---



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.   20549



FORM 20-F



|                                                                                              
|----------------------------------------------------------------------------------------------
|REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|OR                                                                                            
|X
ANNUAL REPORT PURSUANT TO SECTION 13 Or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934        
|For the fiscal year ended December 31, 2007                                                   
|OR                                                                                            
|TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE OF 1934          
|OR                                                                                            
|SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE OF 1934       
|                                                                                              
|Date of event requiring this shell company report ..                                   
|                                                                                              
|For the transition period from ____________to ________________                                



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 xx



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 1934        Yes__No xx



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 xx 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 _xx_



Indicate by check mark which financial statement item the registrant has elected to follow:                 Item 17 xx Item 18 __



If this is an annual report, indicated by check mark whether the registrants is a shell company                   Yes__No xx



1





---







Chai-Na-Ta Corp.

FORM 20-F ANNUAL REPORT

FOR YEAR ENDED DECEMBER 31, 2007



TABLE OF CONTENTS



|                                  |                                                                              |   
|--------------------------------- | ---------------------------------------------------------------------------- | --
|Part I                            | .                                                                            | 3 
|ITEM 1                            | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                        | 3 
|ITEM 2                            | OFFER STATISTICS AND EXPECTED TIMETABLE                                      | 3 
|ITEM 3                            | KEY INFORMATION                                                              | 3 
|ITEM 4                            | INFORMATION ON THE COMPANY                                                   | 9 
|ITEM 5                            | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                 | 16
|ITEM 6                            | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   | 26
|ITEM 7                            | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            | 30
|ITEM 8                            | FINANCIAL INFORMATION                                                        | 31
|ITEM 9                            | THE OFFER AND LISTING                                                        | 32
|ITEM 10                           | ADDITIONAL INFORMATION                                                       | 34
|ITEM 11                           | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   | 40
|ITEM 12                           | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       | 41
|                                  |                                                                              |   
|PART II                           |                                                                              | 41
|ITEM 13                           | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              | 41
|ITEM 14                           | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 41
|ITEM 15                           | CONTROLS AND PROCEDURES                                                      | 41
|ITEM 16                           | RESERVED                                                                     | 42
|                                  |                                                                              |   
|PART III                          |                                                                              | 43
|ITEM 17                           | FINANCIAL STATEMENTS                                                         | 43
|ITEM 18                           | FINANCIAL STATEMENTS                                                         | 44
|ITEM 19                           | EXHIBITS                                                                     | 44
|SIGNATURE PAGE                    | 45                                                                          
|CONSOLIDATED FINANCIAL STATEMENTS | 46                                                                          





2





---











PART I



ITEM 1

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS



Not applicable.





ITEM 2

OFFER STATISTICS AND EXPECTED TIMETABLE



Not applicable.





ITEM 3

KEY INFORMATION



SELECTED FINANCIAL DATA



The selected financial data of the Company for the fiscal years ended December 31, 2007, 2006 and 2005 are derived from the consolidated financial statements of the Company which have been audited by Deloitte & Touche LLP, Independent Registered Chartered Accountants as indicated in their report which is included elsewhere in this Annual Report. The selected financial data set forth for the years ended December 31, 2007, 2006, 2005, 2004 and 2003 are derived from the Company's audited consolidated financial statements.



The selected financial data should be read in conjunction with the Companys consolidated financial statements, related notes thereto and other financial information included elsewhere in this report.



Table No. 1 is derived from the audited consolidated financial statements of the Company, which have been prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP), the application of which, in the case of the Company, conforms in all material respects for the periods presented with United States GAAP, except as referred to in the footnotes to the audited consolidated financial statements. The value of the U.S. Dollar relative to the Canadian Dollar was approximately 0.99 as of December 31, 2007.

















3





---



Table No.1

Selected Financial Data

(CDN$ in 000, except Earning/Loss per Share and Share Data)



|                                        | Year Ended |   | Year Ended |   | Year Ended |   | Year Ended | Year Ended
|--------------------------------------- | ---------- | - | ---------- | - | ---------- | - | ---------- | ----------
|                                        | 12/31/2007 |   | 12/31/2006 |   | 12/31/2005 |   | 12/31/2004 | 12/31/2003
|                                       
|Canadian GAAP                           |            |   |            |   |            |   |            |           
|Revenue                                 | 7,562      |   | 5,928      |   | 5,826      |   | 7,425      | 16,581    
|Gross Profit (2)                        | 168        |   | 98         |   | 338        |   | 2,571      | 6,368     
|Operating Profit (Loss) (5)             | (4,430     | ) | (7,462     | ) | (11,738    | ) | 103        | 3,698     
|Net Income (Loss) (5)                   | (3,328     | ) | (9,461     | ) | (8,131     | ) | 80         | 2,551     
|Earnings (Loss) per Share  basic (5)   | (0.10      | ) | (0.27      | ) | (0.23      | ) | 0.00       | 0.07      
|Earnings (Loss) per Share  diluted (5) | (0.10      | ) | (0.27      | ) | (0.23      | ) | 0.00       | 0.07      
|Weighted Average Number of Common       |            |   |            |   |            |   |            |           
|Shares (3)                              | 34,698     |   | 34,698     |   | 34,698     |   | 34,690     | 34,664    
|Diluted Number of Common Shares (4)     | 34,698     |   | 34,698     |   | 34,698     |   | 34,789     | 34,664    
|Dividends declared per Share            | 0          |   | 0          |   | 0          |   | 0          | 0         
|                                       
|Working Capital                         | 7,424      |   | 7,525      |   | 4,917      |   | 11,437     | 14,761    
|Ginseng Crops (1)                       | 11,395     |   | 14,519     |   | 19,349     |   | 20,869     | 16,648    
|Capital Assets                          | 3,795      |   | 5,793      |   | 6,589      |   | 9,171      | 6,950     
|Total Assets                            | 25,613     |   | 29,693     |   | 36,751     |   | 41,341     | 36,119    
|Net Assets                              | 11,242     |   | 14,258     |   | 23,714     |   | 31,272     | 31,172    
|Term Debt  Non Current                 | 6,973      |   | 8,366      |   | 2,450      |   | 279        | 86        
|Capital Stock                           | 38,246     |   | 38,246     |   | 38,246     |   | 38,246     | 38,200    
|                                       
|US GAAP                                 |            |   |            |   |            |   |            |           
|Revenue                                 | 7,562      |   | 5,928      |   | 5,826      |   | 7,425      | 16,581    
|Gross Profit (Loss) (2)                 | (2,553     | ) | (5,496     | ) | (9,082     | ) | 2,480      | 6,182     
|Operating Profit (Loss) (5)             | (3,621     | ) | (6,715     | ) | (10,751    | ) | 723        | 4,531     
|Net Income (Loss)                       | (3,317     | ) | (9,439     | ) | (7,770     | ) | 318        | 3,166     
|Earnings (Loss) per Share- basic (5)    | (0.10      | ) | (0.27      | ) | (0.22      | ) | 0.01       | 0.09      
|Earnings (Loss) per Share  diluted (5) | (0.10      | ) | (0.27      | ) | (0.22      | ) | 0.01       | 0.09      
|Dividends declared per Share            | 0          |   | 0          |   | 0          |   | 0          | 0         
|                                       
|Working Capital                         | 7,416      |   | 7,511      |   | 4,877      |   | 10,873     | 13,857    
|Ginseng Crops (2)                       | 11,382     |   | 14,497     |   | 19,276     |   | 20,582     | 16,194    
|Capital Assets                          | 3,795      |   | 5,793      |   | 6,589      |   | 9,171      | 6,950     
|Total Assets                            | 25,600     |   | 29,669     |   | 36,706     |   | 40,709     | 34,951    
|Net Assets                              | 11,229     |   | 14,235     |   | 23,668     |   | 30,866     | 30,527    
|Term Debt  Non Current                 | 6,973      |   | 8,366      |   | 2,450      |   | 279        | 86        
|Capital Stock                           | 38,226     |   | 38,226     |   | 38,226     |   | 38,226     | 38,200    



1.

Ginseng plants reach maturity and can be harvested at the end of their third year of growth. Total acreage under cultivation is 629 acres at December 31, 2007 (966 acres at December 31, 2006, 1,240 acres at December 31, 2005, 1,431 acres at December 31, 2004 and 1,211 acres at December 31, 2003).   The Company values these plants and the acreage at the lower of cost or net realizable value.

2.

Under US GAAP, the interest capitalised into Ginseng Crops would not be eligible for capitalisation.  These amounts would be expensed in the period incurred. For US GAAP, the write-down of inventory and certain crop costs would be included as part of cost of goods sold and therefore, the reclassification would impact reported gross profit for the period. (see audited financial statement note 21).

3.

Figures in thousands. In 2006, 10,399,149 preferred shares have been converted into common shares on a 1:1 basis. In 2003, 10,000,000 preferred shares have been converted into common shares on a 1:1 basis. In 2004, 34,500 shares were issued for stock options exercised.

4.

Options to purchase 343,400, 403,300, and 437,600 shares of common stock were outstanding in 2007, 2006 and 2005 respectively but were not included in the computation of diluted number of common shares because their effect would have been anti-dilutive.

5.

During 2007, 2006 and 2005, the Company incurred write-downs of $2,735,495, $5,639,421 and $9,978,902, respectively, on inventory and crop costs which caused a significant decrease in net earnings (loss) in total and on a per share basis compared to prior years.



4





---





In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (CDN$). The Government of Canada permits a floating exchange rate to determine the value of the Canadian Dollar against the U.S. Dollar (US$).



Table No. 2 sets forth the rate of exchange for the Canadian Dollar 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 Canadian Dollars required under that formula to buy one U.S. Dollar.

Table No. 2
U.S. Dollar/Canadian Dollar



|Fiscal Year Ended | Average | High | Low  | Close
|----------------- | ------- | ---- | ---- | -----
|                 
|12/31/2007        | 1.07    | 1.19 | 0.92 | 0.99 
|12/31/2006        | 1.13    | 1.19 | 1.10 | 1.17 
|12/31/2005        | 1.21    | 1.27 | 1.14 | 1.16 
|12/31/2004        | 1.30    | 1.39 | 1.20 | 1.20 
|12/31/2003        | 1.40    | 1.57 | 1.29 | 1.30 
|                 
|Month Ended       |         | High | Low  | Close
|                 
|02/28/2008        |         | 1.02 | 0.97 | 0.98 
|01/31/2008        |         | 1.03 | 0.99 | 1.00 
|12/31/2007        |         | 1.02 | 0.98 | 0.99 
|11/30/2007        |         | 1.00 | 0.92 | 1.00 
|10/31/2007        |         | 1.00 | 0.94 | 0.94 
|09/30/2007        |         | 1.06 | 0.99 | 0.99 



The closing rate of exchange was 0.98 on February 29, 2008.





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.



Chai-Na-Ta is 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 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.



5





---









Going Concern



The Company has experienced a significant loss for the year ended December 31, 2007, due to a low selling price of ginseng and has an accumulated deficit of $28,244,602 as at December 31, 2007. The Company is closely monitoring cash resources and has received significant financing from a Canadian chartered bank and a company formerly under common control. Going forward, revenue generated from the last year of harvest in British Columbia will help reduce the Companys debt level and the Company expects an improvement in both the yield and quality of roots harvested in Ontario as recent changes to the crop management plan are fully realized. The Company's ability to continue as a going concern is dependant on achieving ongoing profitable operations and the continued financial support of its creditors.



Agricultural Risks



The Companys primary business is 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. Insurance is available to cover such risks but the relatively high costs have resulted in the Company electing to self-insure.



Although the Company believes that its Integrated Crop Management System and diversification of farming operations will help mitigate risks, there can be no assurance that such policies or procedures will be effective in reducing such risks and accordingly, the Companys business, financial condition, operating results and cash flows may be materially affected.



Product Pricing



The marketing of bulk and graded North American ginseng in world markets is subject to pricing risks. The 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. The Companys long-term strategy is to expand the level of vertical integration throughout its operations, potentially reducing the exposure to bulk North American ginseng price fluctuations as more bulk root is sold into the value-added consumer products market. In addition, the Company maintains economies of scale in its operations which are designed to give it a competitive advantage relative to other producers when prices decline.



North American ginseng root prices continue to be at low levels but stabilized in 2007 with a slight increase toward the end of the year despite the increasingly strong Canadian dollar. Although the Company believes that prices will improve modestly towards the end of 2008, significant changes in the supply of or demand for North American ginseng may adversely impact the price of ginseng roots and have a material adverse effect on the Companys business, financial condition, operating results and cash flows.



The Ministry of Commerce of the Peoples Republic of China announced an order to stop the import of cultivated North American ginseng to China for the purpose of contract processing in China and then re-export. The announcement was effective on November 1, 2004. As a result, the Company believes there could be an impact on the demand for and the prices of North American ginseng; however, based on information available to date the Company does not believe that there has been a significant impact attributable to this announcement.



6





---





On July 21, 2005, the Peoples Bank of China announced an increase of 2.1% in the value of the Chinese renminbi in relation to the US dollar. The bank also announced that it will no longer fix the renminbi to the US dollar but instead will fix it to a market basket of currencies. However, the Company is not aware of any significant impact on the demand for and the prices of North American ginseng as a result of this.



Lengthy Growing Cycle for Ginseng



As the cycle for growing ginseng takes several years from the time of planting to the time of harvesting, our future profitability is also impacted by our ability to accurately predict demand for our products in future years. Unanticipated decreases in demand or excess supplies in world markets could adversely affect profitability due in part to the limitation in our inability to make adjustments to the size of our crops in reaction to short term swings in supply and demand. Consequently, if the expected yields and quality of future harvests are not realized, the Company may not be able to harvest additional ginseng in sufficient quantities or quality to compensate for the shortfall. Lower than expected yields and quality could have a material adverse effect on the Companys business, financial condition, operating results and cash flows.



Availability of Suitable Land



The Company leases approximately 865 acres and owns 270 acres of farm land in Canada of which 629 acres are currently under ginseng cultivation. Generally, the Company uses 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. In 2005 the Company announced that it will no longer plant in British Columbia due to the continued province-wide rust problem and the downward price pressure on ginseng grown in that region. Although the Company believes that the southern region of Ontario will continue to have available farm land that could be used for ginseng farming, there can be no assurances that the Company will be able to secure leases on terms similar to existing leases or acquire suitable farm land at reasonable prices. The inability to secure suitable farm land through leases or through acquisitions could have a material adverse effect on the Company's business, financial condition, operating results and cash flows.



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 which 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 and a limited number of smaller customers. During the years ended December 31, 2007, 2006 and 2005, the Company had sales of approximately 83%, 90%, and 79% to its top four 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.



7





---





During the years ended December 31, 2007, 2006 and 2005, the Company had sales of approximately 89%, 79% and 79% to customers in the Far East, primarily China. The Company expects sales to markets in the Far East to continue to represent the majority of the Companys sales. Any adverse change in the demand for ginseng from Far East markets may have a material adverse effect on the Companys business, financial condition, operating results and cash flows.



