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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 20-F [   ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934OR[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 Or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2011OR[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE OF 1934OR[   ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE OF 1934 Commission file number 0-20386 CHAI-NA-TA CORP.(Exact name of Registrant as specified in its charter) NOT APPLICABLE(Translation of Registrant’s Name into English) BRITISH COLUMBIA, CANADA(Jurisdiction of incorporation or organization) UNIT 100 – 12051 HORSESHOE WAY, RICHMOND, BRITISH COLUMBIA V7A 4V4(Address of principal executive offices) Securities registered or to be registered pursuant to Section 12(b) of the Act:NONE Securities registered or to be registered pursuant to Section 12(g) of the Act:COMMON STOCK, WITHOUT PAR VALUE(Title of Class) Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:None Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.Common 34,698,157 Indicate by check mark if the registrant is a well-known seasonal issuer, as defined in Rule 405 of the Securities Act.Yes [   ]   No [ X ] If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934Yes[   ]   No [ X ] Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.Yes [ X ]   No [   ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.Large accelerated filer [   ]   Accelerated filer [   ]   Non-accelerated filer [ X ] Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:US GAAP [ X ]   IFRS [   ]   Other [   ] If “Other” has been checked, indicate by check mark which financial statement item the registrant has elected to follow:Item 17 [   ]   Item 18 [   ] If this is an annual report, indicated by check mark whether the registrants is a shell company Yes [   ]   No [ X ] 1


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Chai-Na-Ta Corp.FORM 20-F ANNUAL REPORTFOR YEAR ENDED DECEMBER 31, 2011 TABLE OF CONTENTS Part I

   .

   3ITEM 1

   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

   3ITEM 2

   OFFER STATISTICS AND EXPECTED TIMETABLE

   3ITEM 3

   KEY INFORMATION

   3ITEM 4

   INFORMATION ON THE COMPANY

   7ITEM 5

   OPERATING AND FINANCIAL REVIEW AND PROSPECTS

   12ITEM 6

   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

   17ITEM 7

   MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

   22ITEM 8

   FINANCIAL INFORMATION

   23ITEM 9

   THE OFFER AND LISTING

   23ITEM 10

   ADDITIONAL INFORMATION

   25ITEM 11

   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   31ITEM 12

   DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

   31PART II

   

   32ITEM 13

   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

   32ITEM 14

   MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

   32ITEM 15

   CONTROLS AND PROCEDURES

   32ITEM 16

   RESERVED

   33PART III

   

   34ITEM 17

   FINANCIAL STATEMENTS

   34ITEM 18

   FINANCIAL STATEMENTS

   35ITEM 19

   EXHIBITS

   35SIGNATURE PAGE

   37CONSOLIDATED FINANCIAL STATEMENTS

   38
 2


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PART I ITEM 1

   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
 Not applicable. ITEM 2

   OFFER STATISTICS AND EXPECTED TIMETABLE
 Not applicable. ITEM 3

   KEY INFORMATION
 SELECTED FINANCIAL DATA The selected consolidated financial data of the Company as of and for each of the years ended December 31, 2011, 2010, 2009, 2008 and 2007 has been derived from the Company’s audited consolidated financial statements. The selected consolidated condensed financial data should be read in conjunction with, and are qualified in their entirety by reference to, our audited consolidated financial statements and related notes included in Item 17 of this annual report as well as Item 5 - Operating and Financial Review and Prospects included elsewhere in this annual report. Effective January 1st, 2011, the audited consolidated financial statements are prepared and presented in accordance with United States generally accepted accounting principles (“US GAAP”). In order to allow for comparison to the financial results for the previous years presented herein, the financial data for the years ended, and as of, December 31, 2010, 2009, 2008 and 2007 has been restated to reflect US GAAP according to the policy described in Note 2 - Significant Accounting Policies - Basis of Presentation in the notes accompanying our financial statements which are included in Item 17 of this annual report. In this annual report, unless otherwise specified, all dollar amounts are expressed in Canadian dollars (CDN$). The Government of Canada permits a floating exchange rate to determine the value of the CDN$ against the United States dollar (US$). At December 31, 2011, US$1.00 was equal to CDN$1.02. 3


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Table No. 1Selected Financial Data(CDN$ in 000, except Earnings/Loss per Share and Share Data)Year Ended

   

   Year Ended

   

   Year Ended

   

   Year Ended

   

   Year Ended12/31/2011

   

   12/31/2010

   

   12/31/2009

   

   12/31/2008

   

   12/31/2007Revenue

   

   9,475

   

   8,951

   

   6,941

   

   9,232

   

   7,562Write-down of ginseng crops and inventory

   

   200

   

   170

   

   514

   

   2,998

   

   2,735Operating income (loss) (2)

   

   2,893

   

   829

   

   (1,582

   )

   (3,644

   )

   (3,621

   )Net earnings (loss) (2)

   

   3,015

   

   1,258

   

   174

   

   (4,666

   )

   (3,317

   )Earnings (loss) per share – basic and diluted (2)

   

   0.09

   

   0.04

   

   0.01

   

   (0.13

   )

   (0.10

   )Weighted average number of common shares used to calculate basic and diluted earnings (loss) per share (1)

   

   34,698

   

   34,698

   

   34,698

   

   34,698

   

   34,698Dividends declared per share

   

   0

   

   0

   

   0

   

   0

   

   0Total assets

   

   11,539

   

   12,995

   

   17,346

   

   20,882

   

   25,600Net assets

   

   10,981

   

   8,010

   

   6,641

   

   6,104

   

   11,229Term debt (non-current)

   

   0

   

   2,984

   

   6,499

   

   8,619

   

   6,973Capital stock

   

   38,226

   

   38,226

   

   38,226

   

   38,226

   

   38,226
  1.

   Options to purchase 343,400 shares of common stock were outstanding in 2007 but were not included in the computation of diluted number of common shares because their effect would have been anti-dilutive.2.

   During 2008 and 2007, the Company incurred write-downs on inventory and crop costs as detailed in Table No. 1 which caused a significant decrease in operating income (loss) and net earnings (loss) in total and on a per share basis compared to other years. Table No. 2 sets forth the rate of exchange for the CDN$ for the last five years and the most recent six months. For purposes of this table, the rate of exchange means the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York. The table sets forth the number of CDN$ required under that formula to buy one US$. Table No. 2US$/CDN$ Fiscal Year Ended

   Average

   High

   Low

   Close12/31/2011

   0.99

   1.07

   0.94

   1.0012/31/2010

   1.03

   1.08

   0.99

   0.9912/31/2009

   1.14

   1.30

   1.03

   1.0512/31/2008

   1.07

   1.30

   0.97

   1.2212/31/2007

   1.07

   1.19

   0.92

   0.99Month Ended

   

   High

   Low

   Close02/29/2012

   

   1.00

   0.98

   0.9901/31/2012

   

   1.03

   1.00

   1.0012/31/2011

   

   1.04

   1.01

   1.0211/30/2011

   

   1.05

   1.00

   1.02
 4


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10/31/2011

   

   1.07

   0.99

   1.0009/30/2011

   

   1.05

   0.97

   1.05
 RISK FACTORS The Company may from time to time make written or oral forward-looking statements. Written forward-looking statements may appear in this document and other documents filed with the Securities and Exchange Commission, in press releases, in reports to shareholders, on the Company’s website, and other documents. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Such estimates, projections or other forward looking estimates involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and could materially affect actual results in the future, and cause actual results to differ materially from the results expressed in any estimates, projections or other forward-looking statements. Prospective investors should consider carefully the risk factors set out below. The Company was subject to a number of business and financial risks including: agricultural risk such as weather and disease, commodity price risk for ginseng bulk root, exchange risk (predominantly United States and Hong Kong dollar related), the lengthy growing cycle for ginseng, interest rate risk, credit risk and the concentration of customers, and future need for financing. Going Concern The Company did not plant new crops in the previous three years and is expecting to cease operations in their current form after completing the sale of the remaining inventory from the 2011 harvest in 2012. After completion of such sales, the Company will not have a recurring source of revenue, other than interest income on its cash deposits. The Company is currently in a position to acquire and manage an operating business with growth opportunities, although the Company has not yet received an opportunity attractive enough to seriously consider. As such, there is substantial doubt about the Company's ability to continue indefinitely as a going concern. However the Company’s financial statements were prepared on a going concern basis which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. Should a liquidation plan be approved, the Company will adopt liquidation based accounting to prepare the Company's financial statements. The impact of adopting a liquidation basis accounting to prepare the financial statements is limited as the Company has stated the significant assets and liabilities at amounts which are not expected to significantly differ from their net realizable value. Agricultural Risks The Company’s primary business has been the cultivation and marketing of North American ginseng. Ginseng farming is subject to agricultural risks such as weather and disease and risks of low yields, poor crop quality, and crop failure. The Company has harvested all of its ginseng crops and thus all of its agricultural risks have now been alleviated. Product Pricing The marketing of bulk and graded North American ginseng in world markets is subject to pricing risks. The 5


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price of North American ginseng may be affected by factors such as the size, shape, color, taste, and quality of the harvest for the Company and the industry at large, as well as other factors in any given year. These are factors that the Company may not be able to control in the short term. However, the Company has entered into contracts with various buyers to sell over 95% of the inventory from the Company’s final harvest so this risk has been minimized. Availability of Suitable Land Generally, the Company used farm land only for one ginseng crop as it is generally believed that ginseng depletes the soil of nutrients necessary for a second successful ginseng crop. Since the Company does not plan to make any additional plantings, the availability of suitable farm land will no longer have an effect on the Company's business, financial condition, operating results and cash flows. Competition The ginseng industry is quite competitive as the Company competes with numerous other long established ginseng growers. Most of these competitors are managed by private companies or individuals who have smaller acres under cultivation and harvest fewer pounds of ginseng but also have lower overhead costs compared to the Company. A high amount of ginseng harvested by the competition can adversely affect the price that the Company can achieve for its ginseng. However, since the Company has already entered into contracts with various buyers to sell over 95% of the inventory from the Company’s final harvest, this risk has been minimized. Credit Risk and the Concentration of Customers The Company is exposed to credit risk on accounts receivable from customers. In order to manage its credit risk, the Company carefully monitors credit terms, and investigates credit history. Payments or deposits are usually received before shipments of inventory to the customer and credit is typically granted only to customers with established relationships or those customers who have been subject to a credit review and approval by management. When such relationships have not been established or credit reviews have not been acceptable, letters of credit may be used to secure such payment or revenues may not be recognized until collection. The Company’s product is typically sold to major ginseng brokers in Hong Kong or Canada and a limited number of smaller direct customers. During the years ended December 31, 2011, 2010 and 2009, the Company had sales of approximately 89% to its top four customers, approximately 89% to its top four customers, and approximately 78% to its top three customers in each year, respectively. The Company believes that a limited number of customers will continue to represent a significant portion of its total revenue. Although the Company does not consider itself economically dependent upon any single customer or combination of customers due to the existence of other potential brokers capable of purchasing the Company’s supply, there can be no assurance that the Company will be able to maintain its current significant customers or secure significant new customers on similar terms and this may have a material adverse effect on the Company’s business, financial condition, operating results and cash flows. During the years ended December 31, 2011, 2010 and 2009, the Company had sales of approximately 39%, 57% and 79% to customers in the Hong Kong and China geographic region. Although the Company sold a smaller proportion of its inventory to customers in Hong Kong and China in 2011, the Company believes that the majority of its Canadian customers will resell the product in Hong Kong and China. Any adverse change in the demand for ginseng in Hong Kong and China may have a material adverse effect on the Company’s business, financial condition, operating results and cash flows. 6


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Risks Associated with International Operations The Company operates in international markets and conducts business in Canada (bulk root farming operations and certain bulk root sales) as well as Hong Kong and China (bulk root sales centre in Asia). There are a number of risks inherent in the Company’s international business activities, including changes in regulatory requirements, tariffs and other trade barriers, costs and risks associated with foreign markets, differing culture and business practices, potentially adverse tax consequences, the burdens of complying with a wide variety of foreign laws, war, insurrection, terrorism and other political risks and factors beyond the Company’s control. Exchange risks are also present as currencies may fluctuate at different rates depending on economic, political and other factors. There can be no assurance that adverse changes in the above noted factors will not materially affect the Company’s business, financial condition, operating results and cash flows. Foreign Exchange The Company transacts primarily in US$, CDN$ and Hong Kong dollar (“HK$”) denominations. The Hong Kong Monetary Authority has set up a linked exchange rate system in which the HK$ is limited to a trading range of HK$7.75 – HK$7.85 against the US$. The Company monitors its exposure to foreign exchange risk and balances its foreign currency holdings to reduce exposure to any one currency by engaging in foreign exchange contracts and by repatriating any excess funds. Fluctuations in currency exchange rates, particularly the weakening or strengthening of the US$ against the CDN$ could have a significant impact on our results of operations. Market for Common Shares; Potential Volatility of Stock Price The trading prices of the common shares have been subject to wide fluctuations in recent years. There can be no assurance that the market price of the common shares will not significantly fluctuate from its current level. Furthermore, the low average trading volumes for the Company’s common shares may impact the liquidity of the shares or the ultimate price at which they can be sold. Directors, Officers and Key Employees The success of the Company is currently largely dependent on the performance of its officers and key senior management. The loss of the services of these persons will have a materially adverse effect on the Company’s business and prospects. The Company has offered retention bonuses to its officers and key senior management in an effort to ensure that they will stay with the Company through the expected final harvest in 2011 and the sale of inventory from that harvest in 2012. There is no assurance the Company can maintain the services of its officers and key senior management or other qualified personnel required to operate its business. Failure to do so could have a material adverse affect on the Company. The Company has not purchased any “key-man” insurance with respect to any of its directors or officers to the date hereof. The loss of any key officer or employee of the Company could have an adverse impact on the Company, its business and its financial position. ITEM 4

   INFORMATION ON THE COMPANY
 HISTORY AND DEVELOPMENT OF THE COMPANY The Company and Operations Chai-Na-Ta Corp. (“Chai-Na-Ta” and the “Registrant” or the “Company”) was incorporated on August 12, 7


