**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-QSB/A**


**** (Mark
      One)





x
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934





**For
      the quarterly period ended June 30, 2007**





o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
                ACT





For
      the
      transition period from ________________ to _______________





**000-28195**


(Commission
      file number)





**AGFEED
      INDUSTRIES, INC.**


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





**Nevada**
            
            **20-2597168**(State
                or other jurisdiction
            
            (IRS
                Employerof
                incorporation or organization)
            
            Identification
                No.)




**1095
      Qing Lan Avenue**


**Economic
      and Technical Development Zone**


**Nan
      Chang City, Jiangxi Provence**


**China,
      330013**


(Address
      of principal executive offices)





**86-0791-2189878**


(Issuer’s
      telephone number)





**N/A**


(Former
      name, former address and former fiscal year, if changed since last
      report)





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
xNo
o





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date: As of August 2, 2007 - 27,026,756 shares
      of
      common stock





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








Transitional
      Small Business Disclosure Format (check one): Yes oNo x








**AGFEED
      INDUSTRIES, INC.**


**Index**





PageNumberEXPLANATORY
                NOTE
              1PART
                  I.
              FINANCIAL
                  INFORMATIONItem
                  1.
              Financial
                  Statements
              2Consolidated
                  Balance Sheet as of June 30, 2007 (unaudited)
              2Consolidated
                  Statements of Income and Other Comprehensive Income for the three
                  and six
                  months ended June 30, 2007 and 2006 (unaudited)
              3Consolidated
                  Statements of Cash Flows for the six months ended June 30, 2007
                  and 2006
                  (unaudited)
              4Notes
                  to Consolidated Financial Statements (unaudited)
              5Item
                  2.
              Management’s
                  Discussion and Analysis or Plan of Operations
              19Item
                  3A(T).
              Controls
                  and Procedures
              42PART
                  II.
              OTHER
                  INFORMATIONItem
                  1.
              Legal
                  Proceedings
              42Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              43Item
                  3.
              Defaults
                  Upon Senior Securities
              43Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              43Item
                  5.
              Other
                  Information
              43Item
                  6.
              Exhibits
              44SIGNATURES
              
              45





i




EXPLANATORY
      NOTE




We
        are amending this Quarterly Report on Form
        10-QSB in its entirety to report certain segment reporting and other information
        for the periods presented and to include additional risk factors, which changes
        are being made to conform the information presented in this report to
        disclosures made in our Registration Statement on Form SB-2 that was declared
        effective by the Securities and Exchange Commission on October 25,
        2007.


1


**Item
      1.  Financial Statements**




**AGFEED
      INDUSTRIES, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEET**




**June
                  30,****2007**(unaudited)**ASSETS****CURRENT
                  ASSETS:**Cash
                  and cash equivalents
              
              $
              9,199,987Accounts
                  receivable, net of allowance for doubtful accounts of $68,400
              
              
              5,295,836Advances
                  to suppliers
              
              
              120,537Other
                  receivable
              
              
              262,304Inventory
              
              
              918,334Prepaid
                  expense
              
              
              98,456Other
                  current assets
              
              
              49,828Total
                  current assets
              
              
              15,945,282**PROPERTY
                  AND EQUIPMENT, net**
              
              
              1,382,644**INTANGIBLE
                  ASSETS**
              
              
              548,294**OTHER
                  ASSETS**
              
              
              620,000**TOTAL
                  ASSETS**
              
              $
              18,496,220**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****CURRENT
                  LIABILITIES:**Accounts
                  payable
              
              $
              1,311,910Other
                  payables
              
              
              28,799Unearned
                  revenue
              
              
              59,019Accrued
                  expenses
              
              
              197,583Accrued
                  payroll
              
              
              94,718Short
                  term loans
              
              
              1,810,306Tax
                  and welfare payable
              
              
              227,189Total
                  current liabilities
              
              
              3,729,524**COMMITMENTS
                  AND CONTINGENCIES**
              
              
              -**STOCKHOLDERS'
                  EQUITY:**Common
                  stock, $0.001 per share; 75,000,000 shares authorized; 27,026,756
                  shares issued and outstanding
              
              
              27,027Additional
                  paid-in capital
              
              
              10,303,855Other
                  comprehensive income
              
              
              260,029Statutory
                  reserve
              
              
              448,916Retained
                  earnings
              
              
              3,726,869Total
                  stockholders' equity
              
              
              14,766,696**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY**
              
              $
              18,496,220
  The
        accompanying notes are an integral part of these consolidated financial
        statements





2


**AGFEED
      INDUSTRIES, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME**








**Three
                  Months Ended June 30,**
              
              **Six
                  Months Ended June 30,****2007**
              
              **2006**
              
              **2007**
              
              **2006**(unaudited)
              
              (unaudited)
              
              (unaudited)
              
              (unaudited)**Net
                  Revenue**
              
              $
              6,891,153
              
              $
              2,092,501
              
              $
              11,869,448
              
              $
              4,186,790**Cost
                  of Revenue**
              
              
              4,881,227
              
              
              1,294,308
              
              
              8,316,316
              
              
              2,599,398**Gross
                  profit**
              
              
              2,009,926
              
              
              798,193
              
              
              3,553,132
              
              
              1,587,392Operating
                  expensesSelling
                  expenses
              
              
              529,625
              
              
              313,890
              
              
              873,016
              
              
              579,402General
                  and administrative expenses
              
              
              259,777
              
              
              144,545
              
              
              481,701
              
              
              254,016Total
                  operating expenses
              
              
              789,402
              
              
              458,435
              
              
              1,354,717
              
              
              833,418**Income
                  from operations**
              
              
              1,220,524
              
              
              339,758
              
              
              2,198,415
              
              
              753,974Non-operating
                  income (expense):Other
                  income (expense)
              
              
              1,652
              
              
              14,540
              
              
              10,722
              
              
              15,488Interest
                  income
              
              
              44,023
              
              
              (181
              )
              
              54,190
              
              
              -Interest
                  expense
              
              
              (20,956
              )
              
              (1,814
              )
              
              (63,605
              )
              
              (1,814
              )Total
                  non-operating income (expense)
              
              
              24,719
              
              
              12,545
              
              
              1,307
              
              
              13,674Income
                  before income tax
              
              
              1,245,243
              
              
              352,303
              
              
              2,199,722
              
              
              767,648Income
                  tax
              
              
              (215,759
              )
              
              112,845
              
              
              (40,461
              )
              
              249,808**Net
                  income**
              
              $
              1,461,002
              
              $
              239,458
              
              $
              2,240,183
              
              $
              517,840Other
                  comprehensive incomeForeign
                  currency translation gain
              
              
              92,277
              
              
              5,859
              
              
              143,183
              
              
              16,991**Comprehensive
                  Income**
              
              $
              1,553,279
              
              $
              245,317
              
              $
              2,383,366
              
              $
              534,831**Weighted
                  average shares outstanding :**Basic
              
              
              25,935,813
              
              
              15,006,723
              
              
              25,144,526
              
              
              15,006,723Diluted
              
              
              25,959,272
              
              
              15,006,723
              
              
              25,144,526
              
              
              15,006,723**Earnings
                  per share:**Basic
              
              $
              0.06
              
              $
              0.02
              
              $
              0.09
              
              $
              0.03Diluted
              
              $
              0.06
              
              $
              0.02
              
              $
              0.09
              
              $
              0.03
   The
        accompanying notes are an integral part of these consolidated financial
        statements





3


**AGFEED
      INDUSTRIES, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**








**Six
                  Months Ended June 30,****2007**
              
              **2006**(unaudited)
              
              (unaudited)**CASH
                  FLOWS FROM OPERATING ACTIVITIES:**Net
                  income
              
              $
              2,240,183
              
              
              517,840Adjustments
                  to reconcile net income to net cash provided
                  in (used in) operating activities:Depreciation
              
              
              77,897
              
              
              48,819Loss
                  on disposal of property and equipment
              
              
              -
              
              
              453Amortization
              
              
              48,981
              
              
              2,441(Increase)
                  / decrease in assets:Accounts
                  receivable
              
              
              (3,412,186
              )
              
              (695,132
              )Other
                  receivable
              
              
              (53,432
              )
              
              4,548Inventory
              
              
              (118,418
              )
              
              40,427Due
                  from related party
              
              
              100,703
              
              
              (2,227
              )Advances
                  to suppliers
              
              
              (40,399
              )
              
              (11,753
              )Prepaid
                  expense
              
              
              (86,241
              )
              
              (1,003
              )Other
                  assets
              
              
              (666,903
              )
              
              -Increase
                  / (decrease) in current liabilities:Accounts
                  payable
              
              
              476,037
              
              
              10,373Unearned
                  revenue
              
              
              (24,259
              )
              
              (54,277
              )Other
                  payables
              
              
              (29,166
              )
              
              (10,245
              )Due
                  to related party
              
              
              -
              
              
              (2,086
              )Accrued
                  expenses
              
              
              101,000
              
              
              13,195Accrued
                  payroll
              
              
              55,832
              
              
              -Tax
                  and welfare payable
              
              
              (59,307
              )
              
              213,688Net
                  cash provided by (used in) operating activities
              
              
              (1,389,678
              )
              
              75,061**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Acquisition
                  of property and equipment
              
              
              (52,656
              )
              
              (57,540
              )Acquisition
                  of intangible assets
              
              
              -
              
              
              (1,778
              )Net
                  cash used in investing activities
              
              
              (52,656
              )
              
              (59,318
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES:**Repayment
                  to shareholders
              
              
              (746,645
              )
              
              (24,899
              )Advances
                  from related parties
              
              
              -
              
              
              49,798Repayment
                  to related parties
              
              
              -
              
              
              (58,675
              )Advance
                  to related parties
              
              
              -
              
              
              (65,371
              )Proceeds
                  from loans
              
              
              1,086,646
              
              
              560,238Proceeds
                  from the sale of common stock
              
              
              9,830,259
              
              
              -Offering
                  costs
              
              
              (822,756
              )
              
              -Payment
                  on note payable
              
              
              (1,102,004
              )
              
              -Collection
                  of subscription receivable
              
              
              226,083
              
              
              -Collection
                  from related parties
              
              
              935,859
              
              
              44,495Net
                  cash provided by financing activities
              
              
              9,407,442
              
              
              505,586Effect
                  of exchange rate changes on cash and cash equivalents
              
              
              30,779
              
              
              3,773**NET
                  INCREASE IN CASH & CASH EQUIVALENTS**
              
              
              7,995,887
              
              
              525,102**CASH
                  & CASH EQUIVALENTS, BEGINNING BALANCE**
              
              
              1,204,100
              
              
              136,406**CASH
                  & CASH EQUIVALENTS, ENDING BALANCE**
              
              $
              9,199,987
              
              $
              661,508**SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:**Interest
                  paid
              
              $
              32,602
              
              $
              2,294Income
                  taxes paid
              
              $
              53,982
              
              $
              39,700


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


4




AGFEED
      INDUSTRIES, INC. AND
      SUBSIDIARIES


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)





**Note
      1 - Organization and Basis of Presentation**





The
      unaudited consolidated financial statements have been prepared by AgFeed
      Industries, Inc. (the “Company”), pursuant to the rules and regulations of the
      Securities Exchange Commission. The information furnished herein reflects all
      adjustments (consisting of normal recurring accruals and adjustments) which
      are,
      in the opinion of management, necessary to fairly present the operating results
      for the respective periods. Certain information and footnote disclosures
      normally present in annual consolidated financial statements prepared in
      accordance with accounting principles generally accepted in the United States
      of
      America have been omitted pursuant to such rules and regulations. These
      consolidated financial statements should be read in conjunction with the audited
      consolidated financial statements and footnotes included in the Company’s Annual
      Report on Form 10-KSB/A. The results for the six months ended June 30, 2007
      are
      not necessarily indicative of the results to be expected for the full year
      ending December 31, 2007.






Organization
      and Line of Business




AgFeed
      Industries, Inc. formerly known as Wallace Mountain Resources Corp.,
      (hereinafter referred to as the “Company” or “AgFeed”) was incorporated in the
      State of Nevada on March 30, 2005.





On
      October 31, 2006, the Company entered into and closed a share purchase agreement
      with Nanchang Best Animal Husbandry Co., Ltd., a corporation formed under the
      laws of the People’s Republic of China (“Nanchang Best”), and each of Nanchang
      Best’s shareholders (the “Nanchang Purchase Agreement”). Pursuant to the
      Nanchang Purchase Agreement, the Company acquired all of the issued and
      outstanding capital stock of Nanchang Best from the Nanchang Best shareholders
      in exchange for 16,128,000 shares of common stock.





Contemporaneously,
      on October 31, 2006, the Company entered into and closed a share purchase
      agreement with Shanghai Best Animal Husbandry Co., Ltd., a corporation formed
      under the laws of the People’s Republic of China (“Shanghai Best”), and each of
      Shanghai Best’s shareholders (the “Shanghai Purchase Agreement”). Pursuant to
      the Shanghai Purchase Agreement, the Company acquired all of the issued and
      outstanding capital stock of Shanghai Best from the Shanghai Best shareholders
      in exchange for 3,072,000 shares of common stock.





The
      exchanges of shares with Nanchang Best and Shanghai Best were accounted for
      as
      reverse acquisition under the purchase method of accounting since the
      stockholders of Nanchang Best and Shanghai Best obtained control of the Company.
      On November 17, 2006, Wallace Mountain Resources Corp. changed its name to
      AgFeed Industries, Inc. Accordingly, the merger of Nanchang Best and Shanghai
      Best into the Company were recorded as a recapitalization of Nanchang Best
      and
      Shanghai Best, with Nanchang Best and Shanghai Best being treated as the
      continuing entities. Nanchang Best and Shanghai Best had common shareholders
      and
      common management. The historical financial statements presented are the
      combined financial statements of both Nanchang Best and Shanghai Best. The
      share
      exchange agreements have been treated as a recapitalization and not as a
      business combination; therefore, no pro forma information is disclosed. At
      the
      date of this transaction, the net assets of the legal acquirer were
      $59,762.





As
      a
      result of the reverse merger transactions described above, the historical
      financial statements presented are those of Nanchang Best and Shanghai Best,
      the
      operating entities.





5


On
      December 20, 2006, the Company entered into and closed a share purchase
      agreement with Guangxi Huijie Sci. & Tech. Feed Co, Ltd., a company formed
      pursuant to the laws of the People’s Republic of China (“Guangxi Huijie”), and
      the shareholders of Guangxi Huijie pursuant to which the Company acquired all
      the outstanding shares of Guangxi Huijie for a total purchase price of eight
      million six hundred thousand Chinese Renminbi (8,600,000 CNY), equivalent to
      approximately U.S. $1,100,420 based on exchange rates reported in the Wall
      Street Journal for December 20, 2006.





The
      Company obtained the funds for the acquisition of the Guangxi Huijie shares
      by
      borrowing 8,600,000 CNY from Sunrise Capital International, Inc. The proceeds
      of
      the loan from Sunrise Capital International, Inc. were paid directly to the
      selling shareholders of Guangxi Huijie as consideration and as provided by
      the
      share purchase agreement. The Company’s repayment obligation is evidenced by a
      promissory note bearing interest at the rate of seven percent per annum (7%)
      and
      maturing in six months. This loan was repaid in March 2007.





The
      Company is engaged in the research and development, manufacturing, marketing,
      distribution and sale of pre-mix fodder blended feed and feed additives
      primarily for use in China’s domestic pork husbandry market. The Company
      operates production plants in Nanchang City, Shanghai City and Nanning City
      and
      sells to distributors and large-scale swine farms.





Stock
      Splits




On
      November 17, 2006, the Company declared a stock dividend of two additional
      shares of common stock for each share of common stock outstanding (effectively
      a
      three for one stock split). All share information for common shares has been
      retroactively restated for this stock split.




Basis
      of Presentation





The
      accompanying consolidated financial statements include the accounts of AgFeed
      Industries, Inc. and its 100% wholly-owned subsidiaries Nanchang Best and
      Shanghai Best (for all periods presented) and Guangxi Huijie (from the date
      of
      acquisition, December 20, 2006).   All significant inter-company accounts
      and transactions have been eliminated in consolidation.





The
      accompanying consolidated financial statements have been prepared in conformity
      with accounting principles generally accepted in the United States of America.
      The Company’s functional currency is the Chinese Yuan Renminbi (CNY); however
      the accompanying consolidated financial statements have been translated and
      presented in United States Dollars ($).