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), US (minimal sales of herbal products), and Hong Kong (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. The Company mitigates its exposure to foreign currency by managing working capital and through incurring expenditures in local currencies. To further minimize exposure to the Hong Kong dollar the Company maintains low capital investment in the region, and repatriates all surplus cash balances. There can be no assurance, however, that adverse changes in the above noted factors will not materially affect the Companys business, financial condition, operating results and cash flows.



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.



Financing of Current Operations



The Company relies on the sale of inventory to fund the planting, maintenance and harvesting of ginseng crops that will be harvested in future years. To fund current operations the Company will first try and sell inventory but if the Company cannot reach acceptable selling terms the Company will attempt to fund current operations with additional financing. There can be no assurance that capital markets will be conducive to such financing at all or on acceptable terms. This could have a material adverse effect on the Company's business, financial condition, operating results and cash flows.



Long-Term Financing



The Company has historically used term debt financing to finance capital asset acquisitions and short-term borrowings and operating lines to finance crops and working capital needs. In 2006, the Company established a four year term loan facility to refinance existing loan facilities and to finance the general working capital requirements of the Company. Interest rate risk is managed by arranging most term debt financing with fixed rates for the life of the obligations.



The Company will continue to focus on its farming and marketing initiatives and will also move forward to explore other business opportunities as resources permit.



8





---





In order to fund the financial requirements of the Company, including capital for debt repayment and funding for expansion and other activities, additional external sources of financing may be required. The amount of such funding depends on the future profitability of the Company, as well as the pricing of its products in world markets and the scale of any future expansion. The ability of the Company to issue additional equity may be impacted by the limited liquidity in the stock due to low historical trading volumes and significant percentages held by a limited number of shareholders. Further, if the Company decides to and is able to issue additional funds through public or private debt or equity financings to fund operations, new equity securities may have priority rights over existing equity security holders and the percentage ownership of current stockholders may be reduced.  Although future funding may require issues of additional debt or equity; there can be no assurance that capital markets will be conducive to such financing at all or on acceptable terms.



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, 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. Based on discussion with customers, suppliers and review of available farming industry literature, the Company believes that with 629 acres currently under cultivation it is the worlds largest producer of North American ginseng.



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 maintains farms near Lillooet and Kamloops in British Columbia and Otterville in Ontario.



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 stock symbol is CCCFF. 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 Companys wholly-owned subsidiary, Chai-Na-Ta Farms Ltd. (CNT Farms) is headquartered in Richmond, British Columbia and carries out the planting, growing and harvesting of the Companys ginseng crops. CNT Farms also handles the storage of the Companys root inventory and manages the distribution of inventory directly to local customers or to customers in the Far East through CNT Trading (Hong Kong) Limited. CNT Farms also carries out crop research through its agricultural staff.





9





---





The Company also has a wholly-owned subsidiary, Unique Formulations Inc. (Unique) which previously operated out of Portland, Oregon as a wholesaler of ginseng and non-ginseng based herbal products to the U.S. market. As part of the Companys efforts to reduce operating costs, the Portland office was closed in November 1999 and the operations were then administered from the head office in British Columbia, Canada. The company has been inactive since 2003.



The Company incorporated its wholly-owned subsidiary, CNT Trading (Hong Kong) Limited (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 incorporated its wholly-owned subsidiary, CNT Nutraceuticals Ltd. (CNTN) on February 3, 2004 to operate a showroom in Richmond, British Columbia and carry out direct marketing and sales of graded roots and ginseng-based value-added products to customers in Canada. The direct marketing and operation of the showroom were scaled down in 2005 due to cash flow restraints. The operations of CNTN in the short-term will be limited to selling existing inventory and to creating custom-made ginseng products for wholesale distribution.



The Companys principal capital expenditures incurred during 2007, 2006 and 2005 were $60,562, $231,588, and $373,108, respectively, which primarily related to purchases of property, plant and equipment located in Canada.



Financing



On April 4, 2005, the Company established a revolving loan facility of HK$10,000,000 from a company formerly under common control. On October 13, 2005, the Company established another revolving loan facility of HK$13,200,000 from the same company formerly under common control. Both loans were refinanced on August 18, 2006 for a four year term loan facility as detailed below.



On August 18, 2006, the Company established a four year term loan facility of HK$54,700,000 (approximately $8,000,000 at the date of establishment) from the same company formerly under common control. The loan is unsecured and bears interest at 1.7% per annum over the HIBOR (Hong Kong Interbank Offered Rate) or LIBOR (London Interbank Offered Rate). The loan was used to refinance the above two existing shorter-term loan facilities and to finance the general working capital requirements of the Company.



On May 16, 2005, the Company secured a $1,500,000 non-revolving term loan bearing interest at prime plus 1.5% per annum for three years from a Canadian chartered bank. The loan is repayable in monthly instalments of $41,700 plus interest and is secured by specific property of the Company. In 2006, two lump sum payments totaling $865,000 were made on the loan from the proceeds of assets held for sale. The loan is now repayable in monthly installments of $10,000 plus interest and is secured by specific property of the Company. As at December 31, 2007, $39,700 is outstanding which will become due within the next twelve months.



As at December 31, 2007, subject to limitations based on the value of inventory, certain receivables and the estimated value of qualifying ginseng crops, the Company has available a $5,000,000 revolving demand operating loan with a Canadian chartered bank that bears interest at bank prime rate plus 1.25% per annum.  As at December 31, 2007, $3,510,000 (2006 - $4,310,000, 2005 - $6,400,000) had been drawn under the operating loan.



10





---





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 the Orient and North America and this has stimulated the demand for farm grown ginseng.



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 has chosen to farm in two areas, British Columbia and Ontario. The arid interior of southern British Columbia is characterised by extremely dry air and frequent breezes that keep humidity in the gardens low and the leaves dry. This reduces the risk of leaf blights and root rots. Although southern Ontario has higher humidity and rainfall than southern British Columbia, the sandy tobacco land allows good drainage, resulting in exceptional growth rates and high quality 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. As described below, 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, led to the decision in 2005 to permanently discontinue planting in British Columbia.



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.



As at December 31, 2007, the Company has under lease 865 acres and owns 270 acres of farmland of which 629 are under ginseng cultivation of which 410 is located in Ontario and 219 is located in British Columbia. The southern region of Ontario has abundant farm land that could be used for ginseng farming and lease costs are relatively low. In British Columbia land suitable for ginseng cultivation is scarce and leases are expensive. This availability is important because farm land is usually used for only one ginseng crop, the growing of which is generally believed to deplete the soil of nutrients necessary for a second successful ginseng crop.





11





---





Due to the continued rusty root problem and the downward price pressure of ginseng grown in British Columbia, the Company decided in 2005 to stop planting in British Columbia and to close its British Columbia operations after the projected final harvest in 2008. The Company decided not to proceed with its 2007 planting due to temporary cash flow restraints. However, the land preparation for the 2008 planting has commenced and the Company intends to continue planting in Ontario in 2008. The Company does not anticipate significantly increasing its plantings in Ontario therefore the number of acres being harvested will decrease significantly after the British Columbia operation has been closed.



Table No. 3

|                           |                     |                               |                 |                               |                     
|-------------------------- | ------------------- | ----------------------------- | --------------- | ----------------------------- | --------------------
|Ginseng Farming Operations
|                           |                     |                               |                 |                               |                     
|Calendar                   | New
Acreage Planted | Total
Acres Under Cultivation | Acres Harvested | Harvest
Yield in lbs
Per Acre | Total
Harvest
in lbs
|2007                       | 0                   | 629                           | 332             | 2,767                         | 918,963             
|2006                       | 40                  | 966                           | 311             | 2,576                         | 801,662             
|2005                       | 188                 | 1,240                         | 352             | 2,240                         | 787,402             
|2004                       | 460                 | 1,431                         | 240             | 2,116                         | 506,626             
|2003                       | 354                 | 1,211                         | 370             | 2,096                         | 775,630             
|2002                       | 304                 | 1,284                         | 359             | 2,666                         | 956,996             
|2001                       | 329                 | 1,339                         | 346             | 2,816                         | 975,577             
|2000                       | 289                 | 1,356                         | 366             | 2,612                         | 957,431             
|1999                       | 358                 | 1,433                         | 404             | 2,685                         | 1,083,643           
|1998                       | 413                 | 1,479                         | 402             | 2,799                         | 1,130,790           



Medicinal Properties



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;





12





---







·

Antioxidant (anti-aging);

·

Hypotensive;

·

Enhanced mental activity; and

·

Synergized 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. In world markets, North American ginseng represents about 20% of the total ginseng sold. Based on information obtained through discussion with customers, suppliers and review of available farming industry literature, management estimates that the Company currently produces approximately 15% of the total North American ginseng supply annually.



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 (including larger four year old root), lower production costs achieved through economies of scale and an extensive marketing and distribution network serving customers in Hong Kong and the Far East.



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, 2007, 2006 and 2005, the Company had sales of approximately 89%, 79% and 79%, respectively, to its major customers located in Hong Kong. Although the Company believes that a 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 2007, 2006 and 2005 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 yea so its limited shelf life can cause some barrier for future planting.



13





---





Manufacturing and processing of value-added products in North America is contracted out to third party manufacturers through the Companys wholly-owned subsidiary CNTN in Canada. Activities in recent years have consisted of a limited amount of sales of herbal health products to distributors in Canada.



Canada and Foreign Sales/Assets



During 2007, the Company earned $3.5 million in sales in Canada, and $4.1 million in sales in the Far East.



During 2006, the Company earned $1.3 million in sales in Canada, and $4.7 million in sales in the Far East.



During 2005, the Company earned $1.2 million in sales in Canada, and $4.6 million in sales in the Far East.



As at December 31, 2007, 2006, and 2005, over 99% of the Companys long lived assets were in Canada.



Research and Development



The Company has developed, and in 2000 trademarked, CNT 2000Ò, a standardized North American ginseng extract. Standardization enables the Company to conduct scientific studies on the efficacy of North American ginseng and makes all the studies comparable with each other. The standardization of North American ginseng enables the Company to proprietize its products and facilitate global product registration under different regulatory environments. Finally, standardization puts the Company in the strategic position to further diversify its markets.



The Company had entered into an agreement to contribute funding to a university in Canada to support a rusty root research project but was discontinued in 2005 due to capital constraints of the Company. Total amounts expended on research and development activities during the years ended December 31, 2007, December 31, 2006 and December 31, 2005 were $NIL, $NIL and $46,925, respectively.



Staffing



As at December 31, 2007, the Company employed approximately 19 salaried full-time people in its operations world-wide. The Company may hire up to 100 persons for seasonal work in 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





14





---





preferred shares 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 38% of the Companys issued and outstanding common shares as at December 31, 2007 and December 31, 2006. Wai Kee is a Hong Kong based publicly traded company, with its core business in investment holdings.



As of December 31, 2007 the Company has the following wholly-owned subsidiaries:



a)

Chai-Na-Ta Farms Ltd. (CNT Farms)
incorporated on February 28, 1994 in British Columbia, Canada

b)

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

c)

Chai-Na-Ta (Asia) Ltd. (CNTA) (Inactive)
incorporated on October 26, 1992 in Barbados

d)

North American Ginseng Enterprises Limited (NAGEL) (Inactive)
incorporated on July 6, 1990 in Hong Kong

e)

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

f)

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

g)

CNT Trading (Hong Kong) Limited (CNT HK) 
incorporated on October 13, 1999 in Hong Kong

h)

Unique Formulations Inc. (UF) (Inactive)
incorporated on April 21, 1993 in Oregon, USA

i)

CNT Nutraceuticals Ltd. (CNTN)
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. Other office facilities include farm offices located on its farm sites in Cherry Creek, British Columbia, and Otterville, Ontario.



The Company holds 865 gross acres of farmland under lease in British Columbia and Ontario (Table No. 4) and owns 220 acres of farm land near Kamloops, British Columbia and a 50 acre farm near Otterville, Ontario. The Kamloops farm cultivates ginseng and is the location of the British Columbia office of CNT Farms. The Kamloops farm has been made available for sale and has been reclassified as an asset held for sale on the consolidated balance sheet. In 2004, the Company developed a processing facility on the Otterville farm at a total cost of approximately $1.6 million. Beginning in 2004, all Ontario harvested roots have been processed in the new facilities, thereby reducing transportation and handling costs. Currently, 629 acres of the agricultural land held by the Company is under cultivation for the production of ginseng.



15





---





The Company will continue to plant in the growing regions in Ontario. However, due to the continued rusty root problem and the downward price pressure of ginseng grown in British Columbia, the Company decided in the latter half of 2005 to stop planting in British Columbia and expects to close its British Columbia operations after the projected final harvest in 2008. New seeding was 0 acres for 2007, 40 acres for 2006 and 188 acres for 2005. The Company decided not to proceed with its 2007 planting due to temporary cash flow restraints. However, the land preparation for the 2008 planting has commenced and the Company intends to continue planting in Ontario in 2008. The Company does not anticipate planting additional acreage in Ontario to compensate for the discontinuation of planting in British Columbia. The Company believes that the current levels of leased and owned lands as well as the lands under cultivation are sufficient to meet the Companys needs.



The Company cultivates ginseng primarily on leased land. Agricultural land is normally leased for a 5 year period and land rentals range from $300 - $500 per year per acre.



|                         |                            |               |            | 
|------------------------ | -------------------------- | ------------- | ---------- | 
|Table No. 4             
|Agricultural Land Leases
|                         |                            |               |           
|Name                     | Location                   | Gross Acreage | Expiration
|                         |                            |               |           
|Adam                     | Norwich, Ontario           | 65.0          | 12/31/2008
|Ash                      | Norwich, Ontario           | 51.0          | 12/31/2008
|Ash                      | Norwich, Ontario           | 5.3           | 12/31/2010
|Deconinck                | Norwich, Ontario           | 19.2          | 12/31/2008
|Farmer                   | Kamloops, British Columbia | 30.5          | 12/31/2008
|Grim                     | Otterville, Ontario        | 77.5          | 12/31/2012
|Halfway                  | Lillooet, British Columbia | 90.0          | 12/31/2008
|Harper Ranch             | Kamloops, British Columbia | 91.3          | 12/31/2008
|Maitz                    | Norwich, Ontario           | 42.0          | 12/31/2009
|Maitz                    | Norwich, Ontario           | 40.0          | 12/31/2010
|Pathy                    | Otterville, Ontario        | 67.0          | 12/31/2008
|Pierssens                | Norwich, Ontario           | 67.0          | 12/31/2008
|River Ridge              | Norwich, Ontario           | 85.0          | 12/31/2009
|Talach                   | Norwich, Ontario           | 59.2          | 12/31/2008
|Walhachin                | Kamloops, British Columbia | 75.0          | 12/31/2008
|                         |                            | 865.0         |           



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,





16





---





quality of the Companys harvest, and successful implementation of new products. This section should be read in conjunction with the Companys Consolidated Financial Statements included as item 17 of this report. These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP), which in the case of these financial statements, conform in all material respects with those in the United States (US GAAP), except as disclosed in note 21 to the consolidated financial statements.