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1981, under the Canada Business Corporations Act. The Company originally was named Chai-Na-Ta Ginseng Products Limited. During 1994, the name was changed to Chai-Na-Ta Corp. Chai-Na-Ta, together with its subsidiaries, is engaged in the growing, processing and marketing of North American ginseng. Ginseng, a woodland plant with species native to both China and North America, is prized for its root which has been the most valuable herb in Oriental medicine for over 2,000 years. The vast proportion of North American ginseng is farm grown. The corporate head office is located at: Unit 100 - 12051 Horseshoe Way, Richmond, British Columbia, V7A 4V4, the current contact person is Wilman Wong, C.E.O.; and the telephone number is (604) 272-4118. The head office operations include corporate administration, corporate finance, human resources, sales and marketing, and investor relations. The Company had a farm office in Otterville Ontario which was sold on January 16, 2012. The Company listed its common stock on the Toronto Stock Exchange ("TSX") in October 1989; the stock symbol was CC. On April 28, 2006, the Company shares were delisted by the Toronto Stock Exchange as the Company had not met the continued listing requirements of the Exchange. The Company listed its common stock on the North American Stock Dealers Automatic Quotation (“NASDAQ”) Stock Market in October 1992. The Company’s stock was delisted from NASDAQ in April 1999 for not meeting the listing requirements. The Company commenced trading on the NASDAQ’s OTC Bulletin Board in April 1999. The stock symbol is CCCFF. The Company’s wholly-owned subsidiary, Chai-Na-Ta Farms Ltd. (“CNT Farms”) is headquartered in Richmond, British Columbia and carried out the planting, growing and harvesting of the Company’s ginseng crops. CNT Farms currently handles the storage of the Company’s root inventory and manages the distribution of inventory directly to local customers or to customers in Asia through its wholly-owned subsidiary, CNT Trading (Hong Kong) Limited (“CNT HK”). The Company incorporated CNT HK on October 13, 1999 to carry out direct marketing, sales and distribution functions for North American ginseng in Hong Kong for distribution through Asia. CNT HK sells ginseng roots directly to brokers, distributors and certain customers in the Far East, primarily China, who use the bulk ginseng root for a variety of purposes. The Company’s principal capital expenditures incurred during 2011, 2010 and 2009 were $20,000, $86,000 and $145,000, respectively, which related to purchases of farm equipment located in Canada. Financing On September 1, 2009 the Company agreed to an extension of an existing HK$51,500,000 loan facility from More Growth Finance Limited (“More Growth”). The Company repaid the loan during the year ended December 31, 2011. BUSINESS OVERVIEW Ginseng Farming There are two main types of ginseng recognised in the world. Asian or Korean ginseng (Panax ginseng C.A. Meyer), is a herb indigenous to the mountainous forests of eastern Asia. North American ginseng (Panax quinquefolius) is a woodland plant native to North America. Wild woodland ginseng has been harvested nearly to extinction in both Asia and North America and this has stimulated the demand for farm grown ginseng. 8


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Cultivated North American ginseng is grown under artificial shade with a heavy mulch of straw to replicate the conditions found on the forest floor in the hardwood forests of its native habitat. In the late summer and early fall, the ginseng seeds are planted in raised beds, which provide the necessary drainage and solar warming of the soil during the spring. After the straw mulch is applied to conserve moisture and to protect the plants from hard frosts, the shade structure is erected over the plants. The shade cloth is left off the gardens in the spring to allow the soil to warm in the sun. As the plants emerge and the sun gets stronger, the shade cloth is put in place to provide the optimum growing environment for a healthy crop. The shade cloth is removed in the winter months to allow snow cover so that the root remains dormant over the winter. This annual cycle is repeated until the third or fourth year when the root is harvested, typically using mechanical methods. Historically, the Company had chosen to farm in two areas, British Columbia and Ontario. Due to the Company’s ongoing problem in British Columbia with rusty roots, an aesthetic problem that decreases the perceived value of the root but does not affect its medicinal properties, the Company made the decision in 2005 to permanently discontinue planting in British Columbia. The company closed its British Columbia operations in 2009 after completing the final harvest in 2008. The sandy tobacco land of southern Ontario allows good drainage, resulting in exceptional growth rates and high quality North American ginseng root. Careful selection of farm sites and scrupulous attention to garden drainage and ventilation substantially reduces the Company's farming risks, while taking advantage of the excellent growing conditions. The Company conducts an extensive battery of tests on each garden to determine water retention characteristics, pH and plant nutrient levels. The Company then adjusts soil fertility and pH to optimum levels for ginseng growth. Once the crop is seeded, the Company's "Integrated Crop Management" program operates seven days a week to monitor nutrients, soil moisture and temperature which are critical to optimum root growth. As the root crop is harvested, the condition and yield of each garden is measured to permit re-evaluation of the production system. Due to the low prices for the 2008 harvest in both British Columbia and in Ontario and the 2009 harvest in Ontario, the Company decided not to plant new crops in Ontario in 2009 or 2010. Despite the significant improvement in ginseng prices for the 2010 harvest and the improvement in both the yield and quality of its roots, the Company did not plant new crops in Ontario in 2011 and sold its real property and assets used in connection with the farming operations in Ontario on January 16, 2012. Table No. 3Ginseng Farming OperationsNew

   Total

   

   Harvest

   TotalAcreage

   Acres Under

   Acres

   Yield in lbs

   HarvestCalendar

   Planted

   Cultivation

   Harvested

   Per Acre

   in lbs2011

   0

   0

   140

   2,614

   366,7252010

   0

   140

   126

   4,345

   544,9402009

   0

   266

   126

   3,541

   446,2122008

   109

   392

   350

   2,824

   988,4562007

   0

   629

   332

   2,767

   918,9632006

   40

   966

   311

   2,576

   801,6622005

   188

   1,240

   352

   2,240

   787,4022004

   460

   1,431

   240

   2,116

   506,6262003

   354

   1,211

   370

   2,096

   775,6302002

   304

   1,284

   359

   2,666

   956,996
 Medicinal Properties 9


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Ginseng is sold in capsule, slice, tablet, tea, powder, extract, whole root form and as additives to various consumer products. The amount of active ingredients (ginsenosides) varies with each product and each brand. Though it is not a rule, extracts generally contain the highest concentration of active ingredients, followed by capsules, powders, tablets, slices, whole roots, and teas. Western medicine does not recognise ginseng's medicinal properties; however scientific study of ginseng began in the early 19th century. The chemical component of ginseng is very complex and varies in different species and from the different processing methods used. Asian and North American ginseng are similar in chemical composition. They both contain ginsenosides, which are recognized as the main active ingredients in ginseng but the amount and quality of the ginsenosides varies between the two species. In addition to the more than 30 ginsenosides identified by scientists around the world, other elements such as fatty acids, amino acids, peptides, polysaccharides, vitamins and minerals have been discovered in different parts of the ginseng plant. Many of these non-ginsenoside components are believed to have immunity enhancing and hypoglycaemic activities. While Western medicine remains unconvinced of ginseng's effectiveness, millions of users around the world believe in the plant's therapeutic powers. Ginseng has been regarded as an important health product in many Asian cultures for over 2,000 years. Some of the perceived benefits of North American ginseng include: Reduced stress/relaxant;Regulated blood sugar;Strengthened immune function;Antioxidant (anti-aging);Hypotensive;Enhanced mental activity; andSynergized activity of anti-cancer drugs. Competition The Company produces North American ginseng, which is a distinctly different product from the consumer’s perspective from Asian ginseng grown in Korea and China. The Company’s management estimates that the Company currently produces less than 10% of the total North American ginseng supply produced annually in North America. This estimate is based on information obtained through discussion with customers, suppliers and a review of available farming industry literature. Competitors currently producing North American ginseng consist primarily of hundreds of small growers (less than one hundred acres) located in southern Ontario, central British Columbia and Wisconsin and one large publicly-traded company. The Company competes through the production of high quality products, lower production costs achieved through economies of scale and an extensive marketing and distribution network serving customers in Hong Kong and China. Marketing and Customers The Company’s product is typically sold to major ginseng brokers in Hong Kong and a limited number of smaller customers. The marketing efforts to customers in Hong Kong and the Far East, primarily mainland China, are conducted through the Company’s wholly-owned subsidiary CNT HK. During the years ended December 31, 2011, 2010 and 2009, the Company had sales of approximately 39%, 57% and 79%, respectively, to its major customers located in Hong Kong and China. Although the Company believes that a 10


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limited number of customers will continue to represent a significant portion of its total revenue, the Company does not consider itself economically dependent upon any single customer or combination of customers due to the existence of other potential brokers capable of purchasing the Company’s supply. Transfer prices between all the companies in the group are determined based on estimated world market prices at the transaction dates. Market prices are established with reference to various ginseng brokers in Hong Kong and comparable sales to third parties. Manufacturing/Processing Canadian farming and processing operations, conducted through the Company’s wholly-owned subsidiary, CNT Farms., consist of farming, including cultivation, harvesting, washing and drying the root prior to export or sale to the local market. Substantially, all of the Company’s sales during 2011, 2010 and 2009 involved the sale of bulk root. The industry as a whole has a limited supply of seed for new plantings. The supply of seeds comes from those picked each year from mature plants under cultivation. The seeds are living embryos that must be planted in the following year. Normal industry practice is to store the seed for only one year so its limited shelf life can cause some barriers for future planting. Canada and Foreign Sales/Assets During 2011, the Company earned $5.8 million in sales in Canada, and $3.7 million in sales in Hong Kong and China. During 2010, the Company earned $3.8 million in sales in Canada, and $5.1 million in sales in Hong Kong and China. During 2009, the Company earned $1.5 million in sales in Canada, and $5.4 million in sales in Hong Kong and China. As at December 31, 2011, 2010 and 2009, 100% of the Company’s long lived assets were located in Canada. Staffing As at December 31, 2011, the Company had reduced the number of employees to six for its operations world-wide. The Company would hire additional employees for seasonal work at the ginseng farms and for production work in its processing facilities. Seasonality The Company’s business is highly seasonal, with harvesting and planting activities typically occur during the last two quarters of each year. Historically, fall harvests were sold primarily during the first two quarters of the subsequent year leading to significant seasonal variations in the volume of sales, inventory and crop costs. ORGANIZATIONAL STRUCTURE As at December 31, 2005, Road King, through its subsidiary Herb King International Limited, held about 77% of the Company’s issued and outstanding common shares and 100% of the Company’s issued and outstanding preferred shares. On September 1, 2006, Herb King exercised its right to convert 10,399,149 preferred shares 11


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of the Company into an equivalent number of common shares, thereby raising its holdings of the Company’s common shares to 84%. On December 7, 2006, Road King distributed its entire holding of the common shares of the Company to its shareholders by way of a special interim dividend. As a result of the distribution, Wai Kee Holdings Limited (“Wai Kee”) became the largest single shareholder of the Company and holds about 46% of the Company’s issued and outstanding common shares as at December 31, 2011 and December 31, 2010, up from the 38% held as at December 31, 2009 Wai Kee is a Hong Kong based publicly traded company, with its core business in investment holdings. As of December 31, 2011 the Company has the following wholly-owned subsidiaries: a)

   Chai-Na-Ta Farms Ltd. (“CNT Farms”)incorporated on February 28, 1994 in British Columbia, Canadab)

   Chai-Na-Ta International Ltd. ("CNTI") (Inactive)incorporated on January 18, 1994 in Barbadosc)

   Chai-Na-Ta (Asia) Ltd. (“CNTA”) (Inactive)incorporated on October 26, 1992 in Barbadosd)

   CNT Nominees Limited. (Inactive)incorporated on August 6, 1999 in the British Virgin Islandse)

   CNT Trading (Asia) Limited. (Inactive)incorporated on October 17, 2000 in the British Virgin Islandsf)

   CNT Trading (Hong Kong) Limited (“CNT HK”)incorporated on October 13, 1999 in Hong Kongg)

   CNT Nutraceuticals Ltd. (“CNTN”) (Inactive)Incorporated on February 3, 2004 in British Columbia, Canada
 An organisation chart of the Company and its affiliates is included in the exhibit (8.1). PROPERTY, PLANT AND EQUIPMENT The Company's executive office is located in rented premises of approximately 3,000 square feet at Unit 100 -12051 Horseshoe Way, Richmond, British Columbia V7A 4V4. The Company also had an office located on its farm site in Otterville, Ontario which was sold on January 16, 2012. The Company no longer holds any farmland under lease in Ontario as the Company has harvested all of its ginseng crops. ITEM 5

   OPERATING AND FINANCIAL REVIEW AND PROSPECTS
 Forward-looking statements The statements contained in this report which are not historical facts, including, but not limited to, certain statements found under this section, are forward-looking statements that involve a number of risks and uncertainties. The actual results of the future events described in such forward-looking statements could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are the risks and uncertainties discussed in this report, and the uncertainties set forth from time to time in the Company’s filings with the Securities and Exchange Commission, and the other public statements. Such risks and uncertainties include, without limitation, seasonality, interest in the Company’s products, general economic conditions, consumer trends, competition, the effect of governmental regulation, prices, yields, availability of new working capital, quality of the Company’s harvest, and successful implementation of new products. This section should be read in conjunction with the Company’s 12


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consolidated financial statements included as Item 17 of this report. OPERATING RESULTS Fiscal year ended 12/31/2011 compared with year ended 12/31/2010 Revenue increased 6% to $9,475,000 in 2011 from $8,951,000 in 2010. The Company’s average selling price increased to $19.25 per pound compared to $10.25 per pound in 2010 and the Company’s volume of sales decreased 43% in 2011 to 492,000 pounds compared to 858,000 pounds in 2010. The 2011 sales included 480,000 pounds of root harvested in 2010 and 12,000 pounds of root harvested in 2011. The 2010 sales included 65,000 pounds of root harvested in 2010, 445,000 pounds of root harvested in 2009 and 348,000 pounds of root harvested in 2008 and earlier periods. The increase in average selling price was a result of the production of higher quality ginseng roots from the 2010 harvest and favourable market conditions for selling that particular inventory. The decrease in volume was primarily due to customers not taking delivery of the 348,000 pounds of inventory from 2008 and earlier harvests until 2010. The Company expects to sell the remaining 355,000 pounds from the 2011 harvest in 2012 and expects to receive proceeds for that inventory approximating the book value as at December 31, 2011. Although the Company again produced high quality ginseng roots, the greater proportion of three-year-old ginseng roots and weaker customer demand will result in a lower average selling price in 2012 compared to 2011. For the year ended December 31, 2011, the Company recorded a write-down of $200,000 on the inventory that was harvested at the end of 2011. This write-down was recorded due to lower than expected sales prices on the Company’s final harvest which reduced the estimated net realizable value as at December 31, 2011. This write-down brought the cumulative written down amount on the final harvest to $820,000. This is primarily due to the Company harvesting three-year-old crops that would normally have been allowed to mature another year and due to the final year's harvest absorbing a greater proportion of farm overhead costs. For the year ended December 31, 2010, the Company recorded a write-down of $170,000 on the ginseng crops that were eventually harvested at the end of 2011. This write-down was recorded due to frost at one of the Company’s farm locations which harmed the ginseng crops and reduced the expected yield from that location which in turn reduced the net realizable value of those ginseng crops. Cost of goods sold was 56% of sales revenue in 2011 compared to 80% of sales revenue in 2010; therefore gross margin was 44% of revenue in 2011 compared to 20% in 2010. In both 2011 and 2010, the gross margin was primarily due to the high selling price on inventory sold from the 2010 harvest with 88% of the harvest being sold in 2011 and 12% sold in 2010. The Company harvested 367,000 pounds of root in 2011, a decrease of 33% from 545,000 pounds in 2010. In 2011, the Company harvested 140 acres for a yield of 2,614 pounds per acre, while in 2010 the Company harvested 126 acres for a yield of 4,345 pounds per acre. The decrease in yield is a result of the 2011 harvest being primarily composed of three-year-old ginseng roots which have less time to mature and increase in size. Selling, general and administrative expenses increased to $1,322,000 in 2011 from $957,000 in 2010. For 2011, $251,000 in retention bonuses for management and staff was included of which $85,000 was paid and $313,000 was accrued as at December 31, 2011. The selling, general and administrative expenses for 2011 also include performance bonus of $225,000 to the management and farm staff. For 2010, $151,000 in retention bonuses for management and staff was included of which $4,000 was paid and $147,000 was accrued as at December 31, 2010. 13