Foreign
      Currency Translation





As
      of
      June 30, 2007, the accounts of the Company were maintained, and their
      consolidated financial statements were expressed in the Chinese Yuan Renminbi
      (CNY). Such consolidated financial statements were translated into U.S. Dollars
      (USD) in accordance with Statement of Financial Accounts Standards (“SFAS”) No.
      52, “Foreign Currency Translation,” with the CNY as the functional currency.
      According to the Statement, all assets and liabilities were translated at the
      exchange rate on the balance sheet date, stockholder’s equity are translated at
      the historical rates and statement of operations items are translated at the
      weighted average exchange rate for the year. The resulting translation
      adjustments are reported under other comprehensive income in accordance with
      SFAS No. 130, “Reporting Comprehensive Income”.





6


**Note
      2 - Summary of Significant Accounting Policies**








Use
      of
      Estimates





The
      preparation of financial statements in conformity with United States 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 revenues and expenses during the
      reporting period. Actual results could differ from those estimates.





Cash
      and Cash Equivalents





Cash
      and
      cash equivalents include cash in hand and cash in time deposits, certificates
      of
      deposit and all highly liquid debt instruments with original maturities of
      six
      months or less.





Accounts
      Receivable





The
      Company maintains reserves for potential credit losses on accounts receivable.
      Management reviews the composition of accounts receivable and analyzes
      historical bad debts, customer concentrations, customer credit worthiness,
      current economic trends and changes in customer payment patterns to evaluate
      the
      adequacy of these reserves.  The Company offers credit terms from 30-90
      days and in certain cases longer than 90 days.  The Company monitors
      collectibility based on established criteria.  The allowance for
      doubtful debts amounted to $68,400 as of June 30, 2007.





Advances
      to Suppliers





The
      Company makes advances to certain vendors for purchase of its materials. The
      advances to suppliers are interest free and unsecured. At June 30, 2007, the
      Company had advances to suppliers in the amount of $120,537.





Inventories





Inventory
      is stated at the lower of cost, as determined by weighted-average method, or
      market. Management compares the cost of inventories with the market value,
      and
      allowance is made for writing down the inventories to their market value, if
      lower.





Property
      & Equipment





Property
      and equipment are stated at cost. Expenditures for maintenance and repairs
      are
      charged to earnings as incurred; additions, renewals and betterments are
      capitalized. When property and equipment are retired or otherwise disposed
      of,
      the related cost and accumulated depreciation are removed from the respective
      accounts, and any gain or loss is included in operations. Depreciation of
      property and equipment is provided using the straight-line method for
      substantially all assets with estimated lives as follows:





Office
                equipment
            5
                yearsOperating
                equipment
            10
                yearsVehicles
            5
                yearsBuildings
            20
                years





7


The
      following are the details of the property and equipment at June 30,
      2007:




Office
                equipment
            
            $
            79,642Operating
                equipment
            
            
            509,124Vehicles
            
            
            260,758Buildings
            
            
            949,522Total
            
            
            1,799,046Less
                accumulated depreciation
            
            
            (416,402
            )$
            1,382,644





Depreciation
      expense for the six months ended June 30, 2007 and 2006 was $78,299 and $48,819,
      respectively.





Long-Lived
      Assets





Effective
      January 1, 2002, the Company adopted Statement of Financial Accounting Standards
      No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS
      144”), which addresses financial accounting and reporting for the impairment or
      disposal of long-lived assets and supersedes SFAS No. 121, “Accounting for the
      Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,”
and the accounting and reporting provisions of APB Opinion No. 30, “Reporting
      the Results of Operations for a Disposal of a Segment of a Business.” The
      Company periodically evaluates the carrying value of long-lived assets to be
      held and used in accordance with SFAS 144. SFAS 144 requires impairment losses
      to be recorded on long-lived assets used in operations when indicators of
      impairment are present and the undiscounted cash flows estimated to be generated
      by those assets are less than the assets’ carrying amounts. In that event, a
      loss is recognized based on the amount by which the carrying amount exceeds
      the
      fair market value of the long-lived assets. Loss on long-lived assets to be
      disposed of is determined in a similar manner, except that fair market values
      are reduced for the cost of disposal. Based on its review, the Company believes
      that, as of June 30, 2007, there were no significant impairments of its
      long-lived assets.




Intangible
      Assets





Intangible
      assets consist of the right to use land and computer software. Net intangible
      assets at June 30, 2007 are as follows:





Right
                to use land
            
            $
            564,910Computer
                software
            
            
            11,478Total
            
            
            576,388Less
                Accumulated amortization
            
            
            (28,094
            )Intangibles,
                net
            
            $
            548,294




Per
      the
      People’s Republic of China’s governmental regulations, the Government owns all
      land. The Company leases land pursuant to two real estate contracts with
      the government of the People’s Republic of China. One real estate contract
 for a period from November 2006 through October 2056 and the other real
      estate contract is from January 2000 through December 2050. The Company obtained
      possession of the land in July of 2005. Accordingly, the Company is amortizing
      the cost of the right to use land from that date.





8


The
      right
      to use land is amortized over a period of 50 years and the computer software
      is
      amortized over three years.





Other
      Assets





Included
      in other assets is $620,000 for a refundable good faith deposit with a company
      that the Company is in negotiations to acquire.





Fair
      Value of Financial Instruments





Statement
      of financial accounting standard No. 107, Disclosures about fair value of
      financial instruments, requires that the Company disclose estimated fair values
      of financial instruments. The carrying amounts reported in the statements of
      financial position for current assets and current liabilities qualifying as
      financial instruments are a reasonable estimate of fair value.





Revenue
      Recognition




The
        Company’s revenue recognition policies are in compliance with Staff accounting
        bulletin (SAB) 104. Revenue is recognized when services are rendered to
        customers when a formal arrangement exists, the price is fixed or determinable,
        the delivery is completed, no other significant obligations of the Company
        exist
        and collectibility is reasonably assured. The Company determines that delivery
        has occurred when the customer picks up the product and when the product
        is
        shipped FOB. Payments received before all of the relevant criteria for revenue
        recognition are satisfied are recorded as unearned revenue. The Company is
        not
        subject to VAT withholdings.
  The
        Company gives volume rebates to certain customers based on volume achieved.
        The
        Company accrues sales rebates based on actual sales volume. The Company does
        not
        offer any of its customers the unconditional right to return purchased products.
        Customers are only permitted to return defective products. In addition, the
        Company does not provide any price protection or similar rights to its
        customers.
 
 There
        are
        no differences in the Company’s arrangements with its different types of
        customers. Accordingly, the Company does not have different revenue recognition
        policies for different types of customers.
 
 The
        Company offers credit terms ranging from 30 to 90 days for most customers.
        From
        some larger customers, the Company may extend these terms beyond 90 days.




The
      Company gives volume rebates to certain customers based on volume achieved.
      The
      Company accrues sales rebates based on actual sales volume.




Stock-Based
      Compensation





The
      Company accounts for its stock-based compensation in accordance with SFAS No.
      123R, “Share-Based Payment, an Amendment of FASB Statement No. 123.” The Company
      recognizes in the statement of operations the grant-date fair value of stock
      options and other equity-based compensation issued to employees and
      non-employees. On May 31, 2007, the Company granted an aggregate of 32,000
      stock
      options to its directors and strategic advisor.





Income
      Taxes





The
      Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the
      recognition of deferred tax assets and liabilities for the expected future
      tax
      consequences of events that have been included in the financial statements
      or
      tax returns. Under this method, deferred income taxes are recognized for the
      tax
      consequences in future years of differences between the tax bases of assets
      and
      liabilities and their financial reporting amounts at each period end based
      on
      enacted tax laws and statutory tax rates applicable to the periods in which
      the
      differences are expected to affect taxable income. Valuation allowances are
      established, when necessary, to reduce deferred tax assets to the amount
      expected to be realized.





The
      Company adopted the provisions of FASB Interpretation No. 48, Accounting for
      Uncertainty in Income Taxes, on January 1, 2007. As a result of the
      implementation of FIN 48, the company made a comprehensive review of its
      portfolio of tax positions in accordance with recognition standards established
      by FIN 48. As a result of the implementation of Interpretation 48, the Company
      recognized no material adjustments to liabilities or stockholders equity. When
      tax returns are filed, it is highly certain that some positions taken would
      be
      sustained upon examination by the taxing authorities, while others are subject
      to uncertainty about the merits of the position taken or the amount of the
      position that would be ultimately sustained. The benefit of a tax position
      is
      recognized in the financial statements in the period during which, based on
      all
      available evidence, management believes it is more likely than not that the
      position will be sustained upon examination, including the resolution of appeals
      or litigation processes, if any. Tax positions taken are not offset or
      aggregated with other positions. Tax positions that meet the
      more-likely-than-not recognition threshold are measured as the largest amount
      of
      tax benefit that is more than 50 percent likely of being realized upon
      settlement with the applicable taxing authority. The portion of the benefits
      associated with tax positions taken that exceeds the amount measured as
      described above is reflected as a liability for unrecognized tax benefits in
      the
      accompanying balance sheets along with any associated interest and penalties
      that would be payable to the taxing authorities upon examination.





9


Interest
      associated with unrecognized tax benefits is classified as interest expense
      and penalties are classified in selling, general and administrative expenses
      in
      the statements of income. The adoption of FIN 48 did not have a material impact
      on the Company’s financial statements.





Foreign
      Currency Transactions and Comprehensive Income





Accounting
      principles generally require that recognized revenue, expenses, gains and losses
      be included in net income. Certain statements, however, require entities to
      report specific changes in assets and liabilities, such as gain or loss on
      foreign currency translation, as a separate component of the equity section
      of
      the balance sheet. Such items, along with net income, are components of
      comprehensive income. The functional currency of the Company is Chinese
      Renminbi. The unit of Renminbi is in Yuan. Translation gains of $260,029 at
      June
      30, 2007 are classified as an item of other comprehensive income in the
      stockholders’ equity section of the consolidated balance sheet. During the six
      months ended June 30, 2007 and 2006, other comprehensive income in the
      consolidated statements of income and other comprehensive income included
      translation gains of $143,183 and $16,991, respectively.





Basic
      and Diluted Earnings Per Share





Earnings
      per share is calculated in accordance with the Statement of financial accounting
      standards No. 128 (SFAS No. 128), “Earnings per share”. SFAS No. 128 superseded
      Accounting Principles Board Opinion No.15 (APB 15). Net earnings per share
      for
      all periods presented has been restated to reflect the adoption of SFAS No.
      128.
      Basic net earnings per share is based upon the weighted average number of common
      shares outstanding. Diluted net earnings per share is based on the assumption
      that all dilutive convertible shares and stock options were converted or
      exercised. Dilution is computed by applying the treasury stock method. Under
      this method, options and warrants are assumed to be exercised at the beginning
      of the period (or at the time of issuance, if later), and as if funds obtained
      thereby were used to purchase common stock at the average market price during
      the period. There were no options, warrants or dilutive securities outstanding
      during the six months ended June 30, 2006 and during the six months ended June
      30, 2007, there were 611,787 warrants and 32,000 options outstanding. The
      exercise price was greater than the Company’s average stock price for the six
      months ended June 30, 2007; therefore, the basic and diluted earnings per shares
      for the six months ended June 30, 2007 and the three and six months ended June
      30, 2006 are the same. For the three months ended June 30, 2007, the Company’s
      average stock price was greater than some of the exercise prices which resulted
      in additional common stock equivalents of 23,459 shares.




10


Statement
      of Cash Flows





In
      accordance with Statement of Financial Accounting Standards No. 95, “Statement
      of Cash Flows,” cash flows from the Company’s operations are calculated based
      upon the local currencies. As a result, amounts related to assets and
      liabilities reported on the statement of cash flows will not necessarily agree
      with changes in the corresponding balances on the balance sheet.





Segment
      Reporting





Statement
      of Financial Accounting Standards No. 131 (“SFAS 131”), “Disclosure About
      Segments of an Enterprise and Related Information” requires use of the
“management approach” model for segment reporting. The management approach model
      is based on the way a company’s management organizes segments within the company
      for making operating decisions and assessing performance. The Company has
      determined that it has three reportable segments (See Note 10).




Recent
      Pronouncements




Fair
      Value Measurements




In
      September 2006, the FASB issued SFAS No. 157, *“* Fair
      Value Measurements,” which establishes a framework for measuring fair value, and
      expands disclosures about fair value measurements required under the accounting
      pronouncements, but does not change existing guidance as to whether or not
      an
      instrument is carried at fair value. Additionally, it establishes a fair value
      hierarchy that prioritizes the information used to develop those assumptions.
      SFAS No. 157 is effective for financial statements issued for fiscal years
      beginning after November 15, 2007, and interim periods within those fiscal
      years. Earlier application is encouraged, provided that the reporting entity
      has
      not yet issued financial statements for fiscal year, including financial
      statements for an interim period within the fiscal year. The Company is
      currently evaluating the impact, if any, that SFAS No. 157 will have on its
      consolidated financial statements.




Employers’
      Accounting for Defined Benefit Pension and Other Postretirement Plans, an
      Amendment of FASB Statements No. 87, 88, 106, and 132R




In
      September 2006, the FASB issued SFAS, No. 158, “Employers’ Accounting for
      Defined Benefit Pension and Other Postretirement Plans, an Amendment of FASB
      Statements No. 87, 88, 106, and 132R,” which requires employers to recognize the
      underfunded or overfunded status of a defined benefit postretirement plan as
      an
      asset or liability in its statement of financial position and to recognize
      changes in the funded status in the year in which the changes occur through
      accumulated other comprehensive income. Additionally, SFAS No. 158 requires
      employers to measure the funded status of a plan as of the date of its year-end
      statement of financial position. The new reporting requirements and related
      new
      footnote disclosure rules of SFAS No. 158 are effective for fiscal years ending
      after December 15, 2006. We adopted the provisions of SFAS No. 158 for the
      year
      end 2006, and the effect of recognizing the funded status in accumulated other
      comprehensive income was not significant. The new measurement date requirement
      applies for fiscal years ending after December 15, 2008.




Fair
      Value Option for Financial Assets and Financial Liabilities





In
      February 2007, the FASB issued SFAS 159, “ The
      Fair
      Value Option for Financial Assets and Financial Liabilities —Including
      an amendment of FASB Statement No. 115.” The statement permits entities to
      choose to measure many financial instruments and certain other items at fair
      value. The objective is to improve financial reporting by providing entities
      with the opportunity to mitigate volatility in reported earnings caused by
      measuring related assets and liabilities differently without having to apply
      complex hedge accounting provisions. The statement is effective as of the
      beginning of an entity’s first fiscal year that begins after November 15, 2007.
      The Company is analyzing the potential accounting treatment.





11


Considering
      the Effects of Prior Year Misstatements in Current Year Financial
      Statements




In
      September 2006, the Securities and Exchange Commission issued Staff Accounting
      Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when
      Quantifying Misstatements in Current Year Financial Statements,” (“SAB 108”),
      which provides interpretive guidance on the consideration of the effects of
      prior year misstatements in quantifying current year misstatements for the
      purpose of a materiality assessment. The Company adopted SAB 108 in the fourth
      quarter of 2006 with no impact on its consolidated financial
      statements.




**Note
      3 - Notes Payable**





Notes
      payable at June 30, 2007 were as follows:




Short-term
                bank loan; interest rate of 7.44% payable monthly.
              The
                term of the loan is from May 28, 2007 to May 27, 2008.
              This
                loan is collateralized by the Company’s office building,
              workshop,
                employee dorms and use right of land.
            
            $
            788,232Short-term
                bank loan; interest rate of 6.12% payable monthly.
              The
                term of the loan is from December 5, 2006 to December 4,
                2007.
              This
                loan is collateralized by the Company’s equipment.
            
            
            118,235Short-term
                bank loan; interest rate of 6.57% payable monthly.
              The
                term of the loan is from May 25, 2007 to May 24, 2008.
              This
                loan is collateralized by the Company’s use right of land.
            
            
            275,881Short-term
                bank loan; interest rate of 5.67% payable monthly.
              The
                term of the loan is from April 11, 2007 to October 11, 2007.
              This
                loan is collateralized by the officer’s bank deposits.
            
            
            627,958$
            1,810,306








**Note
      4 - Stockholders’ Equity**





Common
      Stock





On
      April
      29, 2007, the Company completed a final closing of a private placement offering
      of units pursuant to which it sold an aggregate of 2,276,753 units at an
      offering price of $3.00 per unit for aggregate gross proceeds of $6,830,259.
      Each unit consisted of one share of common stock and a warrant to purchase
      8% of
      one share of common stock. Accordingly, the Company issued an aggregate of
      2,276,753 shares of its common stock and warrants to purchase 182,146 shares
      of
      its common stock to the 37 accredited investors who participated in this
      offering. The warrants are exercisable for a period of three years at an
      exercise price of $5.00 per share. In addition, the Company compensated two
      participating selected dealers and one finder that assisted us in the sale
      of
      securities in this private placement offering by (i) paying them cash equal
      to
      8% of the gross proceeds from the sale of units placed totalling $546,421 plus
      (ii) issuing them warrants to purchase an aggregate of 182,141 shares of our
      common stock, representing 8% of the units placed.