OPERATING RESULTS



Fiscal year ended 12/31/2007 compared with year ended 12/31/2006



Revenue increased 28% to $7,561,582 in 2007 from $5,927,755 in 2006. The Companys average selling price increased to $8 per pound in 2007, compared to $6 per pound in 2006, which offset a 9% decrease in the volume of ginseng roots sold during the year. In 2007, there was a greater percentage of higher quality roots sold compared to 2006 and sales prices improved slightly which resulted in a higher average selling price. Ginseng prices remained at low levels but have maintained stability in 2007 despite the continued strengthening of the Canadian dollar compared to the Hong Kong and Chinese currencies. The Company expects that both the average selling price and the volume of sales will increase moderately in 2008.



Cost of goods sold was 98% of sales revenue in both 2007 and 2006 as ginseng root sales in both years were made after the inventory had been written down to its net realizable value in the previous year. The Company harvested 918,963 pounds of root in 2007, an increase of 15% from 801,662 pounds in 2006. The Company harvested 332 acres in British Columbia and Ontario, with an average yield of 2,767 pounds per acre. In 2006, the Company harvested 311 acres with an average yield of 2,576 pounds per acre. The higher yield in 2007 was due to an improvement in farming techniques and crop management. The Company harvested about the same number of acres of three-year-old root as was harvested in 2006. The Companys production cost per pound decreased to $12 per pound in 2007 compared to $13 in 2006 as a result of both an increase in yield and a decrease in costs on a per acre basis in 2007 compared to 2006.



Gross margin was 2% of sales revenue in both 2007 and 2006 due to the ginseng root sales in both years being made after the inventory had been written down to its net realizable value in the previous year.



Selling, general and administrative expenses totalled $1,067,850 in 2007, a 12% decrease from the $1,219,618 in expenses in 2006. The decrease was primarily due to a reduction in management, selling and administrative staff and the resulting savings in salaries and related employment costs.



Interest on short-term debt decreased to $160,329 in 2007 from $383,781 in 2006. The decrease in interest on short-term debt in 2007 is due to the Company receiving the proceeds from its sales earlier in 2007 compared to 2006 thus enabling the Company to reduce its operating loan balance earlier in the year.



Interest on long-term debt increased to $634,353 in 2007 from $317,095 in 2006. The increase in interest on long-term debt in 2007 is due to the HK$54,700,000 four year non-revolving term loan facility from More Growth Finance Limited (More Growth), a company formerly under common control, that was agreed to on August 18, 2006. This loan was outstanding for the all of 2007 while only outstanding for a portion of 2006.



17





---





The Company recorded a write-down of $1,450,000 on ginseng crops for the year ended December 31, 2007 to reduce their carrying value to their net realizable value. This write-down was made on the expected 2008 harvest of ginseng crops in British Columbia. 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.



During the three months ended June 30, 2007, the Company recorded a write-down on inventory of $1,285,895. This inventory was being held by the Company to fulfill a contract with a Canadian customer for a predetermined minimum quantity at a fixed price. The contract has expired and the customer did not order the predetermined minimum quantity and the Company has been unable to negotiate an acceptable subsequent agreement. The Company intends to pursue all possible options, including legal action, to ensure receipt of the contracted amount for this inventory. However, due to the uncertainty of the Company's ability to receive the contracted amount, a write-down has been recorded to reduce the carrying value of the inventory to its estimated net realizable value instead of the predetermined contract price.



Due to the continued low selling price of low grade ginseng, the Company recorded a write-down of inventory of $2,901,483 for the year ended December 31, 2006 to reduce the carrying value of the inventory to its estimated net realizable value. This amount includes a $235,200 write-down of 2005 inventory realized in the second quarter of 2006 and a $2,666,283 write-down on 2006 inventory that was realized upon the completion of the 2006 harvest. The net realizable value of the inventory was estimated based on purchase commitments received for inventory on hand.



The Company recorded a write-down of $2,700,000 on ginseng crops for the year ended December 31, 2006 to reduce their carrying value to their net realizable value. This amount includes a $2,050,000 write-down on the 2007 harvest and a write-down of $650,000 on the expected 2008 harvest. 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 also recorded a write-down of inventory, raw materials and supplies for its value-added products of $37,938 during the year ended December 31, 2006.



The Company had other non-operating income of $1,101,219 for the year ended December 31, 2007 which included $638,461 in foreign exchanges gains, $473,681 in gains on the disposal of property, plant and equipment and other non-operating losses of $10,923. The Company recorded other losses of $143,651 for the year ended December 31, 2006. This amount included $154,319 in foreign exchange losses as well as $10,668 of interest and miscellaneous income.



In 2007, the Company incurred a net loss of $3,328,491, or $0.10 basic and diluted loss per share, compared to the 2006 net loss of $9,460,716, or $0.27 basic and diluted loss per share. The net loss in 2007 was largely a result of the minimal gross margin achieved on the sale of ginseng and the write-downs on inventory and crop costs.



In order to conform Canadian GAAP to U.S. GAAP, cost of goods sold and hence gross margins would be adjusted for differences in accounting for interest capitalized to crop costs and the presentation of the write-down of inventory and crop costs as a component of cost of sales. Accordingly, cost of goods sold would be increased and gross margins decreased by $2,721,658 for the year ended December 31, 2007 and cost of goods sold would be increased and gross margins decreased by $5,593,548 for the year ended December 31, 2006. In addition, the net loss would be decreased by $11,037 for the year ended December 31, 2007 and



18





---





net loss decreased by $22,143 for the year ended December 31, 2006 reflecting the differences in the accounting for interest, financial instruments and write-down of inventory and related future income taxes. As a result of these adjustments, the net loss under U.S. GAAP would have been $3,317,454 for the year ended December 31, 2007 and the net loss would have been $9,438,573 for the year ended December 31, 2006. Basic and diluted loss per share under U.S.GAAP would have been $0.10 for the year ended December 31, 2007 compared to basic and diluted loss per share of $0.27 for the year ended December 31, 2006.



Fiscal year ended 12/31/2006 compared with year ended 12/31/2005



Revenue rose 2% to $5,972,755 in 2006 from $5,825,946 in 2005. The Companys average selling price decreased to $6 per pound in 2006 compared to about $10 per pound in 2005 but revenue increased due to an 82% increase in the volume of ginseng roots sold during the year. The lower sales price per pound was due to a larger percentage of lower quality roots being sold while the higher volume of sales is the result of a larger 2005 harvest compared to 2004. Ginseng prices have fallen over the last three years due to the strength of the Canadian dollar compared to the Hong Kong and Chinese currencies, the high amount of rusty root and the normal volatility within the ginseng industry. However, prices did remained stable throughout the last half of 2006 and have strengthened slightly in 2007.



Cost of goods sold was 98% of sales revenue in 2006 compared to 94% in 2005. Cost of goods sold as a percentage of revenue was about the same as the prior year due to the ginseng root sales in both years were made after the inventory had been written down to their net realizable value. The Company harvested 801,662 pounds of root in 2006, an increase of 2% from 787,402 pounds in 2005. The Company harvested 311 acres in British Columbia and Ontario, with an average yield of 2,576 pounds per acre. In 2005, the Company harvested 352 acres with an average yield of 2,240 pounds per acre. The higher yield in 2005 was due to fewer acres of three-year-old root being harvested in 2006 compared to 2005 and due to improved farming techniques enacted by management. The Companys production cost per pound was $13 per pound in 2006 compared to $14 in 2005 which is a result of the increase in yield in 2006 compared to 2005.



Gross margin was 2% of sales revenue in 2006 compared to 6% in 2005. The low gross margins in 2006 and 2005 were due to the ginseng root sales in both years being made after the inventory had been written down to its net realizable value.



Selling, general and administrative expenses totalled $1,219,618 in 2006, a 14 % decrease from the $1,422,323 in expenses in 2005. The decrease was primarily due to the overhead cost saving measures enacted by management.



Interest on short-term debt increased to $383,781 in 2006 from $362,722 in 2005. The increase in interest on short-term debt in 2006 is due to higher interest rates on bank borrowings.



Interest on long-term debt increased to $317,095 in 2006 from $65,276 in 2005. The increase in interest on long-term debt in 2006 is due to a new $8,000,000 four year non-revolving term loan facility from More Growth Finance Limited (More Growth), a company formerly under common control. The new loan facility was used to fund working capital requirements and to repay $3,500,000 in borrowings that had been established over shorter terms during 2005.



Due to the continued low selling price of low grade ginseng, the Company recorded a write-down of inventory of $2,901,483 for the year ended December 31, 2006 to reduce the carrying value of the inventory to its estimated net realizable value. This amount includes a $235,200 write-down of 2005 inventory realized in the second quarter of 2006 and a $2,666,283 write-down on 2006 inventory that was realized upon the completion of the 2006 harvest. The net realizable value of the inventory was estimated based on purchase commitments received for inventory on hand.



19





---









The Company recorded a write-down of $2,700,000 on ginseng crops for the year ended December 31, 2006 to reduce their carrying value to their net realizable value. This amount includes a $1,550,000 write-down on the expected 2007 harvest and a write-down of $1,150,000 on the expected 2008 harvest. 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 also recorded a write-down of inventory, raw materials and supplies for its value-added products of $37,938 during the year ended December 31, 2006.



In 2005, the Company recorded write-downs on inventory and crop costs of $9,978,902. These write-downs reduced the carrying value of inventory and crop costs to their estimated net realizable value. The write-downs consisted of $9,736,863 on inventory which includes $2,500,000 on crop costs that were subsequently harvested in 2005, $213,127 on cancelled planting sites and $28,912 on raw materials and supplies used to produce value-added products.



In 2004, the Company recorded a $599,717 write-down on low grade ginseng roots to their estimated net realizable value. This was due to the downward trend of ginseng root prices after the winter of 2004.



In 2005, the Company recorded write-downs on assets held for sale of $246,498 include $136,210 for the Companys head office located in Richmond, British Columbia and $110,288 for land used for planting ginseng near Walhachin, British Columbia. Both properties identified as being assets held for sale were written-down to their estimated net realizable value less costs to sell and were disposed of in January 2006.



The Company recorded other losses of $143,651 for the year ended December 31, 2006. This amount includes $154,319 in foreign exchange losses as well as $10,668 of interest and miscellaneous income. In 2005, the other losses of $481,042 included foreign exchange losses of $490,748 as well as $9,706 of interest and miscellaneous income. The foreign exchange losses realized in 2005 are mainly the result of a previously deferred exchange loss of $508,721 included in a separate component of shareholders equity that was realized when a long-term investment in a foreign subsidiary was repaid during the year.



The Company recorded a valuation allowance against future income tax assets of $1,855,000 for the year ended December 31, 2006 as a result of the loss incurred in 2006 and an increase in future interest expense from additional borrowings. This caused the future income tax assets to no longer be more likely than not to be recovered by the Company.



In 2006, the Company incurred a net loss of $9,460,716, or $0.27 basic and diluted loss per share, compared to the 2005 net loss of $8,131,069, or $0.23 basic and diluted loss per share. The net loss in 2006 was largely a result of low ginseng prices, the write-downs on inventory and crop costs and the provision against the Companys future income tax assets.



In order to conform Canadian GAAP to U.S. GAAP, cost of goods sold and hence gross margins would be adjusted for differences in accounting for interest capitalized to crop costs and the presentation of the write-down of inventory and crop costs as a component of cost of sales.  Accordingly, cost of goods sold would be increased and gross margins decreased by $5,593,548 for the year ended December 31, 2006 and cost of goods sold would be increased and gross margins decreased by $9,419,508 for the year ended December 31, 2005.  In addition, the net loss would be decreased by $22,143 for the year ended December 31, 2006 and



20





---





net loss decreased by $360,797 for the year ended December 31, 2005 reflecting the differences in the accounting for interest, financial instruments and write-down of inventory and related future income taxes. As a result of these adjustments, the net loss under U.S. GAAP would have been $9,438,573 for the year ended December 31, 2006 and the net loss would have been $7,770,272 for the year ended December 31, 2005. Basic and diluted loss per share under U.S.GAAP would have been $0.27 for the year ended December 31, 2006 compared to basic and diluted loss per share of $0.22 for the year ended December 31, 2005.



LIQUIDITY AND CAPITAL RESOURCES



Fiscal year ended 12/31/2007 compared with year ended 12/31/2006



In 2007, the cash surplus from operations was $503,814 compared to a cash deficit of $2,112,848 in 2006. The Companys cash as at December 31, 2007 was $307,219 compared to a balance of $484,466 at December 31, 2006, a decrease of $177,247. The increase in cash from operations in 2007 was due to a decrease in the amount spent on current and long-term ginseng crops as a result of fewer acres being maintained and due to an increase in the amount of customer deposits received at year end.



The working capital position of the Company at December 31, 2007 was a surplus of $7,422,969 compared to a surplus of $7,525,769 at December 31, 2006.



Current and non-current crop cost expenditures before depreciation and interest totalled $6,280,000 for the year ended December 31, 2007 as compared to $7,079,231 in 2006. The decrease in expenditures was due to savings from reduced plantings in 2007 compared to 2006.



The Company had drawn $3,510,000 of the available $5,000,000 revolving demand operating loan with a Canadian chartered bank as of December 31, 2007. The Company incurred interest of $160,329 on the demand loan for the year which has been included in interest on short-term debt on the statement of operations.



On August 18, 2006, the Company established a four year term loan facility of HK$54,700,000 from More Growth. The loan is unsecured and bears interest at 1.7% per annum over the HIBOR (Hong Kong Interbank Offered Rate) or LIBOR (London Interbank Offered Rate). The loan was used to refinance already existing shorter-term loan facilities with More Growth and to finance the general working capital requirements of the Company. The Company has fully drawn the loan facility. For the year ended December 31, 2007, the Company incurred $625,758 of interest which has been included in interest on long-term debt on the statement of operations and which remains accrued as at December 31, 2007.



Capital expenditures of $60,562 during 2007 were mainly for the purchase of equipment in Ontario. Proceeds from the disposition of excess farming equipment, vehicles, irrigation equipment and hardware used to shade the ginseng gardens totalled $487,814.



The Company believes that its existing cash resources, together with the cash generated from future sales of inventory, available bank borrowings and the current related party borrowings, will be sufficient to meet its working capital and operating requirements for the next twelve months. If the Company cannot generate sufficient cash from its existing resources, it will become necessary to secure additional financing; however there is no assurance that additional financing will be available on terms favourable to the Company. If the Company cannot generate sufficient cash and if it cannot secure additional financing, the Company's ability to continue as a going concern will be dependant on the continuing support of its principal shareholder and its creditors.



21





---





As at December 31, 2007, the Company had the contractual obligations and commercial commitments outlined in the chart below:



Table No. 5

Contractual Obligations



|Contractual Obligations       |       | Payments Due by Period
|----------------------------- | ----- | ----------------------
|                              | Total |                       
|
|Long-term Debt (1)            | $     | 9,232,737             
|Operating Leases (2)          | $     | 145,529               
|Agricultural Land Leases (3)  | $     | 528,127               
|Total Contractual Obligations | $     | 9,906,393             



(1)

Long-term debt includes the term loan from a Canadian chartered bank at an interest rate of prime plus 1.5% per annum, the loan from More Growth at an interest rate of 1.7% per annum over the HIBOR (Hong Kong Interbank Offered Rate) or LIBOR (London Interbank Offered Rate) and various equipment purchase loans at interest rates up to 7.75% per annum. Long-term debt also includes accrued interest and estimated future interest payments on long-term debt.



