**U.
        S. SECURITIES AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 
 **Form 10-KSB**
 
 R
              **ANNUAL
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF 1934****For
                  the fiscal year ended December 31, 2007**£
              **TRANSITION
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF 1934****For
                  the transition period from __________ to
                  __________**
 
 **Commission
        File Number:** **333-140118**
 
 **China
        Agri-Business, Inc.**
 *(Name
        of small business issuer as specified in its charter)*
 
 **Maryland**
              **20-3912942***(State
                  or other jurisdiction of*
              *(I.R.S.
                  Employer**incorporation
                  or organization)*
              *Identification
                  No.)*
 
 **Finance
        Plaza, 9** **th** **Floor, Hi-Tech Road No. 42, Hi-Tech Industrial Development Zone, Xi-An, China
        710068**
 *(Address
        of principal executive offices, including zip code)*
 
 Issuer’s
        telephone number, including area code:
 (212)
        348-5600
 
 Securities
        registered pursuant to Section 12(b) of the Act:
 **None.**
 
 Securities
        registered pursuant to Section 12(g) of the Act:
 **None.**
 ________________
  Check
        whether the issuer is not required to file reports pursuant to Section 13
        or
        15(d) of the Exchange Act.  ̈
 
 Check
        whether the issuer (1) filed all reports required to be filed by
        Section 13 or 15(d) of the Exchange Act of 1934 during the past
        12 months (or for such shorter period that the registrant was required to
        file such reports), and (2) has been subject to such filing requirements
        for the past 90 days.  Yes R No £
 
 Check
        if
        disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
        is not contained in this form, and no disclosure will be contained, to the
        best
        of registrant’s knowledge, in definitive proxy or information statements
        incorporated by reference in Part III of this Form 10-KSB or any
        amendment to this Form 10-KSB. £
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in
        Rule 12b-2 of the Exchange Act).  Yes £ No R
 
 The
        issuer’s revenues for the most recent fiscal year were $3,037,414.
 
 The
        aggregate market value of the voting and non-voting common equity held by
        non-affiliates of the issuer was approximately $5.6 million as of March 24,
        2008.
 
 12,958,574 shares
        of the issuer’s common stock, par value $.001 per share, were issued and
        outstanding as of March 24, 2008.
 
 Documents
        Incorporated by Reference: **None** .
 
 Transitional
        Small Business Disclosure Format: **No** .
  
  **CHINA
        AGRI-BUSINESS, INC.**
 
 **2007
        FORM 10-KSB ANNUAL REPORT**
 
 **TABLE
        OF CONTENTS**
 
 **Page****PART
                  I**Item 1.
              Description
                  of Business and Risk Factors
              3Item 2.
              Description
                  of Property
              13Item 3.
              Legal
                  Proceedings
              13Item 4.
              Submission
                  of Matters to a Vote of Security Holders.
              13**PART II**Item 5.
              Market
                  for Common Equity and Related Stockholder Matters and Small Business
                  Issuer Purchases of Equity Securities.
              13Item 6.
              Management’s
                  Discussion and Analysis or Plan of Operation.
              14Item 7.
              Financial
                  Statements. (See F-1 - F-16)
              18Item 8.
              Changes
                  in and Disagreements with Accountants on Accounting and Financial
                  Disclosure.
              19Item 8A.
              Controls
                and
                Procedures.
              19Item 8A(T).
              Controls
                and
                Procedures.
              19Item
                  8B.
              Other
                  Information.
              19**PART III**Item 9.
              Directors,
                  Executive Officers, Promoters, Control Persons and Corporate Governance;
                  Compliance with Section 16(a) of the Exchange Act
              20Item 10.
              Executive
                  Compensation
              22Item 11.
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              23Item 12.
              Certain
                  Relationships and Related Transactions, and Director
                  Independence
              24Item 13.
              Exhibits
              25Item 14.
              Principal
                  Accountant Fees and Services.
              25Report
                  of Independent Registered Public Accounting Firm
              F-1
 