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The operating income of the Company increased more than three fold to $2,893,000 in 2011 compared to $829,000 in 2010. The increase in operating income was primarily due to the gross margin earned on sales from the 2010 harvest in 2011. Interest on long-term debt decreased to $9,000 in 2011 compared to $383,000 in 2010. The decrease in interest on long-term debt is due to the full repayment of the Company’s long-term debt obligations in the first quarter of 2011. The Company does not expect to incur any additional interest expense. The Company had other non-operating income of $95,000 for the year ended December 31, 2011 which included $46,000 in foreign exchange gains, $45,000 in government supplement payments, $1,000 in gains on the disposal of property, plant and equipment, and miscellaneous non-operating income of $3,000. For the year ended December 31, 2010 the Company had other non-operating income of $803,000 which included $591,000 in gains on the disposal of property, plant and equipment, $138,000 in government supplement payments net of participating fees, $69,000 in foreign exchange gains, and miscellaneous non-operating income of $5,000. In 2011, the Company achieved net earnings of $3,015,000, or $0.09 basic and diluted earnings per share compared to the 2010 net earnings of $1,258,000, or $0.04 basic and diluted earnings per share. Fiscal year ended 12/31/2010 compared with year ended 12/31/2009 Revenue increased 29% to $8,951,000 in 2010 from $6,941,000 in 2009. The Company’s average selling price increased to $10.25 per pound compared to $8.50 per pound in 2009 and the Company’s volume of sales increased by 8% in 2010 to 858,000 pounds compared to 798,000 pounds in 2009. The 2010 sales included 510,000 pounds of root harvested in 2009 and 2010 and 348,000 pounds of root harvested in 2008 and earlier periods. The 2009 and 2010 harvested root achieved an average selling price of $13.00 per pound while the 2008 and early harvested root achieved lower selling prices. Since the selling price on 2008 and earlier harvests was lower than 2009 and 2010 harvest, this resulted in a lower average selling price than the Company would have achieved in 2010. The increase in volume was primarily due to customers not taking delivery of the 348,000 pounds of inventory from 2008 and earlier harvests until 2010. Cost of goods sold was 80% of sales revenue in 2010 compared to 102% of sales revenue in 2009; therefore gross margin was 20% of revenue in 2010 compared to a gross loss of 2% in 2009. In 2010, the gross margin was primarily due to the increased average selling price on inventory sold from the 2010 harvest. In 2009, the gross loss was primarily due to the write-down on its long-term ginseng crops of $450,000. The Company harvested 545,000 pounds of root in 2010, an increase of 22% from 446,000 pounds in 2009. In 2010, the Company harvested 126 acres for a yield of 4,345 pounds per acre, while in 2009 the Company harvested 127 acres for a yield of 3,513 pounds per acre. The increase in yield is a result of enhanced crop management techniques and because virtually all of the crops harvested in 2010 harvest were five years old. The Company recorded a write-down on the ginseng crops that will be harvested in 2011 of $170,000 for the year ended December 31, 2010 due to frost damage which reduced the expected yield and thus reduced their net realizable value. The net realizable value of the ginseng crops was estimated based on the estimated yield and quality of the crops upon harvest, accumulated costs, estimated additional costs required to bring the crops to harvest and current and projected selling prices. The Company recorded a write-down on its long-term ginseng crops of $450,000 for the year ended December 31, 2009 to reduce their carrying value to their net realizable value. The Company also recorded a write-down 14


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of $64,000 on ginseng fibres from prior harvests resulting in a new carrying value of zero as the ability of the Company to sell these specific ginseng fibres was uncertain. Selling, general and administrative expenses decreased to $957,000 in 2010 compared to $1,458,000 in 2009. For 2010, this amount included $151,000 in retention bonuses for management and staff of which $4,000 was paid and $147,000 was accrued as at December 31, 2010. For 2009, the selling, general and administrative expenses included $530,000 in costs related to the wind-up of the farming operations in British Columbia. Therefore, taking into account these non-recurring items, the Company reduced its other selling, general and administrative expenses by 13% to $806,000 in 2010 from $928,000 in 2009. The Company expects that its total selling, general and administrative expenses will increase in 2011 due to the accrual of retention bonuses. Interest expense increased to $383,000 in 2010 compared to $323,000 in 2009. The increase in interest expense was primarily due to its debt facilities converting to a fixed interest rate on March 1, 2010 compared to a variable interest rate, which was at historically low levels, throughout 2009. The Company had other non-operating income of $803,000 for the year ended December 31, 2010 which included $69,000 in foreign exchange gains, $591,000 in gains on the disposal of property, plant and equipment, $138,000 in government supplement payments net of participating fees and miscellaneous non-operating income of $5,000. For the year ended December 31, 2009, the Company had other non-operating income of $2,077,000 which included $470,000 in foreign exchange gains, $611,000 in gains on the disposal of property, plant and equipment, $995,000 in government supplement payments net of participating fees and miscellaneous non-operating income of $1,000. Government supplement payments were from the Canadian federal government and were received as part of a program to aid agriculture businesses for losses of their margin relative to historic prices. The payment received for the year ended December 31, 2009 was from the 2007 program year and the payment received for the year ended December 31, 2010 was also from the 2007 program year as the Company filed an adjustment to its initial submission. In 2010, the Company achieved net earnings of $1,258,000, or $0.04 basic and diluted earnings per share compared to the 2009 net earnings of $174,000, or $0.01 basic and diluted earnings per share. LIQUIDITY AND CAPITAL RESOURCES Fiscal year ended 12/31/2011 compared with year ended 12/31/2010 In 2011, the cash provided by operations was $4,703,000 compared to $3,325,000 in 2010. The Company’s cash as at December 31, 2011 was $4,494,000 compared to $2,659,000 at December 31, 2010, an increase of $1,835,000. The increase in cash in 2011 is due to the proceeds from the sale of the Company’s inventory during the year which more than covered the Company’s annual operating costs and the final $2,950,000 repayment of its long-term debt. The working capital position of the Company at December 31, 2011 was a surplus of $10,981,000 compared to a surplus of $8,747,000 at December 31, 2010, an increase of $2,234,000. This increase in working capital is due to the proceeds from and due to the Company’s operating assets being reclassified as a current asset that is being held for sale as the Company entered into an agreement to sell the assets during 2011 with a closing date of January 16, 2012. On September 1, 2009, the Company agreed to a three year extension of the remaining HK$51,500,000 (equivalent to $6,741,000 at December 31, 2011) loan facility from a company formerly under common control. The loan was denominated in the amounts of HK$21,125,000 (equivalent to $2,765,000 at December 31, 2011) and US$3,878,000 (equivalent to $3,944,000 at December 31, 2011) and was unsecured and bore interest at 6.25%. The Company repaid HK$21,125,000 ($2,820,000) and US$878,000 ($892,000) during the 15


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year ended December 31, 2010 and repaid US$3,000,000 ($2,950,000) during the year ended December 31, 2011 settling the loan facility in full. Capital expenditures of $20,000 during 2011 were for the purchase of equipment for the Ontario farming operations. During the year, the Company sold sunshade and equipment in Ontario for proceeds of $101,000. The remaining tangible capital assets of the Company’s farming operations were sold on January 16, 2012 for $1,850,000 as described above. The Company believes that its existing cash resources, together with the cash generated from future sales of inventory will be sufficient to meet its working capital and operating requirements for the next twelve months. The Company has entered into an operating lease for its corporate head office in Richmond, British Columbia at a cost of $3,000 per month through July 31, 2012. The Company has no other commitments as at March 8, 2012. The Company had operating leases on farm equipment and a vehicle as at December 31, 2011 but those leases were transferred to the purchaser of the Company's farming operations in Ontario in January 2012 and the Company has no further commitment on those leases. The Company had commitments to agriculture land rentals for 2012 as at December 31, 2011 but those have subsequently been alleviated as the harvest of the ginseng crops on that land was completed in 2011. The Company does not have any off balance sheet arrangements as defined in Item 5(e) of Form 20-F. The Company has no significant purchase obligations as at December 31, 2011. Fiscal year ended 12/31/2010 compared with year ended 12/31/2009 In 2010, the cash provided by operations was $3,325,000 compared to $3,647,000 in 2009. The Company’s cash as at December 31, 2010 was $2,659,000 compared to a balance of $2,488,000 at December 31, 2009, an increase of $171,000. The slight increase in cash in 2010 was due to the $645,000 in proceeds from the disposition of property, plant and equipment. The working capital position of the Company at December 31, 2010 was a surplus of $8,747,000 compared to a surplus of $8,445,000 at December 31, 2009, an increase of $302,000. On September 1, 2009 the Company agreed to an extension of an existing HK$51,500,000 loan facility from More Growth Finance Limited (“More Growth”). The Company has repaid HK$21,125,000 ($2,820,000) and US$878,000 ($892,000) during the year ended December 31, 2010 bringing the balance due down to US$3,000,000 ($2,984,000) at December 31, 2010. The Company incurred $383,000 (2009 - $283,000) of interest which has been included in interest on long-term debt on the statement of operations and deficit. The remaining portion of the loan is due on September 1, 2012; however, subsequent to the end of the reporting period, the Company repaid the remaining balance of the loan. Capital expenditures of $86,000 during 2010 were for the purchase of equipment for the Ontario farming operations. During the year, the Company sold excess sunshade and equipment in Ontario and received proceeds from their disposition of $645,000. CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES The significant accounting policies are outlined within Note 3 to the consolidated financial statements included in Item 17 of this annual report. Some of those accounting policies require the Company to make estimates and assumptions that affect the amounts reported by the Company. The following items require the 16


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most significant judgement and involve complex estimation. Inventory The Company periodically reviews the carrying value of inventory to determine if write-downs are required to state the inventory at the lower of cost and net realizable value and if previously recognized write-downs are required to be reversed. The determination of net realizable value reflects management’s best estimate of the expected selling price of the roots as well as consideration of qualitative factors such as size, shape, colour and taste. The carrying value of inventory also reflects management’s expectation that the inventory will eventually be sold. Although management does not believe that additional provisions are required to align the carrying value of certain inventory with its net realizable values, future events may indicate that the inventory is not saleable or that such inventory is not saleable at prices above carrying value. Ginseng crops The Company uses the full absorption costing method to value its ginseng crops and periodically reviews their carrying value for evidence of impairment. Included in the cost of crops are seed, labour, applicable overhead, interest and supplies required to bring them to harvest. The determination of impairment requires complex calculations and significant management estimation with respect to future costs to bring crops to harvest; demand for and the market price of harvested ginseng roots; and expectations as to the yield and quality of ginseng roots harvested. The estimation process is further complicated by the relatively long growing cycle of three to four years and the fact that roots remain underground. Although the Company’s assumptions reflect management’s best estimates, future events may result in materially different outcomes with respect to the recoverability of ginseng crop costs and the time required bringing the crops to harvest. Income Taxes The Company estimates its income taxes in each of the jurisdictions that it operates. The process involves estimating the current income tax exposure, together with assessing temporary differences from different treatment of items for tax and accounting purposes. The Company calculates the deferred tax asset or liability account balances at the balance sheet date using tax laws and rates expected to apply to taxable income in the periods in which deferred tax assets or liabilities are expected to be realized or settled. The Company establishes valuation allowances, when necessary, to reduce deferred tax assets to the extent it is more likely than not that such deferred tax assets will not be realized. The process of determining if a valuation allowance is necessary includes estimates of the recoverability of inventory and ginseng crops, as detailed above, and an estimate of future interest expense. Future events may result in materially different outcomes than is estimated with respect to the recoverability of both inventory and ginseng crops. RECENT ACCOUNTING PRONOUNCEMENTS There are no applicable recent accounting pronouncements. ITEM 6

   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 DIRECTORS AND SENIOR MANAGEMENT Directors Table No. 4 lists as of February 29, 2012, the names of all the Directors of the Company. The Directors have served in their respective capacities since their election and will serve until the next Annual General Meeting 17


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or until a successor is duly elected, unless the office is vacated in accordance with the Articles/By-laws of the Company. Table No. 4Directors Date FirstName

   Age

   ElectedDr. Eric Littley (2)

   57

   June, 2001Peter Leung (1) (2)

   52

   August, 2001Steven Hsieh (1)

   57

   February, 2002Wilman Wong (2)

   56

   November, 2005Derek Zen

   59

   November, 2006Brent Lau (1)