12


The
      securities offered in the private placement have not been registered under
      the
      Securities Act, or any state securities laws, and unless so registered, may
      not
      be sold in the United States except pursuant to an exemption from, or in a
      transaction not subject to, the registration requirements of the Securities
      Act
      and applicable state securities laws.





The
      value
      of the 364,287 warrants mentioned above of $664,717 was determined using the
      Black-Scholes pricing model with the following assumptions: discount rate -
      5.0%; dividend yield - 0%; expected volatility - 50% and term of 3 years. The
      recording of the value of these warrants had no impact in the financial
      statements as the entry was to debit and credit additional paid in capital
      for
      the value of the warrants.





On
      June 22, 2007, the Company completed a private placement offering of units
      pursuant to which it sold an aggregate of 750,000 units at an offering price
      of
      $4.00 per unit for aggregate gross proceeds of $3,000,000. Each unit consisted
      of one share of common stock and a warrant to purchase 25% of one share of
      common stock. Accordingly, the Company issued 750,000 shares of its common
      stock
      and warrants to purchase 187,500 shares of its common stock to the one
      accredited investor who participated in this offering. The warrants are
      exercisable for a period of three years at an exercise price of $5.60 per share.
      In addition, the Company compensated Four Tong Investments, Ltd. for assisting
      it in the sale of securities in this private placement offering by (i) paying
      them $240,000, plus (ii) issuing them warrants to purchase 60,000 shares of
      its
      common stock on the same terms and conditions as the warrants granted in the
      offering.





The
      value
      of the 247,500 warrants mentioned above of $546,511 was determined using the
      Black-Scholes pricing model with the following assumptions: discount rate -
      5.0%; dividend yield - 0%; expected volatility - 50% and term of 3 years. The
      recording of the value of these warrants had no impact in the financial
      statements as the entry was to debit and credit additional paid in capital
      for
      the value of the warrants.





In
      connection with each of the private placement offerings that the Company
      completed in 2007, the Company entered into a registration rights agreement
      with
      each of the investors pursuant to which it agreed to register the resale of
      the
      shares of common stock and the shares of common stock issuable upon exercise
      of
      the warrants issued in each offering for an offering.





If: (i)  a resale
      registration statement is not filed on or prior to the date that is 60 days
      after the final closing of the respective private placement offering;





(ii)  the
      Company fails to file with the Securities and Exchange Commission (the “SEC”) a
      request for acceleration in accordance with Rule 461 promulgated under the
      Securities Act, within five trading days of the date that the Company is
      notified (orally or in writing, whichever is earlier) by the SEC that a
      Registration Statement will not be “reviewed,” or is not subject to further
      review;





(iii)  prior
      to
      the date when such registration statement is first declared effective
      by the SEC, the Company fails to file a pre-effective amendment and otherwise
      respond in writing to comments made by the SEC in respect of
      such registration statement within 15 trading days after the receipt
      of comments by or notice from the SEC that such amendment is required in order
      for a registration statement to be declared effective;





13


(iv)  a registration statement
      filed or required to be filed in satisfaction of these rights is not declared
      effective by the SEC on or before the date that is 180 days after the
      final closing of the respective private placement offering as a result of the
      failure of the Company to meet its obligations with respect to such filing
      as
      provided for in the registration rights agreements, or





(v)  after
      a registration statement is first declared effective by the SEC, it
      ceases for any reason to remain continuously effective as to
      the registrable securities held by an investor, or
      the investor is not permitted to utilize the prospectus therein to
      resell such registrable securities, for in any such case 15
      consecutive trading days but no more than an aggregate of 25 trading days during
      any 12-month period (which need not be consecutive trading days) (any such
      failure or breach being referred to as an “Event,” and for purposes of clause
      (i) or (iv) the date on which such Event occurs, or for purposes of clause
      (ii)
      the date on which such 5 trading day period is exceeded, or for purposes of
      clause (iii) the date which such 15 trading day period is exceeded, or for
      purposes of clause (v) the date on which such 15- or 25-day period, as
      applicable, is exceeded being referred to as an “Event Date”),
      then:





- on
      the first Event Date to occur, the Company is obligated pay
      to each investor in the private placement offerings whose obligations
      have been breached an amount in cash equal to 2.0% of the aggregate purchase
      price paid by such Investor for any Registrable Securities then held by such
      Investor; and





- on
      each anniversary of such Event Date (if the applicable Event, or any subsequent
      Event, shall not have been cured by such date) until all Event(s) are cured,
      the
      Company shall pay to such Investor an amount in cash equal to 2.0% of the
      aggregate purchase price paid by such Investor pursuant to the Subscription
      Agreement for any Registrable Securities then held by such Investor. While
      there is no cap on the amount of such liquidated damages that the Company may
      be
      required to pay to the investors, these liquidated damages are the sole remedy
      available to an investor for any breach of the registration agreements, provided
      that, the investors may seek injunctive relief, including specific performance
      of their rights under the registration rights agreements.




If
      the
      Company fails to pay any liquidated damages in full within seven days after
      the
      date payable, then the Company is obligated to pay interest
      thereon at a rate of 15% per annum (or such lesser maximum amount that is
      permitted to be paid by applicable law) to the Investor, accruing daily from
      the
      date such liquidated damages are due until such amounts, plus all such interest
      thereon, are paid in full. The liquidated damages pursuant to the terms hereof
      shall apply on a daily pro-rata basis for any portion of a year prior to the
      cure of an Event.





14


Stock
      Options





The
      following table summarizes the stock options for the periods or as of the dates
      indicated:





**Options
                Granted**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price**Balance,
                December 31, 2006
            
            
            —
            
            $
            —Granted
            
            
            32,000
            
            $
            5.30Balance,
                June 30, 2007
            
            
            32,000
            
            $
            5.30Exercisable,
                June 30, 2007
            
            
            —
            
            $
            —





The
      fair
      value of the
      stock
      options granted in 2007 of $70,907 was calculated using the Black-Scholes
      option-pricing model with the following assumptions: expected volatility of
      34%;
      risk-free interest rate of 5.0%; expected life of 5.0 years; no expected
      dividend yield; and is being amortized over the vesting period of the
      options.





The
      weighted average remaining contractual life of stock options outstanding for
      directors, officers and employees is 4.92 years at June 30, 2007. The
      intrinsic value of the outstanding options at June 30, 2007 was $24,000.
      The exercise price for all stock options outstanding at June 30, 2007 was
      $5.30.





**Note
      5 - Employee Welfare Plan**





The
      Company had its own employee welfare plan in accordance with Chinese law and
      regulations before all three subsidiaries in China became Sino-foreign joint
      ventures. The Company made annual contributions of 14% of all employees’
salaries to the employee welfare plan. The total expense for the above plan
      was
      $29,076 and $4,412 for the six months ended June 30, 2006 and 2007,
      respectively. In accordance with Chinese law, a Sino-foreign joint venture
      is
      not required to accrue welfare payable in advance since January 2006, and local
      entities are not required to accrue such payable since January 2007.
      Accordingly, all three subsidiaries have stopped accruing welfare payable.
      Instead, welfare expense is recorded as incurred. As of June 30, 2007, welfare
      payable has a balance of $75,280, which is included in tax and welfare payable
      in the accompanying consolidated balance sheet.




**Note
      6 - Statutory Common Welfare Fund**




As
      stipulated by the Company Law of the People’s Republic of China (PRC), net
      income after taxation can only be distributed as dividends after appropriation
      has been made for the following:








i.
            Making
                up cumulative prior years’ losses, if any;





ii.
            Allocations
                to the “Statutory surplus reserve” of at least 10% of income after tax, as
                determined under PRC accounting rules and regulations, until the
                fund
                amounts to 50% of the Company’s registered capital;





15


iii.
            Allocations
                of 5-10% of income after tax, as determined under PRC accounting
                rules and
                regulations, to the Company’s “Statutory common welfare fund” (“SCWF”),
                which is established for the purpose of providing employee facilities
                and
                other collective benefits to the Company’s employees; and





iv.
            Allocations
                to the discretionary surplus reserve, if approved in the stockholders’
                general meeting.





Pursuant
      to the new Corporate Law effective on January 1, 2006, there is now only one
      “Statutory surplus reserve” requirement. The reserve is 10 percent of income
      after tax, not to exceed 50 percent of registered capital.





Pursuant
      to the “Circular of the Ministry of Finance ( MOF) on the Issue of Corporate
      Financial Management after the Corporate Law Enforced” (No.67 [2006]), effective
      on April 1, 2006, issued by the MOF, the companies will transfer the balance
      of
      SCWF as of December 31, 2005 to Statutory Surplus Reserve. Any deficit in the
      SCWF will be charged in turn to Statutory Surplus Reserve, additional paid-in
      capital and undistributed profit of previous years. If a deficit still remains,
      it should be transferred to retained earnings and be reduced to zero by a
      transfer from after tax profit of following years. At June 30, 2007, the Company
      did not have a deficit in the SCWF.





The
      Company has appropriated $177,801 and $84,106 as reserve for the statutory
      surplus reserve and welfare fund for the six months ended June 30, 2007 and
      2006, respectively.





**Note
      7 - Related Party Transactions**





During
      the six months ended June 30, 2007, the Company repaid $746,645 in advances
      from
      the companies that were related to the Company prior to the second quarter
      of
      2007. All these companies were related to the Company through one common
      shareholder. In the
      second quarter of 2007, the shareholder sold his shares in all related entities
      to third parties.





Due
      to
      related parties and due from related parties represent amounts payable and
      receivable from related parties arising from purchases and sales
      transactions.





Advances
      to and from related parties and shareholders are non interest bearing and are
      payable or receivable on demand.





Sales
      to
      related parties amounted to $77,054 and $106,414 for the six months ended June
      30, 2007 and 2006, and $0 and $80,668 for the three months ended June 30, 2007
      and 2006 respectively.





Purchases
      from related parties amounted to $9,284 and $55,455 for the six months ended
      June 30, 2007 and 2006 and $0 and $50,527 for the three months ended June 30,
      2007 and 2006, respectively.




**Note
      8 - Taxes**





Local
      PRC
      Income Tax





Pursuant
      to the tax laws of China, general enterprises are subject to income tax at
      an
      effective rate of 33%.





16


A
      reconciliation of tax at United States federal statutory rate to provision
      for
      income tax recorded in the financial statements is as follows:





For
                the Six monthsEnded
                June30,2007
            
            2006Tax
                provision (credit) at statutory rate
            
            
            34
            %
            
            34
            %Foreign
                tax rate difference
            
            
            (1
            %)
            
            (1
            %)Effect
                of tax holiday and waiver ofcurrent
                tax liability
            
            
            (35
            %)
            
            -(2
            %)
            
            33
            %





In
      July
      2006, as a result of an investment by a foreign investor in one of the Company’s
      subsidiaries, the Company’s subsidiary became a Sino-Foreign Joint Venture.
      Pursuant to the Chinese income tax law, the Company’s subsidiary became fully
      exempt from income tax for a period of two years from July 14, 2006 to July
      14,
      2008, followed by a reduced tax rate of 15% for the next three years. Concurrent
      with the exemption, the tax authorities waived approximately CNY 3,400,000
      ($425,429) in taxes due.




On
      June 5, 2007, Shanghai Best received a tax exemption
      certificate from the local tax bureau and is exempt from income tax from January
      1, 2007 to December 31, 2008, followed by a reduced tax rate of 15% for the
      next
      three years.




On
      April 25, 2007, Guangxi Huijie also received an
      exemption from income tax for the period from January 1, 2006 to December 31,
      2008.  The exemption was issued by the local government because Huijie is
      located in a zone where federal government encourage establishment of new
      entities.




The
      effect of the change of tax status has been accounted for in accordance with
      SFAS No. 109, par. 28, which states that the effect of a change in tax status
      is
      computed as of the date of change and is included in the tax provision for
      continuing operations. Management believes that the local tax authorities would
      not have waived past taxes had it not been for the change in the Company’s
      subsidiary’s tax status.





If
      the
      Company’s subsidiary had not been exempt from paying income taxes, income tax
      expense for the six months ended June 30, 2007 would have been approximately
      $726,000 and earnings per share would have been reduced by approximately $0.03
      per share.





**Note
      9 - Acquisition of**  **Guangxi
      Huijie Sci. & Tech. Feed Co, Ltd**





On
      December 20, 2006, the Company completed its acquisition of Guangxi
      Huijie.





The
      pro
      forma financial information shown below presents the consolidated
      operations of the Company as if the Guangxi Huijie acquisition had occurred
      as
      of the beginning of the periods presented is presented.





17


For
      the
      six months ended June 30, 2006


**As
                Reported**
            ****
            
            ****
            
            ****
            
            ********
            **by
                the**
            ****
            **Guangxi**
            ****
            
            ****
            
            ********
            **Company**
            ****
            **Huijie**
            ****
            **Adjustments**
            ****
            **Pro
                forma**Net
                Revenue
            
            $
            4,186,790
            
            $
            1,156,170
            
            
            -
            
            $
            5,342,960Cost
                of Revenue
            
            
            2,599,398
            
            
            798,082
            
            
            -
            
            
            3,397,480Gross
                Profit
            
            
            1,587,392
            
            
            358,088
            
            
            -
            
            
            1,945,480Operating
                expenses:Selling
                expenses
            
            
            579,402
            
            
            72,429
            
            
            -
            
            
            651,831General
                and administrative expenses
            
            
            254,016
            
            
            49,052
            
            
            2,713
                a.
            
            
            305,781Total
                operating expenses
            
            
            833,418
            
            
            121,481
            
            
            2,713
            
            
            957,612Income
                from operations
            
            
            753,974
            
            
            236,607
            
            
            (2,713
            )
            
            987,868Non-operating
                income (expense):Other
                income (expense)
            
            
            15,488
            
            
            30Interest
                income
            
            
            -
            
            
            105
            
            
            -
            
            
            105Interest
                expense
            
            
            (1,814
            )
            
            (4,376
            )
            
            (38,846)
                b.
            
            
            (45,036
            )Total
                non-operating income (expense)
            
            
            13,674
            
            
            (4,241
            )
            
            (38,846
            )
            
            (44,931
            )Income
                before income tax
            
            
            767,648
            
            
            232,366
            
            
            (41,559
            )
            
            942,937Income
                tax
            
            
            249,808
            
            
            -
            
            
            -
            
            
            249,808Net
                income
            
            $
            517,840
            
            $
            232,366
            
            
            (41,559
            )
            $
            693,129Earnings
                per share
            
            $
            0.03
            
            
            
            
            
            
            
            $
            0.05Weighted
                average shares outstanding
            
            
            15,006,723
            
            
            
            
            
            
            
            
            15,006,723





a.
            to
                record additional amortization for the increase in basis of the land
                use
                rights as a result of the purchase.


b.
            to
                record interest expense on the acquisition
                note.




**Note
        10 - Segment Information**
 
 The
        Company's predominant business is the research & development, manufacture,
        marketing, distribution, and sale of pre-mix fodder blended feed and feed
        additives primarily for use in China's domestic pork husbandry market. The
        Company is organized into three wholly owned subsidiaries: Shanghai Best
        Animal
        Husbandry Co., LTD. ("Shanghai"), Nanchang Best Animal Husbandry Co., LTD.
        ("Nanchang"), and Guangxi Huijie Sci. & Tech. Feed Co.,
        LTD.("Guangxi").
 
