**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-Q**




x
            **QUARTERLY
                REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
                EXCHANGE**
              **ACT
                OF 1934 for the quarterly period ended September 30,
                2008**o
            **TRANSITION
                REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
                OF
                1934****for
                the transition period from ____________ to
                ________________**





Commission
      File No. 333-52472





**SHANDONG
      ZHOUYUAN SEED AND NURSERY CO., LTD.**


(Name
      of
      Small Business Issuer in its Charter)





Delaware
            58-2258912(State
                or Other Jurisdiction of
              incorporation
                or organization)
            (I.R.S.
                Employer I.D. No.)





238
      Jianxindong Street, Laizhou, Shandong Province, People’s Republic of
      China


(Address
      of Principal Executive Offices)





Issuer's
      Telephone Number: 86 0535-2212279





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




Large
                accelerated filer
            o
            
            Accelerated
                filer
            oNon-accelerated
                filer
            o
            
            Smaller
                reporting company
            x




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




Number
      of
      shares of common stock outstanding as of November 12, 2008:
      70,001,200










**FORWARD-LOOKING
      STATEMENTS**





*In
      addition to historical information, this Annual Report contains forward-looking
      statements, which are generally identifiable by use of the words “believes,”
“expects,” “intends,” “anticipates,” “plans to,” “estimates,” “projects,” or
      similar expressions. These forward-looking statements represent Management’s
      belief as to the future of Shandong Zhouyuan Seed and Nursery Co. Ltd. Whether
      those beliefs become reality will depend on many factors that are not under
      Management’s control. Many risks and uncertainties exist that could cause actual
      results to differ materially from those reflected in these forward-looking
      statements. Factors that might cause such a difference include, but are not
      limited to, those discussed in the section entitled “Management’s Discussion and
      Analysis of Financial Condition and Results of Operations—Risk Factors That May
      Affect Future Results.” Readers are cautioned not to place undue reliance on
      these forward-looking statements. We undertake no obligation to revise or
      publicly release the results of any revision to these forward-looking
      statements.*








**PART
      1—FINANCIAL INFORMATION**


***Item
      1. Financial Statements***





**SHANDONG
      ZHOUYUAN SEED AND NURSERY CO., LTD.**


**CONSOLIDATED
      BALANCE SHEETS**


**(Unaudited)**








September
                30,
            
            December
                31,2008
            
            2007(unaudited)
            
            (Audited)ASSETSCurrent
                Assets:Cash
                and cash equivalents
            
            $
            189,258
            
            $
            11,345Accounts
                receivable, net (Note 5)
            
            
            32,171
            
            
            18,380Inventory
                (Note 6)
            
            
            172,541
            
            
            183,600Other
                receivable
            
            
            15,813
            
            
            17,144Contract
                security deposit (Note 15)
            
            
            137,241
            
            
            -Advance
                to suppliers
            
            
            32,603
            
            
            113,063Total
                Current Assets
            
            
            579,627
            
            
            343,532Property,
                Plant, and Equipment, net (Note 7)
            
            
            1,863,149
            
            
            1,827,528Other
                AssetsLand
                use right, net (Note 8)
            
            
            473,857
            
            
            452,067Acquired
                plant variety protections, net (Note 9)
            
            
            468,079
            
            
            545,417Receivable
                from sale of land use right
            
            
            348,324
            
            
            326,465Total
                Other Assets
            
            
            1,290,260
            
            
            1,323,949Total
                Assets
            
            $
            3,733,036
            
            $
            3,495,009LIABILITIES
                AND STOCKHOLDERS' EQUITYCurrent
                Liabilities:Bank
                loans (Note 11)
            
            $
            1,251,623
            
            $
            1,449,255Short-term
                loans
            
            
            20,452
            
            
            37,238Accounts
                payable and accrued expenses
            
            
            366,483
            
            
            522,151Pension
                and employee benefit payable
            
            
            250,676
            
            
            252,137Taxes
                payable
            
            
            133,099
            
            
            124,748Interest
                payable
            
            
            400,771
            
            
            315,579Deferred
                revenue
            
            
            37,135
            
            
            49,729Court
                judgment payable (Note 14)
            
            
            220,310
            
            
            208,217Due
                to employees
            
            
            48,669
            
            
            34,526Due
                to an officer
            
            
            117,848
            
            
            -Customer
                security deposit
            
            
            93,037
            
            
            89,591Total
                Current Liabilities
            
            
            2,940,103
            
            
            3,083,171Minority
                Interest
            
            
            416,695
            
            
            248,020Stockholders'
                Equity:Preferred
                stock, $0.001 par value, 5,000,000 shares authorized; none issued
                and
                outstanding as of September 30, 2008 and December 31, 2007
            
            
            -
            
            
            -Common
                stock, $0.001 par value, 150,000,000 shares authorized; 70,001,635
                shares
                issued and outstanding as of September 30, 2008 and December 31,
                2007
            
            
            70,002
            
            
            70,002Additional
                paid-in capital
            
            
            3,144,237
            
            
            3,144,237Accumulated
                deficiency
            
            
            (2,795,880
            )
            
            (2,636,401
            )Deferred
                compensation
            
            
            (154,000
            )
            
            (497,000
            )Accumulated
                other comprehensive income
            
            
            111,879
            
            
            82,980Stockholders'
                Equity
            
            
            376,238
            
            
            163,818Total
                Liabilities and Stockholders' Equity
            
            $
            3,733,036
            
            $
            3,495,009





**See
      Notes to Consolidated Financial Statements**








**SHANDONG
      ZHOUYUAN SEED AND NURSERY CO., LTD.**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME
      (LOSS)**





For
                the Three Months Ended
            
            For
                the Nine Months EndedSeptember
                30,
            
            September
                30,2008
            
            2007
            
            2008
            
            2007(unaudited)
            
            (unaudited)
            
            (unaudited)
            
            (unaudited)RevenuesSale
                of seeds
            
            $
            91,712
            
            $
            152,215
            
            $
            901,403
            
            $
            611,564Total
                revenue
            
            
            91,712
            
            
            152,215
            
            
            901,403
            
            
            611,564Cost
                of good soldCost
                of seeds sold
            
            
            56,633
            
            
            101,957
            
            
            608,832
            
            
            457,149Amortization
                of plant variety protections
            
            
            37,948
            
            
            34,370
            
            
            111,518
            
            
            101,684Total
                cost of sales
            
            
            94,581
            
            
            136,327
            
            
            720,350
            
            
            558,833Gross
                Profit
            
            
            (2,869
            )
            
            15,888
            
            
            181,053
            
            
            52,731Governmental
                subsidy for one plant variety protection
            
            
            -
            
            
            -
            
            
            552,092
            
            
            -Operating
                ExpensesSelling
                expenses
            
            
            7,664
            
            
            4,462
            
            
            22,365
            
            
            16,670Payroll
            
            
            15,551
            
            
            15,622
            
            
            47,110
            
            
            56,960Pension
                and employee benefit
            
            
            (11,634
            )
            
            8,197
            
            
            4,772
            
            
            24,469Depreciation
                expenses
            
            
            28,828
            
            
            26,663
            
            
            86,409
            
            
            78,055Amortization
                of land use rights
            
            
            2,825
            
            
            2,559
            
            
            8,303
            
            
            7,571Office
                expenses
            
            
            36,171
            
            
            4,595
            
            
            73,980
            
            
            14,518Consultant
                fees
            
            
            114,333
            
            
            114,334
            
            
            343,000
            
            
            228,667Travel
                and entertainment
            
            
            5,108
            
            
            5,221
            
            
            23,859
            
            
            18,815Judgment
                expense
            
            
            4,031
            
            
            2,687
            
            
            12,093
            
            
            204,187Other
                general and administrative
            
            
            939
            
            
            13,271
            
            
            20,521
            
            
            41,943Total
                Operating Expenses
            
            
            203,816
            
            
            197,611
            
            
            642,412
            
            
            691,855(Loss)
                from Operations
            
            
            (206,685
            )
            
            (181,723
            )
            
            90,733
            
            
            (639,124
            )Other
                Income (Expenses)Interest
                income
            
            
            4,188
            
            
            2,579
            
            
            13,258
            
            
            14,690Interest
                expenses
            
            
            (47,457
            )
            
            (47,684
            )
            
            (138,280
            )
            
            (136,477
            )Other
                income (expenses)
            
            
            3,659
            
            
            24,338
            
            
            9,151
            
            
            18,442Total
                other income (expenses)
            
            
            (39,610
            )
            
            (20,767
            )
            
            (115,871
            )
            
            (103,345
            )(Loss)
                before provision for Income Tax
            
            
            (246,295
            )
            
            (202,490
            )
            
            (25,138
            )
            
            (742,469
            )Provision
                for Income Tax
            
            
            -
            
            
            -
            
            
            -
            
            
            -(Loss)
                before Minority Interest
            
            
            (246,295
            )
            
            (202,490
            )
            
            (25,138
            )
            
            (742,469
            )Minority
                Interest
            
            
            43,864
            
            
            34,680
            
            
            (134,341
            )
            
            132,200Net
                (loss)
            
            
            (202,431
            )
            
            (167,810
            )
            
            (159,479
            )
            
            (610,269
            )Other
                Comprehensive Income (Loss) Effects of Foreign Currency
                Conversion
            
            
            (7,755
            )
            
            7,295
            
            
            28,899
            
            
            20,200Comprehensive
                Income (Loss)
            
            $
            (210,186
            )
            $
            (160,515
            )
            $
            (130,580
            )
            $
            (590,069
            )Basic
                and fully diluted earnings (loss) per share
            
            $
            (0.00
            )
            $
            (0.00
            )
            $
            (0.00
            )
            $
            (0.01
            )Weighted
                average shares outstanding
            
            
            70,001,635
            
            
            66,999,401
            
            
            70,001,635
            
            
            66,999,401





**See
      Notes to Consolidated Financial Statements.**








**SHANDONG
      ZHOUYUAN SEED AND NURSERY CO., LTD.**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**





For
                the Nine Months EndedSeptember
                30,2008
            
            2007(unaudited)
            