 2
 
 **PART I**
 
 **Cautionary
        Statement Concerning Forward-Looking Statements**
 
 This
        Form 10KSB Annual Report and the documents we incorporate by reference in
        this Annual Report contain forward-looking statements, within the meaning
        of
        Section 21E of the Securities Exchange Act of 1934, as amended, and
        Section 27A of the Securities Act of 1933, as amended. Any statement that
        is not a statement of historical fact may be deemed a forward-looking statement.
        For example, statements containing the words “believes,” “anticipates,”
“estimates,” “plans,” “expects,” “intends,” “may,” “projects,” “will,” “would”
and similar expressions may be forward-looking statements. We may not actually
        achieve the plans, intentions or expectations disclosed in our forward-looking
        statements and you should not place undue reliance on our forward-looking
        statements. There are a number of important factors that could cause our
        actual
        results to differ materially from those indicated by these forward-looking
        statements, including the factors referred to above under the caption “Risk
        Factors.” These important factors include the factors that we identify in the
        documents we incorporate by reference in this Form 10KSB Annual Report. You
        should read these factors and the other cautionary statements made in this
        Form 10KSB Annual Report and in the documents we incorporate by reference
        as being applicable to all related forward-looking statements wherever they
        appear in this Form 10KSB Annual Report and in the documents incorporated
        by reference. We do not assume any obligation to update any forward-looking
        statements made by us.
 
 **Item 1.** ***Description
        of Business***
 
 **Company
        History**
 
 China
        Agri-Business, Inc. ("China Agri") was incorporated in the State of Maryland
        on
        December 7, 2005. On March 24, 2006, China Agri formed Mei Xin Agri Technology
        (Shaanxi) Co., Ltd. ("WOFE") in Xi'an city, the PRC. WOFE is a wholly-owned
        subsidiary of China Agri and a limited liability company organized under
        the
        laws of the People’s Republic of China (“PRC”).
 
 WOFE
        acts
        as a management company for Shaanxi Xin Sheng Centennial Agricultural and
        Technology Co., Ltd. ("Xinsheng"). WOFE controls all aspects of Xinsheng's
        business and management, and is entitled to all proceeds of Xingsheng's business
        and obligated to fund its operations. In summary, we do not own Xinsheng.
        However, through WOFE, we are entitled to receive all of the profits of,
        and are
        obligated to pay all of the debts of, Xinsheng .
 
 Xinsheng
        was founded on April 22, 2002 as a joint stock limited liability company
        formed
        under the laws of the PRC and has approximately 2,340 individual shareholders.
        Prior to April 21, 2004, Xinsheng's stock was traded on China Zhongguancun
        Technology & Equity Exchange, a government endorsed local platform for local
        non-public companies to trade their equity securities. Xinsheng de-listed
        its
        stock from China Zhongguancun Technology & Equity Exchange on April 21,
        2004.
 
 WOFE's
        control over Xinsheng was established in the following manner, and in accordance
        with PRC laws:
 
 On
        April
        18, 2006, WOFE entered into a management entrustment agreement ("Management
        Agreement") with Xinsheng. Under the Management Agreement, Xinsheng and its
        shareholders entrusted to WOFE its management rights, the rights and powers
        of
        its shareholders and board of directors, and the right to receive all of
        Xinsheng's profits in exchange for WOFE's assumption of the obligation to
        fund
        all operating losses of Xinsheng.
 
 On
        April
        22, 2006, following a Xinsheng shareholder meeting at which an attorney-in-fact
        was appointed to represent the Xinsheng shareholders, China Agri entered
        into a
        stock purchase agreement with the attorney-in-fact (the "Stock Purchase
        Agreement"). Pursuant to the Stock Purchase Agreement, we issued an aggregate
        of
        5,389,221 shares (10,950,897 shares after a 2.032-for-1 forward split in
        October
        2006) of our common stock to the Xinsheng shareholders in consideration of
        the
        execution of the Management Agreement between Xinsheng and WOFE. Pursuant
        to the
        Stock Purchase Agreement and a voting trust and escrow agreement (the "Voting
        Trust and Escrow Agreement") entered into by the parties in connection with
        the
        Stock Purchase Agreement, these shares were issued in the name of a trustee
        for
        the Xinsheng shareholders, which trustee also acts as the escrow and selling
        agent for the Xinsheng shareholders for the sale of the shares. The trustee
        is
        entitled to exercise all rights and powers to vote the shares on behalf of
        the
        Xinsheng shareholders. If a shareholder wishes to sell the shares held by
        the
        trustee, the trustee would sell the shares and remit the proceeds to the
        shareholder.
 
 The
        entry
        into the Management Agreement, the Stock Purchase Agreement and the Voting
        Trust
        and Escrow Agreement, and the appointment of the attorney-in-fact, were approved
        by the Xinsheng shareholders at a meeting held on April 10, 2006, under the
        PRC
        Company Law. 352 shareholders representing an aggregate of 77.66% of the
        total
        outstanding shares of Xinsheng attended the shareholder meeting in person
        or by
        sending their representatives. More than 50% of the voting shares present
        at the
        shareholder meeting approved the Management Agreement and more than two thirds
        of the voting shares present at the shareholders meeting approved the Stock
        Purchase Agreement, Voting Trust and Escrow Agreement and appointment of
        the
        attorney-in-fact, which met the applicable requirements for actions requiring
        shareholder approval under the PRC Company Law.
 