   51

   November, 2006
 (1) Member of the Audit Committee(2) Member of the Farm Review Committee Dr. Eric Littley, Director of the Company, is a resident of British Columbia, Canada. Dr. Littley has a diverse background in the management of crops and plant diseases, and has extensive experience in the ginseng industry. He holds a Masters degree in Pest Management and a Ph.D. in Plant Pathology from the Centre for Pest Management at Simon Fraser University. His background includes 10 years leading the R&D efforts with Chai-Na-Ta Corp. and 7 years as a consultant to specialty crop growers in Canada and the U.S. He is currently Chair of the Department of Biological Sciences at Thompson Rivers University in Kamloops, British Columbia. Mr. Peter Leung, Director and former Officer of the Company, is a resident of Ontario, Canada. Mr. Leung holds a Bachelor of Science degree in Pharmacy and was a former President of the Chinese Pharmaceutical Society in Ontario. Mr. Steven Hsieh, Director of the Company, is a resident of British Columbia, Canada. Mr. Hsieh is a member of the Chartered Institute of Management Accountants, U.K., and of the Certified Financial Planners of Canada. He is in public practice as a Certified Management Accountant in Vancouver, British Columbia. Mr. Hsieh also serves as a director of Fireswirl Technologies Inc., a public company traded on the TSX Venture. Mr. Wilman Wong, Director and Officer of the Company, is a resident of British Columbia, Canada. Mr. Wong is a fellow member of the Association of Chartered Certified Accountants and associate member of the Hong Kong Institute of Certified Public Accountants. Mr. Wong has over 20 years experience in auditing, taxation, secretarial and financial management Mr. Derek Zen,Chairman of the Company, is a resident of Hong Kong. Mr. Zen is the executive director of Road King Infrastructure Limited since its establishment. He is also the Vice Chairman of Wai Kee Holdings Limited and the Chairman of Build King Holdings Limited – both companies listed in the Hong Kong Stock Exchange. He holds a Bachelor of Science degree in Engineering and a Master of Business Administration degree. He is a Chartered Engineer and is a member of the Institution of Civil Engineer and is a fellow member of the Institute of Quarrying, UK. Mr. Zen has over 30 years of experience in civil engineering industry. Mr. Brent Lau,Director of the Company, is a resident of Hong Kong. Mr. Lau has previously acted as the 18


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executive director for companies listed on the Hong Kong Stock Exchange for many years. He graduated from the University of Toronto with a Bachelor of Commerce degree and has over twenty years of experience in various senior corporate administration and operation management, money lending and securities trading business. Officers Table No. 7 lists as of February 28, 2011 the names of all of the Executive Officers of the Company. The Executive Officers are elected annually by the Directors following the Annual General Meeting and serve until the earlier of their resignation or termination with or without cause by the Directors. Each Executive Officer has continuously served in his respective position from the date indicated in Table No. 5 unless otherwise indicated in his resume data following Table No.5. Table No. 5Executive Officers Name

   Age

   Title

   Date First AffiliatedWilman Wong

   56

   CEO & Corporate Secretary

   June, 2000Terry Luck

   35

   CFO

   July, 2000
 Mr. Wilman Wong, Chief Executive Officer/Corporate Secretary, and an Officer of the Company, is a resident of British Columbia, Canada. Mr. Wong is a fellow member of the Association of Chartered Certified Accountants and associate member of the Hong Kong Institute of Certified Public Accountants. Mr. Wong has over 20 years experience in auditing, taxation, secretarial and financial management. Mr. Wong was appointed to the position of Chief Executive Officer in May 2007. Mr. Terry Luck, Chief Financial Officer, and an Officer of the Company, is a resident of British Columbia, Canada. Mr. Luck is a Certified General Accountant with over ten years of experience in accounting, treasury, financial management and taxation. Mr. Luck was appointed to the position of Chief Financial Officer in May 2007. There are no arrangements or understanding between any two or more Directors or Executive Officers. COMPENSATION The Company has a standard arrangement for compensating its Directors for their service in their capacity as Directors. In addition, Directors may be granted stock options. Directors received compensation during the year ended December 31, 2011, for their services as a Director including committee participation and/or special assignments as described below. The Company also grants stock options to Executive Officers and employees from time to time. Table No. 6 lists the compensation during the year ended December 31, 2011, for Executive Officers and Directors. 19


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Table No. 6Director/Officer CompensationYear Ended December 31, 2011 Base

   

   

   

   TotalDirector/Officer

   

   Salary

   

   Bonus

   

   CompensationWilman Wong

   $

   124,329

   $

   28,000

   $

   152,329Terry Luck

   

   96,938

   

   23,000

   

   119,938Other Directors

   

   30,000

   

   30,000

   

   60,000Total

   $

   251,267

   $

   81,000

   $

   332,267
 There were no stock options granted to or exercised by any officers or directors during the year ended December 31, 2011. The bonuses received by the directors and officers for the year ended December 31, 2011 were performance bonuses based on the gross margins received from the sale of ginseng crops harvest in 2010 and sold in 2011. The Company accrued $82,000 and $66,000 in retention bonuses for the Chief Executive Officer and the Chief Financial Officer, respectively, as at December 31, 2011 as part of a Company wide plan to retain management and staff through the expected final harvest in 2011 and the subsequent sale of the inventory in 2012. No other funds were set aside or accrued by the Company during the year ended December 31, 2011 to provide pension, retirement or similar benefits for Directors or Executive Officers. The Company has entered into contractual agreements with the Executive Officers that will provide specific compensation in the event that the executive is terminated without cause. The executive will be entitled to three months written notice or equivalent severance pay in lieu of notice plus one month’s salary per full or partial fiscal year of employment. These payments are contingent on the executive accepting a one-year non-competition agreement as well as a non-disclosure agreement. The Company has no plans or arrangements in respect of remuneration received or that may be received by Executive Officers of the Company in the year ended December 31, 2011 to compensate such officers in the event of termination of employment as a result of termination with cause, retirement, or a change of responsibilities following a change of control. BOARD PRACTICES All directors hold office until the next annual general meeting of shareholders, which generally is in May of each calendar year, or until their respective successors are duly elected and qualified or their positions are earlier vacated by resignation or otherwise. All executive officers are appointed by the Board and serve at the pleasure of the Board. The Audit Committee of the board of directors reviews, acts on and reports to the board of directors with respect to various auditing and accounting matters, including the selection of our auditors, the scope of the annual audits, fees to be paid to the auditors, the performance of our independent auditors and our accounting practices. The Audit Committee consists of Mr. Steven Hsieh, Mr. Brent Lau and Mr. Peter Leung. The Farm Review Committee of the board of directors reviews and reports to the board with respect to Ontario Farm operations, including land selection recommendation and site inspection, farm policy and plant science techniques recommendation; quarterly review of farm operations to ensure acceptable cultural maintenance practices are maintained. The Committee consists of Mr. Peter Leung, Mr. Eric Littley and Mr. 20


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Wilman Wong. The Company does not currently have a remuneration or compensation committee. EMPLOYEES During 2011, the Company employed 8 persons on a full time basis and 39 persons on an hourly basis. During 2010, the Company employed 9 persons on a full time basis and 41 persons on an hourly basis. During 2009, the Company employed 12 persons on a full time basis and 57 persons on an hourly basis. The Company is not a party to any material labour contract or collective bargaining agreement. SHARE OWNERSHIP Table No. 7 lists the share ownership in the Company by the Executive Officers and Directors as at February 29, 2012. Table No. 7Share Ownership of Directors/Officers as at February 29, 2012 Officer/Director

   Title

   Approximate Number of SharesDerek Zen

   Director

   (1)Wilman Wong

   CEO/Corporate Secretary

   -Terry Luck

   CFO

   -Other Directors

   

   2,000
 (1) 12,858,415 and 3,168,000 common shares of the Company are owned by ZWP Investments Limited and Groove Trading Limited, respectively, of which Derek Zen is a Director. Derek Zen holds 253,728 common shares of the Company. STOCK OPTIONS The Company has a total of 785,000 shares reserved for issue under the Plan. As of February 29, 2012, no options to purchase shares were outstanding while 159,268 options remain available for issuance under the Plan. In May 1997, the shareholders approved a stock option plan (“the Plan”), and all outstanding options to directors, officers and service providers were brought within the purview of the Plan. Shareholder approval will no longer be required for each grant, as has been the case in the past, but will continue to be required as regards to any amendment to the Plan. The Plan has restrictions as follows: 1.

   the number of shares reserved for issuance pursuant to stock options granted to insiders shall not exceed 10% of the outstanding issue;2.

   there shall not be issued to insiders, within a one-year period, a number of shares exceeding 10% of the outstanding issue; or3.

   there shall not be issued to any one insider and such insider’s associated parties, within a one year period, a number of shares exceeding 5% of the outstanding issue. 21


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ITEM 7
        MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 MAJOR SHAREHOLDERS The Company is a publicly owned corporation, the shares of which are owned by Canadian residents, US residents, and residents of other countries. As of December 31, 2011 (latest record date), the following persons and/or companies held 5% or more beneficial interest in the Company's outstanding common stock. ZWP Investments Limited (1)
        12,858,415 (37.06%) common sharesGroove Trading Limited (1)
        3,168,000 (9.13%) common sharesHover Limited
        7,011,318 (20.21%) common shares
 (1) ZWP Investments Limited and Groove Trading Limited are subsidiaries of Wai Kee. The authorized capital of the Company consists of an unlimited number of shares of common stock without par value of which 34,698,157 were issued/outstanding as of December 31, 2011 and 21 million Series 1 non-voting, non-cumulative preferred shares convertible into common shares on a 1:1 basis of which none were issued/outstanding at December 31, 2011. All of the authorized shares of the Company's common stock are of the same class and, once issued, rank equally as to dividends, voting powers, and participation in assets. Holders of common stock are entitled to one vote for each share held of record on all matters to be acted upon by the shareholders. Holders of common stock are entitled to receive such dividends as may be declared from time to time by the Board of Directors, at its discretion, out of funds legally available therefore. Upon liquidation, dissolution or winding up of the Company, holders of common stock are entitled to receive on a pro rata basis the assets of the Company, if any, remaining after payments of all debts and liabilities, including settlement of the preferred shares. No shares have been issued subject to call or assessment. There are no pre-emptive or conversion rights and no provisions for redemption or purchase for cancellation, surrender, or sinking or purchase funds. Provisions as to the modification, amendment of variation of such shareholder rights or provisions are contained in the Canada Business Corporation Act. Unless the Canada Business Corporation Act, or the Company's By-Law’s otherwise provide, any action to be taken by a resolution of the members may be taken by an ordinary resolution or by a vote of a majority or more of the shares represented at the shareholders' meeting. The Canada Business Corporation Actcontains provisions, which require a "special resolution" for effecting certain corporate actions. Such a "special resolution" requires a two-thirds vote of shareholders rather than a simple majority for passage. Special resolutions are required to effect a "fundamental change" as provided in Section 173 of the Canada Business Corporation Act; in addition, special resolutions would be required on an amalgamation, on a continuation, and on a voluntary dissolution. RELATED PARTY TRANSACTIONS The Company pays management fees to Wai Kee for performing sales, accounting and administrative services 22


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for CNT HK. The Company paid management fees of $60,000 for the year ended December 31, 2011 (2010 - $63,000, 2009 - $114,000). ITEM 8
        FINANCIAL INFORMATION
 CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION Financial Statements The Company's audited consolidated financial statements are set forth under Item 17. Legal Proceedings None. Export Sales Information regarding our export sales is provided under ‘Segmented Reporting’ in the notes to the consolidated financial statements under Item 17. Export sales are comprised of the external revenue from the Hong Kong and China geographic region. Dividend Policy Holders of our common shares and preferred shares are entitled to receive such dividends as may be declared from time to time by our board of directors. There can be no assurance that any dividend will be declared, or if declared, what the amounts of dividend will be or whether such dividends, once declared, will continue for any future period. ITEM 9
        THE OFFER AND LISTING
 On December 7, 2005, the Company was notified by the TSX that the eligibility of the Company’s continued listing on the TSX was being reviewed. The Company was granted 120 days to comply with the requirement for continued listing. On March 31, 2006, the Toronto Stock Exchange suspended the Company’s shares from trading and delisted the common shares on April 28, 2006 as the Company had not met the continued listing requirements of the Exchange. The Company's common stock trades on the NASDAQ Stock Market in the United States, having the trading symbol "CCCFF" (formerly "CJGPF") and CUSIP #15745J-10-6. The Company's common stock commenced trading on the NASDAQ Stock Market in October 1992 and was delisted on April 14, 1999 for not meeting the listing requirements. The Company’s common stocks commenced trading on the NASDAQ OTC Bulletin Board in April 1999 retaining the trading symbol “CCCFF”. The following tables set forth the high/low prices on NASDAQ OTC Bulletin Board for shares of the Company's common stock for each of the last five years, each of the quarters in the two most recently completed financial years and monthly for each of the most recent six months. 23


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NASDAQ Stock High/Low Prices 
    (US Cents) YearEnded
        High
        LowNASDAQ OTCBB:12/31/2011
        21.0¢
        3.0¢12/31/2010
        5.0¢
        1.2¢12/31/2009
        6.0¢
        0.2¢12/31/2008
        5.0¢
        1.0¢12/31/2007
        12.0¢
        2.0¢12/31/2006
        20.0¢
        3.0¢
  QuarterEnded
        High
        LowNASDAQ OTCBB:12/31/2011
        21.0¢
        16.0¢09/30/2011
        20.0¢
        11.0¢06/30/2011
        19.0¢
        4.0¢03/31/2011
        7.0¢
        3.0¢12/31/2010
        5.0¢
        2.0¢09/30/2010
        5.0¢
        1.2¢06/30/2010
        1.5¢
        0.2¢03/31/2010
        1.8¢
        0.2¢
  MonthEnded
        High
        Low02/29/2012
        27.0¢
        18.0¢01/31/2012
        21.1¢
        17.1¢12/31/2011
        21.0¢
        17.1¢11/30/2011
        21.0¢
        16.0¢10/31/2011
        20.0¢
        16.0¢09/30/2011
        20.0¢
        16.0¢
 The Company's common stock is issued in registered form and the following information is taken from the records of Computershare located in Vancouver, British Columbia, Canada, the registrar and transfer agent for the common stock. On February 29, 2012, the shareholders' list for the Company's common stock showed 1,287 registered shareholders and depositories with 34,698,157 shares outstanding of which 5.5% are held in Canada, 30.5% in the United States and 64.0% are held internationally. Based upon the number of proxy statements and annual 24