            (unaudited)Operating
                ActivitiesNet
                income (loss)
            
            $
            (159,479
            )
            $
            (610,269
            )Adjustments
                to reconcile net income (loss) to net cash provided (used) by operating
                activities:Minority
                interest
            
            
            134,341
            
            
            (132,200
            )Depreciation
            
            
            86,409
            
            
            78,055Amortization
                of land use rights and plant variety protections
            
            
            119,821
            
            
            109,255Amortization
                of costs of common stocks issued for consultant service
            
            
            343,000
            
            
            228,667Increase
                in court judgment payable
            
            
            12,093
            
            
            204,187Changes
                in operating assets and liabilities:(Increase)/Decrease
                in accounts receivable
            
            
            (12,250
            )
            
            (1,151
            )(Increase)/Decrease
                in inventory
            
            
            22,227
            
            
            73,063(Increase)/Decrease
                in other receivable
            
            
            2,365
            
            
            (3,118
            )(Increase)/Decrease
                in advance to suppliers
            
            
            85,246
            
            
            (5,383
            )(Increase)/Decrease
                in contract security deposit
            
            
            (133,344
            )
            
            -(Increase)/Decrease
                in judgment receivable
            
            
            -
            
            
            29,486Increase/(Decrease)
                in accounts payable and accrued expenses
            
            
            (183,901
            )
            
            61,414Increase/(Decrease)
                in pension and employee benefit payable
            
            
            (17,187
            )
            
            17,949Increase/(Decrease)
                in taxes payable
            
            
            313
            
            
            4,400Increase/(Decrease)
                in interest payable
            
            
            63,038
            
            
            124,004Increase/(Decrease)
                in deferred revenue
            
            
            (15,346
            )
            
            (17,631
            )Increase/(Decrease)
                in customer security deposit
            
            
            (2,256
            )
            
            944Net
                cash provided (used) by operating activities
            
            
            345,090
            
            
            161,672Investing
                ActivitiesPurchase
                of fixed assets
            
            
            (741
            )
            
            (86,089
            )Net
                cash (used) by investing activities
            
            
            (741
            )
            
            (86,089
            )Financing
                ActivitiesPayback
                of bank loans
            
            
            (282,652
            )
            
            (92,219
            )Short-term
                loans
            
            
            (18,638
            )
            
            -Loans
                from an officer
            
            
            114,502
            
            
            -Loans
                from employees
            
            
            11,582
            
            
            -Payback
                of loans from employees
            
            
            -
            
            
            (2,805
            )Net
                cash provided (used) by financing activities
            
            
            (175,206
            )
            
            (95,024
            )Increase
                (decrease) in cash
            
            
            169,143
            
            
            (19,441
            )Effects
                of exchange rates on cash
            
            
            8,770
            
            
            23,819Cash
                at beginning of period
            
            
            11,345
            
            
            2,600Cash
                at end of period
            
            $
            189,258
            
            $
            6,978Supplemental
                Disclosures of Cash Flow Information:Cash
                paid (received) during year for:Interest
            
            $
            (76,929
            )
            $
            (18,111
            )Income
                taxes
            
            $
            -
            
            $
            -





**See
      Notes to Consolidated Financial Statements.**





**SHANDONG
      ZHOUYUAN SEED AND NURSERY CO., LTD.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2008 UNAUDITED**





**Note
      1-BASIS OF PRESENTATION**





The
      consolidated financial statements of Shandong Zhouyuan Seed and Nursery Co.,
      Ltd. ( the "Company"), included herein were prepared, without audit, pursuant
      to
      rules and regulations of the Securities and Exchange Commission. Because certain
      information and notes normally included in financial statements prepared in
      accordance with accounting principles generally accepted in the United States
      of
      America were condensed or omitted pursuant to such rules and regulations, these
      financial statements should be read in conjunction with the financial statements
      and notes thereto included in the audited financial statements of the Company
      as
      included in the Company's Form 10-KSB for the year ended December 31,
      2007.





**Note
      2-ORGANIZATION AND OPERATIONS**





Shandong
      Zhouyuan Seed and Nursery Co., Ltd.. f/k/a Pingchuan Pharmaceuticals, Inc.
      (“Pingchuan”) was organized under the laws of the State of North Carolina on
      July 20, 1996. The Company currently engages in the business of development,
      production and distribution of hybrid crop seeds in the People's Republic of
      China ("PRC'), through its whole owned subsidiary, Infolink Pacific Limited
      ("Infolink").





On
      January 30, 2007, Pingchuan issued to Mr. Wang, Zhigang and Ms. You, Li
      55,000,000 shares of its capital stock in exchange for all of the capital stock
      of Infolink.




Infolink
      was incorporated on September 28, 2006 in British Virgin Islands (“BVI”) under
      the BVI Business Companies Act, 2004, for the purpose of seeking and
      consummating a merger or acquisition with a business entity organized as a
      private corporation, partnership, or sole proprietorship as defined by Statement
      of Financial Accounting Standards (SFAS) No. 7.





On
      October 18, 2006, Mr. Li Han Xun and Ms. You Li (collectively the "Trustees"),
      both of whom are citizens of the People's Republic of China ("PRC") and owned
      a
      60% equity ownership interest in Shandong Zhouyuan Seed and Nursery Co., Ltd.
      (
      "Zhouyuan" ), executed Trust and Indemnity Agreements with Infolink, pursuant
      which the Trustees assigned to Infolink all of the beneficial interest in the
      Trustee's equity ownership interest in Zhouyuan. These arrangements have been
      undertaken solely to satisfy PRC regulations, which prohibits foreign companies
      from owning or operating the business of sale and development of crop seeds
      in
      PRC.





Through
      the agreements described in the preceding paragraph, Infolink is deemed a 60%
      beneficiary and Zhouyuan is considered to be a variable interest entity (“VIE”)
      under the provisions of Financial Interpretation 46 (Revised) (“FIN 46 (R)”)
“Consolidation of Variable Interest Entities” issued by the Financial Accounting
      Standards Board (“FASB”). Under FIN 46 (R), companies are required to
      consolidate VIEs for which they are the primary beneficiary.





Zhouyuan
      was incorporated in Laizhou City, Shandong Province, PRC on October 26, 2001.
      Zhouyuan engages in the business of development, production and distribution
      of
      hybrid crop seeds in PRC.





**SHANDONG
      ZHOUYUAN SEED AND NURSERY CO., LTD.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


SEPTEMBER
      30, 2008
      UNAUDITED




**Note
      2-**  **ORGANIZATION
      AND OPERATIONS (continued)**


Under
        the
        Company Law of PRC, two formerly state owned companies, Laizhou Yongzhou
        Seed
        Ltd and Laizhou Agriculture Science Research and Development Ltd., were reformed
        and merged into one company named Laizhou Huiyuan Seed Ltd ("Huiyuan") on
        October 26, 2001. On December 24, 2002, Huiyuan changed its name to Shandong
        Zhouyuan Seed and Nursery Co., Ltd.
 
 Zhouyuan
        owns 80% of Laizhou Tianzhe Seed Research and Development Ltd. ("Tianzhe"),
        which was incorporated in Laozhou City, Shandong Province, PRC on October
        24,
        2004 under the Company Law of PRC. Tianzhe engages in the research and
        development of crop seeds.
 
 The
        merger of Pingchuan with Infolink results in a capital transaction accounted
        for
        as a reverse merger. The transaction was treated for accounting purposes
        as a
        recapitalization of the accounting acquirer (Infolink) and a reorganization
        of
        the accounting acquiree (Pingchuan). Accordingly, the historical financial
        statements presented prior to the merger are the historical financial statements
        of Infolink, which includes Infolink's variable interest entity,
        Zhouyuan.
 
 On
        April
        2, 2007, the Company changed its name to Shandong Zhouyuan Seed and Nursery
        Co.,
        Ltd.
 
 Pingchuan,
        Infolink, Zhouyuan, and Tianzhe are hereafter referred to as the
        Company.
 
 **Note
        3-**  **GOING
        CONCERN**
 
 As
        reflected in the accompanying consolidated financial statements, the Company
        has
        an accumulated deficit of $2,795,880 and working capital deficit of $2,360,476
        at September 30, 2008. Additionally, the Company was in default on bank loans
        and interest payments, totaling $1,652,394, as of September 30, 2008. These
        factors raise substantial doubt about its ability to continue as a going
        concern. In view of the matters described above, recoverability of a major
        portion of the recorded asset amounts shown in the accompanying consolidated
        balance sheet is dependent upon continued operations of the Company, which
        in
        turn is dependent upon the Company's ability to raise additional capital,
        obtain
        financing and succeed in its future operations. The financial statements
        do not
        include any adjustments relating to the recoverability and classification
        of
        recorded asset amounts or amounts and classification of liabilities that
        might
        be necessary should the Company be unable to continue as a going
        concern.
 
 Management
        has taken the following steps to revise its operating and financial
        requirements, which it believes are sufficient to provide the Company with
        the
        ability to continue as a going concern. The Company is actively pursuing
        additional funding and a potential merger or acquisition candidate and strategic
        partners, which would enhance stockholders' investment. Management believes
        that
        the above actions will allow the Company to continue operations through the
        next
        fiscal year.
  
 
 **SHANDONG
        ZHOUYUAN SEED AND NURSERY CO., LTD.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 SEPTEMBER
        30, 2008
        UNAUDITED
  **Note
        4-SIGNIFICANT ACCOUNTING POLICIES**
 
 **Basis
        of Presentation**
 The
        accompanying consolidated financial statements are prepared in accordance
        with
        generally accepted accounting principles in the United States of America
        ("US
        GAAP"). This basis of accounting differs from that used in the statutory
        accounts of the Company, which are prepared in accordance with the "Accounting
        Principles of China " ("PRC GAAP"). Certain accounting principles, which
        are
        stipulated by US GAAP, are not applicable in the PRC GAAP. The difference
        between PRC GAAP accounts of the Company and its US GAAP financial statements
        is
        immaterial.
 