 3
 At
        present, neither the Company nor WOFE have any existing or planned business
        activities other than acting as a holding company and management company,
        respectively, for Xinsheng, and raising capital for its operations. However,
        these plans are subject to change in the future.
 
 **Overview
        of Business**
 
 Xinsheng
        began producing agricultural application products in 2004. Xinsheng currently
        has approximately 120 employees and utilizes one factory facility in Xi'an,
        Shaanxi Province. Most of our sales are in Shaanxi and the Southern region
        of
        China in the Hunan, Hubei, Anhui and Jiangsu provinces, which tend to have
        warmer weather and longer growing seasons.
 
 The
        offices of China Agri-Business are located at 11 East 86th Street, New York,
        New
        York 10028. Xinsheng is located outside of the city of Xi-an in the Shaanxi
        Province of the PRC. Xinsheng’s telephone number is
        011-86-29-88222938.
 
 Our
        business is concentrated in areas within the growing PRC "Green" food market,
        which is described below. We manufacture and market the following six categories
        of "Green," environmentally friendly organic biochemical agricultural
        application products:
 
 o
        Xinsheng Luyuan, a line of products whose primary function is to increase
        agricultural production.
 
 o
        Xinsheng Lufeng, a line of products whose primary function is as a
        bactericide.
 
 o
        Xinsheng Dadang , an organic fungicide with additional ingredients to enhance
        anti-fungal effects.
 
 o
        Xinsheng Huang-jin-gai, designed to help crops absorb calcium and to improve
        their quality.
 
 o
        Xinsheng Jia-tian-xia, an organic potassium fertilizer designed to help farmers
        improve the quality of crops.
 
 o
        Xinsheng Bai-le, designed to provide supplementary micro-nutrients to crops
        and
        to help crops grow with balanced nutrition.
 
 Within
        these six categories, we produce more than 50 different agricultural application
        products.
 
 **Organic
        Biochemical Agricultural Application Products**
 
 Our
        agricultural application products are made of a chemical polymer combined
        with
        active potassium, organic nitrogen and 20 other ingredients, including
        polysaccharides extracted from the shells of crustaceans and mixed with active
        calcium. Because each of our products are designed to have no adverse effects
        on
        the environment and to contain no toxins, use of our products contributes
        to the
        production of safe, healthy and environmentally friendly crops. Since 2004,
        and
        through our latest inspection in June 2007, our products meet all standards
        of
        the Q/SXN001-2004 Index, according to the annual Inspection Report issued
        by the
        Shaanxi Chemical Products Quality Monitoring and Inspection Station. The
        Q/SXN001-2004 Index is a quality standard for our industry promulgated by
        the
        government of Shaanxi Province and approved by the PRC Ministry of Agriculture,
        and the Inspection Report is issued as a verification of the quality of our
        products performed each year by the Shaanxi Chemical Products Quality Monitoring
        and Inspection Station.
 
 The
        key
        raw material for our products is chitosan, which consists primarily of
        polysaccharides extracted from the shells of crustaceans such as crabs and
        shrimp. Studies performed by our research and development team show that
        nitrogen, phosphorus, potassium and other nutrients in traditional chemical
        fertilizers tend to become highly water-soluble, and runoff water can remove
        them from the soil. Our products, which contain chitosan, release nutrients
        into
        the soil at a slower rate, making them less likely to be leached from the
        soil
        by rainwater. The retention of these nutrients improves the efficiency of
        use of
        both naturally-occurring and applied nutrients and fertilizers. Our
        chitosan-based products are also designed to build soil structure, which
        allows
        more air to reach plant roots and increases the soil's ability to retain
        water,
        resulting in healthier crops. Each of our products contains a minimum of
        50
        grams of chitosan per liter of finished product. Our products also use chitosan
        to provide nutrients used by soil microorganisms, which in turn make mineral
        nutrients available to plants.
 
 4
 Our
        agricultural application products are produced and sold in two types of
        packaging: (i) polyethylene bottles that are 12 centimeters in height and
        5.8
        centimeters in diameter and have a net weight of 200 grams and (ii) bags
        that
        are 11 centimeters in length and 8.4 centimeters in width and have a net
        weight
        of 20 grams.
 
 The
        raw
        materials we use in production are generally available from local suppliers
        and
        we do not have any long term supply contracts.
 