(2)

Operating leases comprise of the Companys long-term leases of equipment, office facilities and vehicles.



(3)

Agricultural land leases comprise of the Companys land rentals in British Columbia and Ontario for the cultivation of ginseng.



The following commitments are not included in the Contractual Obligations table above:



The Company has agreed to indemnify a landlord with respect to any environmental contamination for certain premises. As the Company does not expect to incur any costs in connection with this indemnification, no amounts have been accrued as of December 31, 2007.



The Company is committed to maintaining its ginseng crops from the time of initial planting to the time of harvesting which usually takes three to four years. The cost to maintain these crops is financed through the sale of inventory and available bank borrowings.



The Company has become involved in a legal proceeding as a result of an automobile accident. The Company believes that existing insurance will be sufficient to cover any claim from this matter. While the outcome of this proceeding cannot be determined at this time, no provision has been recorded as the Company believes that the resolution of this proceeding will not have a material impact on the financial condition, earnings or cash flows of the Company.



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, 2007.





22





---





Fiscal year ended 12/31/2006 compared with year ended 12/31/2005



In 2006, the cash deficit from operations was $2,112,848 compared to $4,017,939 in 2005. The Companys cash and cash equivalents as at December 31, 2006 was $484,466 compared to a balance of $42,551 at December 31, 2005, an increase of $441,915. The increase in cash from operations in 2006 was mainly due to a decrease in the amount spent on current and long-term ginseng crops as a result of fewer acres being maintained.



The working capital position of the Company at December 31, 2006 was a surplus of $7,525,729 compared to a surplus of $4,917,442 at December 31, 2005. This increase was due to the new long-term loan facility which the Company obtained during the year from More Growth which was used in part to repay short-term borrowings.



Current and non-current crop cost expenditures before depreciation and interest totalled $7,079,231 for the year ended December 31, 2006 as compared to $9,002,827 in 2005. The decrease in expenditures was due to savings from reduced plantings in 2006 compared to 2005 and cost saving measures enacted by management.



The Company had drawn $4,310,000 of the available $5,000,000 revolving demand operating loan with a Canadian chartered bank as of December 31, 2006. The Company incurred interest of $325,690 on the demand loan for the year which has been included in interest on short-term debt on the statement of operations.



On May 16, 2005, the Company secured a $1,500,000 non-revolving term loan for three years from the same Canadian chartered bank with an interest rate of prime plus 1.5% per annum. During 2006, two lump sum payments totaling $865,000 were made on the loan from the proceeds of assets held for sale as at December 31, 2005. The loan is repayable in monthly installments of $10,000 plus interest and is secured by specific property of the Company. As at December 31, 2006, $159,700 is outstanding of which $120,000 will become due within the next twelve months. For the year ended December 31, 2006, the Company incurred $18,310 of interest which has been included in interest on long-term debt on the statement of operations.



On August 18, 2006, the Company established a four year term loan facility of HK$54,700,000 (approximately $8,000,000) from More Growth. The loan is unsecured and bears interest at 1.7% per annum over the HIBOR (Hong Kong Interbank Offered Rate) or LIBOR (London Interbank Offered Rate). The loan was used to refinance already existing shorter-term loan facilities with More Growth and to finance the general working capital requirements of the Company. The Company has fully drawn the loan facility. For the year ended December 31, 2006, the Company incurred $219,506 of interest which has been included in interest on long-term debt on the statement of operations and which remains accrued as at December 31, 2006.



On April 4, 2005, the Company established a revolving loan facility of HK$10,000,000 (approximately $1,600,000) from More Growth. The loan was unsecured and bears interest at 1.7% per annum over the HIBOR (Hong Kong Interbank Offered Rate). The loan was refinanced on August 18, 2006 as detailed above. The Company incurred $58,091 of interest for the year which has been included in interest on short-term debt on the statement of operations.





23





---





On October 13, 2005, the Company secured an additional HK$13,200,000 (approximately $2,000,000) loan facility from More Growth. The loan was unsecured and bears interest at 1.7% per annum over the HIBOR (Hong Kong Interbank Offered Rate). The loan was refinanced on August 18, 2006 as detailed above. The Company incurred $78,907 of interest for the year which has been included in interest on long-term debt on the statement of operations.



Capital expenditures of $212,488 during 2006 were mainly for the purchase of equipment and additional dryers in Ontario. The Company also acquired vehicle under purchase loan during 2006 for $19,100.



During 2006, the Company received $1,555,461 as proceeds from the disposition of assets that had been classified as held for sale as at December 31, 2005.



CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES



The significant accounting policies are outlined within Note 3 to the consolidated financial statements. 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 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. 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 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. The market price of harvested ginseng roots is also difficult to determine due to industry-wide factors such as the variable worldwide supply each harvest season and foreign exchange rate fluctuations, and due to specific qualitative factors to each grower such as the size, shape, color, taste, and quality of the roots harvest. There is no set price for harvested ginseng roots, the yield from each garden will vary and the perceived market value will vary along with it. 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



24





---





different treatment of items for tax and accounting purposes. These differences result in future tax assets and liabilities that are included in the consolidated balance sheet to the extent that a net future income tax asset or liability exists. The valuation of any future income tax assets or liabilities is reviewed quarterly and adjusted, if necessary, by use of a valuation allowance to reflect the estimated realizable amount. 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 a materially different outcomes than is estimated with respect to the recoverability of both inventory and ginseng crops.



RECENT ACCOUNTING PRONOUNCEMENTS



Pronouncements from the United States



The Fair Value Option for Financial Assets and Financial Liabilities



In February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities which includes an amendment to FASB Statement No. 115. This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. This Statement is effective as of the beginning of an entitys first fiscal year that begins after November 15, 2007. The Company does not believe that the adoption of SFAS Statement No. 159 will have a significant impact on its consolidated financial statements.



Business Combinations



In December 2007, the FASB issued a revision to Statement No. 141, Business Combinations. The purpose of this Statement is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. The Company does not believe that the adoption of the revision to Statement No. 141 will have a significant impact on its consolidated financial statements.



Non-Controlling Interests in Financial Statements



In December 2007, the FASB issued Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements. The purpose of this Statement is to improve the relevance, comparability, and transparency of the information that a reporting entity provides in its consolidated financial statements in regards to non-controlling interests. This Statement amends Accounting Research Bulletin No. 51. This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008. The Company does not believe that the adoption of SFAS Statement No. 160 will have a significant impact on its consolidated financial statements.



Pronouncements from Canada



Effective January 1, 2007, the Company adopted accounting standards relating to comprehensive income and financial instruments that were issued by the Canadian Institute of Chartered Accountants (CICA). These changes are fully described in Note 3(c) of the consolidated financial statements. The recent pronouncements from the CICA that the Company will adopt on January 1, 2008 are fully described in Note 3(n) of the consolidated financial statements.





25





---





ITEM 6

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



DIRECTORS AND SENIOR MANAGEMENT



Directors



Table No. 6 lists as of February 28, 2008, 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 or until a successor is duly elected, unless the office is vacated in accordance with the Articles/By-laws of the Company.



Table No. 6
Directors

|                     |     |               
|-------------------- | --- | --------------
|                     |     | Date First    
|Name                 | Age | Elected       
|                     |     |               
|Dr. Eric Littley (2) | 53  | June, 2001    
|Peter Leung (1) (2)  | 48  | August, 2001  
|Steven Hsieh (1)     | 53  | February, 2002
|Wilman Wong (2)      | 52  | November, 2005
|Derek Zen            | 55  | November, 2006
|Brent Lau (1)        | 47  | 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. 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



26





---





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. He is the brother of Mr. William Zen.



Mr. Brent Lau, Director of the Company, is a resident of Hong Kong. Mr. Lau is an Executive Director of Greenfield Chemical Holdings Limited  a company listed in the Hong Kong Stock Exchange. 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, 2007 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. 7 unless otherwise indicated in his resume data following Table No.7.



Table No. 7

Executive Officers



|            |     |  |                           |                      
|----------- | --- |  | ------------------------- | ---------------------
|Name        | Age |  | Title                     | Date First Affiliated
|            |     |  |                           |                      
|Wilman Wong | 52  |  | CEO & Corporate Secretary | June, 2000           
|Terry Luck  | 31  |  | 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 elected 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.



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, 2007, 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. 8 lists the compensation during the year ended December 31, 2007, for Executive Officers and Directors.



27





---





Table No. 8

Director/Officer Compensation

Year Ended December 31, 2007



|                         |   |         |  |   | Option Exercise  |  |   | Total       
|------------------------ | - | ------- |  | - | ---------------- |  | - | ------------
|Officer/Director         |   | Salary  |  |   | Net Market Value |  |   | Compensation
|                        
|Peter Leung              | $ | 56,328  |  | $ | 0                |  | $ | 56,328      
|Wilman Wong              |   | 116,551 |  |   | 0                |  |   | 116,551     
|Terry Luck               |   | 57,604  |  |   | 0                |  |   | 57,604      
|Other Directors/Officers |   | 22,967  |  |   | 0                |  |   | 22,967      
|Total                    | $ | 253,450 |  | $ | 0                |  | $ | 253,450     



Option Exercise Net Market Value is computed by subtracting the cost of exercising the stock option from the market value of the respective shares of common stock on the date of exercise. There was 107,300 stock options granted to officers/directors as at December 31, 2007.



No funds were set aside or accrued by the Company during the year ended December 31, 2007 to provide pension, retirement or similar benefits for Directors or Executive Officers.



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, 2007 to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) 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. Wilman Wong.



The Company does not currently have a remuneration or compensation committee.



EMPLOYEES



During fiscal 2007, the Company employed 23 persons on a full time basis and 122 persons on an hourly basis.





28





---





During fiscal 2006, the Company employed 25 persons on a full time basis and 170 persons on an hourly basis.



During fiscal 2005, the Company employed 31 persons on a full time basis and 170 persons on an hourly basis.



The Company is not a party to any material labour contract or collective bargaining agreement.



SHARE OWNERSHIP



Table No. 9 lists the share ownership in the Company by the Executive Officers and Directors as at February 28, 2008.



Table No. 9

Share Ownership of Directors/Officers as at February 28, 2007



|                 |                         |                             
|---------------- | ----------------------- | ----------------------------
|Officer/Director | Title                   | Approximate Number of Shares
|Derek Zen        | Director                | (1)                         
|Wilman Wong      | CEO/Corporate Secretary | -                           
|Terry Luck       | CFO                     | -                           
|Other Directors  |                         | 2,000                       



(1) 10,047,236 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 28, 2008, options to purchase 335,800 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; or

3.

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.



The names and titles of the Directors and Executive Officers of the Company to whom outstanding stock options have been granted and the number of common shares subject to such options is set forth in Table No. 10 as of February 28, 2008, as well as the number of options granted to employees and all others as a group.  The exercise price of the options is stated in Canadian dollars.





29





---







Table No. 10

Share Purchase Options Outstanding at February 28, 2007



|                                          |              |                |      |          |  |           
|----------------------------------------- | ------------ | -------------- | ---- | -------- |  | ----------
|                                          |              | CDN$           |      |          |  |           
|                                          |              | # of Shares of |      | Exercise |  | Expiration
|Name                                      | Title        | Common Stock   |      | Price    |  | Date      
|                                          |              |                |      |          |  |           
|Wilman Wong                               | Director/CEO | 34,300         |      | 0.73     |  | 12/15/2008
|Steven Hsieh                              | Director     | 18,000         |      | 0.73     |  | 12/15/2008
|Eric Littley                              | Director     | 18,000         |      | 0.73     |  | 12/15/2008
|Peter Leung                               | Director     | 18,000         |      | 0.73     |  | 12/15/2008
|Terry Luck                                | CFO          | 19,000         |      | 0.73     |  | 12/15/2008
|                                          |              |                |      |          |  |           
|Employees (10 persons)                    |              | 228,500        |      | 0.73     |  | 12/15/2008
|                                          |              |                |      |          |  |           
|Total Officers/Directors/Employees/Others | 335,800      |                | 0.73 |          | 



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, 2007 (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) | 10,047,236 (28.96%) common shares
|Groove Trading Limited (1)  | 3,168,000 (9.13%) common shares  
|Hover 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, 2007 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, 2007.



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.





30





---





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 Act contains 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.



Holders of preferred shares shall not be entitled to attend meetings of the shareholders nor shall they have any voting rights for the election of directors.  Holders shall be entitled to receive a non-cumulative dividend equal to any dividend the Board of Directors of the Company may from time to time declare and pay on each common share.  Holders shall be entitled to exercise their right to convert the preferred shares into common shares on a 1:1 basis at any time, provided a written notice is given to the Registrant. Any issued and outstanding preferred shares will automatically be converted into common shares in 2010.



In the event of liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holders of preferred shares shall be entitled to receive, before any distribution of any part of the assets of the Registrant among the holders of the common stock, for each preferred share the amount of $0.6804 and any dividends declared thereon and unpaid, and following such distribution, the holders of preferred shares shall be entitled to share equally and rateably without preference or distinction on a per share basis with the holders of common stock.



RELATED PARTY TRANSACTIONS



On August 18, 2006, the Company established a four year term loan facility of HK$54,700,000 from More Growth. The loan is unsecured and bears interest at 1.7% per annum over the HIBOR (Hong Kong Interbank Offered Rate) or LIBOR (London Interbank Offered Rate). The loan was used to refinance existing loan facilities and to finance the general working capital requirements of the Company.

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



The Company has become involved in a legal proceeding as a result of an automobile accident.  The Company believes that existing insurance will be sufficient to cover any claim from this matter. While the outcome of this proceeding cannot be determined at this time, no provision has been recorded as the Company believes that the resolution of this proceeding will not have a material impact on the financial condition, earnings or cash flows of the Company.





31





---





Export Sales



Information regarding our export sales is provided under Segmented Reporting in the notes to the Consolidation Financial Statements under Item 17.



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 the Toronto Stock Exchange for shares of the Company's common stock for each of the last five years.



Toronto Stock Exchange Stock High/Low Prices

(CDN Dollars)



|Year       |  |   |      |  |   |      | 
|---------- |  | - | ---- |  | - | ---- | 
|Ended      |  |   | High |  |   | Low  | 
|           | 
|12/31/2007 |  |   | N/A  |  |   | N/A  | 
|12/31/2006 |  |   | N/A  |  |   | N/A  | 
|12/31/2005 |  | $ | 0.68 |  | $ | 0.21 | 
|12/31/2004 |  |   | 1.43 |  |   | 0.50 | 
|12/31/2003 |  |   | 1.04 |  |   | 0.26 | 



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.