 The
        Company maintains its books and accounting records in PRC currency "Renminbi"
        ("RMB"), which is determined as the functional currency.  Assets and
        liabilities of the Company are translated at the prevailing exchange rate
        at
        each year end. Contributed capital accounts are translated using the historical
        rate of exchange when capital is injected. Income statement accounts are
        translated at the average rate of exchange during the year. Translation
        adjustments arising from the use of different exchange rates from period
        to
        period are include in the cumulative translation adjustment account in
        shareholders' equity. Gain and losses resulting from foreign currency
        transactions are included in operations.
 
 Translation
        adjustments resulting from this process are included in accumulated other
        comprehensive income (loss) in the consolidated statement of shareholders’
equity and amounted to $111,879 as of September 30, 2008, as compared to
        $82,980
        as of December 31, 2007. The balance sheet amounts with the exception of
        equity
        at September 30, 2008 were translated at 6.85 RMB to $1.00 USD as compared
        to
        7.31 RMB at December 31, 2007. The equity accounts were stated at their
        historical rate. The average translation rates applied to income statement
        accounts for the nine months ended September 30, 2008 and 2007 were 7.00
        RMB and
        7.68 RMB, respectively.
 
 **Use
        of Estimates**
 
 The
        preparation of financial statements in conformity with generally accepted
        accounting principles requires management to make estimates and assumptions
        that
        affect the reported amounts of assets and liabilities and disclosure of
        contingent assets and liabilities at the date of the financial statements,
        and
        the reported amounts of revenue and expenses during the reporting period.
        Actual
        results when ultimately realized could differ from those estimates.
 
 **Cash
        and Cash Equivalents**
 
 Cash
        and
        cash equivalents include cash on hand, deposits in banks with maturities
        of
        three months or less, and all highly liquid investments which are unrestricted
        as to withdrawal or use, and which have original maturities of three months
        or
        less.
  
 
 **SHANDONG
        ZHOUYUAN SEED AND NURSERY CO., LTD.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 SEPTEMBER
        30, 2008
        UNAUDITED
  **Note
        4-SIGNIFICANT ACCOUNTING POLICIES (continued)**
 
 **Accounts
        Receivable**
 Accounts
        receivable are recorded at the invoiced amount and do not bear interest.
        The
        Company extends unsecured credit to its customers in the ordinary course
        of
        business but mitigates the associated risks by performing credit checks and
        actively pursuing past due accounts. An allowance for doubtful accounts is
        established and determined based on managements' assessment of known
        requirements, aging of receivables, payment history, the customer's current
        credit worthiness, and the economic environment. Recoveries of balances
        previously written off are also reflected in this allowance
 
 **Concentrations
        of Credit Risk**
 Financial
        instruments that subject the Company to concentrations of credit risk consist
        primarily of cash and cash equivalents. The Company maintains its cash and
        cash
        equivalents with high-quality institutions. Deposits held with banks may
        exceed
        the amount of insurance provided on such deposits. Generally these deposits
        may
        be redeemed upon demand and therefore bear minimal risk.
 
 **Fair
        Value of Financial Instruments**
 The
        carrying value of financial instruments including cash and cash equivalents,
        receivables, accounts payable and accrued expenses, approximates their fair
        value due to the relatively short-term nature of these instruments.
 
 **Advance
        to Suppliers**
 The
        Company purchases seeds from the suppliers throughout the operating cycle.
        The
        majority of the seeds is purchased from the growers from the end of November
        through the following February. Pursuant to some purchase contracts, the
        Company
        may advance certain amount of purchase price to growers.
 
 **Inventories**
 Inventories
        are stated at the lower of cost or market value. Actual cost is used to value
        raw materials and supplies. Finished goods and work in process are valued
        at
        First-In-First-Out (FIFO) method.
 
 **Impairment
        of Long-life Assets**
 Long-lived
        assets and certain identifiable intangibles are reviewed for impairment whenever
        events or changes in circumstances indicate that the carrying amount of an
        asset
        may not be recoverable. Recoverability of assets to be held and used is measured
        by a comparison of the carrying amount of an asset to future net cash flows
        expected to be generated by the asset. If such assets are considered to be
        impaired, the impairment to be recognized is measured by the amount by which
        the
        carrying amount of the assets exceeds the fair value of the assets. Assets
        to be
        disposed of are reported at the lower of the carrying amount or fair value
        less
        costs to sell.
  
  **SHANDONG
        ZHOUYUAN SEED AND NURSERY CO., LTD.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 SEPTEMBER
        30, 2008
        UNAUDITED
  **Note
        4-SIGNIFICANT ACCOUNTING POLICIES (continued)**
 
 **Property,
        Plant and Equipment**
 Property,
        plant and equipment are carried at cost. 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.
 
 Depreciation
        is calculated on a straight-line basis over the estimated useful life of
        the
        assets. The percentages or depreciable life applied are:
 
 Property
                  and plant
              30
                  yearsMachines
                  and equipment
              7
                  yearsOffice
                  equipment
              5
                  yearsMotor
                  vehicles
              5
                  years
 
 **Land
        Use Right**
 All
        land
        belongs to the State in PRC. Enterprises and individuals can pay the State
        a fee
        to obtain a right to use a piece of land for commercial purpose or residential
        purpose for a period of 50 years or 70 years, respectively. The right of
        land
        usage can be sold, purchased, and exchange in the market.
 
 The
        Company obtained the right to use a piece of land at which its headquarter
        building is located for a period of 50 years, from December 30, 1998 to December
        30, 2045, and a piece of land at which its packing facilities and warehouse
        are
        located for a period of 50 years from September 10, 2003 to September 10,
        2053.
        We amortize the cost of these and usage rights over a period of 50 years,
        using
        straight-line method with no residual value.
 
 **Acquired
        Plant Variety Protections, net**
 Acquired
        intangible assets consist primarily of purchased technology rights and are
        stated at cost less accumulated amortization. Amortization is calculated
        on a
        straight-line basis over the estimated useful lives of these assets of an
        average of 10 years and recorded in cost of revenues.
 
 **Short-term
        Loans**
 Short-term
        loans are temporally loans from third parties to finance the Company’s operation
        due to lack of cash resources. These loans are unsecured, non-interest bearing
        and have no fixed terms of repayment, therefore, deemed payable on demand.
        Cash
        flows from these activities are classified as cash flows from financing activates.




**SHANDONG
      ZHOUYUAN SEED AND NURSERY CO., LTD.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


SEPTEMBER
      30, 2008
      UNAUDITED




**Note
      4-SIGNIFICANT ACCOUNTING POLICIES (continued)**





**Due
      to Employees**


Due
      to
      employees are temporally short-term loans from our employees to finance the
      Company’s operation due to lack of cash resources. These loans are unsecured,
      non-interest bearing and have no fixed terms of repayment, therefore, deemed
      payable on demand. Cash flows from these activities are classified as cash
      flows
      from financing activates.





**Due
      to An Officer**


Due
      to an
      officer are temporally short-term loans from Mr. Zhigang Wang, CEO of the
      Company, to finance the Company’s operation. These loans are unsecured,
      non-interest bearing and have no fixed terms of repayment, therefore, deemed
      payable on demand. Cash flows from these activities are classified as cash
      flows
      from financing activates.





**Revenue
      Recognition**


The
      Company derives its revenue primarily from the sale of various branded
      conventional seeds and branded seeds with biotechnology traits. Revenue is
      recognized when pervasive evidence of an arrangement exists, products have
      been
      delivered, the price is fixed or determinable, collectibility is reasonably
      assured and the right of return has expired. The estimated amounts of revenues
      billed in excess of revenues recognized are recorded as deferred
      revenues.





**Governmental
      subsidy for one plant variety protection**


In
      February 2008, Zhouyuan received governmental subsidy of $552,092 (RMB
      3,950,000) for one of its plant variety protections, named H8723, which is
      a
      wheat variety and was cultivated by one of Zhouyuan's predecessor, Laizhou
      Agriculture Science Research and Development Ltd.





**Research
      and Development Costs**


Research
      and development costs relating to the development of new products and processes,
      including significant improvements and refinements to existing products, are
      expensed as incurred. The Research and development cost was immaterial for
      the
      Company for the nine months ended September 30, 2008 and 2007, respectively,
      and
      was included into general and administration expenses.





**Advertising
      Costs**


Advertising
      costs are expensed as incurred and included as part of selling and marketing
      expenses. Advertising expenses were $5,535 and $1,625 for the nine months ended
      September 30, 2008 and 2007, respectively.





**SHANDONG
      ZHOUYUAN SEED AND NURSERY CO., LTD.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


SEPTEMBER
      30, 2008
      UNAUDITED




**Note
      4-**  **SIGNIFICANT
      ACCOUNTING POLICIES (continued)**





**Pension
      and Employee Benefits**


Full
      time
      employees of the PRC entities participate in a government mandated
      multi-employer defined contribution plan pursuant to which certain pension
      benefits, medical care, unemployment insurance, employee housing fund and other
      welfare benefits are provided to employees. Chinese labor regulations require
      the Company to accrue for these benefits based on certain percentages of the
      employees' salaries.





In
      September 2008, the Company received a notice from local government agency
      regarding its pension liability. Based on the balance on the notice, the Company
      adjusted its pension expenses payable and pension expenses for the nine months
      ended September 31, 2008. The total provisions for employee benefits and pension
      were $4,772 and $24,496 for the nine months ended September 30, 2008 and 2007,
      respectively.





**Statutory
      Reserves**


Pursuant
      to the laws applicable to the PRC, PRC entities are required to make
      appropriations to three non-distributable reserve funds, the statutory surplus
      reserve, statutory public welfare fund, and discretionary surplus reserve,
      based
      on after-tax net earnings as determined in accordance with the PRC GAAP.
      Appropriation to the statutory surplus reserve should be at least 10% of the
      after-tax net earnings until the reserve is equal to 50% of the Company's
      registered capital. Appropriation to the statutory public welfare fund is 10%
      of
      the after-tax net earnings. The statutory public welfare fund is established
      for
      the purpose of providing employee facilities and other collective benefits
      to
      the employees and is non-distributable other than in liquidation. No
      appropriations to the discretionary surplus reserve are made at the discretion
      of the Board of Directors. The statutory surplus reserve fund and statutory
      public welfare fund are included into retained earnings in the balance sheet
      presented. Since the Company has been accumulating deficiency, no such reserve
      funds have been made.