 Shanghai
        is located in the Nanxiang, Jia Ding district, Shanghai and sells its products
        to approximately 360 customers, consisting of 170 local distributors and
        190
        large scale pig farms. Nanchang is located in Chang Bei District Industrial
        Park, in Nanchang, Jiangxi province and sells its products to approximately
        300
        customers, consisting of 90 local distributors and 210 large scale pig farms.
        Guangxi is located in Coastal Industrial Park, Liangquin district, Nanning
        city,
        Guangxi Province and sells its products to approximately 325 customers,
        consisting of 140 local distributors and 185 large scale pig farms.
  The
          following tables summarize segment information:
  **6/30/2007**
                    
                    **6/30/2006****(unaudited)**
                    
                    **(unaudited)****Revenues
                        from unrelated entities**Shanghai
                    
                    $
                    1,982,145
                    
                    $
                    1,634,048Guangxi
                    
                    
                    3,643,339
                    
                    
                    -Nanchang
                    
                    
                    6,243,964
                    
                    
                    2,552,74211,869,448
                    
                    
                    4,186,790**Intersegment
                        revenues**Shanghai
                    
                    
                    1,348,778
                    
                    
                    -Guangxi
                    
                    
                    -
                    
                    
                    -Nanchang
                    
                    
                    5,230
                    
                    
                    -1,354,008
                    
                    
                    -**Total
                        Revenues**Shanghai
                    
                    
                    3,330,923
                    
                    
                    1,634,048Guangxi
                    
                    
                    3,643,339
                    
                    
                    -Nanchang
                    
                    
                    6,249,194
                    
                    
                    2,552,742Less
                        Intersegment revenues
                    
                    
                    (1,354,008
                    )
                    
                    -11,869,448
                    
                    
                    4,186,790**Income
                        from operations**Shanghai
                    
                    
                    575,402
                    
                    
                    294,433Guangxi
                    
                    
                    779,569
                    
                    
                    -Nanchang
                    
                    
                    967,063
                    
                    
                    459,541Holding
                        Company
                    
                    
                    (123,619
                    )
                    
                    -2,198,415
                    
                    
                    753,974**Interest
                        income**Shanghai
                    
                    
                    627
                    
                    
                    -Guangxi
                    
                    
                    837
                    
                    
                    -Nanchang
                    
                    
                    4,021
                    
                    
                    -Holding
                        Company
                    
                    
                    48,705
                    
                    
                    -54,190
                    
                    
                    -**Interest
                        Expense**Shanghai
                    
                    
                    -
                    
                    
                    -Guangxi
                    
                    
                    12,209
                    
                    
                    -Nanchang
                    
                    
                    20,816
                    
                    
                    1,814Holding
                        Company
                    
                    
                    30,580
                    
                    
                    -63,605
                    
                    
                    1,814**Income
                        tax expense (benefit)**Shanghai
                    
                    
                    -
                    
                    
                    (97,655
                    )Guangxi
                    
                    
                    40,461
                    
                    
                    -Nanchang
                    
                    
                    -
                    
                    
                    (152,153
                    )40,461
                    
                    
                    (249,808
                    )**Net
                        Income**Shanghai
                    
                    
                    581,032
                    
                    
                    208,925Guangxi
                    
                    
                    808,658
                    
                    
                    -Nanchang
                    
                    
                    955,987
                    
                    
                    308,915Holding
                        Company
                    
                    
                    (105,494
                    )
                    
                    -2,240,183
                    
                    
                    517,840**Provision
                        for depreciation**Shanghai
                    
                    
                    13,911
                    
                    
                    9,269Guangxi
                    
                    
                    21,989
                    
                    
                    -Nanchang
                    
                    
                    41,997
                    
                    
                    39,55077,897
                    
                    
                    48,819**Capital
                      Expenditures**Shanghai
                    
                    
                    6,449
                    
                    
                    34,404Guangxi
                    
                    
                    40,178
                    
                    
                    -Nanchang
                    
                    
                    6,030
                    
                    
                    24,91452,657
                    
                    
                    59,318**Total
                        Assets**Shanghai
                    
                    
                    1,901,967Guangxi
                    
                    
                    3,882,194Nanchang
                    
                    
                    6,248,042Holding
                        Company
                    
                    
                    6,464,01718,496,220


18


**CAUTIONARY
      STATEMENT FOR FORWARD-LOOKING STATEMENTS**




*This
      Quarterly Report on Form 10-QSB/A includes forward-looking statements within
      the
      meaning of Section 27A of the Securities Act of 1933, as amended, and Section
      21E of the Securities Exchange Act of 1934, as amended. We have based these
      forward-looking statements on our current expectations and projections about
      future events. These forward-looking statements are subject to known and unknown
      risks, uncertainties and assumptions about us that may cause our actual results,
      levels of activity, performance or achievements to be materially different
      from
      any future results, levels of activity, performance or achievements expressed
      or
      implied by such forward-looking statements. In some cases, you can identify
      forward-looking statements by terminology such as “may,” “will,” “should,”
“could,” “would,” “expect,” “plan,” anticipate,” believe,” estimate,” continue,”
or the negative of such terms or other similar expressions. Factors that might
      cause or contribute to such a discrepancy include, but are not limited to,
      those
      listed under the heading “Risk Factors” and those listed in our other Securities
      and Exchange Commission filings. The following discussion should be read in
      conjunction with our Financial Statements and related Notes thereto included
      elsewhere in this report.*





**Item
      2.**  **Management’s
      Discussion and Analysis or Plan of Operations**




**Overview**





We
      are
      incorporated under the laws of the state of Nevada. We engage in the business
      of
      the research and development, manufacture, marketing and sale of fodder and
      blended feed for use in China’s domestic animal husbandry markets. Our chief
      source of revenues is the sale of feed products for pigs, however, we do produce
      other feed products for chickens and cows. We sell our products in approximately
      ten provinces within the People’s Republic of China.





We
      currently conduct our business through the following three operating
      subsidiaries in China:





·
            Nanchang
                Best is located in the province of
                Jiangxi,


·
            Shanghai
                Best is located in Shanghai City, and


·
            Guangxi
                Huijie is located in the province of
                Guangxi.





We
      operate each subsidiary independently with regard to manufacturing and marketing
      and sales efforts. We do have some sharing of sales referrals and leads amongst
      the subsidiaries, but they do not compete against each other for new sales.
      Most
      of our research and development occurs at Nanchang and Guangxi, and each shares
      their efforts with the other and Shanghai. In addition, many of the
      administrative duties are performed by Nanchang for Shanghai, and we are
      attempting to study the feasibility of centralizing more administrative
      functions.





We
      are
      targeting growth through three main channels: (i) organic growth through
      increasing sales at each of our current operating subsidiaries, (ii) the
      distribution of our products through approximately 300 new independently
      owned retail locations (as of August 10, 2007), and (iii) an aggressive
      acquisition program to increase the number of provinces in China in which we
      do
      business.





Our
      revenues increased 12.9% in 2006 as compared to 2005 and our net income
      increased 110% in 2006 as compared to 2005. Similarly, in the six month period
      ended June 30, 2007, our revenues increased 183.5% and our net income increased
      332.6% compared to the six month period ended June 30, 2006. The increases
      we
      experienced in both periods are the result of our organic growth at each
      operating subsidiary. In addition, the growth in the first half of fiscal 2007
      reflects the acquisition of our Guangxi Huijie subsidiary in December 2006.
      Since we acquired Nanchang Best and Shanghai Best in October 2006, we have
      effectively marketed our products through a team based approach, sharing sales
      leads and referrals. We also developed the new Arubao Series of product at
      Nanchang Best and introduced the product in our three current
      subsidiaries.





19


Since
      January 2007, we established approximately 300 independently owned retail
      stores to complement our existing distribution channels. We will continue
      to market our products to the operators of large swine farms and large
      distributors. We will now rely on the owners of these independent retail
      stores to market and sell our products to the smaller swine farms. Even
      though the number of small swine farms in China is declining, we did not want
      to
      lose revenues by forgoing sales to this market segment. We determined that
      the
      best and most efficient use of our resources is to concentrate on the larger
      customers and allow the franchisees to sell to the smaller farmers.





In
      order
      to provide excellent customer service and differentiate ourselves from our
      competition, at our customer’s request, we supply to them customized
      formulations of our products. In any given month, the cost of the various
      additives used in these customized formulations fluctuates, which can result
      in
      temporary increases in unit cost of goods sold. We believe even though this
      may
      have an effect on our short term profits, we take the long term view that it
      increases customer loyalty and builds the AgFeed brand. The increase in our
      revenues during the six months ended June 30, 2007 were mostly due to increases
      in the volume of products sold as a direct result of new products launched
      and
      our expansion to new markets. We also experienced increases in our cost of
      goods
      sold during the six months ended June 30, 2007. The costs of corn and soybean
      meal, which are two of our main raw materials, increased approximately 15%
      and
      10%, respectively. In order to remain competitive in our markets, we have not
      increased the prices of our products to pass these cost increases on to our
      customers. Accordingly, our revenues have not increased during the three and
      six
      month periods ended June 30, 2007 in proportion to our cost of goods sold.
      We
      believe that this competitive pricing strategy has and will continue to increase
      our sales volume and ultimately increase our long-term revenue
      growth.





We
      also
      continue to aggressively search for acquisition targets in our industry,
      throughout China. The growth in sales and net revenues we experienced in the
      first half of fiscal 2007 compared to the first half of 2006 was due in part
      to
      our acquisition of Guangxi Huijie late in December 2006.





**Critical
      Accounting Policies**





In
      presenting our financial statements in conformity with accounting principles
      generally accepted in the United States, we are required to make estimates
      and
      assumptions that affect the amounts reported therein. Several of the estimates
      and assumptions we are required to make relate to matters that are inherently
      uncertain as they pertain to future events. However, events that are outside
      of
      our control cannot be predicted and, as such, they cannot be contemplated in
      evaluating such estimates and assumptions. If there is a significant unfavorable
      change to current conditions, it will likely result in a material adverse impact
      to our consolidated results of operations, financial position and in liquidity.
      We believe that the estimates and assumptions we used when preparing our
      financial statements were the most appropriate at that time. Presented below
      are
      those accounting policies that we believe require subjective and complex
      judgments that could potentially affect reported results.





USE
      OF
      ESTIMATES: Our discussion and analysis of our financial condition and results
      of
      operations are based upon our consolidated financial statements, which have
      been
      prepared in accordance with accounting principles generally accepted in the
      United States of America. The preparation of these consolidated financial
      statements requires us to make estimates and judgments that affect the reported
      amounts of assets, liabilities, revenues and expenses, and related disclosures
      of contingent assets and liabilities. On an ongoing basis, we evaluate our
      estimates, including those related to impairment of long-lived assets, and
      allowance for doubtful accounts. We base our estimates on historical experience
      and on various other assumptions that we believe to be reasonable under the
      circumstances, the results of which form the basis for making judgments about
      the carrying value of assets and liabilities that are not readily apparent
      from
      other sources. Actual results may differ from these estimates under different
      assumptions or conditions; however, we believe that our estimates, including
      those for the above-described items, are reasonable.





20


Areas
      that require estimates and assumptions include valuation of accounts receivable
      and inventory, determination of useful lives of property and equipment,
      estimation of certain liabilities and sales returns.





***Allowance
      For Doubtful Accounts***


The
      Company continually monitors customer payments and maintains a reserve for
      estimated losses resulting from its customers’ inability to make required
      payments. In determining the reserve, the Company evaluates the collectibility
      of its accounts receivable based upon a variety of factors. In cases where
      the
      Company becomes aware of circumstances that may impair a specific customer’s
      ability to meet its financial obligations, the Company records a specific
      allowance against amounts due. For all other customers, the Company recognizes
      allowances for doubtful accounts based on its historical write-off experience
      in
      conjunction with the length of time the receivables are past due, customer
      creditworthiness, geographic risk and the current business environment. Actual
      future losses from uncollectible accounts may differ from the Company’s
      estimates.





***Inventories***


Inventories
      are stated at the lower of cost or market. Cost is determined using the
      first-in, first-out method. The Company evaluates its ending inventories for
      estimated excess quantities and obsolescence. The Company’s evaluation includes
      the analysis of future sales demand by product, within specific time horizons.
      Inventories in excess of projected future demand are written down to net
      realizable value. In addition, the Company assesses the impact of changing
      technology on inventory balances and writes-down inventories that are considered
      obsolete. Inventory obsolescence and excess quantities have historically been
      minimal.





***Long-Lived
      Assets***


The
      Company periodically assesses potential impairments to its long-lived assets
      in
      accordance with the provisions of SFAS No. 144, “Accounting for the
      Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 requires, among
      other things, that an entity perform an impairment review whenever events or
      changes in circumstances indicate that the carrying value may not be fully
      recoverable. Factors considered by the Company include, but are not limited
      to:
      significant underperformance relative to expected historical or projected future
      operating results; significant changes in the manner of use of the acquired
      assets or the strategy for the Company’s overall business; and significant
      negative industry or economic trends. When the Company determines that the
      carrying value of a long-lived asset may not be recoverable based upon the
      existence of one or more of the above indicators of impairment, the Company
      estimates the future undiscounted cash flows expected to result from the use
      of
      the asset and its eventual disposition. If the sum of the expected future
      undiscounted cash flows and eventual disposition is less than the carrying
      amount of the asset, the Company recognizes an impairment loss. An impairment
      loss is reflected as the amount by which the carrying amount of the asset
      exceeds the fair market value of the asset, based on the fair market value
      if
      available, or discounted cash flows. To date, there has been no impairment
      of
      long-lived assets.





Property
      and equipment: Useful lives of property and equipment is based on historical
      experience and industry norms. Changes in useful lives due to changes in
      technology or other factors can affect future depreciation
      estimates.




REVENUE
      RECOGNITION: Our revenue recognition policies are in compliance with Staff
      accounting bulletin (SAB) 104. Revenue is recognized when services are rendered
      to customers when a formal arrangement exists, the price is fixed or
      determinable, the delivery is completed, no other significant obligations exist
      and collectibility is reasonably assured. Payments received before all of the
      relevant criteria for revenue recognition are satisfied are recorded as unearned
      revenue. We are not subject to VAT withholdings. We give volume rebates to
      certain customers based on volume achieved. We accrue sales rebates based on
      actual sales volume. Sales rebates for the year ended December 31, 2005 and
      2006
      and the six months ended June 30, 2006 and 2007 were $ 74,046 and $258,503
      and
      $5,048 and $174,415 respectively. Sales returns for the six months ended June
      30, 2006 and 2007 were $32,931 and $45,447 respectively.





21


We
      make
      estimates and judgments when determining whether the collectibility of revenue
      from customers is reasonably assured. Management estimates regarding
      collectibility impact the actual revenues recognized each period and the timing
      of the recognition of revenues. Our assumptions and judgments regarding future
      collectibility could differ from actual events, thus materially impacting our
      financial position and results of operations.





Sales
      returns and allowances have historically been insignificant. Accordingly,
      estimating returns is not critical. However, if circumstances change, returns
      and allowance may impact the company’s earnings.




The
        Company gives volumes rebates to certain customers based on volume achieved.
        Sales rebates are accrued based on actual sales volume. Sales rebates for
        the
        year ended December 31, 2005 and 2006 were $74,046 and $258,503, respectively.
        The Company does not offer any of its customers the unconditional right to
        return purchased products. Customers are only permitted to return defective
        products. In addition, the Company does not provide any price protection
        or
        similar rights to its customers.
 
 There
        are
        no differences in the Company’s arrangements with its different type of
        customers. Accordingly, the Company does not have different revenue recognition
        policies for different types of customers.
 
 The
        Company offers credit terms ranging from 30 to 90 days for most customers.
        For
        some large customers, the Company may extend these terms beyond 90
        days.
  Recent
        Accounting
        Pronouncements


Fair
      Value Measurements





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which
      establishes a framework for measuring fair value, and expands disclosures about
      fair value measurements required under the accounting pronouncements, but does
      not change existing guidance as to whether or not an instrument is carried
      at
      fair value. Additionally, it establishes a fair value hierarchy that prioritizes
      the information used to develop those assumptions. SFAS No. 157 is effective
      for
      financial statements issued for fiscal years beginning after November 15, 2007,
      and interim periods within those fiscal years. Earlier application is
      encouraged, provided that the reporting entity has not yet issued financial
      statements for the fiscal year, including financial statements for an
      interim period within the fiscal year. The Company is currently evaluating
      the
      impact, if any, that SFAS No. 157 will have on its consolidated financial
      statements.





Employers’
      Accounting for Defined Benefit Pension and Other Postretirement Plans, an
      Amendment of FASB Statements No. 87, 88, 106, and 132R




In
      September 2006, the FASB, issued SFAS, No. 158, “Employers’ Accounting for
      Defined Benefit Pension and Other Postretirement Plans, an Amendment of FASB
      Statements No. 87, 88, 106, and 132R,” which requires employers to recognize the
      underfunded or overfunded status of a defined benefit postretirement plan as
      an
      asset or liability in its statement of financial position and to recognize
      changes in the funded status in the year in which the changes occur through
      accumulated other comprehensive income. Additionally, SFAS No. 158 requires
      employers to measure the funded status of a plan as of the date of its year-end
      statement of financial position. The new reporting requirements and related
      new
      footnote disclosure rules of SFAS No. 158 are effective for fiscal years ending
      after December 15, 2006. We adopted the provisions of SFAS No. 158 for the
      year
      end 2006, and the effect of recognizing the funded status in accumulated other
      comprehensive income was not significant. The new measurement date requirement
      applies for fiscal years ending after December 15, 2008.