32





---





NASDAQ Stock High/Low Prices

(US Dollars)



|              |   |      |   |     
|------------- | - | ---- | - | ----
|              |   |      |   |     
|Year          |   |      |   |     
|Ended         |   | High |   | Low 
|              |   |      |   |     
|NASDAQ OTCBB: |   |      |   |     
|              |   |      |   |     
|12/31/2007    | $ | 0.12 | $ | 0.02
|12/31/2006    |   | 0.20 |   | 0.03
|12/31/2005    |   | 0.50 |   | 0.11
|12/31/2004    |   | 1.24 |   | 0.38
|12/31/2003    |   | 0.90 |   | 0.10
|              |   |      |   |     
|              |   |      |   |     
|Quarter       |   |      |   |     
|Ended         |   | High |   | Low 
|              |   |      |   |     
|NASDAQ OTCBB: |   |      |   |     
|              |   |      |   |     
|12/31/2007    |   | 0.08 |   | 0.02
|09/30/2007    |   | 0.04 |   | 0.03
|06/30/2007    |   | 0.05 |   | 0.03
|03/31/2007    |   | 0.12 |   | 0.03
|              |   |      |   |     
|12/31/2006    |   | 0.14 |   | 0.03
|09/30/2006    |   | 0.20 |   | 0.05
|06/30/2006    |   | 0.20 |   | 0.05
|03/31/2006    |   | 0.20 |   | 0.08
|              |   |      |   |     
|Month         |   |      |   |     
|Ended         |   | High |   | Low 
|              |   |      |   |     
|02/28/2008    |   | 0.03 |   | 0.01
|01/31/2008    |   | 0.04 |   | 0.02
|              |   |      |   |     
|12/31/2007    |   | 0.08 |   | 0.02
|11/30/2007    |   | 0.06 |   | 0.03
|10/31/2007    |   | 0.04 |   | 0.02
|09/30/2007    |   | 0.04 |   | 0.03



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 28, 2008, the shareholders' list for the Company's common stock showed 1,322 registered shareholders and depositories with 34,698,157 shares outstanding of which 6% are held in Canada, 30% in the United States and 64% are held internationally. Based upon the number of proxy statements and annual 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.





33





---





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 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





34





---







(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, or



ii.

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;



35





---







(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;



36





---







(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 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.



37





---





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.



The Investment Canada Act will prohibit implementation, or if necessary, require divestiture of an investment deemed reviewable under the Investment Canada Act by 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 Act if 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 Act if 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; and

3.

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



There is no material contract entered into for the two years immediately preceding publication of this document.



38





---





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.



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; or

·

they 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.



If a non-resident were to dispose of common stock of the Company to another Canadian corporation which deals or is deemed to deal on a non-arm's length basis with the non-resident and which, immediately after the disposition, is connected with the Company (i.e., which holds shares representing more than 10% of the voting power and more than 10% of the market value of all issued and outstanding shares of the Company), the excess of the proceeds over the paid-up capital of the common stock sold will be deemed to be taxable as a dividend either immediately or eventually by means of a deduction in computing the paid-up capital of any shares issued by the purchasing corporation.



39





---





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 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 Canadian dollar as its functional currency.  A minor portion of the Companys revenues and receivables are denominated in U.S. dollars and Hong Kong dollars as well as loans from a company under company control which 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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 Canadian dollar 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. An increase in the selling price by $1 per pound will increase the Companys net earnings by approximately $900,000 (based on the 2007 harvest of 918,963 pounds) and a decrease in the selling price by $1 per pound would have an equally negative impact on net earnings.





40





---





The interest income from cash and cash equivalents and the interest expense from borrowings under credit facilities are subject to interest rate changes and therefore interest income and interest expense will fluctuate directly with changes in interest rates and the amount of cash and cash equivalents and borrowing outstanding at any given time. A decrease in interest rates of 1% will increase the Companys net earnings by approximately $106,000 (based on bank indebtedness and long-term debt of approximately $10.6 million as at December 31, 2007) and a decrease in interest rates of 1% would have an equally negative impact on net earnings.



ITEM 12

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES



Not applicable.



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



Evaluation of Disclosure Controls and Procedures



Under the supervision and with the participation of the management, including the Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of its disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Companys disclosure controls and procedures are effective.



Changes in Internal Controls



There are no changes in the Companys internal control over financial reporting that occurred during the last fiscal year that have materially affected, or are reasonable likely to material affect, the Companys internal control over financial reporting..



41





---





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 4V4



By 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, 2007 and 2006. The following table discloses the aggregate fees billed for professional services rendered by Deloitte & Touche LLP for the years ended December 31, 2007 and 2006.



|                    |              |             
|------------------- | ------------ | ------------
|                    | 2007
CDN000 | 2006
CDN000
|Audit Fees (1)      | 89           | 133         
|Audit -related Fees | -            | -           
|Tax Fees            | -            | -           
|All Other Fees      | -            | -           
|Total               | 89           | 133         
|                    |              |             





(1)

Audit fees consist of fees billed for the annual audit of the Companys consolidated financial statements and fees billed for reviews of interim financial statements as well as fees billed for services relating to the review of documents filed with the SEC up to February 29, 2008.



Audit Committee Pre-Approval Policies and Procedures



42





---





Consistent with SEC requirements regarding auditor independence, the Audit Committee has adopted a policy to pre-approve services prior to commencement of the specified service. Under the policy, the Audit Committee must pre-approve the provision of services by our principal auditor. Requests or applications to provide services that require specific approval by the Audit Committee are submitted to the Audit Committee, through the Audit Committee Chairman, by both the external auditor and the Chief Financial Officer.



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



PART III



ITEM 17

FINANCIAL STATEMENTS



The Company's consolidated financial statements are stated in Canadian dollars (CDN$) and are prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP), the application of which, in the case of the Company, conforms in all material respects for the periods presented with United States GAAP, except as referred to in footnotes to the audited consolidated financial statements. The value of the U.S. dollar in relationship to the Canadian dollar was approximately 0.99 as of December 31, 2007.



Audited Consolidated Financial Statements and Financial Statement Schedules:



Report of Independent Registered Chartered Accountants, dated March 10, 2008



Consolidated Balance Sheets as at December 31, 2007 and December 31, 2006



Consolidated Statements of Operations and Deficit for the years ended December 31, 2007, December 31, 2006 and December 31, 2005.



Consolidated Statements of Comprehensive Loss for the years ended December 31, 2007, December 31, 2006 and December 31, 2005.



Consolidated Statements of Accumulated Other Comprehensive Loss for the years ended December 31, 2007, December 31, 2006 and December 31, 2005.



Consolidated Statements of Cash Flows for the years ended December 31, 2007, December 31, 2006 and December 31, 2005.



43





---





Consolidated Statements of Crop Costs for the years ended December 31, 2007, December 31, 2006 and December 31, 2005.



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)



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.





44





---













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.                   
| |     | Registrant                         
| |     |                                    
| |     |                                    
| |     | TERRY LUCK                       
| | By: |                                    
| |     | Terry Luck, Chief Financial Officer







Dated: March 28, 2008









45





---







Report of Independent Registered Chartered Accountants



and Consolidated Financial Statements







CHAI-NA-TA CORP.



(Stated in Canadian dollars)



DECEMBER 31, 2007, 2006 AND 2005





46



---

| | Deloitte & Touche LLP      
| | ---------------------------
| | 2800 - 1055 Dunsmuir Street
| | 4 Bentall Centre           
| | P.O. Box 49279             
| | Vancouver BC V7X 1P4       
| | Canada                     
| |                            
| | Tel: (604) 669-4466        
| | Fax: (604) 685-0395        
| | www.deloitte.ca            

Report of Independent Registered Chartered Accountants

To the Board of Directors of Chai-Na-Ta Corp.

We have audited the consolidated balance sheets of Chai-Na-Ta Corp. as at December 31, 2007 and 2006 and the consolidated statements of operations and deficit, comprehensive loss and accumulated other comprehensive income, cash flows and crop costs for each of the years in the three year period ended December 31, 2007. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these 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 plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of Chai-Na-Ta Corp. as at December 31, 2007 and 2006 and the results of its operations, its cash flows and its crop costs for each of the years in the three year period ended December 31, 2007 in accordance with Canadian generally accepted accounting principles.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion.

On March 10, 2008, we reported separately to the shareholders of Chai-Na-Ta Corp. on our audits, conducted in accordance with Canadian generally accepted auditing standards, on financial statements for the same period, prepared in accordance with Canadian generally accepted accounting principles.

Independent Registered Chartered Accountants 
March 10, 2008

47

---

Comments by Independent Registered Chartered Accountants on Canada-United States of America reporting differences

The standards of the Public Company Accounting Oversight Board (United States) require the addition of an explanatory paragraph when the financial statements are affected by conditions and events that cast substantial doubt on the Companys ability to continue as a going concern, such as those described in Note 1 to the consolidated financial statements. The standards of the Public Company Accounting Oversight Board (United States) also require the addition of an explanatory paragraph when there are changes in accounting principles that have a material effect on the comparability of the Companys financial statements, such as the change described in Note 3 (c) to the financial statements. Although we conducted our audits in accordance with both Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), our report to the Shareholders dated March 10, 2008 is expressed in accordance with Canadian reporting standards which do not permit or require references to such conditions and events and to such changes in accounting principles in the auditors report when these are properly accounted for and adequately disclosed in the consolidated financial statements.

Independent Registered Chartered Accountants 
  March 10, 2008

48

---

|CHAI-NA-TA CORP.            
|----------------------------
|Consolidated Balance Sheets 
|(Stated in Canadian Dollars)

|As at December 31                                  |   | 2007        |   |   | 2006        |  
|-------------------------------------------------- | - | ----------- | - | - | ----------- | -
|ASSETS                                             |   |             |   |   |             |  
|Current assets                                     |   |             |   |   |             |  
|Cash                                               | $ | 307,219     |   | $ | 484,466     |  
|Accounts receivable and other assets               |   | 55,885      |   |   | 217,615     |  
|Inventory (Note 14)                                |   | 8,734,851   |   |   | 8,627,699   |  
|Ginseng crops (Notes 4 and 14)                     |   | 5,677,640   |   |   | 5,213,919   |  
|Prepaid expenses                                   |   | 45,244      |   |   | 50,632      |  
|                                                   |   | 14,820,839  |   |   | 14,594,331  |  
|                                                  
|Ginseng crops (Notes 4 and 14)                     |   | 5,716,925   |   |   | 9,305,416   |  
|                                                  
|Assets held for sale (Note 5)                      |   | 1,280,183   |   |   | -           |  
|                                                  
|Property, plant and equipment (Note 6)             |   | 3,795,081   |   |   | 5,792,907   |  
|                                                   | $ | 25,613,028  |   | $ | 29,692,654  |  
|LIABILITIES                                        |   |             |   |   |             |  
|                                                  
|Current liabilities                                |   |             |   |   |             |  
|Bank indebtedness (Note 8)                         | $ | 3,510,000   |   | $ | 4,310,000   |  
|Accounts payable and accrued liabilities           |   | 1,347,551   |   |   | 1,066,357   |  
|Customer deposits (Note 9)                         |   | 2,387,940   |   |   | 1,392,808   |  
|Current portion of long-term debt (Note 10)        |   | 152,379     |   |   | 299,437     |  
|                                                   |   | 7,397,870   |   |   | 7,068,602   |  
|                                                  
|Long-term debt (Note 10)                           |   | 6,973,296   |   |   | 8,365,665   |  
|                                                   |   | 14,371,166  |   |   | 15,434,267  |  
|SHAREHOLDERS' EQUITY                               |   |             |   |   |             |  
|                                                  
|Share capital (Note 11)                            |   | 38,246,209  |   |   | 38,246,209  |  
|Contributed surplus (Note 11)                      |   | 338,081     |   |   | 338,081     |  
|Accumulated other comprehensive income (Note 3(c)) |   | 902,174     |   |   | 590,208     |  
|Deficit                                            |   | (28,244,602 | ) |   | (24,916,111 | )
|                                                   |   | 11,241,862  |   |   | 14,258,387  |  
|                                                   | $ | 25,613,028  |   | $ | 29,692,654  |  

Going concern (Note 1) 
  Commitments, contingencies and guarantees (Note 16)

See accompanying notes to the consolidated financial statements

APPROVED BY THE BOARD

| Derek Zen  |  |  Wilman Wong         
|------------- |  | -----------------------
|Derek Zen     |  | Wilman Wong            
|Chairman      |  | Chief Executive Officer

49

---

|CHAI-NA-TA CORP.                                 
|-------------------------------------------------
|Consolidated Statements of Operations and Deficit
|(Stated in Canadian Dollars)                     

|Years ended December 31                               |   |   | 2007        |   |   |   | 2006        |   |   |   | 2005        |  
|----------------------------------------------------- | - | - | ----------- | - | - | - | ----------- | - | - | - | ----------- | -
|Revenue                                               |   | $ | 7,561,582   |   |   | $ | 5,927,755   |   |   | $ | 5,825,946   |  
|Cost of goods sold                                    |   |   | 7,393,265   |   |   |   | 5,829,905   |   |   |   | 5,488,252   |  
|                                                      |   |   | 168,317     |   |   |   | 97,850      |   |   |   | 337,694     |  
|Selling, general and administrative expenses          |   |   | 1,067,850   |   |   |   | 1,219,618   |   |   |   | 1,422,323   |  
|Interest on short-term debt (Note 8)                  |   |   | 160,329     |   |   |   | 383,781     |   |   |   | 362,722     |  
|Interest on long-term debt (Note 10)                  |   |   | 634,353     |   |   |   | 317,095     |   |   |   | 65,276      |  
|Write-down of assets held for sale (Note 13)          |   |   | -           |   |   |   | -           |   |   |   | 246,498     |  
|Write-down of inventory and ginseng crops (Notes 3(f) |   |   | 2,735,495   |   |   |   | 5,639,421   |   |   |   | 9,978,902   |  
|and 14)                                               |   |   |             |   |   |   |             |   |   |   |             |  
|                                                      |   |   | 4,598,027   |   |   |   | 7,559,915   |   |   |   | 12,075,721  |  
|Operating loss                                        |   |   | (4,429,710  | ) |   |   | (7,462,065  | ) |   |   | (11,738,027 | )
|Other income (loss) (Note 15)                         |   |   | 1,101,219   |   |   |   | (143,651    | ) |   |   | (481,042    | )
|Loss before income taxes                              |   |   | (3,328,491  | ) |   |   | (7,605,716  | ) |   |   | (12,219,069 | )
|Provision for (recovery of) income taxes (Note 7)     |   |   | -           |   |   |   | 1,855,000   |   |   |   | (4,088,000  | )
|                                                     
|NET LOSS                                              |   |   | (3,328,491  | ) |   |   | (9,460,716  | ) |   |   | (8,131,069  | )
|Deficit, beginning of year                            |   |   | (24,916,111 | ) |   |   | (15,455,395 | ) |   |   | (7,324,326  | )
|DEFICIT, END OF YEAR                                  | $ |   | (28,244,602 | ) | $ |   | (24,916,111 | ) | $ |   | (15,455,395 | )
|                                                     
|Basic and diluted loss per share (Note 3(j))          | $ |   | (0.10       | ) | $ |   | (0.27       | ) | $ |   | (0.23       | )
|Weighted average number of common shares used         |   |   |             |   |   |   |             |   |   |   |             |  
|to calculate basic and diluted loss per share         |   |   | 34,698,157  |   |   |   | 34,698,157  |   |   |   | 34,698,157  |  