**Income
      Taxes**


The
      Company accounts for income taxes in interim periods as required by Accounting
      Principles Board Opinion No. 28 "Interim Financial Reporting" and as interpreted
      by FASB Interpretation No. 18, "Accounting for Income Taxes in Interim Periods".
      The Company has determined an estimated annual effect tax rate. The rate will
      be
      revised, if necessary, as of the end of each successive interim period during
      the Company's fiscal year to its best current estimate.





The
      estimated annual effective tax rate is applied to the year-to-date ordinary
      income (or loss) at the end of the interim period.





**SHANDONG
      ZHOUYUAN SEED AND NURSERY CO., LTD.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


SEPTEMBER
      30, 2008
      UNAUDITED




**Note
      4-SIGNIFICANT ACCOUNTING POLICIES (continued)**





**Earnings
      (Loss) Per Share**


The
      Company reports earnings per share in accordance with the provisions of SFAS
      No.
      128, “Earnings Per Share.” SFAS No. 128 requires presentation of basic and
      diluted earnings per share in conjunction with the disclosure of the methodology
      used in computing such earnings per share. Basic earnings (loss) per share
      is
      computed by dividing income (loss) available to common shareholders by the
      weighted-average number of common shares outstanding during the period. Diluted
      earnings per share is computed similar to basic earnings per share except that
      the denominator is increased to include the number of additional common shares
      that would have been outstanding if the potential common shares had been issued
      and if the additional common shares were dilutive. There are no potentially
      dilutive securities for the nine months ended September 30, 2008 and 2007,
      respectively.





**Comprehensive
      Income**


Statement
      of Financial Accounting Standards (SFAS) No. 130, “Reporting Comprehensive
      Income,” establishes standards for reporting and display of comprehensive
      income, its components and accumulated balances. Comprehensive income as defined
      includes all changes in equity during a period from non-owner sources.
      Accumulated comprehensive income, as presented in the accompanying statement
      of
      changes in shareholders' equity consists of changes in unrealized gains and
      losses on foreign currency translation. This comprehensive income is not
      included in the computation of income tax expense or benefit.





**Segment
      Reporting**


SFAS
      No.
      131 “Disclosures about Segments of an Enterprise and Related Information”
establishes standards for reporting information about operating segments on
      a
      basis consistent with the Company’s internal organization structure as well as
      information about geographical areas, business segments and major customers
      in
      financial statements. The Company currently plans on operating in one principal
      business segment. Therefore, segment disclosure is not presented.





**Related
      Parties**


For
      the
      purposes of these financial statements, parties are considered to be related
      to
      the Company if the Company has the ability, directly or indirectly, to control
      the party or exercise significant influence over the party in making financial
      and operating decisions, or vice versa, or where the Company and the party
      are
      subject to common control or common significant influence. Related parties
      may
      be individuals or other entities.





**SHANDONG
      ZHOUYUAN SEED AND NURSERY CO., LTD.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


SEPTEMBER
      30, 2008
      UNAUDITED




**Note
      4-SIGNIFICANT ACCOUNTING POLICIES (continued)**





**Reverse
      Stock Split**


Effective
      on January 2, 2007, the Company filed with the Secretary of State of the State
      of North Carolina Articles of Amendment to its Articles of Incorporation. The
      amendment effected a reverse stock split of the Company's common stock in the
      ratio of 1:6. The number of common stocks issued and outstanding immediately
      after the reverse stock split was 12,001,635, including an addition of 2,234
      shares for rounding up fractional shares. All share and per share information
      included in these consolidated financial statements have been adjusted to
      reflect this reverse stock split.





**Statement
      of Cash Flows**


In
      accordance with SFAS No. 95, “Statement of Cash Flows,” cash flows from the
      Company’s operations is calculated based upon the functional currency. As a
      result, amounts related to assets and liabilities reported on the statement
      of
      cash flows may not necessarily agree with changes in the corresponding balances
      on the balance sheet.





**Recent
      Accounting Pronouncements**


In
      June
      2008, the Financial Accounting Standards Board (“FASB”) issued FSP No. EITF
      03-6-1, Determining Whether Instruments Granted in Share-Based Payment
      Transactions Are Participating Securities (“FSP EITF 03-6-1”). FSP EITF 03-6-1
      concludes that unvested share-based payment awards that contain rights to
      receive non-forfeitable dividends or dividend equivalents are participating
      securities, and thus, should be included in the two-class method of computing
      earnings per share (“EPS”). FSP EITF 03-6-1 is effective for fiscal years
      beginning after December 15, 2008, and interim periods within those years.
      Early
      application of EITF 03-6-1 is prohibited. It also requires that all prior-period
      EPS data be adjusted retrospectively. We have not yet determined the effect,
      if
      any, of the adoption of this statement on our financial condition or results
      of
      operations.





In
      April
      2008, the FASB issued Staff Position FAS 142-3, Determination of the Useful
      Life
      of Intangible Assets (“FSP FAS 142-3”) which amends the factors an entity should
      consider in developing renewal or extension assumptions used to determine the
      useful life of a recognized intangible asset under FAS No. 142, Goodwill and
      Other Intangible Assets (“FAS No. 142”). FSP FAS 142-3 applies to intangible
      assets that are acquired individually or with a group of assets and intangible
      assets acquired in both business combinations and asset acquisitions. It removes
      a provision under FAS No. 142, requiring an entity to consider whether a
      contractual renewal or extension clause can be accomplished without substantial
      cost or material modifications of the existing terms and conditions associated
      with the asset. Instead, FSP FAS 142-3 requires that an entity consider its
      own
      experience in renewing similar arrangements. An entity would consider market
      participant assumptions regarding renewal if no such relevant experience exists.
      FSP FAS 142-3 is effective for year ends beginning after December 15, 2008
      with
      early adoption prohibited. We have not yet determined the effect, if any, of
      the
      adoption of this statement on our financial condition or results of
      operations.





**SHANDONG
      ZHOUYUAN SEED AND NURSERY CO., LTD.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


SEPTEMBER
      30, 2008
      UNAUDITED




**Note
      4-SIGNIFICANT ACCOUNTING POLICIES (continued)**





**Recent
      Accounting Pronouncements (continued)**


In
      March
      2008, the FASB issued SFAS 161, “Disclosures about Derivative Instruments and
      Hedging Activities”. The new standard is intended to improve financial reporting
      about derivative instruments and hedging activities by requiring enhanced
      disclosures to enable investors to better understand their effects on an
      entity’s financial position, financial performance, and cash flows. It is
      effective for financial statements issued for fiscal years and interim periods
      beginning after November 15, 2008, with early application encouraged. The
      Company is currently evaluating the impact of adopting SFAS 161 on its
      consolidated financial statements.





In
      December 2007, the FASB issued Statements of Financial Accounting Standards
      No.
      141 (revised 2007), “Business Combinations” (“SFAS 141R”) and No. 160,
“Noncontrolling Interests in Consolidated Financial Statements – an
      amendment to ARB No. 51” (“SFAS 160”). Both SFAS 141R and SFAS 160 are to be
      adopted effective January 1, 2009. SFAS 141R requires the application of several
      new or modified accounting concepts that, due to their complexity, could
      introduce a degree of volatility in periods subsequent to a material business
      combination. SFAS 141R requires that all business combinations result in assets
      and liabilities acquired being recorded at their fair value, with limited
      exceptions. Other areas related to business combinations that will require
      changes from current GAAP include: contingent consideration, acquisition costs,
      contingencies, restructuring costs, in process research and development and
      income taxes, among others. SFAS 160 will primarily impact the presentation
      of
      minority or noncontrolling interests within the Balance Sheet and Statement
      of
      Operations as well as the accounting for transactions with noncontrolling
      interest holders. The Management does not expect that the adoption of SFAS
      No.
      141 (revised 2007) and SFAS No. 160 would have a material effect on the
      Company’s financial position and results of operations.





**SHANDONG
      ZHOUYUAN SEED AND NURSERY CO., LTD.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


SEPTEMBER
      30, 2008
      UNAUDITED




**Note
      5-**  **ACCOUNTS
      RECEIVABLE**





Accounts
      receivable consists of the following:





September 30,
            
            December 31,2008
            
            2007(unaudited)Accounts
                receivable
            
            $
            259,045
            
            $
            278,713less:
                Allowance for bad debt
            
            
            (226,874
            )
            
            (260,333
            )Accounts
                receivable, net
            
            $
            32,171
            
            $
            18,380





We
      use
      indirect method to write off accounts receivable. The bad debt expenses was
      $0
      and $0 for the nine months ended September 30, 2008 and 2007,
      respectively.





**Note
      6-INVENTORIES**





Inventories
      consist of following:





September 30,
            
            December 31,2008
            
            2007(unaudited)Finished
                goods
            
            $
            112,058
            
            $
            121,923Supply
                and packing materials
            
            
            60,483
            
            
            61,677$
            172,541
            
            $
            183,600





**SHANDONG
      ZHOUYUAN SEED AND NURSERY CO., LTD.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


SEPTEMBER
      30, 2008
      UNAUDITED




**Note
      7-PROPERTY AND EQUIPMENT**





The
      following is a summary of property, plant and equipment-at cost, less
      accumulated depreciation:





September 30,
            
            December 31,2008
            
            2007(unaudited)Property
                and plant
            
            $
            2,079,481
            
            $
            1,948,984Machines
                and equipment
            
            
            202,772
            
            
            189,391Office
                equipment
            
            
            19,766
            
            
            17,801Motor
                vehicles
            
            
            104,797
            
            
            98,222Total
            
            
            2,406,816
            
            
            2,254,398Less:
                Accumulated depreciation
            
            
            (543,667
            )
            
            (426,870
            )Total
            
            $
            1,863,149
            
            $
            1,827,528





Depreciation
      expense charged to operations was $86,409 and $78,055 for the nine months ended
      September 30, 2008 and 2007, respectively.