Fair
      Value Option for Financial Assets and Financial Liabilities





In
      February of 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial
      Assets and Financial Liabilities—Including an amendment of FASB Statement No.
      115.” The statement permits entities to choose to measure many financial
      instruments and certain other items at fair value. The objective is to improve
      financial reporting by providing entities with the opportunity to mitigate
      volatility in reported earnings caused by measuring related assets and
      liabilities differently without having to apply complex hedge accounting
      provisions. The statement is effective as of the beginning of an entity’s first
      fiscal year that begins after November 15, 2007. We are analyzing the potential
      accounting treatment.





22


Other-Than-Temporary
      Impairment





FASB
      Staff Position on FAS No. 115-1 and FAS No. 124-1 (“the FSP”), “The Meaning of
      Other-Than-Temporary Impairment and Its Application to Certain Investments,” was
      issued in November 2005 and addresses the determination of when an investment
      is
      considered impaired, whether the impairment on an investment is
      other-than-temporary and how to measure an impairment loss. The FSP also
      addresses accounting considerations subsequent to the recognition of
      other-than-temporary impairments on a debt security, and requires certain
      disclosures about unrealized losses that have not been recognized as
      other-than-temporary impairments. The FSP replaces the impairment guidance
      on
      Emerging Issues Task Force (EITF) Issue No. 03-1 with references to
      existing authoritative literature concerning other-than-temporary
      determinations. Under the FSP, losses arising from impairment deemed to be
      other-than-temporary, must be recognized in earnings at an amount equal to
      the
      entire difference between the securities cost and its fair value at the
      financial statement date, without considering partial recoveries subsequent
      to
      that date. The FSP also required that an investor recognize other-than-temporary
      impairment losses when a decision to sell a security has been made and the
      investor does not expect the fair value of the security to fully recover prior
      to the expected time of sale. The FSP is effective for reporting periods
      beginning after December 15, 2005. The adoption of this statement will not
      have
      a material impact on our consolidated financial statements.




The
          Company adopted the provisions of FASB Interpretation No. 48, Accounting
          for
          Uncertainty in Income Taxes, on January 1, 2007. As a result of the
          implementation of FIN 48, the company made a comprehensive review of its
          portfolio of tax positions in accordance with recognition standards established
          by FIN 48. As a result of the implementation of Interpretation 48, the
          Company
          recognized no material adjustments to liabilities or stockholders equity.
          When
          tax returns are filed, it is highly certain that some positions taken would
          be
          sustained upon examination by the taxing authorities, while others are
          subject
          to uncertainty about the merits of the position taken or the amount of
          the
          position that would be ultimately sustained. The benefit of a tax position
          is
          recognized in the financial statements in the period during which, based
          on all
          available evidence, management believes it is more likely than not that
          the
          position will be sustained upon examination, including the resolution of
          appeals
          or litigation processes, if any. Tax positions taken are not offset or
          aggregated with other positions. Tax positions that meet the
          more-likely-than-not recognition threshold are measured as the largest
          amount of
          tax benefit that is more than 50 percent likely of being realized upon
          settlement with the applicable taxing authority. The portion of the benefits
          associated with tax positions taken that exceeds the amount measured as
          described above is reflected as a liability for unrecognized tax benefits
          in the
          accompanying balance sheets along with any associated interest and penalties
          that would be payable to the taxing authorities upon
          examination.


23


Considering
      the Effects of Prior Year Misstatements in Current Year Financial
      Statements





In
      September 2006, the Securities and Exchange Commission issued Staff Accounting
      Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when
      Quantifying Misstatements in Current Year Financial Statements,” (“SAB
      108”),which provides interpretive guidance on the consideration of the effects
      of prior year misstatements in quantifying current year misstatements for the
      purpose of a materiality assessment. The Company adopted SAB 108 in the fourth
      quarter of 2006 with no impact on its consolidated financial
      statements.





**Results
      of Operations**





*Three
      Months Ended June 30, 2007 Compared to Three Months Ended June 30,
      2006*


Three
                Months ended June 30, 2007
            
            Three
                Months ended June 30, 2006
            
            $
                Change
            
            %
                ChangeRevenues
            
            $
            6,891,153
            
            $
            2,092,501
            
            $
            4,798,652
            
            
            229.3
            %Cost
                of Sales
            
            
            4,881,227
            
            
            1,294,308
            
            
            3,586,919
            
            
            277.1
            %Gross
                Profits
            
            
            2,009,926
            
            
            798,193
            
            
            1,211,733
            
            
            151.8
            %Selling,
                General and Administrative Expenses
            
            
            789,402
            
            
            458,435
            
            
            330,967
            
            
            72.2
            %Net
                Income
            
            
            1,461,002
            
            
            239,458
            
            
            1,221,544
            
            
            510.1
            %





Revenues.
      The increase in revenues was due to an increase in the volume of feed products
      that we sold, the acquisition of the Guangxi Huijie subsidiary and the
      introduction in the first quarter of 2007 of the Airubao Series, a new special
      blended feed product formulated especially for baby pigs. Guangxi contributed
      approximately 1,886 metric tons (MT) of premix volume during the three months
      ended June 30, 2007, accounting for significantly all of the increase in premix
      sales volume. Nanchang experienced an increase of approximately 24 MT of
      premix volume and Shanghai experienced a decrease of approximately 29 MT of
      premix volume during this three month period.  During the three months
      ended June 30, 2007, we focused on increasing sales of the Airubao Series,
      which
      is a special blended feed product. For comparative purposes, we will analyze
      the
      blended feed and Airubao Series together. Together the blended category sold
      6,171 MT compared to only 363 MT during the same period a year ago. This
      increase was due to the new Airubao sales and approximately 976 MT of blended
      feed sold by Guangxi offset by a decrease of approximately 600 MT of blended
      sales at Nanchang and Shanghai. The decrease of blended feed sold by Nanchang
      and Shanghai is more than compensated by the sales of the new Airubao Series
      products. Guangxi also accounted for 244 MT of other feed products. Nanchang
      sold 64,462 MT and Shanghai sold 76,990 MT of other feed products
      during the three months ended June 30, 2007.  Overall, the Guangxi
      acquisition provided approximately 27.1% of our revenues while Nanchang provided
      47.8% and Shanghai provided 25.1% of our total revenues during the three
      month period ended June 30, 2007 and Guangxi contributed approximately
      27.1% of the total volume of feeds during the three month period ended June
      30,
      2007 and Nanchang contributed approximately 49.4% and Shanghai contributed
      approximately 24.2% of the total volume of feeds during the three month period
      ended June 30, 2007.  Nanchang's revenues increased approximately 175.84%
      during the three months ended June 30, 2007 compared to the same period in
      2006.  Shanghai's revenues increased approximately 130.74% during the three
      months ended June 30, 2007 compared to the same period in 2006.





While
      the
      increase in the average sales price of our blended products also contributed
      to
      our increase in revenues, this effect was offset by the decrease in the average
      sales price of our other products category. Also, we strategically did not
      seek
      to maximize our sales prices in order to remain competitive in our markets.
      We
      believe that this competitive pricing strategy has and will contribute to our
      increased sales volumes and ultimately lead to long-term revenues
      growth.





24


Feed
                Type
            
            Metric
                Tons Sold
              3
                months ended June 30, 2007
            
            Metric
                Tons Sold
              3
                months ended June 30, 2006
            
            Difference
            
            %
                changePremix
            
            
            5,206
            
            
            3,325
            
            
            1,881
            
            
            56.6Blended
            
            
            732
            
            
            363
            
            
            369
            
            
            101.7Airubao
            
            
            5,439
            
            
            0
            
            
            5,439
            
            
            N/AOther
            
            
            384
            
            
            78
            
            
            306
            
            
            392.3Total
            
            
            11,761
            
            
            3,766
            
            
            7,995
            
            
            212.3




The
      average sale price/MT during the three months ended June 30, 2007 and June
      30,
      2006 of each of our product classes is set forth below.




Feed
                Type
            
            Average
                Price/MT 3 Months Ended
              June
                30, 2007
            
            Average
                Price/MT 3 Months Ended
              June
                30, 2006
            
            Difference
            
            %
                changePremix
            
            $
            662.69
            
            $
            594.99
            
            $
            27.70
            
            
            4.7Blended
            
            
            687.34
            
            
            453.83
            
            
            233.51
            
            
            51.5Other
            
            
            1,160.95
            
            
            2,565.96
            
            
            (1,405.01
            )
            
            (54.8
            )





The
      average sale price/MT was calculated in U.S. Dollars using a conversion factor
      of 7.58 RMB to $1.00 USD. The average price for each product category was
      calculated by multiplying the prices charged in each product category at each
      operating subsidiary by a weighted average of revenues generated in each product
      category at each operating subsidiary as compared to total revenues generated
      by
      that product by all operating subsidiaries for the period. The Airubao Series
      is
      included in the calculations for blended feed.





During
      the first quarter of 2007, we launched the Airubao Series, a new special blended
      feed designed specifically for baby pigs. The Airubao Series is meant to be
      used
      four days after weaning. The main ingredients used in these products are amino
      acids, vitamins, feed additives and minerals. These products are intended to
      maximize the baby pig’s feed intake, help the baby pig adapt to corn feeding,
      enhance immunity and digestibility and reduce post-weaning syndrome. We
      anticipate that the large pig farms will be the largest users of the Airubao
      Series although we have also introduced the Series to the small individual
      farmers. We have gained immediate acceptance from our customers. We shipped
      approximately $3.3 million of this new product to customers during the three
      month period ended June 30, 2007. This product line consists of a series of
      three distinct formulations, the average gross margin is approximately 24%,
      and
      the average selling price is approximately $670 per MT. The Annual Report on
      China’s Feed Industry, published by the Chinese government, estimates that the
      market for premium baby pig feed is approximately $3.8 billion per
      year.





Cost
      of
      Goods Sold. We experienced approximately 27.3% and 15% increases in the unit
      cost of goods sold for blended feed and premix products, respectively, during
      the three month period ended June 30, 2007 compared to the same period in 2006.
      In order to provide excellent customer service and differentiate ourselves
      from
      our competition, at our customer’s request, we supply customized formulations of
      our products. In any given period, the cost of the various additives used as
      raw
      materials in our products fluctuates, which can result in increases in unit
      cost
      of goods sold. During the three month period ended June 30, 2007, the costs
      of
      corn and soybean meal increased approximately 15% and 10%, respectively. These
      additives constitute approximately 70% of our raw material costs. These
      increased costs offset our increases in revenues. Even though this may have
      an
      adverse effect on our short term profits, we take the long term view that this
      practice results in customer loyalty, builds the AgFeed brand and will
      ultimately lead to increased sales and gross profits. In addition, we are
      presently experiencing more stable pricing in these additives, which we
      anticipate will stabilize our cost of goods sold.




Nanchang
      experienced a 231.05% increase in cost of goods sold during the three months
      ended June 30, 2007 compared to the same period in 2006.  Shanghai
      experienced a 174.79% increase in cost of goods sold during the three months
      ended June 30, 2007 compared to the same period in 2006.


25


Gross
      Profit. Gross margins decreased to 29.2% from 38.1% during the three months
      ended June 30, 2007 as compared to the same period last year. The decrease
      in
      gross margin can be attributed to several factors: (i) the cost of introducing
      the Airubao Series; (ii) we experienced an approximate 27.3% increase in the
      unit cost of goods sold of blended feed during the three months ended June
      30,
      2007 compared to the same period in 2006; and (iii) the unit cost of goods
      sold
      for premix products increased approximately 15% during the three months ended
      June 30, 2007 compared to the same period in 2006.




Gross
        margins at Nanchang for the three month period ended June 30, 2007 were
        approximately 23.71% compared to 36.43% for the same period in 2006. Gross
        margins at Shanghai for the three month period ended June 30, 2007 were 26.51%
        compared to 38.29% for the same period in 2006. Gross margins at Guangxi
        for the
        three month period ended June 30, 2007 were approximately 29.32%. Gross margin
        calculations for each subsidiary are calculated prior to any adjustments
        for
        intercompany sales, which are reflected in the consolidated financial
        statements.


Selling,
      General and Administrative Expenses. We incurred legal and audit expense in
      the
      three month period ended June 30, 2007 of approximately $46,500 associated
      with
      being a publicly traded United States reporting company that we did not incur
      during the same period in 2006. The increase in our general and administrative
      expense also reflects the addition of our Guangxi subsidiary, which had
      approximately $67,800 of general and administrative expenses during the three
      months ended June 30, 2007. General and administrative expense includes overhead
      expenses such as rent, management and staff salaries, general insurance,
      marketing, accounting, legal and offices expenses. Selling expenses for the
      period increased by 68.7% due to the 238% increase in revenues and the costs
      associated with entering markets in neighboring provinces, as well as the
      addition of our Guangxi subsidiary, which had approximately $160,300 of selling
      expenses during the three months ended June 30, 2007. We attempted to control
      our selling expenses through the use of strict cost controls and efficient
      use
      of our distribution channels.





Net
      Income. Our increase in net income was due to an increase in income from
      operations and an increase in non-operating income due to net interest income
      of
      approximately $23,000. The major reason for the increase in non-operating
      expense during this period in 2007 was interest earned on the net proceeds
      of
      our financings of approximately $44,000 offset by interest paid in connection
      with short term loans of approximately $21,000. In addition, our Nanchang Best
      subsidiary became a Sino Foreign Joint Venture due to an investment by a foreign
      investor in July 2006. Nanchang Best receives favorable tax status and is exempt
      from all income tax through July 14, 2008 and then will pay a reduced rate
      of
      15% for the next three years.





26


*Six
      Months Ended June 30, 2007 Compared to Six Months Ended June 30,
      2006*





Six
                Months ended
              June
                30, 2007
            
            Six
                Months ended
              June
                30, 2006
            
            $
                Change
            
            %
                ChangeRevenues
            
            $
            11,869,448
            
            $
            4,186,790
            
            $
            7,682,658
            
            
            183.5
            %Cost
                of Sales
            
            
            8,316,316
            
            
            2,599,398
            
            
            5,716,918
            
            
            219.9
            %Gross
                Profits
            
            
            3,553,132
            
            
            1,587,392
            
            
            1,965,740
            
            
            123.8
            %Selling,
                General and Administrative Expenses
            
            
            1,354,717
            
            
            833,418
            
            
            521,299
            
            
            62.5
            %Net
                Income
            
            
            2,240,183
            
            
            517,840
            
            
            1,722,343
            
            
            332.6
            %




Revenues.
        The increase in revenues was due to an increase in the volume of feed products
        that we sold, the acquisition of the Guangxi Huijie subsidiary and the
        introduction in early 2007 of the Airubao Series, a new special blended feed
        product formulated especially for baby pigs. Guangxi contributed approximately
        3,322 Metric Tons (MT) of premix volume during the six months ended June
        30,
        2007, Nanchang experienced a decrease of approximately 428 MT of premix volume
        and Shanghai experienced a decrease of approximately 428 MT of premix
        volume during this six month period. We focused on increasing sales of the
        Airubao Series, which is a special blended feed product. For comparative
        purposes, we will analyze the blended feed and Airubao Series together. Together
        the blended category sold 10,018 MT compared to only 753 MT during the same
        period a year ago. This increase was due primarily to the new Airubao sales
        and
        approximately 1,579 MT of blended feed sold by Guangxi. Nanchang sold 6,204
        MT
        during the six months ended June 30, 2007 compared to 753 MT during the same
        period in 2006. Guangxi also accounted for 393 MT of other feed products,
        Nanchang sold 110 MT and Shanghai sold 155 MT of other feed products during
        the
        six months ended June 30, 2007. Overall, the Guangxi acquisition provided
        approximately 27.6% of our revenues while Nanchang provided 47.2% and Shanghai
        provided 25.2% of our total revenues during the six month period ended June
        30,
        2007. Guangxi contributed approximately 26.2%, Nanchang approximately 49.1%
        and
        Shanghai approximately 24.7% of the total volume of feed sold during the
        six
        month period ended June 30, 2007.  Nanchang’s revenues increased
        approximately 126% during the six months ended June 30, 2007 compared to
        the
        same period in 2006. Shanghai’s revenues increased approximately 95% during the
        six months ended June 30, 2007 compared to the same period in 2006.