See accompanying notes to the consolidated financial statements

50

---

|CHAI-NA-TA CORP.                             
|---------------------------------------------
|Consolidated Statements of Comprehensive Loss
|(Stated in Canadian Dollars)                 

|Years ended December 31                     |   | 2007       |   |   | 2006       |   |   | 2005       |  
|------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
|                                           
|Net loss                                    | $ | (3,328,491 | ) | $ | (9,460,716 | ) | $ | (8,131,069 | )
|Other comprehensive income:                 |   |            |   |   |            |   |   |            |  
|Adjustments as a result of foreign exchange |   |            |   |   |            |   |   |            |  
|translation                                 |   | 311,966    |   |   | 4,975      |   |   | 573,085    |  
|Comprehensive loss                          | $ | (3,016,525 | ) | $ | (9,455,741 | ) | $ | (7,557,984 | )

|CHAI-NA-TA CORP.                                                 
|-----------------------------------------------------------------
|Consolidated Statements of Accumulated Other Comprehensive Income
|(Stated in Canadian Dollars)                                     

|Years ended December 31                |   | 2007    |  |   | 2006    |  |   | 2005   
|-------------------------------------- | - | ------- |  | - | ------- |  | - | -------
|Balance, beginning of year (Note 3(c)) | $ | 590,208 |  | $ | 585,233 |  | $ | 12,148 
|Other comprehensive income (Note 3(c)) |   | 311,966 |  |   | 4,975   |  |   | 573,085
|Balance, end of year                   | $ | 902,174 |  | $ | 590,208 |  | $ | 585,233

See accompanying notes to the consolidated financial statements

51

---

|CHAI-NA-TA CORP.                     
|-------------------------------------
|Consolidated Statements of Cash Flows
|(Stated in Canadian Dollars)         

|Years ended December 31                                           |   | 2007       |   |   | 2006       |   |   | 2005       |  
|----------------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
|                                                                  |   |            |   |   |            |   |   |            |  
|Net inflow (outflow) of cash related to the following activities: |   |            |   |   |            |   |   |            |  
|                                                                  |   |            |   |   |            |   |   |            |  
|Operating Activities                                              |   |            |   |   |            |   |   |            |  
|Net loss                                                          | $ | (3,328,491 | ) | $ | (9,460,716 | ) | $ | (8,131,069 | )
|Items included in net loss not affecting cash                     |   |            |   |   |            |   |   |            |  
|(Note 19(a))                                                      |   | 8,700,335  |   |   | 13,414,205 |   |   | 11,910,019 |  
|Changes in non-cash operating assets and liabilities              |   |            |   |   |            |   |   |            |  
|(Note 19(b))                                                      |   | (1,572,520 | ) |   | (1,869,114 | ) |   | (2,046,381 | )
|Change in non-current crop costs                                  |   | (3,295,510 | ) |   | (4,197,223 | ) |   | (5,750,508 | )
|                                                                  |   | 503,814    |   |   | (2,112,848 | ) |   | (4,017,939 | )
|                                                                  |   |            |   |   |            |   |   |            |  
|Financing Activities                                              |   |            |   |   |            |   |   |            |  
|Bank indebtedness                                                 |   | (800,000   | ) |   | (2,090,000 | ) |   | (531,634   | )
|Short-term borrowings                                             |   | -          |   |   | -          |   |   | 1,565,000  |  
|Long-term borrowings                                              |   | -          |   |   | 7,842,560  |   |   | 3,500,000  |  
|Repayment of long-term debt                                       |   | (299,437   | ) |   | (4,569,156 | ) |   | (420,834   | )
|                                                                  |   | (1,099,437 | ) |   | 1,183,404  |   |   | 4,112,532  |  
|                                                                  |   |            |   |   |            |   |   |            |  
|Investing Activities                                              |   |            |   |   |            |   |   |            |  
|Purchase of property, plant and equipment                         |   | (60,562    | ) |   | (212,488   | ) |   | (163,922   | )
|Proceeds from disposition of property, plant and equipment        |   | 487,814    |   |   | 28,541     |   |   | 24,181     |  
|Cash outlays included in assets held for sale                     |   | (5,219     | ) |   | -          |   |   | -          |  
|Proceeds from disposition of assets held for sale                 |   | -          |   |   | 1,555,461  |   |   | -          |  
|                                                                  |   | 422,033    |   |   | 1,371,514  |   |   | (139,741   | )
|                                                                  |   |            |   |   |            |   |   |            |  
|Effect of exchange rate changes on cash                           |   | (3,657     | ) |   | (155       | ) |   | (928       | )
|                                                                  |   |            |   |   |            |   |   |            |  
|Net increase (decrease) in cash                                   |   | (177,247   | ) |   | 441,915    |   |   | (46,076    | )
|                                                                  |   |            |   |   |            |   |   |            |  
|Cash, beginning of year                                           |   | 484,466    |   |   | 42,551     |   |   | 88,627     |  
|                                                                  |   |            |   |   |            |   |   |            |  
|Cash, end of year                                                 | $ | 307,219    |   | $ | 484,466    |   | $ | 42,551     |  

Supplementary information (Note 19(c))

See accompanying notes to the consolidated financial statements

52

---

|CHAI-NA-TA CORP.                     
|-------------------------------------
|Consolidated Statements of Crop Costs
|(Stated in Canadian Dollars)         

|Years ended December 31                        |   | 2007       |  |   | 2006       |  |   | 2005      
|---------------------------------------------- | - | ---------- |  | - | ---------- |  | - | ----------
|                                              
|Depreciation                                   | $ | 888,172    |  | $ | 980,866    |  | $ | 1,092,715 
|Farm equipment operating costs                 |   | 531,563    |  |   | 575,199    |  |   | 740,025   
|Interest on long-term debt                     |   | 6,484      |  |   | 9,755      |  |   | 6,557     
|Land rental costs                              |   | 548,094    |  |   | 702,403    |  |   | 989,604   
|Mulch and fertilizer                           |   | 1,470,015  |  |   | 1,666,070  |  |   | 2,338,314 
|Other                                          |   | 168,162    |  |   | 171,654    |  |   | 309,258   
|Plant science                                  |   | 10,917     |  |   | 17,955     |  |   | 23,277    
|Salaries and wages                             |   | 2,947,551  |  |   | 3,230,882  |  |   | 4,154,465 
|Seed                                           |   | 106,610    |  |   | 150,535    |  |   | 7,309     
|Small tools and supplies                       |   | 44,858     |  |   | 42,410     |  |   | 72,128    
|Warehouse and dryer operations                 |   | 452,230    |  |   | 522,123    |  |   | 368,447   
|                                               |   | 7,174,656  |  |   | 8,069,852  |  |   | 10,102,099
|                                              
|Balance, beginning of year                     |   | 14,519,335 |  |   | 19,348,545 |  |   | 20,869,156
|                                               |   | 21,693,991 |  |   | 27,418,397 |  |   | 30,971,255
|                                              
|Less:                                          |   |            |  |   |            |  |   |           
|Cost of crop harvested                         |   | 8,603,227  |  |   | 10,199,062 |  |   | 11,045,743
|Cost of seeds sold and available for sale      |   | 111,372    |  |   | -          |  |   | 363,840   
|Crop costs reallocated to assets held for sale |   | 134,827    |  |   | -          |  |   | -         
|Write-down of ginseng crops (Note 14)          |   | 1,450,000  |  |   | 2,700,000  |  |   | 213,127   
|Balance, end of year                           |   | 11,394,565 |  |   | 14,519,335 |  |   | 19,348,545
|                                              
|Less: current portion                          |   | 5,677,640  |  |   | 5,213,919  |  |   | 6,546,059 
|                                               | $ | 5,716,925  |  | $ | 9,305,416  |  | $ | 12,802,486

See accompanying notes to the consolidated financial statements

53

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|1. | GOING CONCERN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has experienced a loss of $3,328,491 for the year ended December 31, 2007 due to the low selling price of ginseng and has an accumulated deficit of $28,244,602 as at December 31, 2007. The Company is closely monitoring cash resources and has received significant financing from a Canadian chartered bank and a company formerly under common control.
|  
|   | The Company's ability to continue as a going concern is dependant on achieving ongoing profitable operations and the continued financial support of its creditors. These consolidated financial statements do not include any adjustments to the amounts and reclassification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.                                                                                                                                                                                  
|  
|2. | NATURE OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   | The Company operates North American ginseng farms in Canada, on which ginseng root is 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 also sells ginseng-based value-added products in Canada although they do not represent a significant percentage of sales.                                                                                                                                
|  
|   | 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, a publicly traded Hong Kong based company, which owns 38% of the shares of the Company.                                                                                                                                                                                                                                                                                                      
|  

54

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|3. | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                           
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | These consolidated financial statements, expressed in Canadian dollars, have been prepared in accordance with Canadian generally accepted accounting principles and reflect the following significant accounting policies:
|  
|   | (a)                                                                                                                                                                                                                       
|  
|   |                                                                                                                                                                                                                           
|  
|   |                                                                                                                                                                                                                           
|  

| | Subsidiaries                                          |     |  
| | ----------------------------------------------------- | --- | -
| |                                                      
| | Chai-Na-Ta Farms Ltd.                                 | 100 | %
| | Chai-Na-Ta International Ltd. (Inactive)              | 100 | %
| | Chai-Na-Ta (Asia) Ltd. (Inactive)                     | 100 | %
| | CNT Nominees Limited (Inactive)                       | 100 | %
| | CNT Nutraceuticals Ltd.                               | 100 | %
| | CNT Trading (Asia) Limited (Inactive)                 | 100 | %
| | CNT Trading (Hong Kong) Limited                       | 100 | %
| | North American Ginseng Enterprises Limited (Inactive) | 100 | %
| | Unique Formulations, Inc. (Inactive)                  | 100 | %

|(b) | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    | The above 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.                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(c) | Comprehensive income and financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|    | In April 2005, the Canadian Institute of Chartered Accountants issued Section 3855, "Financial Instruments - Recognition and Measurement", Section 1530, "Comprehensive Income", Section 3865, "Hedges", Section 3861, "Financial Instruments - Disclosure and Presentation", and Section 3251, "Equity". These standards introduce new requirements for recognition, measurement and disclosure of financial instruments, when and how hedge accounting may be applied, establishes the concept of comprehensive income and rules for reporting it and establishes rules for the presentation of equity and changes in equity. The Company adopted these standards effective January 1, 2007.
|   

55

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|3. | SIGNIFICANT ACCOUNTING POLICIES
|-- | -------------------------------
|  
|   | (c)                            
|  
|   |                                
|  
|   |                                
|  
|   | (d)                            
|  
|   |                                
|  
|   | (e)                            
|  
|   |                                
|  
|   | (f)                            
|  
|   |                                
|  
|   |                                
|  
|   |                                
|  

56

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|3. | SIGNIFICANT ACCOUNTING POLICIES (Continued)
|-- | -------------------------------------------
|  
|   | (g)                                        
|  
|   |                                            
|  

| | Buildings                       | 20 years  
| | ------------------------------- | ----------
| | Dryers and related works        | 20 years  
| | Computer equipment and software | 4 years   
| | Furniture and fixtures          | 10 years  
| | Leasehold improvements          | 10 years  
| | Machinery and equipment         | 10 years  
| | Sunshade                        | 10 years  
| | Vehicles                        | 8 years   
| | Pavement                        | 12.5 years

|    | 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.                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(h) | Research and development                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    | Research costs are expensed as incurred. Development costs that meet generally accepted criteria, including reasonable assurance regarding future benefits, are capitalized and amortized to operations. Research costs were $NIL, $NIL, and $46,925 for the years ended December 31, 2007, 2006 and 2005, respectively. There were no development costs capitalized for the years ended December 31, 2007, 2006 and 2005.                                                                                                                                                                                                                                                                                
|   
|(i) | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    | The Company accounts for income taxes using the asset and liability method. Under this method, future income taxes are recorded for the temporary differences between the financial reporting basis and tax basis of the Companys assets and liabilities, and for losses and other deductions carried forward. Future tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply in the years in which such temporary differences or losses and other deductions carried forward are expected to be recovered or settled. A valuation allowance is recognized to the extent that the recoverability of future income tax assets is not considered likely.
|   

57

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|3. | SIGNIFICANT ACCOUNTING POLICIES (Continued)
|-- | -------------------------------------------
|  
|   | (j)                                        
|  
|   |                                            
|  
|   |                                            
|  

| |                   |   |             |   | Number of     |   |           |  
| | ----------------- | - | ----------- | - | ------------- | - | --------- | -
| |                   |   | Net Loss    |   | Shares        |   | Loss      |  
| |                   |   | (numerator) |   | (denominator) |   | Per Share |  
| | 2007              |   |             |   |               |   |           |  
| | Basic and Diluted | $ | (3,328,491  | ) | 34,698,157    | $ | (0.10     | )
| |                  
| | 2006              |   |             |   |               |   |           |  
| | Basic and Diluted | $ | (9,460,716  | ) | 34,698,157    | $ | (0.27     | )
| |                  
| | 2005              |   |             |   |               |   |           |  
| | Basic and Diluted | $ | (8,131,069  | ) | 34,698,157    | $ | (0.23     | )

|    | Certain options to purchase 343,400 (2006  403,300, 2005  437,600) shares of common stock were outstanding as at December 31, 2007, but were not included in the computation of diluted loss per share because their effect would have been anti-dilutive.                                                                                                                                                                                                                                                         
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(k) | Stockbased compensation plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company has adopted the recommendations of the Canadian Institute of Chartered Accountants (CICA) with respect to stock-based compensation and other stock-based payments. This section establishes standards for recognition, measurement and disclosure of stock-based compensation and other stock-based payments made in exchange for goods and services. The standard requires that all stock-based awards made to employees and non-employees be measured and recognized using a fair value based method.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

58

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|3. | SIGNIFICANT ACCOUNTING POLICIES (Continued)
|-- | -------------------------------------------

|(l)     Foreign exchange forward contracts
|------------------------------------------

| | 
| | 
| | 

|(m)   Use of estimates
|----------------------

| | 
| | 
| | 

|(n)    Accounting changes
|-------------------------

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | On January 1, 2008 the Company will adopt the amendments to CICA Handbook Section 1400, General Standards of Financial Statement Presentation. The amendments to this section are based on the assessment of whether an entity is a going concern and related disclosures included in International Accounting Standard (IAS) 1, Presentation of Financial Statements of the International Financial Reporting Standards (IFRS). The Company does not expect that adoption of this standard will have a material impact on its consolidated financial statements.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|On January 1, 2008 the Company will adopt CICA Handbook Section 1535, Capital Disclosures. This Section establishes standards for disclosing information about the entitys capital and how it is managed. The Company does not expect that adoption of this standard will have a material impact on its consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|On January 1, 2008 the Company will adopt CICA Handbook Section 3031, Inventories which is based on the IFRS accounting principles as described in IAS 2, Inventory. The objective of this Section is to prescribe the accounting treatment for inventories and to provide guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realizable value. It also provides guidance on the cost formulas that are used to assign costs to inventories. Section 3031 requires the reversal of any write-down in a previous period, only to the extent of the original write-down, if the net realizable value of the inventory subsequently increases in value. Other than the requirement to potentially reverse a write-down in a subsequent period, the Company does not expect that adoption of this standard will have a material impact on its consolidated financial statements.