**Note
      8-**  **LAND
      USE RIGHT**





The
      following is a summary of land use right, less amortization:





September 30,
            
            December 31,2008
            
            2007(unaudited)Land
                use right
            
            $
            527,349
            
            $
            494,255less:
                Amortization
            
            
            (53,492
            )
            
            (42,188
            )Accounts
                receivable, net
            
            $
            473,857
            
            $
            452,067





Amortization
      expense charged to operations was $8,303 and $7,571 for the nine months ended
      September 30, 2008 and 2007, respectively.





**SHANDONG
      ZHOUYUAN SEED AND NURSERY CO., LTD.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


SEPTEMBER
        30, 2008
        UNAUDITED


**Note
      9-ACQUIRED PLANT VARIETY PROTECTIONS**




The
      following is a summary of acquired seed patents, less amortization:





September 30,
            
            December 31,2008
            
            2007(unaudited)Acquired
                plant variety protections
            
            $
            1,518,095
            
            $
            1,422,826less:
                Amortization
            
            
            (1,050,016
            )
            
            (877,409
            )Accounts
                receivable, net
            
            $
            468,079
            
            $
            545,417





Amortization
      expense charged to operations was $111,518 and $101,684 for the nine months
      ended September 30, 2008 and 2007, respectively.





**Note
      10-COMMON STOCK**





On
      January 18, 2007, The Company entered into a Share Exchange Agreement with
      Mr.
      Wang, Zhigang and Ms. You, Li, who are the shareholders of Infolink, pursuant
      which the Company will issue to Messrs. Wang and You 55,000,000 (330,000,000
      pre-split) shares of its common stock in exchange for all of the capital stock
      of Infolink. Since this transaction was treated for accounting purposes as
      a
      capital transaction and reverse merger, the issuance of 33,000,000 shares of
      common has been report in 2006, as if it had happened in the earliest period
      presented in these consolidated financial statements.





On
      April
      5,2007, the Company engaged a consultant for an eighteen-month period ended
      October 4, 2008. The terms of the agreement are for the consultant to receive
      800,000 shares of common stock valued at $0.28 per share, totaling $224,000,
      which will be amortized over the beneficial period. The consultant assists
      the
      Company in establish two distribution centers in the Center Region,
      PRC.





On
      April
      5,2007, the Company engaged another consultant for a twenty-four-month period
      ended April 4, 2009. The terms of the agreement are for the consultant to
      receive 1,200,000 shares of common stock valued at $0.28 per share, totaling
      $336,000, which will be amortized over the beneficial period. The consultant
      assists the Company in website design, building, maintenance, and
      hosting.





On
      April
      5,2007, the Company engaged another consultant for a twenty-four-month period
      ended April 4, 2009. The terms of the agreement are for the consultant to
      receive 1,000,000 shares of common stock valued at $0.28 per share, totaling
      $280,000, which will be amortized over the beneficial period. The consultant
      assists the Company in establish two distribution centers in the Southwest
      Region, PRC.





**SHANDONG
      ZHOUYUAN SEED AND NURSERY CO., LTD.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


SEPTEMBER
        30, 2008
        UNAUDITED


**Note
      11-BANK LOANS**





Bank
      loans consist of the following as of September 30, 2008:




Loan
            
            
            
            AnnualFinancial
                Institutions
            
            Amount
            
            Duration
            
            Interest Rate
            
            Collateral*****
            
            
            Agricultural
                Bank of China
            
            $
            598,095
            
            
            04/21/04—04/21/05
            
            
            6.903
            %
            
            Headquarter
                Building and land usage right*****
            
            
            Agricultural
                Bank of China
            
            
            583,507
            
            
            11/26/04—11/26/05
            
            
            7.488
            %
            
            Guaranteed
                by a real estate development company*****
            
            
            Agricultural
                Bank of China
            
            
            70,021
            
            
            11/26/04—11/26/05
            
            
            7.488
            %
            
            Guaranteed
                by a real estate development company$
            1,251,623





*****
            The
                Company defaulted on these bank loans, totally $1,251,623 , as of
                September 30, 2008. The Company also defaulted on bank loan interest
                payments of $400,771 as of September 30,
                2008.





In
      2004,
      the Company sold the usage right of a piece of land, which the Company used
      to
      secure its bank loans, to a real estate development company. The real estate
      company agreed to guarantee these bank loans.





Interest
      expense for these bank loans was $136,820 and $134,468 for the nine months
      ended
      September, 2008 and 2007, respectively.





**SHANDONG
      ZHOUYUAN SEED AND NURSERY CO., LTD.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


SEPTEMBER
        30, 2008
        UNAUDITED
  **Note
      12-RECEIVABLE FROM SALE OF LAND USE RIGHT**





In
      2004,
      the Company sold land use rights to a real estate development company for
      $1,228,858. The real estate development company owes the Company $309,025 as
      of
      December 31, 2004. The parties agreed that the real estate development company
      would pay interest annually at 7.488% on $126,817 (RMB 1,000,000) of the
      $309,025 and the rest of the balance bears no interest. As the currency exchange
      rate changes, the balance shown on the balance sheet changes as indicated in
      the
      following:





The
      receivable from sale of land use right consists of the following:





September 30,
            
            December 31,2008
            
            2007(unaudited)Balance
                bearing interest at 7.488%
            
            $
            145,877
            
            $
            136,722Balance
                bearing no interest
            
            
            202,447
            
            
            189,743$
            348,324
            
            $
            326,465





**Note
      13-**  **COMMITMENTS
      AND CONTINGENCIES**





The
      Company faces a number of risks and challenges not typically associated with
      companies in North America and Western Europe, since its assets exist solely
      in
      the PRC, and its revenues are derived from its operations therein. The PRC
      is a
      developing country with an early stage market economic system, overshadowed
      by
      the state. Its political and economic systems are very different from the more
      developed countries and are in a state of change. The PRC also faces many
      social, economic and political challenges that may produce major shocks and
      instabilities and even crises, in both its domestic arena and in its
      relationships with other countries, including the United States. Such shocks,
      instabilities and crises may in turn significantly and negatively affect the
      Company's performance.





**Note
      14-LITIGATION**





On
      August
      1, 2006 Greentree Financial Group, Inc. ("Greentree"), a former consultant
      to a
      subsidiary of the Company, filed a breach of contract complaint in the Superior
      Court in Mecklenberg County, North Carolina for non payment of contractual
      obligations for 2004 and 2005. The claim is for $49,000 in cash and $40,000
      worth of stock as compensatory damages or $80,000 in liquidated damages. The
      Company failed to appear to the Court, and the Court rendered a judgment, which
      orders the Company to pay the plaintiff a sum of $201,500, with interest thereon
      at the rate of 8.000% per annum from the date of Entry of the Judgment until
      paid; and for the costs of this action, in full, to be taxed by the Clerk.
      The
      Company is currently in settlement discussions with GreenTree financial Group
      regarding the default judgment rendered against the Company and expects to
      reach
      a resolution soon.





**SHANDONG
      ZHOUYUAN SEED AND NURSERY CO., LTD.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


SEPTEMBER
        30, 2008
        UNAUDITED


**Note
      15-CONTRACT SECURITY DEPOSIT**





On
      March
      18, 2008, the Company executed an acquisition agreement with Henan Zhongyi
      Seed
      and Nursery Co., Ltd.("Henan Zhongyi"), pursuant to which the Zhouyuan will
      acquire 51% equity ownership interest of Henan Zhongyi. Zhouyuan paid $80,036
      (RMB 550,000) to security this contract. Zhouyuan is currently negotiating
      with
      the majority shareholders of Henan Zhongyi to finalize the acquisition terms.
      However, there is no guarantee the parties will be able close the
      due.





On
      April
      11, 2008, the Company executed an acquisition agreement with Sichuan Huaxia
      Seed
      and Nursery Co., Ltd.("Sichuan Huaxia"), pursuant to which the Zhouyuan will
      acquire 51% equity ownership interest of Sichuan Huaxia. Zhouyuan paid $56,871
      (RMB 390,800) to security this contract. Zhouyuan is currently negotiating
      with
      the majority shareholders of Sichuan Huaxia to finalize the acquisition terms.
      However, there is no guarantee the parties will be able close the
      due.





***ITEM
      2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS***





**Business
      Overview**





Shandong
      Zhouyuan Seed and Nursery Co., Ltd. (“Zhouyuan”) through its consolidated
      subsidiary, Shandong Zhouyuan Seed and Nursery Co., Ltd., a company formed
      under
      the laws of the People’s Republic of China, is engaged in the business of
      developing, distributing and selling agricultural seeds in China.





The
      Company was originally incorporated in the State of North Carolina on July
      20,
      1996 under the name “Great Land Development Co.” In 2000 Great Land Development
      Co. changed its name to “Xenicent, Inc.” In 2004 Xenicent, Inc. changed its name
      to “Pingchuan Pharmaceutical, Inc.” In 2007 Pingchuan changed its name to
“Shandong Zhouyuan Seed and Nursery Company, Ltd.” As Great Land Development Co.
      the Company was in the business of real estate consulting and purchasing and
      reselling vacant tracts of land, primarily in the North Carolina area. In 2002,
      the Company acquired a majority interest in Giantek Technology Corporation
      ("Giantek"), a Taiwanese corporation that manufactured and distributed Light
      Emitting Diode (LED) display systems. In 2003, the Company terminated its
      relationship with Giantek and agreed to transfer all of the Company’s interest
      in Giantek back to its former controlling shareholders. Thereafter the Company
      existed as a “shell company,” but not a “blank check” company, under regulations
      promulgated by the SEC and had no business operations and only nominal assets
      until 2004 when the Company entered into a plan of exchange with Heilongjiang
      Pingchuan Yi Liao Qi Xie You Xian Gong Si, a corporation organized and validly
      existing under the laws of the People’s Republic of China. The plan of exchange
      was consummated on August 11, 2004 and the Company changed its name to
“Pingchuan Pharmaceutical, Inc.” Pingchuan was engaged in the business of
      providing integrated operational management services for a related medical
      company, Harbin Pingchuan Yao Ye Gu Fen You Xian Gong Si, a corporation validly
      organized and existing under the laws of the People’s Republic of China (“Gu
      Fen”). In February 2007, the Company consummated the merger of Infolink Pacific
      Limited into a wholly-owned subsidiary of the Company (the “Merger”) and changed
      its state of incorporation from North Carolina to Delaware. See “The Merger”
below. In connection with the Merger, the Company changed its name from
“Pingchuan Pharmaceutical, Inc.” to “Shandong Zhouyuan Seed and Nursery Company,
      Ltd.” Unless the context otherwise requires, the term “Company” as used herein
      collectively refers to Shandong Zhouyuan and its wholly-owned subsidiaries
      and
      consolidated entities, including Infolink Pacific Limited and Shandong Zhouyuan
      Seed and Nursery Co., Ltd., a PRC company.