While
      the
      increase in the average sales price of our blended products also contributed
      to
      our increase in revenues, this effect was offset by the decrease in the average
      sales price of our other products category. Also, we strategically did not
      seek
      to maximize our sales prices in order to remain competitive in our markets.
      We
      believe that this competitive pricing strategy has and will contribute to our
      increased sales volumes and ultimately lead to long-term revenues
      growth.








Feed
                Type
            
            Metric
                Tons Sold Six Months Ended June 30, 2007
            
            Metric
                Tons Sold Six Months Ended June 30, 2006
            
            Difference
            
            %
                changePremix
            
            
            9,537
            
            
            6,822
            
            
            2,715
            
            
            39.8Blended
            
            
            2,679
            
            
            753
            
            
            1,926
            
            
            255.8Airubao
            
            
            7,339
            
            
            -0-
            
            
            7,339
            
            
            N/AOther
            
            
            658
            
            
            175
            
            
            483
            
            
            276Total
            
            
            20,213
            
            
            7,750
            
            
            12,463
            
            
            160.8





27


The
      average sale price/MT during the six months ended June 30, 2007 and June 30,
      2006 of each of our product classes is set forth below.





Feed
                Type
            
            Average
                Price/MT Six Months Ended June 30, 2007
            
            Average
                Price/MT Six Months Ended June 30, 2006
            
            Difference
            
            %
                changePremix
            
            $
            627.94
            
            $
            594.99
            
            $
            32.98
            
            
            5.5Blended
            
            
            678.10
            
            
            448.55
            
            
            229.55
            
            
            51.2Other
            
            
            1,160.95
            
            
            2,238.79
            
            
            (1,077.84
            )
            
            (48.1
            )





The
      average sale price/MT was calculated in U.S. Dollars using a conversion factor
      of 7.58 RMB to $1.00 USD. The average price for each product category was
      calculated by multiplying the prices charged in each product category at each
      operating subsidiary by a weighted average of revenues generated in each product
      category at each operating subsidiary as compared to total revenues generated
      by
      that product by all operating subsidiaries for the period. The Airubao
      Series is included in the calculations for blended feed.




During
        the first quarter of 2007, we launched the Airubao Series, a new special
        blended
        feed designed specifically for baby pigs. The Airubao Series is meant to
        be used
        four days after weaning. The main ingredients used in these products are
        amino
        acids, vitamins, feed additives and minerals. These products are intended
        to
        maximize the baby pig’s feed intake, help the baby pig adapt to corn feeding,
        enhance immunity and digestibility and reduce post- weaning syndrome. We
        anticipate that the large pig farms will be the largest users of the Airubao
        Series although we have also introduced the Series to the small individual
        farmers. We have gained immediate acceptance from our customers. We shipped
        approximately $5.3 million of this new product to customers during the six
        month
        period ended June 30, 2007. This product line consists of a series of three
        distinct formulations, the average gross margin is approximately 24% and
        the
        average selling price is approximately $670 per MT. The Annual Report on
        China’s
        Feed Industry, published by the Chinese government, estimates that the market
        for premium baby pig feed is approximately $3.8 billion per year.


Cost
      of
      Goods Sold. We experienced an approximate 34% and 15.1% increase in the unit
      cost of goods sold for blended feed and premix products, respectively, during
      the six month period ended June 30, 2007 compared to the same period in 2006.
      In
      order to provide excellent customer service and differentiate ourselves from
      our
      competition, at our customer’s request, we supply to them customized
      formulations of our products. In any given month, the cost of the various
      additives used fluctuates, which can result in temporary increases in unit
      cost
      of goods sold. During the six month period ended June 30, 2007, the costs of
      corn and soybean meal increased approximately 15% and 10%, respectively. These
      additives constitute approximately 70% of our raw material costs. These
      increased costs offset our increases in revenues. Even though this may have
      an
      adverse effect on our short term profits, we take the long term view that this
      practice results in increased customer loyalty, builds the AgFeed brand and
      will
      ultimately lead to increased sales and gross profits. In addition, we are
      presently experiencing more stable pricing in these additives, which we
      anticipate will stabilize our cost of goods sold.




Nanchang
      experienced a 168% increase in cost of goods sold during the six months ended
      June 30, 2007 compared to the same period in 2006.




Shanghai
      experienced a 133% increase in cost of goods sold during the six months ended
      June 30, 2007 compared to the same period in 2006.





Gross
      Profit. Gross margins decreased to 29.9% from 37.9% for the same period last
      year. The decrease in gross margin can be attributed to several factors: (i)
      the
      cost of introducing the Airubao Series; (ii) we experienced an approximate
      34%
      increase in the unit cost of goods sold of blended feed during the six months
      ended June 30, 2007 compared to the same period in 2006; (iii) the unit cost
      of
      goods sold for premix products increased approximately 15.1% during the six
      months ended June 30, 2007 compared to the same period in 2006.




Gross
        margins at Nanchang for the six month period ended June 30, 2007 were
        approximately 24.5% compared to 36% for the same period in 2006. Gross margins
        at Shanghai for the six month period ended June 30, 2007 were 28% compared
        to
        39% for the same period in 2006. Gross margins at Guangxi for the six month
        period ended June 30, 2007 were approximately 29.9%.  Gross margin
        calculations for each subsidiary are calculated prior to any adjustments
        for
        intercompany sales, which are reflected in the consolidated financial
        statements.


Selling,
      General and Administrative Expenses. We incurred legal and audit expense in
      the
      six month period ended June 30, 2007 of approximately $69,000 associated with
      being a publicly traded United States reporting company that we did not incur
      during the same period in 2006. The increase in our general and administrative
      expense also reflects the addition of our Guangxi subsidiary, which had
      approximately $112,000 of general and administrative expenses during the six
      months ended June 30, 2007. General and administrative expense includes overhead
      expenses such as rent, management and staff salaries, general insurance,
      marketing, accounting and legal and office expenses. Selling expenses for the
      period increased by 50.7% due to the 188.1% increase in revenues and the costs
      associated with entering markets in neighboring provinces as well as the
      addition of our Guangxi subsidiary, which had approximately $199,500 of selling
      expenses during the six months ended June 30, 2007. We attempted to control
      our
      selling expenses through the use of strict cost controls and efficient use
      of
      our distribution channels.





28


Net
      Income. Our increase in net income was due to an increase in income from
      operations offset by an increase in non-operating income due to net interest
      expense offset by other income of approximately $1,300. The major reason for
      the
      increase in non-operating income during this period in 2007 was interest earned
      on the net proceeds of our financings of approximately $54,000 and other income
      of approximately $10,700 offset by interest paid in connection with short term
      loans of approximately $63,600. In addition, our Nanchang Best subsidiary became
      a Sino Foreign Joint Venture due to an investment by a foreign investor in
      July
      2006. Nanchang Best receives favorable tax status and is exempt from all income
      tax through July 14, 2008 and then will pay a reduced rate of 15% for the next
      three years.





**Off-Balance
      Sheet Arrangements**





There
      were no off-balance sheet arrangements during the six months ended June 30,
      2007
      that have, or are reasonably likely to have, a current or future affect on
      our
      financial condition, revenues or expenses, results of operations, liquidity,
      capital expenditures or capital resources that is material to our
      interests.





**Liquidity
      and Capital Resources**





At
      June
      30, 2007, we had $9,199,987 cash and cash equivalents on hand. During the six
      month period ending June 30, 2007, we completed two private placement offerings
      of our securities. Through the final closing of the first private placement
      offering on April 29, 2007, we received aggregate gross proceeds of $6,830,259
      from the sale of an aggregate of 2,276,753 units to 37 accredited investors.
      Each unit was priced at $3.00 and represented one share of our common stock
      and
      a warrant to purchase 8% of one share of common stock. Accordingly, we issued
      an
      aggregate of 2,276,753 shares of our common stock and warrants to purchase
      an
      aggregate of 182,146 shares of our common stock to the 37 accredited investors
      who participated in this offering.  In connection with the private
      placement, fees of 8% of the securities placed were paid in cash and a number
      of
      common stock purchase warrants equal to 8% of the units placed were paid to
      participating dealers and a finder. Accordingly, we paid $546,421 and issued
      warrants to purchase 182,141 shares of our common stock to the participating
      dealers and a finder. All stock purchase warrants have a three year term and
      have an initial exercise price of $5.00. We received net proceeds from the
      private placement of $6,247,503, after deduction of costs associated with the
      financing of $582,756.





On
      June 22, 2007, we completed a second private placement offering pursuant to
      which we sold 750,000 units at an offering price of $4.00 per unit for gross
      proceeds of $3,000,000. Each unit consisted of one share of common stock and
      a
      warrant to purchase 25% of one share of common stock. Accordingly, we issued
      750,000 shares of our common stock and warrants to purchase 187,500 shares
      of
      our common stock to the one accredited investor that participated in this
      offering. In connection with this private placement offering, a fee of 8% of
      the
      securities placed was paid in cash and a number of common stock purchase
      warrants equal to 8% of the units placed were paid to a finder. Accordingly,
      we
      paid $240,000 in cash and issued warrants to purchase 60,000 shares of our
      common stock to the finder. All stock purchase warrants are exercisable for
      a
      period of three years at an exercise price of $5.60 per share. We received
      net
      proceeds from the private placement of $2,760,000, after deduction of costs
      associated with the financing.





We
      used
      $1,131,000 of the net proceeds from these private placement offerings to repay
      the short term bank loan we had in connection with our acquisition Guangxi
      Huijie. We also used $620,000 to make a good faith deposit with an agricultural
      feed company located in China that we are in negotiations to acquire. We are
      presently conducting a due diligence investigation of this company. In the
      event
      that the results of this investigation are satisfactory, the next step would
      be
      to negotiate and enter into a definitive share purchase agreement with the
      owners of this company pursuant to which we would purchase all of this company’s
      issued and outstanding capital stock for a purchase price of approximately
      $1,100,000. The deposit is refundable if for any reason we decide not to
      complete this acquisition and will be applied to the purchase price if we
      complete the transaction. We anticipate that the acquisition will close, if
      at
      all, by the end of 2007.





29


As
      of
      June 30, 2007, we had total loans payable of $1,810,306, comprised of four
      loans. There was one short term bank loan to Nanchang of $788,232,
      with an interest rate of 7.44% per annum payable monthly. This loan matures
      on
      May 27, 2008, and is collateralized by our office building, workshop, employee
      dorms, and use right of land. There are three short term bank loans to Guangxi
      Huijie totaling $1,022,074 as follows:





**Remaining
                Balance Due**
            **Maturity
                Date**
            **Interest
                Rate**
            **Collateral**$627,958
            October
                11, 2007
            5.67%
            Officer’s
                Bank Deposits$118,235
            December
                4, 2007
            6.12%
            Company
                Equipment$275,881
            May
                24, 2008
            6.57%
            Company
                Use Right of Land





During
      the six months ended June 30, 2007, we repaid advances totaling $746,645 to
      entities in which Mr. Junhong Xiong, our President and Chief Executive Officer,
      had an equity interest. Mr. Xiong sold his interest in all of these
      entities.





During
      the six months ended June 30, 2007, we used $1,389,678 in our operating
      activities. This use of cash was primarily due to net income of $2,240,183,
      a
      decrease of $100,703 in amounts due from related parties, an increase in
      accounts payable of $476,037, and an increase in accrued expenses of $101,000,
      offset by increases in accounts receivable of $3,412,186, an increase in
      inventory of $118,418, and an increase in other assets of $666,903, which is
      largely accounted for by the $620,000 good faith deposit to the company we
      are
      negotiating to acquire.





We
      used
      $52,656 in investing activities during the six month period ended June 30,
      2007
      for the acquisition of property and equipment.





We
      received $9,407,442 in cash from financing activities. We received $9,007,503,
      net of offering costs, from the sale of our securities during the six months
      ended June 30, 2007. We also received $1,086,646 from the repayment of loans
      due
      to us. We collected $226,083 for subscription receivables and $935,859 from
      related parties due to us. These amounts were offset by the following payments
      we made: $746,645 repayment to shareholders, $822,756 paid in offering costs
      associated with the two financing we completed, and the payment of $1,102,054
      on
      the note receivable associated with the acquisition of Guangxi.




At
        June
        30, 2007, our accounts receivable balance was approximately $5.3 million,
        which
        was approximately 77% of our net revenues for the three months ended June
        30,
        2007. The reason for the large increase in our accounts receivable at
        June 30, 2007 is that our sales increased due to the introduction of our
        Airubao series of products during the first quarter of 2007. Approximately
        $5.8
        million or 85% of our sales during the quarter ended June 30, 2007 occurred
        in May and June 2007. Given that our credit terms range from 30-90 days and
        in
        certain cases exceed 90 days, a significant portion of these sales remained
        in
        accounts receivable at June 30, 2007. Through September 20, 2007, we
        had collected approximately $4.0 million of the approximately 5.3 million
        of
        accounts receivable at June 30, 2007, of which approximately $350,000 of
        the
        amount collected was greater than 90 days old at June 30, 2007. We
        anticipate collecting approximately 70% of this remaining balance of accounts
        receivable that were greater than 90 days old at June 30, 2007 **** in
        2007
        and a substantial portion of the remaining balance during 2008. While we
        believe that the uncollectible portion of our accounts receivable at
        June 30, 2007 will be in line with our historical collection results and
        will not have a material adverse effect on our liquidity, we will continue
        to
        assess the collectibility of our accounts receivable as our sales continue
        to
        increase and evaluate the need to increase our allowance for doubtful
        accounts.


Our
      principal demands for liquidity are to increase capacity, raw materials
      purchase, sales distribution, and the possible acquisition of new subsidiaries
      or joint ventures in our industry as opportunities present themselves, as well
      as general corporate purposes. We estimate that we will require approximately
      $6,200,000 to maintain our current operations and achieve these goals in 2007,
      which include a potential joint venture outside of China, completion of the
      acquisition for which we have made a deposit of $620,000 and an additional
      acquisition that we are presently budgeting. We will also require an additional
      $3,000,000 that we are budgeting for a potential acquisition in 2008. We
      anticipate that the amount of cash we have on hand as of the date of this report
      as well as the cash that we will generate from operations will satisfy these
      requirements.




30


We
      intend
      to meet our liquidity requirements, including capital expenditures related
      to
      the purchase of equipment, purchase of raw materials, and the expansion of
      our
      business, through cash flow provided by operations and funds raised through
      cash
      investments. We may also use short term loans bank loans to meet our liquidity
      requirements.





The
      majority of the Company’s revenues and expenses were denominated primarily in
      Renminbi (“RMB”), the currency of the People’s Republic of China. There is no
      assurance that exchange rates between the RMB and the U.S. Dollar will remain
      stable. The Company does not engage in currency hedging. Inflation has not
      had a
      material impact on the Company’s business.





**RISK
      FACTORS**





*You
      should carefully consider the risks described below in evaluating our business
      and future prospects. The risks described below are not the only ones facing
      our
      company. Additional risks not presently known to us or that we currently believe
      are immaterial may also impair our business operations. Our business could
      be
      harmed by any of these risks. The trading price of our common stock could
      decline due to any of these risks and you may lose all or part of your
      investment. In assessing these risks, you should also refer to the other
      information contained in this reports, including our consolidated financial
      statements and related notes.*





**Risks
      Related to Our Business**





**We
      cannot be certain that our product innovations and marketing successes will
      continue.**




We
      believe that our past performance has been based on, and our future success
      will
      depend upon, in part, our ability to continue to improve our existing products
      through product innovation and to develop, market and produce new products.
      We
      cannot assure you that we will be successful in the introduction, marketing
      and
      production of any new products or product innovations, or that we will develop
      and introduce in a timely manner innovations to our existing products which
      satisfy customer needs or achieve market acceptance. Our failure to develop
      new
      products and introduce them successfully and in a timely manner could harm
      our
      ability to grow our business and could have a material adverse effect on our
      business, results of operations and financial condition.





**Our
      success depends on our management team and other key personnel, the loss of
      any
      of whom could disrupt our business operations.**





Our
      future success will depend in substantial part on the continued service of
      our
      senior management and founders. The loss of the services of one or more of
      our
      key personnel could impede implementation and execution of our business strategy
      and result in the failure to reach our goals. We do not carry key person life
      insurance in respect of any of our officers or employees. Our future success
      will also depend on the continued ability to attract, retain and motivate highly
      qualified personnel in many fields of our operations. The rapid growth of the
      economy in The People’s Republic of China has caused intense competition for
      qualified personnel. We cannot assure you that we will be able to retain our
      key
      personnel or that we will be able to attract, train or retain qualified
      personnel in the future.




**Our
      acquisition strategy involves a number of risks and we have a limited history
      of
      successful acquisitions. Even when an acquisition is completed, we may have
      integration issues that may not produce as positive results as management may
      have projected.**




We
      have
      completed one acquisition since 2006 and intend to grow through the acquisition
      of additional companies.