59

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|3. | SIGNIFICANT ACCOUNTING POLICIES (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | (n)                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|4. | GINSENG CROPS                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   | Ginseng plants reach maturity and can be harvested at the end of their third year of growth. However, the Company may allow crops to mature longer to allow for higher yields and additional seed harvests. Costs accumulated relating to the expected harvest in the next year have been classified as current assets. At December 31, 2007, total area under cultivation and management is 629 acres. A breakdown of acreage by year planted is as follows:
|  

| |              | Number  
| | ------------ | --------
| | Year planted | of acres
| |             
| | 2004         | 403     
| | 2005         | 187     
| | 2006         | 39      
| |             
| |              | 629     

|5. | ASSETS HELD FOR SALE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Due to the decision to discontinue planting in British Columbia and to improve short-term cash flows, the Company made available for sale its site located near Kamloops, British Columbia and reclassified the net book value of the land, buildings and pavement of $894,409 as an asset held for sale as at March 31, 2007. This facility is currently used as the head office for the farms operations in British Columbia.                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Subsequent to the end of the year, the Company accepted an offer to purchase the site, subject to certain conditions by the purchaser, with a closing date of July 31, 2008. In addition to the real estate assets being held for sale, the offer includes the dryers and related production assets, the 5 acres of ginseng crops and some processing equipment at the site. These additional items have a net book value of $385,774 as at December 31, 2007 and have been reclassified to assets held for sale. The selling price of the assets less estimated selling costs exceeds the amount reclassified as an asset held for sale so no impairment provision is required.



60

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|6. | PROPERTY, PLANT AND EQUIPMENT
|-- | -----------------------------

| |                                 |   |            |   | 2007         |   |          
| | ------------------------------- | - | ---------- | - | ------------ | - | ---------
| |                                 |   |            |   | Accumulated  |   | Net Book 
| |                                 |   | Cost       |   | Depreciation |   | Value    
| |                                
| | Land                            | $ | 171,328    | $ | -            | $ | 171,328  
| | Buildings                       |   | 1,214,098  |   | 196,551      |   | 1,017,547
| | Dryers and related works        |   | 533,790    |   | 129,627      |   | 404,163  
| | Computer equipment and software |   | 181,854    |   | 172,864      |   | 8,990    
| | Furniture and fixtures          |   | 225,305    |   | 202,195      |   | 23,110   
| | Machinery and equipment         |   | 6,015,305  |   | 4,722,126    |   | 1,293,179
| | Sunshade                        |   | 12,930,446 |   | 12,254,253   |   | 676,193  
| | Vehicles                        |   | 459,469    |   | 293,674      |   | 165,795  
| | Pavement                        |   | 46,575     |   | 11,799       |   | 34,776   
| |                                 | $ | 21,778,170 | $ | 17,983,089   | $ | 3,795,081
| |                                
| |                                 |   |            |   | 2006         |   |          
| |                                 |   |            |   | Accumulated  |   | Net Book 
| |                                 |   | Cost       |   | Depreciation |   | Value    
| |                                
| | Land                            | $ | 769,843    | $ | -            | $ | 769,843  
| | Buildings                       |   | 1,682,122  |   | 377,051      |   | 1,305,071
| | Dryers and related works        |   | 2,101,786  |   | 1,248,651    |   | 853,135  
| | Computer equipment and software |   | 195,578    |   | 173,406      |   | 22,172   
| | Furniture and fixtures          |   | 282,485    |   | 254,369      |   | 28,116   
| | Leasehold improvements          |   | 75,432     |   | 75,172       |   | 260      
| | Machinery and equipment         |   | 7,020,638  |   | 5,440,095    |   | 1,580,543
| | Sunshade                        |   | 14,303,314 |   | 13,397,574   |   | 905,740  
| | Vehicles                        |   | 509,587    |   | 292,846      |   | 216,741  
| | Pavement                        |   | 148,252    |   | 36,966       |   | 111,286  
| |                                 | $ | 27,089,037 | $ | 21,296,130   | $ | 5,792,907

|7. | FUTURE INCOME TAXES                                                                                                                                
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                    
|   | Temporary differences and carryforwards that give rise to future income tax assets and liabilities as at December 31, 2007 and 2006 are as follows:



61

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|7. | FUTURE INCOME TAXES (Continued)
|-- | -------------------------------

| |                               |   | 2007      |   | 2006     
| | ----------------------------- | - | --------- | - | ---------
| |                              
| | Future income tax assets      |   |           |   |          
| | Property, plant and equipment | $ | 146,000   | $ | 258,000  
| | Inventory and ginseng crops   |   | -         |   | 3,751,000
| | Tax loss carryforwards        |   | 5,080,000 |   | 545,000  
| |                               |   | 5,226,000 |   | 4,554,000
| |                              
| | Less: valuation allowance     |   | 5,226,000 |   | 4,554,000
| |                              
| | Future income tax assets      | $ | -         | $ | -        

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Due to additional financing costs associated with the new loan facility as detailed in Note 10(b) and the write-down on inventory and ginseng crops as detailed in Note 14, the Company determined that it was less likely than not that the future income tax assets would be recoverable in the short and medium-term. Therefore, the Company recorded a valuation allowance of $4,554,000 against its future income tax assets. This valuation allowance is included in the provision for income taxes on the statements of operations and deficit for the year ended December 31, 2006.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | The provision for (recovery of) income taxes has been calculated as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

| |                                          |   | 2007       |   |   | 2006       |   |   | 2005       |  
| | ---------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
| |                                         
| | Canadian statutory tax rate              |   | 33.50%     |   |   | 35.12%     |   |   | 35.12%     |  
| |                                         
| | Provision for income taxes at            |   |            |   |   |            |   |   |            |  
| | the Canadian statutory rates             | $ | (1,064,794 | ) | $ | (2,671,127 | ) | $ | (4,291,337 | )
| |                                         
| | Adjustments:                             |   |            |   |   |            |   |   |            |  
| | Foreign tax rate differential            |   | 30,210     |   |   | 73,076     |   |   | 67,274     |  
| | Change in income tax rates               |   | 199,478    |   |   | -          |   |   | (39,485    | )
| | Other                                    |   | 163,106    |   |   | (100,949   | ) |   | 175,548    |  
| | Valuation allowance                      |   | 672,000    |   |   | 4,554,000  |   |   | -          |  
| | Provision for (recovery of) income taxes | $ | -          |   | $ | 1,855,000  |   | $ | (4,088,000 | )

| | The Companys foreign subsidiaries have tax losses available for carry forward of approximately $762,000 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 $14,284,000 which can be applied to reduce future taxable income and expire at various times over the next five to twenty years.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

62

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|8.  | BANK INDEBTEDNESS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | As at December 31, 2007, subject to limitations based on the value of inventory, certain receivables and the estimated value of qualifying ginseng crops, the Company has available a $5,000,000 revolving demand operating loan with a Canadian chartered bank that bears interest at bank prime rate plus 1.25% per annum. As at December 31, 2007, $3,510,000 (2006 - $4,310,000) had been drawn under the operating loan. During the year, the Company incurred $160,329 (2006 - $325,690) of interest on this debt which has been included in interest on short-term debt on the statements of operations and deficit.
|   
|9.  | CUSTOMER DEPOSITS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    | Customer deposits represent deposits received from customers to secure inventory purchase commitments prior to the actual delivery of inventory.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|10. | LONG-TERM DEBT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   

| |                          |     |   | 2007      |   | 2006     
| | ------------------------ | --- | - | --------- | - | ---------
| |                         
| | Bank term loan           | (a) | $ | 39,700    | $ | 159,700  
| | Term loan                | (b) |   | 6,942,280 |   | 8,182,270
| | Equipment purchase loans | (c) |   | 143,695   |   | 323,132  
| |                          |     |   | 7,125,675 |   | 8,665,102
| | Less: current portion    |     |   | 152,379   |   | 299,437  
| |                         
| |                          |     | $ | 6,973,296 | $ | 8,365,665

|(a) | Bank term loan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | The Company has secured a $1,500,000 non-revolving term loan which expires on May 15, 2008, from a Canadian chartered bank with an interest rate of prime plus 1.5% per annum. The loan is repayable in monthly installments of $10,000 plus interest and is secured by the Companys Ontario property. For the year ended December 31, 2007, the Company incurred $7,411 (2006 - $18,310, 2005 - $44,059) of interest which has been included in interest on long-term debt on the statements of operations and deficit.                              
|   
|(b) | Term loan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    | On August 18, 2006, the Company established a four year term loan facility of HK$54,700,000 from a company formerly under common control. The loan is unsecured and bears interest at 1.7% per annum over the HIBOR (Hong Kong Interbank Offered Rate) or LIBOR (London Interbank Offered Rate). For the year ended December 31, 2007, the Company incurred $625,758 (2006 - $219,506) of interest which has been included in interest on long-term debt on the statements of operations and deficit and which remains accrued as at December 31, 2007.
|   

63

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|10. | LONG-TERM DEBT (Continued)                                                
|--- | --------------------------------------------------------------------------
|   
|    | (c)                                                                       
|   
|    |                                                                           
|   
|    | The loans are scheduled to be repaid over the next three years as follows:
|   

| | 2008 | $ | 152,379   | 
| | ---- | - | --------- | 
| | 2009 |   | 31,016    | 
| | 2010 |   | 6,942,280 | 
| |      | $ | 7,125,675 | 

|11. | SHARE CAPITAL AND CONTRIBUTED SURPLUS                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                        
|    | Authorized share capital consists of an unlimited number of common shares without nominal or par value and 21 million Series 1 non-voting, non-cumulative preferred shares, convertible into common shares on a 1:1 basis. Any issued and outstanding preferred shares will automatically be converted into common shares in 2010. There are currently no outstanding preferred shares.
|    |                                                                                                                                                                                                                                                                                                                                                                                        
|    | Outstanding shares are as follows:                                                                                                                                                                                                                                                                                                                                                     

| |                                       | Number of  |  |        |           
| | ------------------------------------- | ---------- |  | ------ | ----------
| |                                       | shares     |  | Amount
| | Common shares                         |            |  |        |           
| | Balance at December 31, 2006 and 2007 | 34,698,157 |  | $      | 38,246,209
| |                                      
| | Contributed Surplus                   |            |  |        |           
| | Balance at December 31, 2006 and 2007 |            |  | $      | 338,081   

64

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|12. | 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.
|    |                                                                                                                                                                                                                                                                             
|    | Options to purchase 343,400 shares are outstanding and exercisable as at December 31, 2007, as follows:                                                                                                                                                                     

| | Number            | Number            |  | Weighted Average | Weighted Average     
| | ----------------- | ----------------- |  | ---------------- | ---------------------
| | Outstanding as at | Exercisable as at |  | Exercise price   | Remaining Contractual
| | December 31, 2007 | December 31, 2007 |  | ($/share)        | Life in Years        
| |                  
| | 343,400           | 343,400           |  | $0.73            | 0.96                 

| |                                                                                                    
| | ---------------------------------------------------------------------------------------------------
| | Information regarding the Company's stock options for each of the periods is summarized as follows:
| |                                                                                                    

| |                                                     |           |   |   | Exercise   
| | --------------------------------------------------- | --------- | - | - | -----------
| |                                                     | Number of |   |   | price range
| |                                                     | shares    |   |   | ($/share)  
| |                                                    
| | Outstanding as at December 31, 2005                 | 437,600   |   | $ | 0.73       
| | Expired                                             | (34,300   | ) |   | 0.73       
| | Outstanding as at December 31, 2006                 | 403,300   |   |   | 0.73       
| | Expired                                             | (59,900   | ) |   | 0.73       
| | Outstanding and exercisable as at December 31, 2007 | 343,400   |   | $ | 0.73       



|    | There were no options granted or modified during the three years ended December 31, 2007.                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                           
|13. | WRITE-DOWN OF ASSETS HELD FOR SALE                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                           
|    | During the year ended December 31, 2005, the Company entered into agreements to sell the corporate head office and certain agricultural land and recorded a write-down of $246,498 to reduce the carrying value of the assets to their estimated net realizable values less selling costs.



65

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|14. | WRITE-DOWN OF INVENTORY AND GINSENG CROPS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The Company recorded a write-down of $1,450,000 on ginseng crops for the year ended December 31, 2007 to reduce their carrying value to 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | During the three months ended June 30, 2007, the Company recorded a write-down on inventory of $1,285,495. This inventory was being held by the Company to fulfill a contract with a Canadian customer for a predetermined minimum quantity at a fixed price. The contract has expired and the customer has not ordered the predetermined minimum quantity and the Company has been unable to negotiate an acceptable subsequent agreement. The Company intends to pursue all possible options, including legal action, to ensure receipt of the contracted amount for this inventory. However, due to the uncertainty of the Company's ability to receive the contracted amount, a write-down has been recorded to reduce the carrying value of the inventory to its estimated net realizable value instead of the predetermined contract price.                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Due to the continued low selling price of low grade ginseng, the Company recorded a write-down of inventory of $2,901,483 for the year ended December 31, 2006 to reduce the carrying value of the inventory to its estimated net realizable value. This amount includes a $235,200 write-down of 2005 inventory realized in the second quarter of 2006 and a $2,666,283 write-down on 2006 inventory that was realized upon the completion of the 2006 harvest. The net realizable value of the inventory was estimated based on purchase commitments received for inventory on hand.                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The Company recorded a write-down of $2,700,000 on ginseng crops for the year ended December 31, 2006 to reduce their carrying value to 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 also recorded a write-down of inventory, raw materials and supplies for its value-added products of $37,938 during the year ended December 31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The Company recorded a write-down on inventory of $9,736,863 for the year ended December 31, 2005 to reduce the carrying value of the inventory to its estimated net realizable value. The 2005 cost of crop harvested figure of $11,045,743 on the statement of crop costs includes the $2,500,000 write-down on crop costs that was incurred in the third quarter of 2005. The net realizable value of the inventory was estimated based on prices that were being negotiated with buyers and purchase commitments that had been received. The Company wrote off certain crop costs amounting to $213,127 during the year ended December 31, 2005, for costs incurred on sites in British Columbia which the Company subsequently decided not to plant. The Company also wrote off raw materials and supplies for its value-added products of $28,912 during the year ended December 31, 2005.