The
      Common Stock of the Company is quoted on the Over-the-Counter Bulletin Board
      under the symbol “SZSN.OB.” See, “Part II, Item 5. Market for Registrant’s
      Common Equity, Related Stockholder Matters and Issuer Purchasers of Equity
      Securities.”




The
      Company’s executive offices are located at 238 Jianxindong Street, Laizhou,
      Shandong Province, Peoples Republic of China. The Company may be contacted
      by
      telephone at 011 86 451-8271-3712, and its website is
      www.chinaseedcorp.com.





**Subsidiaries
      and Joint Ventures**




The
      diagram below illustrates the current corporate structure of the Company and
      its
      subsidiaries (“we,” “our,” “us,” or the “Company”):




***InfoLink
      Pacific Limited***




Infolink
      was incorporated on September 28, 2006 in British Virgin Islands (“BVI”) under
      the BVI Business Companies Act, 2004 by Li Han Xun and You Li, for the purpose
      of seeking and consummating a merger or acquisition with a business entity
      organized as a private corporation, partnership, or sole proprietorship as
      defined by Statement of Financial Accounting Standards (SFAS) No.
      7.





In
      October 2006 Li Han Xun and You Li, the record shareholders of the PRC
      Subsidiary, entered into Trust and Indemnity Agreements with Infolink pursuant
      to which Mr. Li and Ms. You assigned to Infolink all of the benefits of
      ownership of 60% of the total equity interests in the PRC Subsidiary. In
      addition, Mr. Li and Ms. You agreed to vote on shareholder matters as directed
      by Infolink. Finally, the Declaration of Trust signed by Mr. Li and Ms. You
      contains their undertaking to assign the shares of the PRC Subsidiary to
      Infolink at any time upon Infolink’s request.




***Shandong
      Zhouyuan Seed and Nursery Co., Ltd.***




Shandong
      Zhouyuan Seed and Nursery Co., Ltd., a People’s Republic of China company was
      organized on October 26, 2001 under the laws of the People’s Republic of China
      (the “PRC Subsidiary” or “Zhouyuan”) by Li Han Xun and You Li, who are the
      record shareholders of the PRC Subsidiary. The PRC Subsidiary was created from
      the merger of two formerly state owned companies, Laizhou Yongzhou Seed Ltd
      and
      Laizhou Agriculture Science Research and Development Ltd., which were reformed
      and merged into one company named Laizhou Huiyuan Seed Ltd. ("Huiyuan") on
      October 26, 2001. On December 24, 2002, Huiyuan changed its name to Shandong
      Zhouyuan Seed and Nursery Co., Ltd. Since its formation in 2001, the PRC
      Subsidiary has worked closely with government agencies, particularly the state
      Science and Technology Commission, to develop improved hybrid seed strains.
      The
      PRC Subsidiary now ranks as one of the top three seed producers in the LaiZhou
      District, which is known as the “Seed Valley of China.”





***The
      Merger***





On
      January 18, 2007, the Company entered into a Share Exchange Agreement with
      Infolink Pacific Limited pursuant to which the Company issued 55,000,000 shares
      of its common stock to Li Han Xun and You Li in exchange for all of the issued
      and outstanding capital stock of Infolink and Infolink became a wholly-owned
      subsidiary of the Company.





Subsequently
      the Parent Corporation terminated the pharmaceutical consulting business that
      had been carried by its subsidiary, Heilongjiang Pingchuan Yi Liao Qi Xie You
      Xian Gong Si. On April 2, 2007, the Parent Corporation changed its name to
      “Shandong Zhouyuan Seed and Nursery Co., Ltd.”





The
      merger of the Company with Infolink was accounted for as a reverse merger and
      the transaction was treated for accounting purposes as a recapitalization of
      the
      accounting acquirer (Infolink) and a reorganization of the accounting acquiree
      (the Company). Accordingly, the historical financial statements presented prior
      to the merger are the historical financial statements of Infolink, which
      includes the PRC Subsidiary.








In
      addition, under U.S. accounting rules, as a result of the obligations of the
      parties under the Trust and Indemnity Agreements described above, Infolink
      is
      deemed to be a 60% beneficiary of the PRC Subsidiary and the financial results
      of the PRC Subsidiary may be consolidated with the financial results of the
      Company under Financial Interpretation 46 (Revised) "Consolidation of Variable
      Interest Entities" issued by the Financial Accounting Standards Board ("FASB").





On
      April
      2, 2007, the Company changed its name to Shandong Zhouyuan Seed and Nursery
      Co.,
      Ltd.





***Production***




Zhouyuan
      currently has approval from several provincial governments to market a wide
      variety of seeds. Its primary product is corn seed, including both corn intended
      for forage and corn with a high starch content for use in industrial food
      production. In addition, Zhouyuan currently markets varieties of wheat seeds
      and
      cabbage seeds.




Among
      Zhouyuan’s most popular products are:


·
              
              Corn
                  - Huiyaun 20. This summer sowing seed achieved first place among
                  33
                  competitors in a productivity test conducted in the Zhong District
                  and
                  second place in a competition held in Anhui Province.·
              
              Corn
                  - White Prince. This white corn has a high gluten content that
                  gives it a
                  particularly attractive taste. Zhouyuan is able to sell these seeds
                  for
                  almost four times the market price of standard corn
                  seeds.·
              
              Corn
                  - Select Yeden 5. This corn is valued in difficult climates because
                  it is
                  especially resistant to disease and collapse.·
              
              Corn
                  - Spring Queen. In only 65 days (compared to the standard 95 -
                  115 days)
                  this seed produces a high yield of corn (approx. 24,000 kg. per
                  acre) with
                  a particularly good taste. Because of these benefits, Zhouyuan
                  prices this
                  seed at nine times the price of conventional corn
                  seeds.·
              
              Wheat
                  - Zhouyuan 9369. This is a new variety of high quality wheat. It
                  is rust
                  resistance, and grows to 75
                  cm.




The
      majority of Zhouyuan’s seeds are currently produced by three independent seed
      growers and one municipality consisting of seven towns. These four sources
      dedicate 1400 to 1750 acres to growing seeds for Zhouyuan. Zhouyuan has long
      standing working relationships with all of its seed growers. Zhouyuan provides
      its growers with the patented seeds and the growers would produce the volume
      of
      seeds as required by Zhouyuan. There are no long term contractual relationships
      between Zhouyuan and any of its growers. Zhouyuan determines its volume
      requirements based on its determination of market demand and contracts the
      growers to produce enough seeds to meet the market demand on a seasonal basis.
      Zhouyuan then inspects and packages the seed for distribution
      wholesale.




Zhouyuan’s
      proprietary rights to its seeds are protected by patents, specifically six
      patents on its corn hybrids, one on its wheat hybrid and one on its cabbage
      hybrid. Zhouyuan also owns seven registered trademarks.




***The
      Seed Industry***




The
      People’s Republic of China contains less than 7% of the world’s cultivatable
      land, but 22% of the world’s population. For this reason, the government of
      China has placed a special focus on developing the advanced agricultural
      technology needed to successfully feed its population. The seed industry has
      been a prime beneficiary of this focus, receiving grants, tax relief and
      technological assistance.








Until
      2000 China restricted the market of any individual seed company to the district
      in which it was located. The Seed Law of the People’s Republic of China, issued
      in 2000, eliminated that restriction. Today, there are approximately 3,700
      firms
      marketing seeds nationwide in China. However, because the ability to have a
      national presence is new, the firms marketing seeds in China tend to be small,
      and none has significant market share. The eight largest seed companies are
      believed to control only about 25% of the national market.




A
      number
      of multinational companies have made inroads into the Chinese seed market,
      among
      them Monsanto, Pioneer and Sygenta. To date, however, their influence has been
      limited by the difficulty of marketing to the highly decentralized agricultural
      community in China. In addition, the multinationals primarily offer
      genetically-engineered seeds, which have not gained widespread acceptance in
      China.




***Marketing***




Farming
      in China remains a highly decentralized industry. Marketing to farmers is
      conducted at a local level and customer loyalty is built on personal
      relationships. For that reason, Zhouyuan has developed a decentralized
      distribution network, constituted by county-based sales representatives who
      report to independent retail companies located in each of the 19 Provinces
      and
      Autonomous Regions in which Zhouyuan carries on marketing operations. Zhouyuan’s
      internal marketing personnel are responsible for monitoring the performance
      of
      the regional sales companies and providing any assistance they require.





***Government
      Regulation***





Limitations
      on Foreign Ownership in the Seed Industry





Due
      to
      restriction in the People’s Republic of China on foreign investments in Chinese
      businesses in the seed industry, Infolink does not have direct equity ownership
      in Zhouyuan. Zhouyuan is owned by two PRC citizens, who hold 60% of the equity
      interests in Zhouyuan in trust for the benefit of the Company.