31


We
      are
      regularly engaged in acquisition discussions with a number of companies located
      in China and anticipate that one or more potential acquisition opportunities,
      including those that would be material, may become available in the near future.
      If and when appropriate acquisition opportunities become available, we intend
      to
      pursue them actively. Acquisitions involve a number of special risks, including:




•
            failure
                of the acquired business to achieve expected results;




•
            diversion
                of management’s attention;




•
            failure
                to retain key personnel of the acquired business;




•
            additional
                financing, if necessary and available, could increase leverage, dilute
                equity, or both;




•
            the
                potential negative effect on our financial statements from the increase
                in
                goodwill and other intangibles; and




•
            the
                high cost and expenses of completing acquisitions and risks associated
                with unanticipated events or liabilities.




These
      risks could have a material adverse effect on our business, results of
      operations and financial condition.





We
      have
      faced, and expect to continue to face, increased competition for acquisition
      candidates, which may limit our number of opportunities to acquire companies
      and
      may lead to higher acquisition prices. We cannot assure you that we will be
      able
      to identify, acquire, or manage profitably additional businesses or to integrate
      successfully any acquired businesses into our existing business without
      substantial costs, delays or other operational or financial difficulties. In
      future acquisitions, we also could incur additional indebtedness or pay
      consideration in excess of fair value, which could have a material adverse
      effect on our business, results of operations and financial condition. In
      addition, we may
      inadvertently assume unknown liabilities in acquisitions that we complete. Assumption
      of unknown liabilities in acquisitions may harm our financial condition and
      operating results. Acquisitions may be structured in such a manner that would
      result in the assumption of unknown liabilities not disclosed by the seller
      or
      uncovered during pre-acquisition due diligence. These obligations and
      liabilities could harm our financial condition and operating
      results.




**Rising
      energy prices could adversely affect our operating results.**




In
      the
      last few years, energy prices have risen dramatically, which has resulted in
      increased fuel costs for our businesses and raw materials costs for our branded
      products. Rising energy prices could adversely affect demand for our products
      and increase our operating costs, both of which would reduce our sales and
      operating income.





**We
      rely on independently owned wholesale distributors who do not exclusively offer
      our products to their customers.**




The
      loss
      of, or significant adverse change in, our relationship with any of our key
      wholesale distributors could cause our net sales, income from operations and
      cash flow to decline. The loss of, or reduction in, orders from any significant
      customer, losses arising from customer disputes regarding shipments, fees,
      merchandise condition or related matters, or our inability to collect accounts
      receivable from any major customer could reduce our income from operations
      and
      cash flow.




32


**We
      may not be able to reach our revenue and net income targets due to unpredictable
      market conditions.**




Our
      primary end user customers are commercial hog farms and individual farmers.
      Although hog prices in The People’s Republic of China have reached multi-year
      highs, we cannot predict how long such favorable environment may last or predict
      the buying behavior of our customers as they adjust to market conditions.
      Therefore, our market expectations and projections may exceed our actual
      financial performance.





**We
      are a major purchaser of many commodities that we use for raw materials and
      packaging, and price changes for the commodities we depend on may adversely
      affect our profitability.**





We
      enter
      into contracts for the purchase of raw materials at fixed prices, which are
      designed to protect us against raw material price increases during their term.
      However, when necessary, we attempt to recover our commodity cost increases
      by
      increasing prices, promoting a higher-margin product mix and creating additional
      operating efficiencies. Nevertheless, the raw materials used in our business
      are
      largely commodities that experience price fluctuations caused by external
      conditions and changes in governmental agricultural programs.





We
      also
      use paper products, such as corrugated cardboard, aluminum products, films
      and
      plastics to package our products. Substantial increases in prices of packaging
      materials or higher prices of our raw materials could adversely affect our
      operating performance and financial results.





Commodity
      price changes may result in unexpected increases in raw material and packaging
      costs, and we may be unable to increase our prices to offset these increased
      costs without suffering reduced volume, revenue and income. In addition, any
      substantial fluctuation in the prices of raw materials, if not offset by
      increases in our sales prices, could adversely affect our profitability.





**Outbreaks
      of livestock disease can adversely affect sales of our products.**





Outbreaks
      of livestock diseases can significantly affect demand for our products. An
      outbreak of disease could result in governmental restrictions on the sale of
      livestock products to or from customers, or require our customers to destroy
      their flocks. This could result in the cancellation of orders by our customers
      and create adverse publicity that may have a material adverse effect on the
      agricultural products industry and our ability to market our products
      successfully.





**Our
      products and processes can expose us to product liability
      claims.**





Product
      liability claims or product recalls can adversely affect our business reputation
      and expose us to increased scrutiny by local, provincial, and central
      governmental regulators. The packaging, marketing and distribution of
      agricultural feed products entail an inherent risk of product liability and
      product recall and the resultant adverse publicity. We may be subject to
      significant liability if the consumption of any of our products causes injury,
      illness or death of livestock, other animals or humans. We could be required
      to
      recall certain of our products in the event of contamination or damage to the
      products. In addition to the risks of product liability or product recall due
      to
      deficiencies caused by our production or processing operations, we may encounter
      the same risks if any third party tampers with our products. We cannot assure
      you that we will not be required to perform product recalls, or that product
      liability claims will not be asserted against us, in the future. Any claims
      that
      may be made may create adverse publicity that would have a material adverse
      effect on our ability to market our products successfully or on our business,
      reputation, prospects, financial condition and results of operations. A
      successful product liability claim in excess of our insurance coverage could
      have a material adverse effect on us and could prevent us from obtaining
      adequate product liability insurance in the future on commercially reasonable
      terms.





33


**We
      may not be able to obtain regulatory approvals for our
      products.**





The
      manufacture and sale of agricultural products in The People’s Republic of China
      is regulated by The People’s Republic of China and the local provincial
      governments. Although our licenses and regulatory filings are current, the
      uncertain legal environment in The People’s Republic of China and its industry
      may be vulnerable to local government agencies or other parties who wish to
      renegotiate the terms and conditions of, or terminate their agreements or other
      understandings with us.





**We
      face significant competition in the sales of our agricultural feed
      products.**





Competition
      in the agricultural feed industry, especially with companies with greater
      resources, may make us unable to compete successfully in these industries,
      which
      could adversely affect our business.





In
      general, the competitive factors in the agricultural feed industry in The
      People’s Republic of China include:





·
            Price;





·
            Product
                quality;





·
            Brand
                identification;





·
            Breadth
                of product line; and





·
            Customer
                service.





To
      the
      extent that our products and services do not exhibit these qualities, our
      ability to compete will be hindered.





**Concerns
      with the safety and quality of agricultural feed products could cause customers
      to avoid our products.**





We
      could
      be adversely affected if our customers and the ultimate consumers of our
      products lose confidence in the safety and quality of various feed products.
      Adverse publicity about these types of concerns, such as the recent publicity
      concerning the substance melamine, whether or not valid, may discourage our
      customers from buying our products or cause production and delivery disruptions.
      Any negative change in customer perceptions about the safety and quality of
      our
      products could adversely affect our business and financial
      condition.





**If
      our feed products become adulterated or misbranded, we would need to recall
      those items and may experience product liability claims if consumers are injured
      as a result.**





Animal
      feed products occasionally contain contaminants due to inherent defects in
      those
      products or improper storage or handling. Under adverse circumstances, animal
      feed manufacturers may need to recall some of their products if they become
      adulterated or misbranded and may also be liable if the consumption of any
      of
      their products causes injury.





34


While
      we
      have never been required to recall any of our products and we maintain insurance
      that we believe is adequate to cover this type of loss, a widespread product
      recall could result in changes to one or more of our business processes, product
      shortages, a loss of customer confidence in our food or other adverse effects
      on
      our business.





If
      we are
      required to defend against a product liability claim, whether or not we are
      found liable under the claim, we could incur substantial costs, our reputation
      could suffer and our customers might substantially reduce their existing or
      future orders from us.





**We
      may not be able to adequately protect and maintain our intellectual property,
      trademark, and brand names.**





Our
      success will depend on our ability to continue to develop and market fodder
      and
      blended feed products. We currently have not applied for patents for our
      products or formulae, as our management believes an application for such patents
      would result in public knowledge of our proprietary technology and formulas.
      As
      we do not have patent protection for this technology or formulae, we may not
      be
      able to protect our rights to this intellectual property, if our competitors
      discover or illegally obtain this technology or formulae. Our inability to
      protect our rights to this intellectual property may adversely affect our
      ability to prevent competitors from using our products and
      developments.





**Some
      of our significant customer and supplier contracts are
      short-term.**





Some
      of
      our customers and suppliers operate through purchase orders or short-term
      contracts. Though we have long-term business relationships with many of our
      customers and suppliers and alternative sources of supply for key items, we
      cannot be sure that any of these customers or suppliers will continue to do
      business with us on the same basis. Additionally, although we try to renew
      these
      contracts as they expire, there can be no assurance that these customers or
      suppliers will renew these contracts on terms that are favorable to us, if
      at
      all. The termination of or modification to any number of these contracts may
      adversely affect our business and prospects, including our financial performance
      and results of operations.





**Risks
      Related to Conducting Our Business in The People’s Republic of
      China**





**We
      are subject to international economic and political risks over which we have
      little or no control and may be unable to alter our business practice in time
      to
      avoid the possibility of reduced revenues.**





All
      of
      our business is conducted in The People’s Republic of China. Doing business
      outside the United States, particularly in The People’s Republic of China,
      subjects us to various risks, including changing economic and political
      conditions, major work stoppages, exchange controls, currency fluctuations,
      armed conflicts and unexpected changes in United States and foreign laws
      relating to tariffs, trade restrictions, transportation regulations, foreign
      investments and taxation. We have no control over most of these risks and may
      be
      unable to anticipate changes in international economic and political conditions
      and, therefore, unable to alter out business practice in time to avoid the
      possibility of reduced revenues.





**The
      People’s Republic of China’s economic policies could affect our
      business.**





Substantially
      all of our assets are located in The People’s Republic of China and
      substantially all of our revenue is derived from our operations in The People’s
      Republic of China. Accordingly, our results of operations and prospects are
      subject, to a significant extent, to the economic, political and legal
      developments in The People’s Republic of China.




35


While
      The
      People’s Republic of China’s economy has experienced significant growth in the
      past twenty years, such growth has been uneven, both geographically and among
      various sectors of the economy. The Chinese government has implemented various
      measures to encourage economic growth and guide the allocation of resources.
      Some of these measures benefit the overall economy of The People’s Republic of
      China, but they may also have a negative effect on us. For example, operating
      results and financial condition may be adversely affected by the government
      control over capital investments or changes in tax regulations. The economy
      of
      The People’s Republic of China has been changing from a planned economy to a
      more market-oriented economy. In recent years, the Chinese government has
      implemented measures emphasizing the utilization of market forces for economic
      reform and the reduction of state ownership of productive assets, and the
      establishment of corporate governance in business enterprises; however, a
      substantial portion of productive assets in The People’s Republic of China are
      still owned by the Chinese government. In addition, the Chinese government
      continues to play a significant role in regulating industry development by
      imposing industrial policies. It also exercises significant control over The
      People’s Republic of China’s economic growth through the allocation of
      resources, the control of payment of foreign currency-denominated obligations,
      the setting of monetary policy and the provision of preferential treatment
      to
      particular industries or companies.





**We
      may have difficulty establishing adequate management, legal and financial
      controls in The People’s Republic of China.**





The
      People’s Republic of China historically has not adopted a Western style of
      management and financial reporting concepts and practices, as well as in modern
      banking, computer and other control systems. We may have difficulty in hiring
      and retaining a sufficient number of qualified employees to work in The People’s
      Republic of China. As a result of these factors, we may experience difficulty
      in
      establishing management, legal and financial controls, collecting financial
      data
      and preparing financial statements, books of account and corporate records
      and
      instituting business practices that meet Western standards.





**Our
      bank accounts are not insured or protected against loss.**





We
      maintain our cash with various banks and trust companies located in The People’s
      Republic of China. Our cash accounts are not insured or otherwise protected.
      Should any bank or trust company holding our cash deposits become insolvent,
      or
      if we are otherwise unable to withdraw funds, we would lose the cash on deposit
      with that particular bank or trust company.





**As
      we have limited business insurance coverage in The People’s Republic of China,
      any loss which we suffer may not be insured or may be insured to only a limited
      extent.**





The
      insurance industry in The People’s Republic of China is still in an early state
      of development and insurance companies located in The People’s Republic of China
      offer limited business insurance products. In the event of damage or loss to
      our
      properties, our insurance may not provide as much coverage as if we were insured
      by insurance companies in the United States.





**We
      may face judicial corruption in The People’s Republic of
      China.**





Another
      obstacle to foreign investment in The People’s Republic of China is corruption.
      There is no assurance that we will be able to obtain recourse in any legal
      disputes with suppliers, customers or other parties with whom we conduct
      business, if desired, through The People’s Republic of China’s poorly developed
      and sometimes corrupt judicial systems.





36


**We
      may face obstacles from the communist system in The People’s Republic of
      China.**





Foreign
      companies conducting operations in The People’s Republic of China face
      significant political, economic and legal risks. The Communist regime in The
      People’s Republic of China, including a cumbersome bureaucracy, may hinder
      Western investment.





**If
      relations between the United States and The People’s Republic of China worsen,
      investors may be unwilling to hold or buy our stock and our stock price may
      decrease.**





At
      various times during recent years, the United States and The People’s Republic
      of China have had significant disagreements over political and economic issues.
      Controversies may arise in the future between these two countries. Any political
      or trade controversies between the United States and The People’s Republic of
      China, whether or not directly related to our business, could reduce the price
      of our common stock.





**The
      government of The People’s Republic of China could change its policies toward
      private enterprise or even nationalize or expropriate private enterprises,
      which
      could result in the total loss of our and your investment.**





Our
      business is subject to significant political and economic uncertainties and
      may
      be affected by political, economic and social developments in The People’s
      Republic of China. Over the past several years, the government of The People’s
      Republic of China has pursued economic reform policies including the
      encouragement of private economic activity and greater economic
      decentralization. The government of The People’s Republic of China may not
      continue to pursue these policies or may significantly alter them to our
      detriment from time to time with little, if any, prior notice.





Changes
      in policies, laws and regulations or in their interpretation or the imposition
      of confiscatory taxation, restrictions on currency conversion, restrictions
      or
      prohibitions on dividend payments to stockholders, or devaluations of currency
      could cause a decline in the price of our common stock, should a market for
      our
      common stock ever develop. Nationalization or expropriation could even result
      in
      the total loss of your investment.





**The
      nature and application of many laws of The People’s Republic of China create an
      uncertain environment for business operations and they could have a negative
      effect on us.**





The
      legal
      system in The People’s Republic of China is a civil law system. Unlike the
      common law system, the civil law system is based on written statutes in which
      decided legal cases have little value as precedents. In 1979, The People’s
      Republic of China began to promulgate a comprehensive system of laws and has
      since introduced many laws and regulations to provide general guidance on
      economic and business practices in The People’s Republic of China and to
      regulate foreign investment. Progress has been made in the promulgation of
      laws
      and regulations dealing with economic matters such as corporate organization
      and
      governance, foreign investment, commerce, taxation and trade. The promulgation
      of new laws, changes of existing laws and the abrogation of local regulations
      by
      national laws could cause a decline in the price of our common stock. In
      addition, as these laws, regulations and legal requirements are relatively
      recent, their interpretation and enforcement involve significant
      uncertainty.





37


**Although
      we do not import goods into or export goods out of The People’s Republic of
      China, fluctuation of the Renminbi may indirectly affect our financial condition
      by affecting the volume of cross-border money flow.**





Although
      we use the United States dollar for financial reporting purposes, all of the
      transactions effected by our operating subsidiaries are denominated in The
      People’s Republic of China’s Renminbi. The value of the Renminbi fluctuates and
      is subject to changes in The People’s Republic of China’s political and economic
      conditions. We do not currently engage in hedging activities to protect against
      foreign currency risks. Even if we chose to engage in such hedging activates,
      we
      may not be able to do so effectively. Future movements in the exchange rate
      of
      the Renminbi could adversely affect our financial condition as we may suffer
      financial losses when transferring money raised outside of China into the
      country or paying vendors for services performed outside of China.