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reports requested by shareholders and brokers for the Company's last annual shareholders' meeting and other research, the Company believes it has in excess of 3,000 beneficial owners of its common stock. The Company's common stock is not registered to trade in the United States in the form of American Depository Receipts (ADR's) or similar certificates. ITEM 10
        ADDITIONAL INFORMATION
 MEMORANDUM AND ARTICLES OF ASSOCIATION Directors (a)
      A director who is, in any way, directly or indirectly interested in a proposed contract or transaction with the Company shall disclose the nature and extent of his interest at a meeting of the directors in accordance with the provisions of the Canada Business Corporations Act. A director shall not vote in respect of any contract or transaction with the Company in which he is interested, and if he shall do so, his vote shall not be counted but he may be counted in the quorum present at the meeting at which such vote is taken.(b)
      Subject to any unanimous shareholder agreement, the directors shall be paid such remuneration for their services as the board may from time to time determine.(c)
      Without limiting the borrowing powers of the Company as set forth in the Canada Business Corporations Act, the board may from time to time in such amounts and on such terms as it deems expedient to borrow money upon the credit of the Company.(d)
      No person shall be qualified for election as a director if he is less than 18 years of age and there are no provisions with respect to the retirement of a director or the non-retirement of directors under an age limit requirement.(e)
      A director need not be a shareholder but a majority of the directors shall be resident Canadians. Common Shares and Preferred Shares The share capital of the Company shall consist of an unlimited number of Common Shares and an unlimited number of Preferred Shares, of which 21,000,000 shares are designated Preferred Shares, Series 1, all without par value, having the rights, privileges, restrictions and conditions hereinafter described: The Common Shares shall confer on the holders thereof and shall be subject to the following rights, privileges, conditions and restrictions: (a)
      Voting– The holders of the Common Shares shall be entitled to receive notice of and to attend all meetings of the shareholders of the Company and shall have one vote for each common share held at all meetings of the shareholders of the Company, except for meetings at which only holders of another specified class or series of shares of the Company are entitled to vote separately as a class or series;(b)
      Dividends– Subject to the rights, privileges, conditions and restrictions of the Preferred Shares and any of its series as designated by the directors from time to time, the holders of the Common Shares shall, in the absolute discretion of the directors, be entitled to receive and the Company shall pay out of monies of 25


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the Company properly applicable to the payment of dividends, those dividends as may be declared from time to time in respect of the Common Shares; and(c)
      Dissolution– Subject to the rights, privileges, conditions and restrictions of the Preferred Shares and any of its series as designated by the directors from time to time, the holders of the Common Shares shall be entitled to receive the remaining property of the Company on dissolution. The Preferred Shares shall confer on the holders thereof and shall be subject to the following rights, privileges, conditions and restrictions: (a)
      Series– The directors may issue Preferred Shares in one or more series;(b)
      Designation– The directors may by resolution amend the articles of the Company to fix the number of shares in, and to determine the designation of the shares of, each series of Preferred Shares;(c)
      Directors to Attach Rights– The directors may by resolution amend the articles of the Company to determine the rights, privileges, restrictions and conditions attaching to the shares of each series of Preferred Shares;(d)
      Cumulative Dividends– Where shares of one or more series of Preferred Shares are entitled to cumulative dividends, and where any cumulative dividends in respect of a series of Preferred Shares are not paid in full, the shares of all series of Preferred Shares entitled to cumulative dividends shall participate rateably in respect of accumulated dividends in accordance with the amounts that would be payable on those shares if all the accumulated dividends were paid in full;(e)
      Rateable Participation– Where amounts payable are not paid in full on a winding-up, or on the occurrence of any other event as a result of which the holders of the shares of all series of Preferred Shares are then entitled to a return of capital, the shares of all series of Preferred Shares shall participate rateably in a return of capital in respect of the Preferred Shares in accordance with the amounts that would be payable on the return of capital if all amounts so payable were paid in full;(f)
      No Priority– No rights, privileges, restrictions or conditions attached to a series of Preferred Shares shall confer on the series priority over another series of Preferred Shares then outstanding respecting: i.
      dividends, orii.
      a return of capital: (1)
      on a winding-up, or(2)
      on the occurrence of another event that would result in the holders of all series of Preferred Shares being entitled to a return of capital; (g)
      Additions, Changes and Removals– A directors’ resolution pursuant to paragraphs (a), (b) or (c) may only be passed prior to the issue of shares of the series to which the resolution relates, and after the issue of shares of that series, the number of shares in, the designation of and the rights, privileges, restrictions and conditions attached to, that series may be added to, changed or removed only pursuant to applicable provisions of the Canada Business Corporations Act; 26


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(h)
      No Right to Vote– Except as expressly provided in the rights, privileges, restrictions or conditions which the directors may determine or attach to any series of Preferred Shares, shares of a series of Preferred Shares shall not confer on the holders thereof any right to notice of or to be present at or to vote, either in person or by proxy, at any meeting of the shareholders of the Company other than a separate meeting of the holders of the Preferred Shares, or of the holders of a series of the Preferred Shares, as the case may be. In addition to the rights, privileges, restrictions and conditions attaching to the Preferred Shares of the Company as a class, the Preferred Shares, Series 1 of the Company shall have the following rights and be subject to the following restrictions, conditions and limitations: (a)
      Non-Voting– The holders of the Preferred Shares, Series 1 shall not, as such, be entitled to receive notice of or to attend meetings of the shareholders of the Company nor shall they have any voting rights for the election of directors or for any other purpose (except where the holders of a specified class are entitled to vote separately as a class as provided in the Canada Business Corporations Act).(b)
      Dividends– The holders of the Preferred Shares, Series 1 shall be entitled to receive, and the directors of the Company shall declare and the Company shall pay thereon, out of the moneys of the Company properly applicable to the payment of dividends, a non-cumulative dividend on each Preferred Share, Series 1 equal to any dividend the board of directors of the Company may from time to time declare and the Company pay on each Common Share, and such dividends on the Preferred Shares, Series 1 shall be declared and paid at the same time as the declaration and payment of such dividends on the Common Shares.(c)
      Conversion (i)
      A holder of Preferred Shares, Series 1 shall be entitled, at such holder’s option, at any time and from time to time, to have all or any of the Preferred Shares, Series 1 registered in the name of such holder on the books of the Company converted into Common Shares as the same shall be constituted at the time of conversion upon the basis of one Common Share for each Preferred Share, Series 1 so converted; provided that, on conversion of any Preferred Shares, Series 1, the holders thereof shall be entitled to receive any declared and unpaid dividends thereon which are payable to the holders of Preferred Shares, Series 1 of record on a date prior to the date on which such conversion is effective pursuant to Section 3 (c)(ii) below;(ii)
      The conversion right provided for herein may be exercised by notice in writing given to the Company at its registered office accompanied by the certificate or certificates representing the Preferred Shares, Series 1 in respect of which the holder thereof desires to exercise such right of conversion and such notice shall be executed by the person registered on the books of the Company as the holder of the Preferred Shares, Series 1 in respect of which such right is being exercised or by such holder’s duly authorized attorney and shall specify the number of such shares which the holder desires to have converted. The conversion shall be deemed to take effect upon the date which the said certificate or certificates shall be surrendered to the Company at its registered office accompanied by the said notice unless such date be a Saturday, Sunday or a holiday, in which event it shall take effect on the next business day. If a part only of the Preferred Shares, Series 1 represented by any certificate is converted, a new certificate for the balance shall be issued without charge by the Company;(iii)
      Any Preferred Shares, Series 1 issued and outstanding as of 5:00 p.m. (Vancouver time) on that date which is 10 years following issuance shall, at such time, automatically be converted into Common Shares on the basis one Common Share for each Preferred Share, Series 1 then issued and 27


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outstanding, and after such time, a holder of such automatically converted Preferred Shares, Series 1 shall cease to have any rights as a shareholder in respect of such shares other than the right to receive any declared and unpaid dividends thereon which are payable to the holders of Preferred Shares, Series 1 of record as of a date prior to the date of such automatic conversion. Such holder shall be entitled to receive from the Corporation, without charge, a certificate representing the Common Shares resulting from such automatic conversion of such Preferred Shares, Series 1;(iv)
      All Common Shares resulting from any conversion provided for herein shall be fully paid and non- assessable; and(v)
      In the event that the Preferred Shares, Series 1 or the Common Shares are at any time subdivided, consolidated or changed into a greater or lesser number of shares of the same or another class, an appropriate adjustment shall be made in the rights and conditions attached to the Preferred Shares, Series 1 so as to maintain the relative rights of the holders of those shares. (d)
      Liquidation, Dissolution and Winding-up– In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of the Preferred Shares, Series 1 shall be entitled to receive, before any distribution of any part of the assets of the Corporation among the holders of the Common Shares or any other shares in the capital of the Corporation ranking junior to the Preferred Shares, Series 1, for each Preferred Share, Series 1, the amount of C$0.6804 and any dividends declared thereon and unpaid, and following such distribution, the holders of the Preferred Shares, Series 1 shall be entitled to share equally and rateably without preference or distinction on a per share basis with the holders of Common Shares or other shares in the capital of the Company in the distribution of the remaining property and assets of the Company. Change Rights of Shareholders The directors may by resolution to amend the articles of the Company to change the rights of shareholders. According to Canada Business Corporations Act, such amendment requires approval by a special resolution of shareholders. Meetings of Shareholders An Annual General Meeting must be held once every financial year for the purpose of considering the financial statements and reports, electing directors, appointing auditors and for the transaction of other business as may be brought before the meeting. The board, the chairman of the board or the president shall have power to call a special meeting of shareholders at any time. Notice of the time and place of each meeting of shareholders must be given no less than 21 days, nor more than 50 days, before the date of each meeting to each director, to the auditors and to each shareholder who at the close of business on the record date, if any, for notice is entered in the securities register as the holder of one or more shares carrying the right to vote at the meeting. Rights to Own Securities There are no limitations on the rights of non-resident or foreign shareholders to hold or exercise voting rights. Except as provided in the Investment Canada Act, there are no limitations under the applicable laws of Canada or by our charter or other constituent documents of our Company on the right of foreigners to hold or vote Common Shares of other securities of our Company. 28


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The Investment Canada Actwill prohibit implementation, or if necessary, require divestiture of an investment deemed “reviewable” under the Investment Canada Actby an investor that is not a “Canadian” as defined in the Investment Canada Act(a “non-Canadian”), unless after review the Minister responsible for the Investment Canada Act (“the Minister”) is satisfied that the “reviewable” investment is likely to be of net benefit to Canada. An investment in our Common Shares by a non-Canadian would be reviewable under the Investment Canada Actif it was an investment to acquire control of our Company and the value of our assets was $5 million or more. A non-Canadian would be deemed to acquire control of our company for the purposes of the Investment Canada Actif the non-Canadian acquired a majority of our outstanding Common Shares (or less than a majority but controlled our company in fact through the ownership of one-third or more of our outstanding common shares) unless it could be established that, on the acquisition, our Company was not controlled in fact by the acquirer through the ownership of such Common Shares. Certain transactions in relation to our Common Shares would be exempt from review under the Investment Canada Act, including, among other, the following: 1.
      Acquisition of Common Shares by a person in the ordinary course of that person’s business as a trader or dealer in securities;2.
      Acquisition of control of our Company in connection with the realization of security granted for a loan or other financial assistance and not for any purpose related to the provisions of the Investment Canada Act; and3.
      Acquisition of control of our Company by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control of our company, through the ownership of voting interests, remains unchanged. The Investment Canada Actwas amended with the World Trade Organization Agreementto provide for special review thresholds for “WTO Investors” of countries belonging to the World Trade Organization, among others, nationals and permanent residents (including “WTO Investor controlled entities” as defined in the Investment Canada Act). Under the Investment Canada Act, as amended, an investment in our Common Shares by WTO Investors would be reviewable only if it was an investment to acquire control of our Company and the value of our assets was equal to or greater than a specified amount (the “Review Threshold), which is published by the Minister after its determination for any particular year. Change in Control There are no provisions in our Articles that would have the effect of delaying, deferring or preventing a change in control of our Company, and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company. MATERIAL CONTRACTS On September 14, 2011, the Company entered into an agreement to sell its remaining farm operating assets and real property in Ontario for total cash consideration of $1,850,000 which was approved by the Company’s shareholders at a special meeting on October 28, 2011. The sale was concluded on January 16, 2012. EXCHANGE CONTROL There are no government laws, decrees or regulations in Canada which restrict the export or import of capital or which affect the remittance of dividend, interest or other payments to non-resident holders of our common shares. Any remittances of dividends to United States residents and to other non-residents are, however subject to withholding tax. See “Taxation” below. 29


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TAXATION The following is a fair summary of the material Canadian federal income tax consequences generally applicable in respect of the common stock. The tax consequences to any particular holder of common stock will vary according to the status of that holder as an individual, trust, corporation or member of a partnership, the jurisdiction in which that holder is subject to taxation, the place where that holder is resident and, generally, according to that holder's particular circumstances. This summary is applicable only to holders who are resident in the United States, have never been resident in Canada, deal at arm's length with the Company, hold their common stock as capital property and who will not use or hold the common stock in carrying on business in Canada. This summary is based upon the provisions of the Income Tax Act of Canada and the regulations thereunder (collectively, the "Tax Act") as at the date of the Annual Report, publicly-announced proposals to amend the Tax Act as at the date of this Annual Report and the current administrative practices of the Canada Revenue Agency . This summary does not take into account provincial income tax consequences. The summary assumes that the publicly announced proposals will be enacted as proposed with the effective dates set out therein; otherwise, the summary assumes that there will be no other changes in law whether by judicial or legislative action. This summary is of a general nature only and is not exhaustive of all possible income tax consequences. It is not intended as legal or tax advice to any particular holder of common stock and should not be so construed. Each holder is encouraged to consult their own tax advisor with respect to the income tax consequences applicable to him in his own particular circumstances. Disposition of Common Stock.Under the Tax Act, a gain from the sale of common stock by a non-resident will not be subject to Canadian tax, provided the shareholder (and/or persons who do not deal at arm's length with the shareholder) have not held 25% or more of the shares of any class of the Company's stock at any time in the five years preceding the disposition. Generally, the Canada-United States Tax Convention (the "Tax Convention") will exempt from Canadian taxation any capital gain realized by a resident of the United States unless: their value is derived principally from real property in Canada;the holder was resident in Canada for 120 months during any period of 20 consecutive years preceding the disposition and the common stocks were owned by him when he ceased to be a resident in Canada; orthey form part of the business property of a permanent establishment that the holder has or had in Canada within the 12 months preceding the disposition. Dividend.In the case of any dividends paid to non-residents, the Canadian tax is withheld by the Company, which remits only the net amount to the shareholder. By virtue of Article X of the Tax Convention, the rate of tax on dividends paid to residents of the United States is generally limited to 15% of the gross dividend (or 5% in the case of certain corporate shareholders owning at least 10% of the Company's voting shares). In the absence of the treaty provisions, the rate of Canadian withholding tax imposed on non-residents is 25% of the gross dividend. Stock dividends received by non-residents from the Company are taxable by Canada as ordinary dividends at the amount by which the paid up capital of the Company is increased for the shares issued as dividends. The Tax Convention generally exempts from Canadian withholding tax dividends paid to a religious, scientific, literary, educational or charitable organization exclusively administering a pension, retirement or 30


