Weighted
      Average Exercise PriceBalance
      at beginning of year
            
            
            -
            
            
            $
            -Granted
            
            
            3,402,210
            
            
            
            6.00Exercised
            
            
            -
            
            
            
            -Balance
      at end of year
            
            
            3,402,210
            
            
            $
            6.00Warrants
      exercisable at end of year
            
            
            3,402,210
            
            
            $
            6.00





The
following table summarizes the shares of the Company’s common stock issuable
upon exercise of warrants outstanding at December 31, 2009:




Warrants
      Outstanding
            
            Warrants
      ExercisableRange
      of
              Exercise
      Price
            
            Number
      Outstanding at December 31, 2009
            
            Weighted
      Average Remaining Contractual Life (Years)
            
            Weighted
      Average Exercise Price
            
            Number
              Exercisable
      at
              December
      31, 2009
            
            Weighted
      Average Exercise Price$
      6.00
            
            3,402,210
            
            4.81
            
            6.00
            
            3,402,210
            
            6.00





F-22


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008


NOTE 11 –
MAJOR
CUSTOMERS





For the
years ended December 31, 2009 and 2008, seven customers accounted for 100.0% of
the Company’s revenues, respectively.  In 2009, no customer accounted
for more than 20% of the Company’s net revenues. In 2008, one customer accounted
for 23.4% of net revenues.





NOTE
12  – STATUTORY AND NON-STATUTORY
RESERVES





The
Company is required to make appropriations to reserve funds, comprising the
statutory surplus reserve, statutory public welfare fund and discretionary
surplus reserve, based on after-tax net income determined in accordance with
generally accepted accounting principles of the PRC (the “PRC GAAP”).
Appropriation to the statutory surplus reserve should be at least 10% of the
after tax net income determined in accordance with the PRC GAAP until the
reserve is equal to 50% of the entities’ registered capital or members’ equity.
Appropriations to the statutory public welfare fund are at a minimum of 5% of
the after tax net income determined in accordance with PRC GAAP. Commencing on
January 1, 2006, the new PRC regulations waived the requirement for
appropriating retained earnings to a welfare fund. For the years ended December
31, 2009 and 2008, statutory reserve activity is as follows:




Statutory
            
            
            Non-Statutory
            
            
            TotalBalance
      – December 31, 2007
            
            $
            622,823
            
            
            $
            1,067,981
            
            
            $
            1,690,804Addition
      to reserves
            
            
            -
            
            
            
            1,259,010
            
            
            
            1,259,110Balance
      – December 31, 2008
            
            
            622,823
            
            
            
            2,326,991
            
            
            
            2,949,814Addition
      to reserves
            
            
            -
            
            
            
            -
            
            
            
            -Balance
      – December 31, 2009
            
            $
            622,823
            
            
            $
            2,326,991
            
            
            $
            2,949,814





NOTE 13 –
RESTRICTED NET
ASSETS





Schedule
I of Article 5-04 of Regulation S-X requires the condensed financial information
of registrant shall be filed when the restricted net assets of consolidated
subsidiaries exceed 25 percent of consolidated net assets as of the end of the
most recently completed fiscal year. For purposes of the above test, restricted
net assets of consolidated subsidiaries shall mean that amount of the
registrant’s proportionate share of net assets of consolidated subsidiaries
(after intercompany eliminations) which as of the end of the most recent fiscal
year may not be transferred to the parent company by subsidiaries in the form of
loans, advances or cash dividends without the consent of a third party (i.e.,
lender, regulatory agency, foreign government, etc.).





The
condensed parent company financial statements have been prepared in accordance
with Rule 12-04, Schedule I of Regulation S-X as the restricted net assets of
the subsidiaries of Emerald Acquisition Corporation exceed 25% of the
consolidated net assets of Emerald Acquisition Corporation. The ability of our
Chinese operating affiliates to pay dividends may be restricted due to the
foreign exchange control policies and availability of cash balances of the
Chinese operating subsidiaries. Because a significant portion of our operations
and revenues are conducted and generated in China, all of our revenues being
earned and currency received are denominated in Renminbi (RMB). RMB is subject
to the exchange control regulation in China, and, as a result, we may be unable
to distribute any dividends outside of China due to PRC exchange control
regulations that restrict our ability to convert RMB into US
Dollars.





The
condensed parent company financial statements have been prepared using the same
accounting principles and policies described in the notes to the consolidated
financial statements, with the only exception being that the parent company
accounts for its subsidiaries using the equity method. Refer to the consolidated
financial statements and notes presented above for additional information and
disclosures with respect to these financial statements.