Regulation
      of Foreign Currency Exchange




The
      principal regulation governing foreign currency exchange in China is the Rules
      on Foreign Exchange Control (1996), as amended. Under the Rules, Renminbi is
      freely convertible for trade and service-related foreign exchange transactions,
      but not for direct investment, loan or investment outside China unless the
      prior
      approval of the State Administration for Foreign Exchange of the PRC or other
      relevant authorities is obtained.




Pursuant
      to the Rules on Foreign Exchange Control, foreign investment enterprises in
      China may purchase foreign currency without the approval of the State
      Administration for Foreign Exchange of the PRC for trade and service-related
      foreign exchange transactions by providing commercial documents evidencing
      these
      transactions. They may also retain foreign exchange (subject to a cap approved
      by the State Administration for Foreign Exchange of the PRC) to satisfy foreign
      exchange liabilities or to pay dividends. However, the relevant PRC government
      authorities may limit or eliminate the ability of foreign investment enterprises
      to purchase and retain foreign currencies in the future. In addition, foreign
      exchange transactions for direct investment, loan and investment outside China
      are still subject to limitations and require approvals from the State
      Administration for Foreign Exchange of the PRC.








Regulation
      of Dividend Distribution




The
      principal regulations governing distribution of dividends of wholly
      foreign-owned companies include:




·
            The
                Foreign Investment Enterprise Law (1986), as amended;
                and·
            Administrative
                Rules under the Foreign Investment Enterprise Law
                (2001).




Under
      these regulations, foreign investment enterprises in China may pay dividends
      only out of their accumulated profits, if any, determined in accordance with
      PRC
      accounting standards and regulations. In addition, wholly foreign-owned
      enterprises in China are required to set aside at least 10% of their after-tax
      profits each year, if any, to fund certain reserve funds, unless such reserve
      funds as accumulated have reached 50% of their respective registered capital.
      These reserves are not distributable as cash dividends.




Regulation
      of Enterprise Income Law




The
      Enterprise Income Law (“EIT Law’) was promulgated by the National People’s
      Congress on March 16, 2007 to introduce a new uniform taxation regime in the
      PRC. Both resident and non-resident enterprises deriving income from the PRC
      will be subject to this EIT Law from January 1, 2008. It replaces the previous
      two different tax rates applied to foreign-invested enterprises and domestic
      enterprises by only one single income tax rate applied for all enterprises
      in
      the PRC. Under this EIT Law, except for some hi-tech enterprises which are
      subject to EIT rates of 15% and other very limited situation that allows EIT
      rates at 20%, the general applicable EIT rate in the PRC is 25%. We may not
      enjoy tax incentives for our further established companies in the PRC and
      therefore our tax advantages over domestic enterprises may be
      diminished.




***Employees***




Zhouyuan
      has 68 employees, all of whom are employed on a full-time basis. Its employees
      include 1 research scientist, 13 senior agronomists, 27 agronomists and 18
      technicians.





**Results
      of Operations**





**Three
      Months Ended September 30, 2008 Compared To Three Months Ended September 30,
      2007**




Revenues .
      Revenues for the quarter ended September 30, 2008 were $91,712 compared to
      $152,215 for the quarter ended September 30, 2007, a decrease of $60,503, or
      40%. This decrease was due to the slow down in the economy which caused a
      decrease in sales.




Cost
      of sales .
      Cost of
      sales decreased by 31% from $136,327 for the three months ended September 30,
      2007 to $94,581 for the three months ended September 30, 2008. The decrease
      in
      cost of sales resulted primarily from the decrease in sales.




Operating
      Expenses .
      Operating expenses increased by 3% from $197,611 for the three months ended
      September 30, 2007 to $203,816 for the three months ended September 30, 2008.
      The increase in operating expenses was primarily because of an increase in
      office expenses and judgment expenses relating the settlement with Greentree
      Financial Group, Inc. In addition, the Company incurred expenses associated
      with
      developing new seed varieties.








Net
      Income (Loss) .
      Net
      loss increased by 21% from $167,810 for the three months ended September 30
      to
      $202,431 for the three months ended September 30, 2008, primarily as a result
      of
      a decrease in sales during this period.





Our
      business operates entirely in Chinese Renminbi, but we report our results in
      our
      SEC filings in U.S. Dollars. The conversion of our accounts from RMB to Dollars
      results in translation adjustments, which are reported as a middle step between
      net income and comprehensive income. The net income or net loss is added to
      the
      retained earnings on our balance sheet; while the translation adjustment is
      added to a line item on our balance sheet labeled “accumulated other
      comprehensive income,” since it is more reflective of changes in the relative
      values of U.S. and Chinese currencies than of the success of our business.
      For
      the three months ended September 30, 2008 we recorded $7,755 in unrealized
      loss
      on foreign currency translation.





**Nine
      Months Ended September 30, 2008 Compared To Nine Months Ended September 30,
      2007**




Revenues .
      Revenues for the nine months ended September 30, 2008 were $901,403 compared
      to
      $611,564 for the nine months ended September 30, 2007, an increase of $289,839,
      or 47%. This increase was due to an increase in sales of our seeds with plant
      variety protections which has a higher profit margin during the first two
      quarters of 2008.




Cost
      of sales .
      Cost of
      sales increased by 29% from $558,833 for the nine months ended September 30,
      2007 to $720,350 for the nine months ended September 30, 2008. The increase
      in
      cost of sales resulted primarily from the increase in volume of seeds sold
      during the first two quarters of 2008.




Operating
      Expenses .
      Operating expenses decreased by 7% from $691,855 for the nine months ended
      September 30, 2007 to $642,412 for the nine months ended September 30, 2008.
      The
      decrease in operating expenses was primarily because the Company incurred no
      judgment expense for the first six months of 2008.




Net
      Income (Loss) .
      Net
      loss decreased by 74% from net loss of $610,269 for the nine months ended
      September 30, 2007 to net loss of $159,479 for the nine months ended September
      30, 2008, primarily as a result of an increase in sales as described above
      and
      the government subsidy for one of our plant variety protection during the first
      six months on 2008.





Our
      business operates entirely in Chinese Renminbi, but we report our results in
      our
      SEC filings in U.S. Dollars. The conversion of our accounts from RMB to Dollars
      results in translation adjustments, which are reported as a middle step between
      net income and comprehensive income. The net income or net loss is added to
      the
      retained earnings on our balance sheet; while the translation adjustment is
      added to a line item on our balance sheet labeled “accumulated other
      comprehensive income,” since it is more reflective of changes in the relative
      values of U.S. and Chinese currencies than of the success of our business.
      For
      the first nine months of 2008 we recorded $28,899 in unrealized gains on foreign
      currency translation.





Liquidity
      and Capital Resources





As
      of
      September 30, 2008, total current assets were $579,627, total current
      liabilities were $2,940,103 and we had working capital deficit of $2,360,476.
      Cash at September 30, 2008 was $189,258.





As
      of
      September 30, 2008, we had only $189,258 in liquid assets, and only $32,171
      in
      accounts receivable (net of allowance). At the same time we are in default
      on
      bank loans and interest payments totaling $1,521,623. Negotiations are ongoing
      with respect to a restructuring of the debt. At the same time, we cannot sustain
      operations for any significant period of time unless we obtain additional
      capital. Our efforts to attract capital are hindered, however, by our default
      to
      the Bank. The survival of our business, therefore, depends on our ability to
      develop a comprehensive debt relief and financing package. Unfortunately,
      because our operations have produced only a trickle of cash during the past
      two
      years, we can only achieve financing if we convince the investor that an
      investment in our company can be leveraged into a significant increase in
      revenues and cash flows.








In
      the
      event that we are unable to achieve a restructuring of our debt, it is likely
      that we will be required to sell our real property. This will have the effect
      of
      eliminating the revenue stream that we obtain by leasing a portion of the
      property, and will necessitate that we ourselves commence payment of lease
      fees.
      This would cause a further deterioration of our financial results.





Net
      cash
      provided by operating activities was $345,090 for the nine months ended
      September 30, 2008 compared to $161,672 for the nine months ended September
      30,
      2007. The increase is primarily related to an increase in sales during the
      first
      six months of 2008.





Net
      cash
      used in investing activities was $741 for the nine months ended September 30,
      2008 compared to $86,089 for the same period in 2007.





Net
      cash
      used by financing activities was $175,206 for the nine months ended September
      30, 2008 compared to $95,024 in net cash used in financing activities for the
      same period in 2007. The increase in net cash used is primarily due to payback
      of bank loans.




We
      believe that our business plan is sound, and that our products are marketable.
      With adequate capital, we believe that Zhouyuan can be prosperous and
      profitable. We have no assurance, however, that the necessary capital can be
      achieved.





***Off-Balance
      Sheet Arrangements***





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





**ITEM
      4T. CONTROLS AND PROCEDURES**





As
      required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange
      Act”), as of the end of the period covered by this Quarterly Report, being
      September 30, 2008, we have carried out an evaluation of the effectiveness
      of
      the design and operation of our disclosure controls and procedures. This
      evaluation was carried out under the supervision and with the participation
      of
      our management, including our Chief Executive Officer along with our Chief
      Financial Officer. Based upon that evaluation, our Chief Executive Officer
      along
      with our Chief Financial Officer concluded that our disclosure controls and
      procedures are effective as of the end of the period covered by this Quarterly
      Report. There have been no significant changes in our internal controls over
      financial reporting that occurred during our most recent fiscal quarter that
      have materially affected, or are reasonably likely to materially affect our
      internal controls over financial reporting.





Disclosure
      controls and procedures and other procedures that are designed to ensure that
      information required to be disclosed in our reports filed or submitted under
      the
      Exchange Act are recorded, processed, summarized and reported, within the time
      period specified in the Securities and Exchange Commission's rules and forms.
      Disclosure controls and procedures include, without limitation, controls and
      procedures designed to ensure that information required to be disclosed in
      our
      reports filed under the Exchange Act is accumulated and communicated to
      management, including our Chief Executive Officer and Chief Financial Officer
      as
      appropriate, to allow timely decisions regarding required disclosure.