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employee benefit fund or plan, if the organization is resident in the United States and is exempt from income tax under the laws of the United States. DOCUMENTS ON DISPLAY The documents concerning our Company may be viewed at the offices of our corporate solicitor, Stikeman Elliott, at Suite 1700, Park Place, 666 Burrard Street, Vancouver, BC V6C 2X8, during normal office hours. ITEM 11
        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 The Company’s revenue is derived principally from the sale of ginseng roots to a limited number of customers that are concentrated in Asian markets. In order to manage its credit risk, the Company carefully monitors credit terms, investigates credit history and grants credit to customers with established relationships or an acceptable credit rating. Payments or deposits are usually received before shipments of inventory. Letters of credit may be used, or inventory may be held as security until payment is received, when such relationships have not been established. The Company identifies Canada as the primary economic environment in which it operates and uses the CDN$ as its functional currency. A minor portion of the Company’s revenues are denominated in Hong Kong dollars. The Company monitors its exposure to foreign exchange risk and balances its foreign currency holdings to reduce exposures to any one currency by repatriating any excess funds. The Company may also from time to time utilize foreign exchange contracts to hedge against exchange risks. The Company has a US$ net asset exposure of US$9,000 as at December 31, 2011. Based on this net exposure an increase in the spot CDN$/US$ exchange rate of $0.10 would result in a foreign exchange gain of less than $1,000 while a decrease of $0.10 would result in a corresponding foreign exchange loss. The Company also has foreign exchange exposure related to the foreign exchange adjustment of the deficit of self-sustaining foreign operations which is included in accumulated other comprehensive income. As a result, an increase in the spot CDN$/US$ exchange rate of $0.10 would result in other comprehensive income of $186,000 while a decrease of $0.10 would result in a corresponding other comprehensive loss. The Company’s revenues and earnings are also impacted by the world price of ginseng root which is determined by reference to a number of factors including the supply and demand for North American ginseng root, negotiations between buyer and seller, the quality and aesthetic characteristics of the root and the relative strength of the CDN$ to the currency used by the Company’s customers. A percentage change in the market price of ginseng root will tend to have a corresponding impact on the revenues reported by the Company. The Company has agreed to sell at a fixed price virtually all of the inventory from its final harvest and is therefore no longer subject to risk associated with the market price of North American ginseng. The interest income from cash is subject to interest rate changes and therefore interest income will fluctuate directly with changes in interest rates and the amount of cash at any given time. ITEM 12
        DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
 Not applicable. 31


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PART II ITEM 13
        DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
 Not applicable. ITEM 14
        MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
 Not applicable. ITEM 15
        CONTROLS AND PROCEDURES
 Management notes that, while they believe the Company’s disclosure controls and procedures are designed to provide a reasonable level of assurance that they are effective, they do not expect that the Company’s disclosure controls and procedures will prevent all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report, being the year ended December 31, 2011. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective at the reasonable assurance level as of December 31, 2011 to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the United States Securities and Exchange Commission (“SEC”) rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. Management’s Report on Internal Control over Financial Reporting The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) or 15d-15(f)). This internal control system was designated to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Management, with the participation of the Chief Executive Officer and Chief Financial Officer conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2011 based on the criteria in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, the management has concluded that the Company’s internal control over financial reporting as of December 31, 2011 is effective. 32


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This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report. There are no changes in the Company’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonable likely to material affect, the Company’s internal control over financial reporting. ITEM 16
        RESERVED
  ITEM 16A
        AUDIT COMMITTEE FINANCIAL EXPERT
 The Company’s Board of Directors has determined that Mr. Steven Hsieh, Chairman of the Audit Committee and independent director, qualifies as “audit committee financial expert” pursuant to this Item 16A of the Form 20-F. ITEM 16B
        CODE OF ETHICS
 On May 6, 2005, the Company has adopted a code of ethics that applies to its employees, including its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Company undertake to provide to any person without charge, upon request, a copy of such code of ethics in either of the following ways: By mail to:
        Chai Na Ta Corp.Unit 100 – 12051 Horseshoe Way,Richmond, British Columbia V7A 4V4By e-mail to:
        info@chainata.com
 ITEM 16C
        PRINCIPAL ACCOUNTANT FEES AND SERVICES
 Deloitte & Touche LLP acts as the Company’s principal independent auditor for the years ended December 31, 2011 and 2010. The following table discloses the aggregate fees billed for professional services rendered by Deloitte & Touche LLP for the years ended December 31, 2011 and 2010. 2011
          CDN’000
        2010
          CDN’000Audit Fees (1)
        135
        126Audit -related Fees
        -
        -Tax Fees (2)
        1
        -All Other Fees
        -
        -Total
        136
        126
  (1)
      Audit fees consist of fees for the annual audit of the Company’s consolidated financial statements 33


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and fees for reviews of interim financial statements as well as fees for services relating to the review of documents filed with the SEC up to February 29, 2012.(2)
      Tax fees consist of fees billed for withholding tax refund. Audit Committee Pre-Approval Policies and Procedures The Audit Committee is authorized by the Board of Directors to review the performance of the Company’s external auditors, approve in advance the provision of services other than auditing and to consider the independence of the external auditors, including the range of services provided in the context of all consulting services bought by the Company. The Audit Committee is authorized to approve any non-audit services or additional work with the Chairman of the Audit Committee deems as necessary and will notify other members of the Audit Committee of such non-audit work. ITEM 16D
        EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
 Not applicable ITEM 16E
        PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
 Not applicable ITEM 16F
        CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
 Not applicable ITEM 16G
        CORPORATE GOVERNANCE
 Not applicable PART III ITEM 17
        FINANCIAL STATEMENTS
 The Company's consolidated financial statements are stated in CDN$ and are prepared in accordance with US GAAP. Audited Consolidated Financial Statements and Financial Statement Schedules: Report of Independent Registered Chartered Accountants, dated March 9, 2012 Consolidated Balance Sheets as at December 31, 2011 and December 31, 2010 34


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Consolidated Statements of Earnings for the years ended December 31, 2011, December 31, 2010 and December 31, 2009. Consolidated Statements of Changes in Shareholders’ Equity and Comprehensive Income for the years ended December 31, 2011, December 31, 2010 and December 31, 2009. Consolidated Statements of Cash Flows for the years ended December 31, 2011, December 31, 2010 and December 31, 2009. Consolidated Statements of Crop Costs for the years ended December 31, 2011, December 31, 2010 and December 31, 2009. Notes to the Consolidated Financial Statements. ITEM 18
        FINANCIAL STATEMENTS
 The Registrant has elected to provide financial statements pursuant to Item 17. ITEM 19
        EXHIBITS
  1.1.
      Articles of Incorporation, effective August 12, 1981 (incorporated by reference from our Form 20-F and Form 6K )1.2.
      Certificate of Name Change, dated September 7, 1994 (incorporated by reference from our Form 20-F and Form 6K)2.1
      Instruments defining the rights of holders of registered equity or debt securities – refer to Exhibit 1.1 above.4.1
      Private Placement Share Subscription Agreement, dated April 20, 2000, by the Company and Road King Infrastructure Limited (incorporated by reference from our Form 20-F Annual Report filed on May 30, 2001)4.2
      Employment Agreement, dated May 5, 2000, by the Company and Gerald A. Gill. (incorporated by reference from our Form 20-F Annual Report filed on May 30, 2001)4.3
      Conversion Agreement, dated May 8, 2000, by the Company, Chai-Na-Ta Farms Ltd., John Hancock Life Insurance Company and Herb King International Limited. (incorporated by reference from our Form 20-F Annual Report filed on May 30, 2001)4.4
      Partnership Agreement between Chai-Na-Ta Farms Ltd. and 499599 B.C. Ltd. (incorporated by reference from our Form 20-F Annual Report filed on May 31, 1996).4.5
      Joint Venture Agreement between Chai-Na-Ta Farms Ltd. and the Skeetchestn Indian Band (incorporated by reference from our Form 20-F Annual Report filed on May 31, 1996).4.6
      Share Purchase Agreement between the Company and LTRD Biotech Limited. (incorporated by reference from our Form 20-F Annual Report filed on May 26, 2003) 35


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8.1
      Organization chart of the Company and its affiliates.12.1
      Certification of the CEO under Section 302 of the Sarbanes-Oxley Act of 2002.12.2
      Certification of the CFO under Section 302 of the Sarbanes-Oxley Act of 2002.13.1
      Certification of CEO and CFO as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 36


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SIGNATURE PAGE The registrant hereby certifies that it meets all the requirements for filing on Form 20-F and that it has duly caused and authorised the undersigned to sign this registration statement (annual report) on its behalf. Chai-Na-Ta Corp.RegistrantBy:
        ***“TERRY LUCK”***Terry Luck, Chief Financial Officer
 Dated: March 14, 2012 37


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Report of Independent Registered Chartered Accountants and Consolidated Financial Statements of: CHAI-NA-TA CORP. (Stated in Canadian dollars) December 31, 2011, 2010 and 2009


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Deloitte & Touche LLP2800 - 1055 Dunsmuir Street4 Bentall CentreP.O. Box 49279Vancouver BC V7X 1P4CanadaTel: 604-669-4466Fax: 604-685-0395www.deloitte.ca
 Report of Independent Registered Chartered Accountants To the Shareholders of Chai-Na-Ta Corp. We have audited the accompanying consolidated financial statements of Chai-Na-Ta Corp and its subsidiaries (“the Company”), which comprise the consolidated balance sheets as at December 31, 2011 and 2010, and the consolidated statements of earnings, changes in shareholders’ equity and comprehensive income, cash flows and crop costs for the years in the three-year period ended December 31, 2011 and notes to the consolidated financial statements. Management's Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the generally accepted accounting principles in the United States of America and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). These standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. Emphasis of Matter Without qualifying our opinion, we draw attention to matters indicated in Note 1 of the financial statements as well as herein described that raise substantial doubt about the Company’s ability to continue indefinitely as a going concern. The Company did not plant new crops in the previous three


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Page 2 years and is expecting to cease operations in their current form after completing the sale of the remaining inventory from the 2011 harvest in 2012. After completion of such sales, the Company will not have a recurring source of revenue, other than interest income on its cash deposits. The Company is currently in a position to acquire and manage an operating business with growth opportunities, although the Company has not yet received an opportunity attractive enough to seriously consider. As such, the Company’s financial statements were prepared on a going concern basis. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Chai-Na-Ta Corp. and its subsidiaries as at December 31, 2011 and 2010, and the consolidated statements of earnings, changes in shareholders’ equity and comprehensive income, cash flows and crop costs for each of the three years then ended, in accordance with generally accepted accounting principles in the United States of America. (Signed) Deloitte & Touche LLP Independent Registered Chartered Accountants
    Vancouver, Canada
    March 9, 2012


---

CHAI-NA-TA CORP.Consolidated Balance Sheets(Stated in thousands of Canadian dollars) As at December 31
        Note
        
        2011
        
        
        2010ASSETSCurrent assetsCash
        
        $
        4,494
        
        $
        2,659Accounts receivable
        
        
        164
        
        
        27Inventory
        
        
        4,974
        
        
        4,835Ginseng crops
        
        
        -
        
        
        3,149Prepaid expenses
        
        
        57
        
        
        78Assets held for sale
        3
        
        1,850
        
        
        -11,539
        
        
        10,748Prepaid expenses
        
        
        -
        
        
        15Property, plant and equipment
        3
        
        -
        
        
        2,232$
        11,539
        
        $
        12,995LIABILITIESCurrent liabilitiesAccounts payable and accrued liabilities
        
        $
        558
        
        $
        522Customer deposits
        
        
        -
        
        
        1,479558
        
        
        2,001Long-term debt
        4
        
        -
        
        
        2,984Total liabilities
        
        
        558
        
        
        4,985SHAREHOLDERS' EQUITYShare capital
        5
        
        38,226
        
        
        38,226Additional paid in capital
        
        
        9,436
        
        
        9,436Accumulated other comprehensive income
        
        
        873
        
        
        917Accumulated deficit
        
        
        (37,554
        )
        
        (40,569
        )Total shareholders' equity
        
        
        10,981
        
        
        8,010$
        11,539
        
        $
        12,995
 Commitments (Note 11) See accompanying notes to the consolidated financial statements APPROVED BY THE BOARD /s/ DEREK ZEN
        /s/ WILMAN WONGDerek Zen
        Wilman WongChairman
        Chief Executive Officer


---

CHAI-NA-TA CORP.Consolidated Statements of Earnings(Stated in thousands of Canadian dollars except per share amounts) Years ended December 31
        Note
        
        2011
        
        
        2010
        
        
        2009Revenue
        
        $
        9,475
        
        $
        8,951
        
        $
        6,941Cost of goods soldCost of inventory sold
        
        
        5,045
        
        
        6,934
        
        
        6,444Shipping and handling fees
        
        
        15
        
        
        61
        
        
        107Write-down of ginseng crops and inventory
        7
        
        200
        
        
        170
        
        
        5145,260
        
        
        7,165
        
        
        7,065Gross margin (loss)
        
        
        4,215
        
        
        1,786
        
        
        (124
        )Selling, general and administrative expenses
        8
        
        1,322
        
        
        957
        
        
        1,458Operating income (loss)
        
        
        2,893
        
        
        829
        
        
        (1,582
        )Interest income
        
        
        36
        
        
        9
        
        
        2Interest expense
        
        
        (9
        )
        
        (383
        )
        
        (323
        )Other income
        9
        
        95
        
        
        803
        
        
        2,077NET EARNINGS
        
        
        3,015
        
        
        1,258
        
        
        174Basic and diluted earnings per share
        
        $
        0.09
        
        $
        0.04
        
        $
        0.01Weighted average number of common shares used to calculate basic and diluted earnings per share (in thousands)
        
        
        34,698
        
        
        34,698
        
        
        34,698
 See accompanying notes to the consolidated financial statements


---

CHAI-NA-TA CORP.Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income(Stated in thousands of Canadian dollars except number of shares in thousands) AccumulatedCommon
        
        
        
        Additional
        
        Other
        
        
        
        
        
        TotalShares
        
        Share
        
        Paid In
        
        Comprehensive
        
        
        Accumulated
        
        
        Shareholders'
        