**The
      admission of The People’s Republic of China into the World Trade Organization
      could lead to increased foreign competition for us.**




Domestic
      competition in the animal feed industry is largely fragmented and foreign
      competition is minimal. However, as a result of The People’s Republic of China
      becoming a member of the World Trade Organization (“WTO”), import restrictions
      on agricultural products are expected to be reduced. With the lowering of import
      restrictions and the WTO’s requirement for a reduction of import tariffs as
      condition of membership, such reduced import restrictions and tariffs may result
      in an increase of foreign products and could in turn lead to increased
      competition in the domestic agricultural market.




Risks
      Related to our
      Securities




**It
      will be extremely difficult to acquire jurisdiction and enforce liabilities
      against our officers, directors and assets based in The People’s Republic of
      China.**





As
      our
      executive officers and several of our directors, including the chairman of
      our
      Board of Directors, are Chinese citizens, it may be difficult, if not
      impossible, to acquire jurisdiction over these persons in the event a lawsuit
      is
      initiated against us and/or our officers and directors by a stockholder or
      group
      of stockholders in the United States. Also, because our operating subsidiaries
      and assets are located in The People’s Republic of China, it may be extremely
      difficult or impossible for you to access those assets to enforce judgments
      rendered against us or our directors or executive offices by United States
      courts. In addition, the courts in The People’s Republic of China may not permit
      the enforcement of judgments arising out of United States federal and state
      corporate, securities or similar laws. Accordingly, United States investors
      may
      not be able to enforce judgments against us for violation of United States
      securities laws.





**Our
      common stock price is subject to significant volatility, which could result
      in
      substantial losses for investors.**





During
      the seven month period ended July 31, 2007, the high and low bid prices of
      our
      common stock on the Over-The-Counter Bulletin Board (“OTCBB”) were $7.80 per
      share and $1.85 per share, respectively. Prices for our shares are determined
      in
      the marketplace and may accordingly be influenced by many factors, including,
      but not limited to:





·
              the
                  depth and liquidity of the market for the
                  shares;
 
 ·
              quarter-to-quarter
                  variations in our operating
                  results;
 
 38
 ·
              announcements
                  about our performance as well as the announcements of our competitors
                  about the performance of their
                  businesses;
 
 ·
              investors’
                  evaluations of our future prospects and the food industry
                  generally;
 
 ·
              changes
                  in earnings estimates by, or failure to meet the expectations of,
                  securities analysts;
 
 ·
              our
                  dividend policy; and
 
 ·
              general
                  economic and market
                  conditions.




In
      addition, the stock market often experiences significant price fluctuations
      that
      are unrelated to the operating performance of the specific companies whose
      stock
      is traded. These market fluctuations could adversely affect the trading price
      of
      our shares.





The
      price
      at which investors purchase shares of our common stock may not be indicative
      of
      the price that will prevail in the trading market. Investors may be unable
      to
      sell their shares of common stock at or above their purchase price, which may
      result in substantial losses.





**Shares
      of our common stock lack a significant trading market.**





Shares
      of
      our common stock are not eligible for trading on any national or regional
      exchange. Our common stock is eligible for trading in the over-the-counter
      market on the Over-The-Counter Bulletin Board pursuant to Rule 15c2-11 of the
      Securities Exchange Act of 1934. This market tends to be highly illiquid. There
      can be no assurance that an active trading market in our common stock will
      develop, or if such a market develops, that it will be sustained. In addition,
      there is a greater chance for market volatility for securities that trade on
      the
      Over-The-Counter Bulletin Board as opposed to securities that trade on a
      national exchange or quotation system. This volatility may be caused by a
      variety of factors, including the lack of readily available quotations, the
      absence of consistent administrative supervision of “bid” and “ask” quotations
      and generally lower trading volume.





**Future
      sales of shares of our common stock by our stockholders could cause our stock
      price to decline.**





We
      cannot
      predict the effect, if any, that market sales of shares of our common stock
      or
      the availability of shares of common stock for sale will have on the market
      price prevailing from time to time. As of August 2, 2007, we had outstanding
      27,026,756 shares of common stock. We have filed a Registration Statement on
      Form SB-2 pursuant to which selling stockholders may resell an aggregate of
      3,026,753 shares of our common stock and an additional 611,787 shares
      issuable upon the exercise of warrants into the public market. Sales of shares
      of our common stock in the public market covered under an effective registration
      statement, or the perception that those sales may occur, could cause the trading
      price of our common stock to decrease or to be lower than it might be in the
      absence of those sales or perceptions.





**We
      may issue additional shares of our capital stock or debt securities to raise
      capital or complete acquisitions, which would reduce the equity interest of
      our
      stockholders.**





Our
      certificate of incorporation authorizes the issuance of up to 75,000,000 shares
      of common stock, par value $.001 per share. As of August 2, 2007, 27,026,756
      of
      these shares of common stock were issued and outstanding, 611,787 shares were
      reserved for issuance upon exercise of 611,787 issued and outstanding warrants
      and 32,000 were reserved for issuance upon exercise of 32,000 issued and
      outstanding stock options. There are approximately 47,325,000 authorized and
      unissued shares of our common stock which have not been reserved and
      accordingly, are available for future issuance. Although we have not entered
      into any agreements as of the date of this offering to issue our unreserved
      shares of common stock, we may issue a substantial number of additional shares
      of our common stock to complete a business combination or to raise capital.
      The
      issuance of additional shares of our common stock:





39


·
            may
                significantly reduce the equity interest of investors in this offering;
                and





·
            may
                adversely affect prevailing market prices for our common stock.





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





Holders
      of shares of our common stock may have difficulty selling those shares because
      our common stock will probably be subject to the penny stock rules. Shares
      of
      our common stock are subject to rules adopted by the Securities and Exchange
      Commission that regulate broker-dealer practices in connection with transaction
      in “penny stocks.” Penny stocks are generally equity securities with a price of
      less than $5.00 which are not registered on a national securities exchange,
      provided that current price and volume information with respect to transaction
      in those securities is provided by the exchange or system. The penny stock
      rules
      require a broker-dealer, prior to a transaction in a penny stock not otherwise
      exempt from those rules, to deliver a standardized risk disclosure document
      prepared by the Securities and Exchange Commission, which contains the
      following:





·
            a
                description of the nature and level of risk in the market for penny
                stocks
                in both public offerings and secondary
                trading;





·
            a
                description of the broker’s or dealer’s duties to the customer and of the
                rights and remedies available to the customer with respect to violation
                to
                such duties or other requirements of securities
                laws;





·
            a
                brief, clear, narrative description of a dealer market, including
“bid”
                and “ask” prices for penny stocks and the significance of the spread
                between the “bid” and “ask” price;





·
            a
                toll-free telephone number for inquiries on disciplinary
                actions;





·
            definitions
                of significant terms in the disclosure document or in the conduct
                of
                trading in penny stocks; and





·
            such
                other information and is in such form (including language, type,
                size and
                format), as the Securities and Exchange Commission shall require
                by rule
                or regulation.





Prior
      to
      effecting any transaction in penny stock, the broker-dealer also must provide
      the customer with the following:





·
            the
                bid and offer quotations for the penny
                stock;





·
            the
                compensation of the broker-dealer and its salesperson in the
                transaction;





·
            the
                number of shares to which such bid and ask prices apply, or other
                comparable information relating to the depth and liquidity of the
                market
                for such stock; and





40


·
            monthly
                account statements showing the market value of each penny stock held
                in
                the customer’s account.





In
      addition, the penny stock rules require that, prior to a transaction in a penny
      stock not otherwise exempt from those rules, the broker-dealer must make a
      special written determination that the penny stock is a suitable investment
      for
      the purchaser and receive the purchaser’s written acknowledgment of the receipt
      of a risk disclosure statement, a written agreement to transactions involving
      penny stocks, and a signed and dated copy of a written suitability statement.
      These disclosure requirements may have the effect of reducing the trading
      activity in the secondary market for a stock that becomes subject to the penny
      stock rules.




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





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





**Our
      management owns a significant amount of our common stock, giving them influence
      or control in corporate transactions and other matters, and their interests
      could differ from those of other stockholders.**





Our
      principal executive officers and directors, own approximately 29% of our
      outstanding common stock. As a result, they are in a position to significantly
      influence the outcome of matters requiring a stockholder vote, including the
      election of directors, the adoption of any amendment to our articles of
      incorporation or bylaws, and the approval of significant corporate transactions.
      Their control may delay or prevent a change of control on terms favorable to
      our
      other stockholders and may adversely affect your voting and other stockholders
      rights.





**Our
      articles of incorporation, our bylaws and provisions of Nevada law could make
      it
      more difficult for a third party to acquire us, even if doing so could be in
      our
      stockholders’ best interest.**





Provisions
      of our articles of incorporation and bylaws could make it more difficult for
      a
      third party to acquire us, even if doing so might be in the best interest of
      our
      stockholders. It could be difficult for a potential bidder to acquire us because
      our articles of incorporation and bylaws contain provisions that may discourage
      takeover attempts. These provisions may limit stockholders’ ability to approve a
      transaction that stockholders may think is in their best interests. These
      provisions include a requirement that certain procedures must be followed before
      matters can be proposed for consideration at meetings of our
      stockholders.





Provisions
      of Nevada’s business combinations statute also restrict certain business
      combinations with interested stockholders. We have elected not to be governed
      by
      these provisions in our amended and restated articles of incorporation. However,
      this election may not be effective unless we meet certain conditions under
      the
      Nevada statute.





41


**Capital
      outflow policies in The People’s Republic of China may hamper our ability to
      declare and pay dividends to our shareholders.**





The
      People’s Republic of China has adopted currency and capital transfer
      regulations. These regulations may require us to comply with complex regulations
      for the movement of capital. Although our management believes that we will
      be in
      compliance with these regulations, should these regulations or the
      interpretation of them by courts or regulatory agencies change, we may not
      be
      able to pay dividends to our shareholders outside of The People’s Republic of
      China. In addition, under current Chinese law, we must retain a reserve equal
      to
      10 percent of net income after taxes, not to exceed 50 percent of registered
      capital. Accordingly, this reserve will not be available to be distributed
      as
      dividends to our shareholders. We presently do not intend to pay dividends
      in
      the foreseeable future. Our management intends to follow a policy of retaining
      all of our earnings to finance the development and execution of our strategy
      and
      the expansion of our business.





**Item
      3A(T). Controls and Procedures**





**Evaluation
      of Disclosure Controls and Procedures**




As
      of
      June 30, 2007, we carried out an evaluation of the effectiveness of the design
      and operation of our “disclosure controls and procedures” (as defined in the
      Exchange Act Rules 13a-15(e) and 15d-15(e)) under the supervision and with
      the
      participation of our management, including Junhong Xiong, our Chief Executive
      Officer and Yan Liang Fan, our Chief Financial Officer. Based upon that
      evaluation, Mr. Xiong and Mr. Yan concluded that our disclosure controls and
      procedures are effective.





Disclosure
      controls and procedures are controls 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 periods 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 to allow timely decisions regarding
      required disclosure.




During
      the quarter ended June 30, 2007, there were no changes in our internal control
      over financial reporting that have materially affected our internal control
      over
      financial reporting.




**Part
      II.**  **OTHER
      INFORMATION**





**Item
      1.**  **Legal
      Proceedings**





We
      know
      of no pending legal proceedings to which we are a party which are material
      or
      potentially material, either individually or in the aggregate. We are from
      time
      to time, during the normal course of our business operations, subject to various
      litigation claims and legal disputes. We do not believe that the ultimate
      disposition of any of these matters will have a material adverse effect on
      our
      consolidated financial position, results of operations or
      liquidity.




42


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


On
      April
      29, 2007, we completed a final closing of a private placement offering of units
      pursuant to which we sold an aggregate of 2,276,753 units at an offering price
      of $3.00 per unit for aggregate gross proceeds of $6,830,259. Each unit
      consisted of one share of common stock and a warrant to purchase 8% of one
      share
      of common stock.  Accordingly, we issued an aggregate of 2,276,753 shares
      of our common stock and warrants to purchase 182,146 shares of our common stock
      to the 37 accredited investors who participated in this offering.  The
      warrants are exercisable for a period of three years at an exercise price of
      $5.00 per share.  In addition, we compensated two participating selected
      dealers and one finder that assisted us in the sale of securities in this
      private placement offering by (i) paying them cash equal to 8% of the gross
      proceeds from the sale of units placed plus (ii) issuing them warrants to
      purchase that number of shares of our common stock equal to 8% of the units
      placed, as follows:




Selected
                dealer or finder
            
            Cash
            
            WarrantsFour
                Tong Investments, Ltd.
            
            $
            360,000
            
            
            120,000Legend
                Securities, Inc.
            
            $
            151,861
            
            
            50,621Maxim
                Group LLC
            
            $
            34,560
            
            
            11,520




The
      warrants granted to these finders have the same terms and conditions as the
      warrants granted in the offering.  The net proceeds of this private
      placement offering will be used primarily for working capital
      purposes.





On
      June
      22, 2007, we received $3,000,000 for the sale of 750,000 units of our
      securities, before deductions of offering expenses. Each unit consists of one
      share of common stock and a warrant to purchase 25% of one share of common
      stock. Accordingly, we issued 750,000 shares of our common stock and warrants
      to
      purchase 187,500 shares of our common stock to the one accredited investor
      who
      participated in this offering.  Each unit was priced at $4.00. The
      warrants are exercisable for a period of three years at an exercise price of
      $5.60 per share. Fees of (i) 8% of the securities placed payable in cash
      ($240,000), and (ii) a number of common stock purchase warrants equal to 8%
      of
      the number of units placed (60,000), on the same terms and conditions as the
      warrants granted in the offering, were paid to a finder.





We
      issued
      the securities in these private placements offerings pursuant to Rule 506 of
      Regulation D as (i) we offered and sold these securities to a limited number
      of
      accredited investors, (ii) such investors were not solicited through any form
      of
      general solicitation; (iii) the shares of common stock and warrants that made
      up
      the units were restricted securities in that they were legended with
      restrictions on resale without registration or an exemption therefrom and (iv)
      the investors represented in writing to us that they satisfied the definition
      of
      accredited investor as such term is defined under Rule 501 of Regulation
      D.





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





None.





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





None.





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





None.





43


**Item
      6.**  **Exhibits**





(a)
            Exhibits





**Exhibit
                Number**
            **Description
                of Exhibit**3.1
            The
                Corporation’s Articles of Incorporation, is incorporated herein by
                reference to Exhibit 3.1 to the Corporation’s Registration Statement on
                Form SB-2 dated July 18, 2005.3.2
            The
                Corporation’s Amended and Restated Bylaws, is incorporated herein by
                reference to Exhibit 3.2 to the Corporation’s Report on Form 8-K dated May
                15, 2007.4.1
            Specimen
                common stock certificate, is incorporated herein by reference to
                Exhibit 4
                to the Corporation’s Annual Report on Form 10-KSB for the year ended
                December 31, 2006.4.2
            Form
                of Common Stock Purchase Warrant forming part of units sold, and
                also
                issued as compensation to selected dealers in our private placement
                offering that had a final closing in April 2007, is incorporated
                herein by
                reference to Exhibit 4.1 of the Corporation’s Quarterly Report on Form
                10-QSB for the quarter ended March 31, 2007.4.3
            Form
                of Registration Rights Agreements, is incorporated herein by reference
                to
                Exhibit 4.2 of the Corporation’s Quarterly Report on Form 10-QSB for the
                quarter ended March 31, 2007.4.4
            Form
                of Common Stock Purchase Warrant forming part of units sold and also
                issued as compensation to selected dealers in our June 2007 private
                placement offering, is incorporated herein by reference to Exhibit
                4.4 to
                the Corporation’s Registration Statement on Form SB-2 dated June 28,
                2007.4.5
            Registration
                Rights Agreement dated as of June 22, 2007 by and between AgFeed
                Industries, Inc. and Apollo Asia Opportunity Master Fund, L.P., is
                incorporated herein by reference to Exhibit 4.5 to the Corporation’s
                Registration Statement on Form SB-2 dated June 28,
                2007.31.1
            Certification
                of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
                promulgated under the Securities and Exchange Act of 1934, as
                amended.31.2
            Certification
                of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d
                14(a),
                promulgated under the Securities and Exchange Act of 1934, as
                amended.32.1
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002 (Chief Executive
                Officer).32.2
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002 (Chief Financial
                Officer).




44


**SIGNATURES**





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





Agfeed
                Industries, Inc.November
                27, 2007
            By:
            /s/ Xiong
              JunhongXiong
                Junhong
              Chief
                Executive Officer (Principal Executive
                Officer)


November
                  27, 2007
              By:
              /s/ Yan
                Liang FanYan
                    Liang Fan
                  Chief
                    Financial Officer
                  (Principal
                    Financial and Accounting
                    Officer)
  45