**PART
      II - OTHER INFORMATION**




***Item
          1 Legal Proceedings***




On
      August
      1, 2006 Greentree Financial Group, Inc. ("Greentree"), a former consultant
      to a
      subsidiary of the Company, filed a breach of contract complaint in the Superior
      Court in Mecklenberg County, North Carolina for non payment of contractual
      obligations for 2004 and 2005. The claim is for $49,000 in cash and $40,000
      worth of stock as compensatory damages or $80,000 in liquidated damages. The
      Company failed to appear to the Court, and the Court rendered a judgment, which
      orders the Company to pay the plaintiff a sum of $201,500, with interest thereon
      at the rate of 8.000% per annum from the date of Entry of the judgment until
      paid; and for the costs of this action, in full, to be taxed by the Clerk.
      Subsequently, Greentree filed an involuntary bankruptcy petition in the U.S.
      Bankruptcy Court to collect on the default judgment.





On
      May
      23, 2008, the Company entered into a Settlement Agreement and Release (the
      “Settlement Agreement”) with GreenTree. Pursuant to the Settlement Agreement,
      Greentree is entitled to receive 4,000,000 shares of the Company’s common stock
      from various stockholders of the Company and upon delivery of the common stock
      by such stockholders, Greentree agreed to file with the appropriate courts
      stipulation of dismissal with prejudice to dismiss the petition to collect
      on
      the default judgment and to remove the default judgment within five business
      days. On August 13, 2008, the Company delivered stock certificates representing
      4,000,000 shares of the Company’s common stock to Greentree.





***Item
      1A. Risk Factors***





Risk
      Factors That May Affect Future Results





You
      should carefully consider the risks described below before buying our common
      stock. If any of the risks described below actually occurs, that event could
      cause the trading price of our common stock to decline, and you could lose
      all
      or part of your investment.





*There
      is no assurance that we will be able to generate profits from our
      business.*




To
      date
      we have been unsuccessful in establishing a sufficient market for our seeds
      to
      assure us of profitability. In 2006 our sales were 34% lower than in 2005,
      and
      in neither year were sales at a level that could sustain profits. Although
      sales
      levels are higher in the current year than in 2007, we are still not near a
      revenue level at which we can be profitable. Unless we are able to obtain
      sufficient capital investment to permit us to expand operations, it is unlikely
      that we will be able to operate at a profitable level. We have no commitment
      from any source for financing, and there is no assurance that we will be able
      to
      obtain the necessary financing. Without financing, it is likely that our
      business will fail.





*If
      we
      are unable to settle our bank obligations, we may lose control of our
      business.*




We
      are
      currently in default with respect to principal and interest payments due on
      $1.53 million in obligations to the Agricultural Bank of China. Our current
      financial situation does not permit us to satisfy the debt as written. We have
      been in negotiations with the Bank regarding a restructuring of the debt. If
      those negotiations do not reach a satisfactory conclusion, we may lose the
      realty that we pledged to secure the debt and may face a judgment that could
      force us into bankruptcy.








*We
      will be unable to compete effectively unless we maintain a technological
      advantage over our competitors.*




The
      physics of seed generation has been advancing rapidly in the past forty years.
      Innovations in design of seeds and methods of growing seeds are constant. Our
      ability to compete effectively in this market will depend on our ability to
      stay
      in the vanguard of technological change. However, we compete against many larger
      enterprises that have considerable resources to apply to research and
      development. If we are unable to gain access to the latest discoveries in seeds,
      we will not be able to compete effectively, and our business will
      fail.




*Our
      business and growth will suffer if we are unable to hire and retain key
      personnel that are in high demand.*




Our
      future success depends on our ability to attract and retain highly skilled
      marketing personnel, chemists, manufacturing technicians and engineers.
      Qualified individuals are in high demand in China, and there are insufficient
      experienced personnel to fill the demand. Therefore we may not be able to
      successfully attract or retain the personnel we need to succeed.





*We
      may have difficulty establishing adequate management and financial controls
      in
      China.*




The
      People’s Republic of China has only recently begun to adopt the management and
      financial reporting concepts and practices that investors in the United States
      are familiar with. We may have difficulty in hiring and retaining employees
      in
      China who have the experience necessary to implement the kind of management
      and
      financial controls that are expected of a United States public company. If
      we
      cannot establish such controls, we may experience difficulty in collecting
      financial data and preparing financial statements, books of account and
      corporate records and instituting business practices that meet U.S.
      standards.





*We
      may be unable to protect our proprietary and technology
      rights.*




The
      Company's success will depend in part on its ability to protect its proprietary
      rights and technologies. Zhouyuan relies on a combination of patents, trademark
      laws, trade secrets, confidentiality provisions and other contractual provisions
      to protect its proprietary rights. However, these measures afford only limited
      protection. Zhouyuan’s failure to adequately protect its proprietary rights may
      adversely affect our competitive prospects. Despite our efforts to protect
      our
      proprietary rights, unauthorized parties may attempt to copy aspects of
      Zhouyuan’s products or to obtain and use trade secrets or other information that
      it regards as proprietary.




Zhouyuan’s
      means of protecting its proprietary rights in the People’s Republic of China may
      not be adequate. The system of laws and the enforcement of existing laws in
      China may not be as certain in implementation and interpretation as in the
      United States. The Chinese judiciary is relatively inexperienced in enforcing
      corporate and commercial law, leading to a higher than usual degree of
      uncertainty as to the outcome of any litigation. The inability to enforce or
      obtain a remedy for theft of our proprietary information may have a material
      adverse impact on our business operations.








*Government
      regulation may hinder our ability to function efficiently* .




The
      national, provincial and local governments in the People’s Republic of China are
      highly bureaucratized. The day-to-day operations of our business require
      frequent interaction with representatives of the Chinese government institutions
      in order to obtain and maintain the licenses needed to market hybrid seeds
      in
      China. The effort to obtain the registrations, licenses and permits necessary
      to
      carry out our business activities can be daunting. Significant delays can result
      from the need to obtain governmental approval of our activities. These delays
      can have an adverse effect on the profitability of our operations. In addition,
      compliance with regulatory requirements applicable to manufacturing operations
      and production may increase the cost of our operations, which would adversely
      affect our profitability.





*We
      are subject to the risk of natural disasters* .




Our
      revenue stream depends on our ability to deliver seeds at the beginning of
      their
      growing season. Our supply of seeds and their timely availability can be negated
      by drought, flood, storm, blight, or the other woes of farming. Any such event
      or a combination thereof could render us unable to meet the demands of our
      distribution network. This could have a long-term negative effect on our ability
      to grow our business, in addition to the near-term loss of income.





*Capital
      outflow policies in China may hamper our ability to pay dividends to
      shareholders in the United States.*




The
      People’s Republic of China has adopted currency and capital transfer
      regulations. These regulations require that we comply with complex regulations
      for the movement of capital. Although Chinese governmental policies were
      introduced in 1996 to allow the convertibility of RMB into foreign currency
      for
      current account items, conversion of RMB into foreign exchange for capital
      items, such as foreign direct investment, loans or securities, requires the
      approval of the State Administration of Foreign Exchange. We may be unable
      to
      obtain all of the required conversion approvals for our operations, and Chinese
      regulatory authorities may impose greater restrictions on the convertibility
      of
      the RMB in the future. Because most of our future revenues will be in RMB,
      any
      inability to obtain the requisite approvals or any future restrictions on
      currency exchanges will limit our ability to pay dividends to our
      shareholders.





*Currency
      fluctuations may adversely affect our operating results.*




Zhouyuan
      generates revenues and incurs expenses and liabilities in Renminbi, the currency
      of the People’s Republic of China. However, as a subsidiary of the Parent
      Corporation, it will report its financial results in the United States in U.S.
      Dollars. As a result, our financial results will be subject to the effects
      of
      exchange rate fluctuations between these currencies. From time to time, the
      government of China may take action to stimulate the Chinese economy that will
      have the effect of reducing the value of Renminbi. In addition, international
      currency markets may cause significant adjustments to occur in the value of
      the
      Renminbi. Any such events that result in a devaluation of the Renminbi versus
      the U.S. Dollar will have an adverse effect on our reported results. We have
      not
      entered into agreements or purchased instruments to hedge our exchange rate
      risks.





*We
      have limited business insurance coverage.*




The
      insurance industry in China is still at an early stage of development. Insurance
      companies in China offer limited business insurance products, and do not, to
      our
      knowledge, offer business liability insurance. As a result, we do not have
      any
      business liability insurance coverage for our operations. Moreover, while
      business disruption insurance is available, we have determined that the risks
      of
      disruption and cost of the insurance are such that we do not require it at
      this
      time. Any business disruption, litigation or natural disaster might result
      in
      substantial costs and diversion of resources.








*The
      Parent Corporation is not likely to hold annual shareholder meetings in the
      next
      few years.*




Management
      does not expect to hold annual meetings of shareholders in the next few years,
      due to the expense involved. The current members of the Board of Directors
      were
      appointed to that position by the previous directors. If other directors are
      added to the Board in the future, it is likely that the current directors will
      appoint them. As a result, the shareholders of the Parent Corporation will
      have
      no effective means of exercising control over the operations of the Parent
      Corporation or Zhouyuan.





***Item
      2.*** **** ***Unregistered
      Sale of Equity Securities and Use of Proceeds***





None.





***Item
      3.*** **** ***Defaults
      Upon Senior Securities***





None.





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





None.





***Item
      5.*** **** ***Other
      Information***





None.





***Item 6.***
            
            ***Exhibits***31.1
            
            Certifications
                pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange
                Act
                of 1934, as amended, as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.31.2
            
            Certifications
                pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange
                Act
                of 1934, as amended, as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.32.1
            
            Certifications
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002.32.2
            
            Certifications
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002.





**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this Report to be signed on its behalf by the undersigned thereunto
      duly authorized.





SHANDONG
                ZHOUYUAN SEED AND
              NURSERY
                CO., LTD.Date:
                November 19, 2008
            By:
            /s/
                Wang ZhigangWang
                Zhigang, Chief Executive OfficerBy:
            /s/
                Zhang ChunmanZhang
                Chunman, Chief Financial
                Officer