66

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|15. | OTHER INCOME (LOSS)
|--- | -------------------

| |                                                   |   | 2007      |   |   | 2006     |   |   | 2005     |  
| | ------------------------------------------------- | - | --------- | - | - | -------- | - | - | -------- | -
| |                                                  
| | Foreign exchanges gain (loss)                     | $ | 638,461   |   | $ | (154,319 | ) | $ | (490,748 | )
| | Gain on disposal of property, plant and equipment |   | 473,681   |   |   | 4,519    |   |   | 6,685    |  
| | Other non-operating income (expenses)             |   | (10,923   | ) |   | 6,149    |   |   | 3,021    |  
| |                                                  
| |                                                   | $ | 1,101,219 |   | $ | (143,651 | ) | $ | (481,042 | )

|16. | COMMITMENTS, CONTINGENCIES AND GUARANTEES                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | (a)                                                                                                                                                                                                   
|   
|    | The Company has entered into operating leases for vehicles, farming equipment and offices expiring at various times to 2011. Total future minimum payments required under these leases are as follows:
|   

| | 2008 | $ | 83,310  | 
| | ---- | - | ------- | 
| | 2009 |   | 46,333  | 
| | 2010 |   | 13,181  | 
| | 2011 |   | 3,185   | 
| |      | $ | 146,009 | 

| | The Company is committed to agricultural land rentals for the next five years as follows:
| | -----------------------------------------------------------------------------------------

| | 2008 | $ | 344,893 | 
| | ---- | - | ------- | 
| | 2009 |   | 92,998  | 
| | 2010 |   | 42,197  | 
| | 2011 |   | 24,019  | 
| | 2012 |   | 24,019  | 
| |      | $ | 528,126 | 

| | The Company has incurred rental costs on operating leases and land rentals of $635,493, $822,332 and $1,023,957 for the years ended December 31, 2007, 2006 and 2005, respectively, of which $591,108, $766,671 and $981,900 was capitalized to crop costs for the respective years.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

67

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|16. | COMMITMENTS, CONTINGENCIES AND GUARANTEES (Continued)
|--- | -----------------------------------------------------
|   
|    | (b)                                                  
|   
|    |                                                      
|   
|    |                                                      
|   
|17. | FOREIGN EXCHANGE CONTRACTS                           
|   
|    | (a)                                                  
|   
|    |                                                      
|   
|    |                                                      
|   

68

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|17. | FOREIGN EXCHANGE CONTRACTS (Continued)                                                                                                                                                                                       
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | (b)                                                                                                                                                                                                                          
|   
|    |                                                                                                                                                                                                                              
|   
|    |                                                                                                                                                                                                                              
|   
|18. | SEGMENTED REPORTING                                                                                                                                                                                                          
|   
|    | The Company operates in one industry segment and two geographic regions. Long-lived assets consist of non-current ginseng crops and property, plant and equipment. Information by geographic region is summarized as follows:
|   

| | Year ended                             |   |            |   |   |           |   |              |  
| | -------------------------------------- | - | ---------- | - | - | --------- | - | ------------ | -
| | December 31, 2007                      |   | Canada     |   |   | Far East  |   | Consolidated |  
| | Revenue - external                     | $ | 3,453,287  |   | $ | 4,108,295 | $ | 7,561,582    |  
| | Revenue - intercompany between regions |   | 5,283,066  |   |   | -         |   |              |  
| | Total revenue                          | $ | 8,736,353  |   | $ | 4,108,295 |   |              |  
| | Net earnings (loss)                    | $ | (3,231,709 | ) | $ | 53,218    | $ | (3,178,491   | )
| | Long-lived assets                      | $ | 9,512,006  |   | $ | -         | $ | 9,512,006    |  

| | Major Customers                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                   
| | For the year ended December 31, 2007, consolidated revenue included sales to two customers, which accounted for $1,818,994 from the Canadian geographic region and $3,632,912 from the Far East geographic region.

69

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|18. | SEGMENTED REPORTING (Continued)
|--- | -------------------------------

| | Year ended                             |   |            |   |   |           |   |   |              |  
| | -------------------------------------- | - | ---------- | - | - | --------- | - | - | ------------ | -
| | December 31, 2006                      |   | Canada     |   |   | Far East  |   |   | Consolidated |  
| | Revenue - external                     | $ | 1,272,707  |   | $ | 4,655,048 |   | $ | 5,927,755    |  
| | Revenue - intercompany between regions |   | 4,996,366  |   |   | -         |   |   |              |  
| | Total revenue                          | $ | 6,269,073  |   | $ | 4,655,048 |   |   |              |  
| | Net loss                               | $ | (9,329,260 | ) | $ | (131,456  | ) | $ | (9,460,716   | )
| | Long-lived assets                      | $ | 15,097,479 |   | $ | 844       |   | $ | 15,098,323   |  

Major Customers

For the year ended December 31, 2006, consolidated revenue included sales to four customers, which accounted for $715,905 from the Canadian geographic region and $3,039,738, $989,198 and $610,560, respectively, from the Far East geographic region.

| | Year ended                             |   |            |   |   |           |   |   |              |  
| | -------------------------------------- | - | ---------- | - | - | --------- | - | - | ------------ | -
| | December 31, 2005                      |   | Canada     |   |   | Far East  |   |   | Consolidated |  
| | Revenue - external                     | $ | 1,205,854  |   | $ | 4,620,092 |   | $ | 5,825,946    |  
| | Revenue - intercompany between regions |   | 4,358,943  |   |   | -         |   |   |              |  
| | Total revenue                          | $ | 5,564,797  |   | $ | 4,620,092 |   |   |              |  
| | Net (loss) earnings                    | $ | (7,984,716 | ) | $ | (146,353  | ) | $ | (8,131,069   | )
| | Long-lived assets                      | $ | 19,390,238 |   | $ | 1,496     |   | $ | 19,391,734   |  

Major Customers

For the year ended December 31, 2005, consolidated revenue included sales to two customers, which accounted for $2,696,746 and $1,903,578, respectively, from the Far East geographic region.

70

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|19. | OTHER INFORMATION
|--- | -----------------

|    |                                              
|--- | ---------------------------------------------
|(a) | Items included in net loss not affecting cash
|   

| |                                                          |   | 2007      |   |   | 2006       |   |   | 2005       |  
| | -------------------------------------------------------- | - | --------- | - | - | ---------- | - | - | ---------- | -
| |                                                         
| | Future income taxes                                      | $ | -         |   | $ | 1,855,000  |   | $ | (4,088,000 | )
| | Depreciation and amortization                            |   | 15,887    |   |   | 18,419     |   |   | 47,315     |  
| | Cost of ginseng crops sold                               |   | 7,308,996 |   |   | 5,751,768  |   |   | 5,223,214  |  
| | Provision for write-down of inventory and crop costs     |   | 2,735,495 |   |   | 5,639,421  |   |   | 9,978,902  |  
| | Provision for write-down of assets held for sale         |   | -         |   |   | -          |   |   | 246,498    |  
| | Non-cash realized foreign exchange losses                |   | (886,362  | ) |   | 154,116    |   |   | 508,945    |  
| | (Gain) loss on disposal of property, plant and equipment |   | (473,681  | ) |   | (4,519     | ) |   | (6,855     | )
| |                                                         
| |                                                          | $ | 8,700,335 |   | $ | 13,414,205 |   | $ | 11,910,019 |  

|(b) | Changes in non-cash operating assets and liabilities
|--- | ----------------------------------------------------

| |                                          |   | 2007       |   |   | 2006       |   |   | 2005       |  
| | ---------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
| |                                         
| | Accounts receivable and other assets     | $ | 123,231    |   | $ | (65,518    | ) | $ | 73,147     |  
| | Inventory                                |   | 3,915      |   |   | 31,419     |   |   | 8,539      |  
| | Ginseng crops                            |   | (2,981,381 | ) |   | (2,844,371 | ) |   | (3,135,172 | )
| | Prepaid expenses                         |   | 5,388      |   |   | 1,906      |   |   | 49,912     |  
| | Accounts payable and accrued liabilities |   | 281,195    |   |   | (381,484   | ) |   | 953,319    |  
| | Customer deposits                        |   | 995,132    |   |   | 1,388,934  |   |   | 3,874      |  
| |                                         
| |                                          | $ | (1,572,520 | ) | $ | (1,869,114 | ) | $ | (2,046,381 | )

|(c) | Supplementary cash flow information
|--- | -----------------------------------

| |                                              |   | 2007    |   | 2006    |   | 2005   
| | -------------------------------------------- | - | ------- | - | ------- | - | -------
| |                                             
| | Other cash flows:                            |   |         |   |         |   |        
| | Interest paid                                | $ | 254,037 | $ | 538,474 | $ | 390,607
| |                                             
| | Non-cash investing and financing activities: |   |         |   |         |   |        
| | Property, plant and equipment purchases      |   |         |   |         |   |        
| | financed through equipment purchase          |   |         |   |         |   |        
| | loan agreements                              |   | -       |   | 19,100  |   | 209,200

71

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|20. | FINANCIAL INSTRUMENTS
|--- | ---------------------
|   
|    | (a)                  
|   
|    |                      
|   
|    | (b)                  
|   
|    |                      
|   
|    | (c)                  
|   
|    |                      
|   
|    | (d)                  
|   
|    |                      
|   
|    |                      
|   

72

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|21. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP) which differ in some respects from US GAAP.
|   
|    | The significant differences between Canadian and US GAAP which affect the Companys financial statements are summarized below:                                                    
|   
|    | a)                                                                                                                                                                                
|   
|    |                                                                                                                                                                                   
|   
|    |                                                                                                                                                                                   
|   
|    | b)                                                                                                                                                                                
|   
|    |                                                                                                                                                                                   
|   
|    |                                                                                                                                                                                   
|   
|    | c)                                                                                                                                                                                
|   
|    |                                                                                                                                                                                   
|    |                                                                                                                                                                                   
|    |                                                                                                                                                                                   
|    |                                                                                                                                                                                   
|    |                                                                                                                                                                                   
|   

73

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|21. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)
|--- | ---------------------------------------------------------------------------------------------------
|   
|    | d)                                                                                                 
|   
|    |                                                                                                    
|   
|    |                                                                                                    
|   

| |                                                       |   | 2007       |   |   | 2006       |   |   | 2005       |  
| | ----------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
| |                                                      
| | Cost of goods sold under Canadian GAAP                | $ | 7,393,265  |   | $ | 5,829,905  |   | $ | 5,488,252  |  
| | Adjustment for interest capitalized to crop costs (a) |   | (125,638   | ) |   | (302,063   | ) |   | (360,278   | )
| | Writedown of inventory and crop costs                 |   | 2,847,296  |   |   | 5,895,611  |   |   | 9,779,786  |  
| | Cost of goods sold under US GAAP                      | $ | 10,114,923 |   | $ | 11,423,453 |   | $ | 14,907,760 |  

|e) | Comprehensive Income (Loss)                                                                                                                                                                                                                                                                                                   
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | The FASB issued Statement No. 130, Reporting Comprehensive Income, which was required to be adopted on January 1, 1999. Statement 130 establishes standards for the reporting and display of comprehensive income and its components. The impact of adopting Statement 130 on the Companys financial statement is as follows:
|  

| |                                             |   | 2007       |   |   | 2006       |   |   | 2005       |  
| | ------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
| |                                            
| | Net loss under US GAAP                      | $ | (3,317,454 | ) | $ | (9,438,573 | ) | $ | (7,770,272 | )
| | Other comprehensive income:                 |   |            |   |   |            |   |   |            |  
| | Change in cumulative translation adjustment |   | 311,966    |   |   | 4,975      |   |   | 573,085    |  
| | Comprehensive net loss under US GAAP        | $ | (3,005,488 | ) | $ | (9,433,598 | ) | $ | (7,197,187 | )

|f) | Liability for Uncertain Tax Positions                                                                                                                                                                                                                                                                                                                                                                  
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Under Canadian GAAP, there is no requirement to evaluate uncertain tax positions.                                                                                                                                                                                                                                                                                                                      
|  
|   | Under US GAAP, there is a requirement to evaluate any tax positions that are uncertain and, if necessary, calculate a liability for uncertain tax positions. An analysis of the tax positions taken by the Company was completed and it was determined that there are no material tax positions that could be challenged by taxing authorities that would result in a substantial income tax liability.
|  

74

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|21. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)
|--- | ---------------------------------------------------------------------------------------------------
|   
|    | g)                                                                                                 
|   
|    |                                                                                                    
|   
|    | h)                                                                                                 
|   
|    |                                                                                                    
|   
|    |                                                                                                    
|   
|    |                                                                                                    
|   
|    |                                                                                                    
|   
|    |                                                                                                    
|   
|    |                                                                                                    
|   
|    |                                                                                                    
|   
|    |                                                                                                    
|   
|    |                                                                                                    
|   

75

---

|CHAI-NA-TA CORP.                                    
|----------------------------------------------------
|Notes to the Consolidated Financial Statements      
|(Stated in Canadian Dollars)                        
|For the years ended December 31, 2007, 2006 and 2005

|21. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLYACCEPTED ACCOUNTING PRINCIPLES (Continued)                                   
|--- | -------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                      
|    | The difference between Canadian and US GAAP and their effect on the Companys consolidated financial statements are summarized below:

STATEMENT OF OPERATIONS

| |                                            |   | 2007       |   |   | 2006       |   |   | 2005       |  
| | ------------------------------------------ | - | ---------- | - | - | ---------- | - | - | ---------- | -
| |                                           
| | Net loss as reported under Canadian GAAP   | $ | (3,328,491 | ) | $ | (9,460,716 | ) | $ | (8,131,069 | )
| | Accounting for interest (a)                |   | 119,154    |   |   | 292,308    |   |   | 353,721    |  
| | Financial instruments (c)                  |   | 3,684      |   |   | 1,421      |   |   | 18,161     |  
| | Write-down of inventory and crop costs (d) |   | (111,814   | ) |   | (256,190   | ) |   | 199,116    |  
| | Deferred income tax adjustment             |   | -          |   |   | (15,396    | ) |   | (210,201   | )
| | Net loss under US GAAP                     |   | (3,317,467 | ) |   | (9,438,573 | ) |   | (7,770,272 | )
| |                                           
| |                                           
| | Basic and diluted loss per share           | $ | (0.10      | ) | $ | (0.27      | ) | $ | (0.22      | )
| |                                           
| | Weighted average number of common shares   |   | 34,698,157 |   |   | 34,698,157 |   |   | 34,698,157 |  

BALANCE SHEET

| |                       |                               |   | 2007       |   |   | 2006       |  
| | --------------------- | ----------------------------- | - | ---------- | - | - | ---------- | -
| | Assets                |                               |   |            |   |   |            |  
| | Inventory             | - Canadian GAAP               | $ | 8,734,851  |   | $ | 8,627,699  |  
| |                       | - Interest capitalized (a)    |   | (23,754    | ) |   | (133,267   | )
| |                       | - Financial instruments (c)   |   | -          |   |   | (3,684     | )
| |                       | - Write-down of inventory (d) |   | 23,754     |   |   | 135,568    |  
| |                       | - US GAAP                     | $ | 8,734,851  |   | $ | 8,626,316  |  
| | Ginseng crops current | - Canadian GAAP               | $ | 5,677,640  |   | $ | 5,213,919  |  
| |                       | - Interest capitalized (a)    |   | (7,123     | ) |   | (13,455    | )
| |                       | - US GAAP                     | $ | 5,670,517  |   | $ | 5,200,464  |  
| | Ginseng crops         | - Canadian GAAP               | $ | 5,716,925  |   | $ | 9,305,416  |  
| |                       | - Interest capitalized (a)    |   | (5,445     | ) |   | (8,754     | )
| |                       | - US GAAP                     | $ | 5,711,480  |   | $ | 9,296,662  |  
| |                      
| | Shareholders' Equity  | - Canadian GAAP               | $ | 10,339,688 |   | $ | 13,668,179 |  
| |                       | - Interest capitalized (a)    |   | (36,322    | ) |   | (159,160   | )
| |                       | - Write-down of inventory (d) |   | 23,754     |   |   | 135,568    |  
| |                       | - US GAAP                     | $ | 10,327,120 |   | $ | 13,644,587 |  

76

---






EXHIBIT8.1

---