        
        ComprehensiveOutstanding
        
        Capital
        
        Capital
        
        Income
        
        
        Deficit
        
        
        Equity
        
        
        IncomeBalance - January 1, 2009
        34,698
        $
        38,226
        $
        9,436
        $
        442
        
        $
        (42,001
        )
        $
        6,103Net earnings
        -
        
        -
        
        -
        
        -
        
        
        174
        
        
        174
        
        $
        174Cumulative translation adjustment
        -
        
        -
        
        -
        
        364
        
        
        -
        
        
        364
        
        
        364Balance - December 31, 2009
        34,698
        $
        38,226
        $
        9,436
        $
        806
        
        $
        (41,827
        )
        $
        6,641
        
        $
        538Balance - January 1, 2010
        34,698
        $
        38,226
        $
        9,436
        $
        806
        
        $
        (41,827
        )
        $
        6,641Net earnings
        -
        
        -
        
        -
        
        -
        
        
        1,258
        
        
        1,258
        
        $
        1,258Cumulative translation adjustment
        -
        
        -
        
        -
        
        111
        
        
        -
        
        
        111
        
        
        111Balance - December 31, 2010
        34,698
        $
        38,226
        $
        9,436
        $
        917
        
        $
        (40,569
        )
        $
        8,010
        
        $
        1,369Balance - January 1, 2011
        34,698
        $
        38,226
        $
        9,436
        $
        917
        
        $
        (40,569
        )
        $
        8,010Net earnings
        -
        
        -
        
        -
        
        -
        
        
        3,015
        
        
        3,015
        
        $
        3,015Cumulative translation adjustment
        -
        
        -
        
        -
        
        (44
        )
        
        -
        
        
        (44
        )
        
        (44
        )Balance - December 31, 2011
        34,698
        $
        38,226
        $
        9,436
        $
        873
        
        $
        (37,554
        )
        $
        10,981
        
        $
        2,971
 See accompanying notes to the consolidated financial statements


---

CHAI-NA-TA CORP.Consolidated Statements of Cash Flows(Stated in thousands of Canadian dollars) Years ended December 31
        
        2011
        
        
        2010
        
        
        2009Operating ActivitiesNet earnings
        $
        3,015
        
        $
        1,258
        
        $
        174Items included in net earnings not affecting cash:Cost of ginseng crops sold
        
        5,026
        
        
        6,868
        
        
        5,901Write-down of inventory and crop costs
        
        200
        
        
        170
        
        
        514Gain on the disposal of property, plant and equipment
        
        (1
        )
        
        (591
        )
        
        (611
        )Non-cash realized foreign exchange gains
        
        (109
        )
        
        (117
        )
        
        (410
        )Depreciation and amortization expense
        
        19
        
        
        8
        
        
        10Changes in non-cash operating assets and liabilities:Accounts receivable
        
        (136
        )
        
        (14
        )
        
        302Inventory
        
        4
        
        
        29
        
        
        (16
        )Prepaid expenses
        
        36
        
        
        22
        
        
        (3
        )Accounts payable and accrued liabilities
        
        65
        
        
        50
        
        
        (161
        )Customer deposits
        
        (1,479
        )
        
        (1,822
        )
        
        848Ginseng crop expenditures
        
        (1,937
        )
        
        (2,536
        )
        
        (2,901
        )4,703
        
        
        3,325
        
        
        3,647Financing ActivitiesBank indebtedness
        
        -
        
        
        -
        
        
        (3,060
        )Repayment of long-term debt
        
        (2,950
        )
        
        (3,712
        )
        
        (527
        )(2,950
        )
        
        (3,712
        )
        
        (3,587
        )Investing ActivitiesPurchase of property, plant and equipment
        
        (20
        )
        
        (86
        )
        
        (145
        )Proceeds from the disposition of property, plant and equipment
        
        101
        
        
        645
        
        
        2,38681
        
        
        559
        
        
        2,241Effect of exchange rate changes on cash
        
        1
        
        
        (1
        )
        
        (5
        )NET INCREASE IN CASH
        
        1,835
        
        
        171
        
        
        2,296CASH, BEGINNING OF THE PERIOD
        
        2,659
        
        
        2,488
        
        
        192CASH, END OF THE PERIOD
        $
        4,494
        
        $
        2,659
        
        $
        2,488Supplemental information:Other cash flows:Interest paid
        $
        13
        
        $
        548
        
        $
        176
 See accompanying notes to the consolidated financial statements


---

CHAI-NA-TA CORP.Consolidated Statements of Crop Costs(Stated in thousands of Canadian dollars) Years ended December 31
        Note
        
        2011
        
        2010
        
        2009Depreciation
        
        $
        296
        $
        305
        $
        307Farm equipment operating costs
        
        
        269
        
        226
        
        234Land rental costs
        
        
        64
        
        130
        
        202Mulch, fertilizer and seed
        
        
        271
        
        647
        
        924Office, insurance and other costs
        
        
        51
        
        56
        
        92Salaries and wages
        
        
        1,067
        
        1,229
        
        1,272Small tools and supplies
        
        
        14
        
        14
        
        19Warehouse and dryer operations
        
        
        201
        
        234
        
        1962,233
        
        2,841
        
        3,246Balance, beginning of year
        
        
        3,149
        
        5,549
        
        7,4865,382
        
        8,390
        
        10,732Less:Cost of crop harvested
        
        
        5,382
        
        5,071
        
        4,630Cost of seeds sold and available for sale
        
        
        -
        
        -
        
        103Write-down of ginseng crops
        7
        
        -
        
        170
        
        450Balance, end of year
        
        $
        -
        $
        3,149
        $
        5,549
 See accompanying notes to the consolidated financial statements


---

CHAI-NA-TA CORP.Notes to the Consolidated Financial Statements(Stated in Canadian dollars except tabular amounts in thousands of Canadian dollars)For the years ended December 31, 2011, 2010 and 2009
  1.
        Nature of operations
 The Company operated North American ginseng farms in Ontario, Canada, on which ginseng root was planted, cultivated and harvested. The Company sells ginseng in its primary markets of Hong Kong and China, and to a lesser extent Canada and the United States of America, through its wholly-owned subsidiaries. The Company is publicly traded with no single shareholder holding a majority of the Company’s common shares. The largest shareholder of the Company is Wai Kee Holdings Limited (“Wai Kee”), a publicly traded Hong Kong based company, which owns 46% of the shares of the Company. Going concern The Company did not plant new crops in the previous three years and is expecting to cease operations in their current form after completing the sale of the remaining inventory from the 2011 harvest in 2012. After completion of such sales, the Company will not have a recurring source of revenue, other than interest income on its cash deposits. The Company is currently in a position to acquire and manage an operating business with growth opportunities, although the Company has not yet received an opportunity attractive enough to seriously consider. As such, there is substantial doubt about the Company's ability to continue indefinitely as a going concern. However the Company’s financial statements were prepared on a going concern basis which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. Should a liquidation plan be approved, the Company will adopt liquidation based accounting to prepare the Company's financial statements. The impact of adopting a liquidation basis accounting to prepare the financial statements is limited as the Company has stated the significant assets and liabilities at amounts which are not expected to significantly differ from their net realizable value. 2.
        Summary of significant accounting policies
 Basis of presentation These consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles ("US GAAP"). The Company began reporting in accordance with US GAAP on January 1, 2011 and has restated the comparative figures for the prior years in these consolidated financial statements to conform to US GAAP. Prior to January 1, 2011, the Company reported in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"). All amounts included in these annual consolidated financial statements are expressed in Canadian dollars ("CAD") unless otherwise noted.


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CHAI-NA-TA CORP.Notes to the Consolidated Financial Statements(Stated in Canadian dollars except tabular amounts in thousands of Canadian dollars)For the years ended December 31, 2011, 2010 and 2009
 Basis of consolidation These annual consolidated financial statements include the accounts of the Company and those of its subsidiaries. All significant intercompany transactions and balances have been eliminated. Cash Cash consists of cash on hand and cash deposited in a large, Canadian financial institution. Cash also includes investments in guaranteed short-term instruments with the same financial institution that can be converted to cash in one business day. Interest earned, but not yet received, on these investments are included in interest income on the statement of operations and in accounts receivable on the balance sheet. Inventory Inventory is valued at the lower of average cost or net realizable value. The determination of net realizable value reflects management’s best estimate of the expected selling price of its ginseng roots with a consideration of qualitative factors such as size, shape, colour and taste. The carrying value of inventory also reflects management’s expectation that the inventory will eventually be sold. All of the inventory is costed using the specific identification method. Ginseng crops The Company uses the full absorption costing method to value its ginseng crops. Included in the cost of ginseng crops are seeds, labour, applicable overhead and supplies. Common costs are allocated in each period based on the total number of acres under cultivation during the period. The carrying value of ginseng crops is reviewed on a regular basis for any impairment in value, using management’s best estimate as to expected future market values, yields and costs to harvest. Ginseng costs related to the acreage harvested and sold have been charged to cost of sales. Property, plant and equipment Property, plant and equipment are recorded at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated useful life of the assets as follows: Buildings
        20 yearsComputer equipment and software
        4 yearsDryers and related works
        20 yearsFurniture and fixtures
        10 yearsMachinery and equipment
        10 yearsPavement
        12.5 yearsSunshade
        10 yearsVehicles
        8 years


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CHAI-NA-TA CORP.Notes to the Consolidated Financial Statements(Stated in Canadian dollars except tabular amounts in thousands of Canadian dollars)For the years ended December 31, 2011, 2010 and 2009
 Property, plant and equipment are reviewed on a regular basis for impairment upon the occurrence of events or changes in circumstances which indicate that the net book value of the assets may not be recoverable based on estimated undiscounted future cash flows generated by their use. To the extent not recoverable, impaired assets are written down to their fair value. Routine maintenance and repairs to items used in the farming operations are charged to ginseng crops as incurred while items used for selling, general and administrative activities are expensed as incurred. Upon the completion of the final harvest in December 2011, the Company reclassified all of its property, plant and equipment as assets held for sale as described in Note 3. Revenue recognition Sales of goods are recognized when persuasive evidence of an arrangement exists, delivery has occurred, title and risk have passed to the customer, the sales price is fixed and determinable, and collectibility is reasonably assured. These conditions are generally satisfied when the goods are delivered to the end customers or to the wholesale distributor. In instances when the above criteria are not satisfied, revenue is deferred until all conditions required for recognition of revenue are met. Financial instruments FASB Accounting Standards Codification Topic 820, Fair Value Measurements requires disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. It also clarifies existing fair value disclosures regarding the level of disaggregation and the inputs and valuation techniques used to measure fair value. The Company has designated its cash and foreign exchange forward contracts as held-for-trading, which are measured at fair market value with changes in fair value recorded in earnings. Accounts receivable are classified as loans and receivable which are measured at amortized cost. Accounts payable, accrued liabilities and long-term debt are classified as other liabilities, which are measured at amortized cost. ASC 820-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. ASC 820-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820-10 establishes three levels of inputs that may be used to measure fair value:


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CHAI-NA-TA CORP.Notes to the Consolidated Financial Statements(Stated in Canadian dollars except tabular amounts in thousands of Canadian dollars)For the years ended December 31, 2011, 2010 and 2009
  Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical asset or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model- derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 applies to asset or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. Concentration of credit risk Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company is exposed to credit risk on accounts receivable from customers and on cash and foreign exchange forward contracts. A majority of the Company's sales are made to a small number of customers that are concentrated in Asian markets. To manage its credit risk, the Company carefully monitors credit terms, investigates credit history and only grants credit to customers with established relationships or acceptable credit ratings. Letters of credit may be used, or inventory may be held as security until payment is received, when such relationships have not been established. The credit risk on the Company's cash and foreign exchange forward contracts is substantially minimized as they are placed in, or contracted with, large, high quality financial institutions. While the Company is exposed to credit losses due to the financial collapse by those who are custodians to the Company's cash and those that are counter parties to the foreign exchange forward contracts, the Company considers this risk quite remote. Value-added taxes Value-added taxes that are collected from customers and remitted to taxing authorities are excluded from sales. Likewise, value-added taxes that are paid and refunded by taxing authorities are excluded from cost of sales. Income taxes The Company follows the asset and liability method of accounting for income taxes. Under this method, the change in the net deferred tax asset or liability is included in the computation of net income. Deferred tax assets and liabilities are measured using the enacted tax rates applicable to taxable income in the years in which the temporary differences are expected to be recovered or settled. The Company records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. The components of the deferred tax assets and liabilities are individually classified as current and non-current based upon the classification of the related asset or liability in the financial statements or the expected timing of their reversal if they do not relate to a specific asset or liability. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.


---

CHAI-NA-TA CORP.Notes to the Consolidated Financial Statements(Stated in Canadian dollars except tabular amounts in thousands of Canadian dollars)For the years ended December 31, 2011, 2010 and 2009
  Under current conditions and expectations, the Company does not foresee any significant changes in unrecognized tax benefits that would have a material impact on the Company’s financial statements. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company has not accrued interest or penalties related to uncertain tax positions as of December 31, 2011. Management is currently unaware of any issues under review that could results in significant payments, accruals or material deviations from its position. The Company has made its assessment of the level of tax authority for each tax position (including the potential application of interest and penalties) based on the technical merits. Foreign currency translation The functional and reporting currency of the Company excluding its subsidiary CNT Trading (Hong Kong) Limited ("CNT HK") is the CAD. Monetary assets and liabilities denominated in currencies other than the CAD are translated into the CAD at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than the CAD during the year are converted into CAD at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the consolidated statement of earnings. The financial records of CNT HK are maintained in its local currency, the Hong Kong dollar ("HKD"), which is the functional currency. Assets and liabilities are translated at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates and revenues, expense gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive income (loss) in the consolidated statements of shareholders' equity and comprehensive income. The Company has chosen the CAD as the reporting currency. Leases The Company leases equipment for use in its farming operations where leasing offers advantages of flexibility and lower costs compared to other forms of financing. The Company also leases agricultural land for virtually all of its plantings. All leases are evaluated upon inception and upon any subsequent modifications and are classified as either capital leases or operating leases. All of the Company's current leases for farming equipment, vehicles and agricultural land are classified as operating leases. Earnings per share Basic earnings per share is computed by dividing net earnings attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of common shares by including other common share equivalents in the weighted average number of common shares outstanding for a period, if dilutive. There were no common share equivalents outstanding in the previous three fiscal years.