F-23


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008


NOTE 13 –
RESTRICTED NET ASSETS
(continued)





EMERALD
      ACQUISITION CORPORATION
              CONSOLIDATED
      PARENT COMPANY BALANCE SHEETS




As
      of
              December
      31,
            
            
            As
      of
              December
      31,2009
            
            
            2008ASSETSCash
      and cash equivalents
            
            $
            10,487,306
            
            
            $
            -Cash
      - restricted
            
            
            2,587,916
            
            
            
            -Total
      Current Assets
            
            
            13,075,222
            
            
            
            -Investments
      in subsidiaries at equity
            
            
            46,906,159
            
            
            
            29,581,341Total
      Assets
            
            $
            59,981,381
            
            
            $
            29,581,341LIABILITIES AND
      SHAREHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable
            
            
            103,005
            
            
            
            -Total
      Current Liabilities
            
            
            103,005
            
            
            
            -Shareholders’
      equity:Ordinary
      shares ($0.001 par value; 50,000,000 shares
              authorized,
      27,491,171 and 21,333,332 shares issued
              and
      outstanding at December 31, 2009 and 2008, respectively)
            
            
            27,492
            
            
            
            21,333Additional
      paid-in capital
            
            
            16,331,315
            
            
            
            1,236,396Statutory
      reserve
            
            
            2,949,814
            
            
            
            1,216,292Subscription
      receivable
            
            
            -
            
            
            
            (50,000
            )Retained
      earnings
            
            
            38,080,824
            
            
            
            23,009,955Accumulated
      other comprehensive income
            
            
            2,488,931
            
            
            
            2,413,843Total
      Shareholders’ Equity
            
            
            59,878,376
            
            
            
            29,581,341Total
      Liabilities and Shareholders’ Equity
            
            $
            59,981,381
            
            
            $
            29,581,341





EMERALD
      ACQUISITION CORPORATIONCONDENSED  PARENT
      COMPANY STATEMENTS OF OPERATIONS




For
      the Year Ended December 31,2009
            
            
            2008REVENUES
            
            $
            -
            
            
            $
            -OPERATING
      EXPENSES:General
      and administrative
            
            
            178,861
            
            
            
            -Total
      Operating Expenses
            
            
            178,861
            
            
            
            -LOSS
      FROM OPERATIONS
            
            
            (178,861
            )
            
            
            -LOSS
      ATTRIBUTABLE TO PARENT ONLY
            
            
            (178,861
            )
            
            
            -EQUITY
      INCOME EARNINGS OF SUBSIDIARIES
            
            
            15,249,730
            
            
            
            11,558,401NET
      INCOME
            
            $
            15,070,869
            
            
            $
            11,558,401





F-24


EMERALD
ACQUISITION CORPORATION AND SUBSIDIARIES
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009 and 2008


NOTE 13 –
RESTRICTED NET ASSETS
(continued)





EMERALD
      ACQUISITION CORPORATIONCONSOLIDATED
      PARENT COMPANY STATEMENTS OF CASH
FLOWS




For
      the Year Ended December 31,2009
            
            
            2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
            
            $
            15,070,869
            
            
            $
            11,558,401Adjustments
      to reconcile net income to net cashused
      in operating activities:Equity
      in earnings of subsidiary
            
            
            (15,249,730
            )
            
            
            (11,558,401
            )Changes
      in assets and liabilities:Accounts
      payable
            
            
            103,005
            
            
            
            -NET
      CASH USED IN OPERATING ACTIVITIES
            
            
            (85,856
            )
            
            
            -CASH
      FLOWS FROM INVESTING ACTIVITIES:Investment
      payments to subsidiaries
            
            
            (2,000,000
            )
            
            
            -Increase
      in cash – restricted
            
            
            (2,587,916
            )
            
            
            -NET
      CASH USED IN INVESTING ACTIVITIES
            
            
            (4,587,916
            )
            
            
            -CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from sale of ordinary shares
            
            
            17,011,014
            
            
            
            -Proceeds
      from subscription receivable
            
            
            50,000
            
            
            
            -Payment
      of placement fees and expenses
            
            
            (1,909,936
            )
            
            
            -NET
      CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            15,151,078
            
            
            
            -NET
      INCREASE IN CASH
            
            
            10,487,306
            
            
            
            -CASH
      - beginning of year
            
            
            -
            
            
            
            -CASH
      - end of year
            
            $
            10,487,306
            
            
            $
            -





NOTE 14 –
COMMITMENT





On
December 24, 2009, as part of the Company’s expansion plans to add additional
production capacity, the Company entered into a construction contract for the
construction of a new manufacturing facility and office space for 19,680,000 RMB
(approximately $2,880,000).  The construction project and all payments
are expected to be completed in the second quarter of 2010.  As of
December 31, 2009, the Company paid $863,511 which has been reflected in
property and equipment as construction in process.  At December 31,
2009, future amounts due under the construction contract amount to approximately
$2,106,000.





F-25