---

CHAI-NA-TA CORP.Notes to the Consolidated Financial Statements(Stated in Canadian dollars except tabular amounts in thousands of Canadian dollars)For the years ended December 31, 2011, 2010 and 2009
  Comprehensive income Comprehensive income includes all changes in equity except for those resulting from investments by owners and distributions to owners and is comprised of net income and foreign-currency translation adjustments. The Company discloses this information on its consolidated statements of changes in shareholders’ equity and comprehensive income. Foreign exchange forward contracts The Company periodically entered into foreign exchange forward contracts to manage foreign exchange risk associated with debt repayments denominated in foreign currencies. Realized and unrealized gains and losses resulting from changes in the market value of these contracts were recorded as other income unless they met specified criteria to qualify as a hedging instrument. The Company has not had any contracts that meet the criteria for a hedging instrument. Since the Company no longer has any debt denominated in foreign currencies, the Company currently has no outstanding foreign exchange forward contracts and does not anticipate entering into any new foreign exchange forward contracts. Use of estimates The presentation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and other disclosures as at the end of or during the reporting periods. Significant estimates are used for, but not limited to, the net realizable value of inventory and crop costs, depreciation of property, plant and equipment, the fair value of assets held for sale, future income taxes and contingencies. Actual results may differ from those estimates. 3.
        Assets held for sale and property, plant and equipment
  The Company entered into an agreement for the sale of certain assets and real property used in connection with the farming operations in Ontario for total cash consideration of $1,850,000 in accordance with the terms and conditions of an asset purchase agreement (the “Agreement”) dated September 14, 2011 with a closing date scheduled for January 16, 2012. The closing of the transaction was approved by the Company’s shareholders at a special meeting on October 28, 2011. Under the terms of the Agreement, a deposit of $295,000 was paid by the buyer to the solicitors of the Company in trust for the buyer until the closing date. Subsequent to the end of the reporting period, the transaction was concluded on the scheduled closing date with the full proceeds of the sale being received by the Company in accordance with the Agreement. The assets and real property in the Agreement constitute all of the operating assets of the Company's farming operations. These assets were reclassified as assets held for sale and are recorded at the lower of cost and net realizable value. The remaining tangible capital assets of the Company constitute equipment and furniture at the Company's corporate head office which are recorded at their estimated net realizable value of zero.


---

CHAI-NA-TA CORP.Notes to the Consolidated Financial Statements(Stated in Canadian dollars except tabular amounts in thousands of Canadian dollars)For the years ended December 31, 2011, 2010 and 2009
  A detailed schedule of the property, plant and equipment as at December 31, 2010 is as follows: Accumulated
        
        
        Net BookCost
        
        
        Depreciation
        
        
        ValueLand
        $
        171
        
        $
        -
        
        $
        171Buildings
        
        1,220
        
        
        378
        
        
        842Computer equipment and software
        
        82
        
        
        77
        
        
        5Dryers and related works
        
        602
        
        
        213
        
        
        389Furniture and fixtures
        
        203
        
        
        191
        
        
        12Machinery and equipment
        
        3,151
        
        
        2,545
        
        
        606Pavement
        
        47
        
        
        23
        
        
        24Sunshade
        
        1,414
        
        
        1,296
        
        
        118Vehicles
        
        201
        
        
        136
        
        
        65$
        7,091
        
        $
        4,859
        
        $
        2,232
  4.
        Long-term debt
  2011
        
        
        2010Term loan
        $
        -
        
        $
        2,984Less: current portion
        
        -
        
        
        -$
        -
        
        $
        2,984
  On September 1, 2009, the Company agreed to a three year extension of the remaining HK$51,500,000 (equivalent to $6,741,000 at December 31, 2011) loan facility from a company formerly under common control. The loan was denominated in the amounts of HK$21,125,000 (equivalent to $2,765,000 at December 31, 2011) and US$3,878,000 (equivalent to $3,944,000 at December 31, 2011) and was unsecured and bore interest at 6.25%. The Company repaid HK$21,125,000 ($2,820,000) and US$878,000 ($892,000) during the year ended December 31, 2010 and repaid US$3,000,000 ($2,950,000) during the year ended December 31, 2011 settling the loan facility in full. 5.
        Share capital
  Number of Shares (in thousands)Authorized
        
        
        Outstanding
        
        
        AmountCommon Shares - without par valueBalance as at December 31, 2011 and December 31, 2010
        
        Unlimited
        
        
        34,698
        
        $
        38,226


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CHAI-NA-TA CORP.Notes to the Consolidated Financial Statements(Stated in Canadian dollars except tabular amounts in thousands of Canadian dollars)For the years ended December 31, 2011, 2010 and 2009
  6.
        Stock options
  The Company maintains a stock option plan and grants options to officers, directors and employees of the Company at market prices. A total of 785,000 shares were reserved for issue under the plan. The options vest at the date of grant and expire five years thereafter. There were no options to purchase shares outstanding or any options granted or modified during the three years ended December 31, 2011. 7.
        Write-down of ginseng crops and inventory
  2011
        
        
        2010
        
        
        2009Write-down of ginseng crops
        $
        -
        
        $
        170
        
        $
        450Write-down of inventory
        
        200
        
        
        -
        
        
        64$
        200
        
        $
        170
        
        $
        514
  For the year ended December 31, 2011, the Company recorded a write-down of $200,000 on the inventory that was harvested at the end of 2011. This write-down was recorded due to lower than expected sales prices on the Company’s final harvest which reduced the estimated net realizable value as at December 31, 2011. This write-down brought the cumulative written down amount on the final harvest to $820,000. This is primarily due to the Company harvesting three-year-old crops that would normally have been allowed to mature another year and due to the final year's harvest absorbing a greater proportion of farm overhead costs. For the year ended December 31, 2010, the Company recorded a write-down of $170,000 on the ginseng crops that were eventually harvested at the end of 2011. This write-down was recorded due to frost at one of the Company’s farm locations which harmed the ginseng crops and reduced the expected yield from that location which in turn reduced the net realizable value of those ginseng crops. For the year ended December 31, 2009, the Company recorded a write-down of $450,000 on the ginseng crops that were eventually harvested at the end of 2011. The net realizable value of those crops was estimated based on sales prices at the time and the estimated future yields, quality and costs to bring the crops to harvest. The Company also recorded a write-off of $64,000 on ginseng fibres from prior harvests as the ability of the Company to sell these specific ginseng fibres was uncertain. 8.
        Selling, general and administrative expenses
  2011
        
        
        2010
        
        
        2009Retention bonuses
        $
        251
        
        $
        151
        
        $
        -Wind-up expenses of terminated operations
        
        -
        
        
        -
        
        
        530Other selling, general and administrative expenses
        
        1,071
        
        
        806
        
        
        928$
        1,322
        
        $
        957
        
        $
        1,458


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CHAI-NA-TA CORP.Notes to the Consolidated Financial Statements(Stated in Canadian dollars except tabular amounts in thousands of Canadian dollars)For the years ended December 31, 2011, 2010 and 2009
  During 2010, the Company agreed to pay retention bonuses totalling $485,000 to corporate and farm management and staff to ensure the stability of the operation through the expected final harvest in 2011 and the sale of the Company’s assets in 2012. These retention bonuses are contingent on the satisfactory completion of the job duties of each employee up to their termination date. For the year ended December 31, 2011, $251,000 (2010 - $151,000) of expenses were incurred with $85,000 paid in 2011 (2010 - $4,000) and $313,000 (2010 -$147,000) included in accounts payable and accrued liabilities as at December 31, 2011 ($147,000 as at December 31, 2010). The remaining balance will be recorded over the remaining service period for the employees. For 2009, the wind-up expenses of terminated operations include all expenditures associated with closing the ginseng farm operations in British Columbia after the final harvest was completed in 2008. 9.
        Other income
  2011
        
        
        2010
        
        
        2009Foreign exchange gain
        $
        46
        
        $
        69
        
        $
        470Gain on disposal of property, plant and equipment
        
        1
        
        
        591
        
        
        611Government supplements
        
        45
        
        
        138
        
        
        995Other non-operating income
        
        3
        
        
        5
        
        
        1$
        95
        
        $
        803
        
        $
        2,077
  Foreign exchange gain for the year ended December 31, 2011 includes a $36,000 loss on foreign exchange forward contracts (2010 - $64,000 loss, 2009 - $357,000 loss) Government supplements include funds received from Agriculture Canada as compensation for cost of production increases and reduced margins of the Company's farming operations in prior years, net of program participation fees and related costs. The amount received in 2011 was based on sales made in the 2008 and 2009 program years. The substantial amount received in 2009 was from the 2007 program year and the additional amount received in 2010 was due to an amendment filed for that same program year. The Company considers these payments non-recurring and are recorded as received.


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CHAI-NA-TA CORP.Notes to the Consolidated Financial Statements(Stated in Canadian dollars except tabular amounts in thousands of Canadian dollars)For the years ended December 31, 2011, 2010 and 2009
  10.
        Deferred income taxes
  Temporary differences and loss carry forwards that give rise to deferred income tax assets and liabilities as at December 31, 2011 and 2010 are as follows: 2011
        
        
        2010Deferred income tax assets (liabilities):Property, plant and equipment
        $
        (75
        )
        $
        (135
        )Tax losses carried forward
        
        4,061
        
        
        4,8663,986
        
        
        4,731Less: valuation allowance
        
        (3,986
        )
        
        (4,731
        )$
        -
        
        $
        -
  The majority of the above differences relate to the Company’s farming operations, which are taxable on a cash basis under Canadian tax law and allow for taxable adjustments of inventory and ginseng crops at the discretion of the Company. The provision for income taxes has been calculated as follows: 2011
        
        
        2010
        
        
        2009Canadian statutory tax rate:
        
        28.25%
        
        
        31.00%
        
        
        33.00%Income taxes payable at the Canadian statutory tax rate
        $
        852
        
        $
        390
        
        $
        57Adjustments:Foreign tax rate differential
        
        (11
        )
        
        10
        
        
        (10
        )Change in future income tax rates
        
        -
        
        
        35
        
        
        1,477Other
        
        (96
        )
        
        (10
        )
        
        22Reduction in the valuation allowance
        
        (745
        )
        
        (425
        )
        
        (1,546
        )$
        -
        
        $
        -
        
        $
        -
  The Company’s foreign subsidiaries have tax losses available for carry forward of approximately $728,000 to reduce future taxable income, subject to the approval of the tax authorities, which can be carried forward indefinitely. The Company and domestic subsidiaries have tax losses available for carry forward of approximately $15,781,000 which can be applied to reduce future taxable income and expire at various times over the next three to twenty years.


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CHAI-NA-TA CORP.Notes to the Consolidated Financial Statements(Stated in Canadian dollars except tabular amounts in thousands of Canadian dollars)For the years ended December 31, 2011, 2010 and 2009
  11.
        Commitments
  The Company has entered into an operating lease for its corporate head office in Richmond, British Columbia at a cost of $3,000 per month through July 31, 2012. The Company had operating leases on farm equipment and a vehicle as at December 31, 2011 but those leases were transferred to the purchaser of the Company's farming operations in Ontario in January 2012 and the Company has no further commitment on those leases. The Company had commitments to agriculture land rentals for 2012 as at December 31, 2011 but those have subsequently been alleviated as the harvest of the ginseng crops on that land was completed in 2011. 12.
        Segmented information
  The Company operates in one operating segment and two geographic regions. The geographic region that the external revenue is derived from is determined by the residency of the customer. Intersegment revenue is determined by the residency of the subsidiary selling the product. Information by geographic region is summarized as follows: 2011
        
        
        2010
        
        
        2009External revenue from operations located in:Canada
        $
        5,793
        
        $
        3,841
        
        $
        1,473Hong Kong and People's Republic of China
        
        3,682
        
        
        5,110
        
        
        5,468$
        9,475
        
        $
        8,951
        
        $
        6,941Intersegment revenue from operations located in:Canada
        $
        3,538
        
        $
        4,580
        
        $
        4,454Hong Kong and People's Republic of China
        
        -
        
        
        -
        
        
        556$
        3,538
        
        $
        4,580
        
        $
        5,010Net earnings (loss) from operations located in:Canada
        $
        3,002
        
        $
        1,338
        
        $
        110Hong Kong and People's Republic of China
        
        13
        
        
        (80
        )
        
        64$
        3,015
        
        $
        1,258
        
        $
        174
  The Company had no long-lived assets, which comprise of all assets not classified as current, as at December 31, 2011. All of the Company's long-lived assets were in the Canadian geographic region as at December 31, 2010 and 2009.


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CHAI-NA-TA CORP.Notes to the Consolidated Financial Statements(Stated in Canadian dollars except tabular amounts in thousands of Canadian dollars)For the years ended December 31, 2011, 2010 and 2009
  Major customers: Major customers include all customers with whom the Company has derived revenue greater than 10% of its total revenue within the reporting period. For the year ended December 31, 2011, consolidated revenue included sales to four major customers. Two of these customers accounted for $2,172,000 and $1,190,000, respectively, from the Hong Kong and People’s Republic of China geographic region and two customers accounted for $3,890,000 and $1,190,000, respectively, from the Canadian geographic region. For the year ended December 31, 2010, consolidated revenue included sales to four major customers. Two of these customers accounted for $2,103,000 and $1,444,000, respectively, from the Hong Kong and People’s Republic of China geographic region, one customer accounted for $1,647,000 from the Canadian geographic region, and a fourth customer accounted for a total of $2,730,000 of which $1,843,000 was from the Canadian geographic region and $887,000 was from the Hong Kong and People’s Republic of China geographic region. For the year ended December 31, 2009, consolidated revenue included sales to three major customers, which accounted for $1,040,000 from the Canadian geographic region and $2,328,000 and $2,013,000, respectively, from the Hong Kong and People’s Republic of China geographic region. 13.
        Related party transactions
  In the normal course of business, the Company pays management fees to Wai Kee for performing sales, accounting and administrative services for CNT HK. The Company paid management fees of $60,000 for the year ended December 31, 2011 (2010 - $63,000, 2009 - $114,000) of which $5,000 remains outstanding as at December 31, 2011 (2010 - $10,000, 2009 - $17,000) and is included in accounts payable and accrued liabilities. This related party transaction is measured at the fair value. 14.
        Subsequent event
  On January 16, 2012 the Company concluded its sale of the remaining farm operating assets and real property in Ontario for total cash consideration of $1,850,000 in accordance with the terms and conditions of the Agreement dated September 14, 2011 which was approved by the Company’s shareholders at a special meeting on October 28, 2011 as disclosed in Note 3.


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