 The
        principal advantages of our agricultural application products are their high
        quality and low cost. Higher yields mean that farmers can plant less and
        therefore decrease their operating expenses. We believe our products can
        ultimately increasing plant growth by an estimated 20%, thereby reducing
        farmers' planting and operational expenses by approximately 20%. These estimates
        are based on our own testing and field trial reports issued in 2005 and 2006
        by
        three independent land and fertilizer working stations in China, for the
        years
        of 2005 and 2004 ("Field Trial Reports"), --- Shaanxi Chunhua County Land
        and
        Fertilizer Working Station, Shaanxi Province Land and Fertilizer Working
        Station
        and Shaanxi Province Yangling Zone Land and Fertilizer Working Station.
        Additionally, we offer agricultural application products containing bactericides
        and pesticides in addition to growth-promoting compounds, which are more
        cost
        effective than purchasing separate pesticides and bactericides.
 
 **Market
        for Our Products**
 
 By
        the
        late 1980s, in an effort to produce more food, the PRC had reached a point
        where
        its farmers were using more fertilizers and pesticides than most other
        countries. This overuse of fertilizers and pesticides, as well as the use
        of
        unsafe fertilizers and pesticides, led to the sale of products with dangerous
        and high concentrations of harmful chemicals and several publicized incidents
        of
        food-caused illness. In addition to creating a dangerous situation for domestic
        consumers, it also created problems for the PRC's food exporters which, in
        many
        cases, were barred from exporting to certain countries which have minimum
        acceptable standards for pesticide and chemical use.
 
 In
        1990,
        the PRC Ministry of Agriculture began to encourage the production of “Green
        foods”, which are foods that are safe, free from pollutants and harmful
        chemicals, and of good quality. In 1992, the PRC Ministry of Agriculture
        established the China Green Food Research Center with a number of branches
        charged with inspecting food quality and provincial level centers to monitor
        local food quality in each province. The China Green Food Research Center
        is a
        private, for profit entity. In 1993, the Ministry of Agriculture established
        regulations on the use of Green food labeling. In 1994, the PRC government
        issued an "Agenda in the 21st Century", in which there was specific discussion
        with respect to the development of a Green food industry. In 1996, an
        identifying trademark for Green foods was registered in the PRC and put into
        use.
 
 In
        1997,
        the PRC State Council approved the "Plan to Improve Nutrition in Chinese
        People's Diets," which called for more Green foods to protect people's heath
        and
        well being.
 
 Today,
        with the rapid growth of PRC's economy and per capita income, people living
        in
        the PRC are becoming more health conscious. As a result, there is a growing
        market demand for Green food products. Fruits and vegetables labeled as Green
        food are generally available in supermarkets throughout the PRC and are
        typically sold at higher prices.
 
 According
        to the JOURNAL OF ORGANIC SYSTEMS, a scientific journal focusing on organic
        systems and published by a group of professors in Australia and New Zealand,
        China is at the onset of an organic agriculture revolution. From 2000 to
        2006,
        China has moved from 45th to 2nd position in the world in the number of hectares
        under organic management. China now has more land under organic horticulture
        than any other country. In the years 2005 and 2006, China added 12% to the
        world's land under organic management. This accounted for 63% of the world's
        annual increase in organic land, and China now has 11% of the world's
        organically managed land.
 
 According
        to the PEOPLE'S DAILY ONLINE, by 2003, there were 2,047 Green food producers
        in
        China which sold approximately 72.3 billion RMB of food to the domestic market
        and more than US$ 1 billion to the overseas market.
 
 Green
        food certified by the China Green Food Research Center can be divided into
        2
        groups: grade A (allowed to use a certain amount of chemical materials) and
        Grade AA (containing little or no chemical materials - also know as organic
        food). Our organic biochemical agricultural application products can be used
        to
        grow Grade AA foods.
 
 5
 Shaanxi
        Province, where our production facility is located, is already the largest
        Green
        food producer in the PRC with a history of producing organic and Green products
        for export. According to PEOPLE'S DAILY ONLINE, Shaanxi Province produces
        approximately one-third of the world's condensed apple juice which is required
        to meet rigorous international standards.
 
 **Government
        Regulation**
 
 In
        the
        PRC, producers of fertilizer and related products must obtain a government
        approval known as a fertilizer registration certificate. Since 2004, we have
        obtained a temporary certificate each year from the PRC’s Ministry of
        Agriculture authorizing us to manufacture and distribute our agricultural
        application products throughout China. This certificate is reviewed by the
        PRC’s
        Ministry of Agriculture on an annual basis. The Company plans to seek renewal
        of
        the certificate on an annual basis.
 
 While
        we
        believe that we maintain all requisite licenses and permits and are in
        compliance with all applicable regulations, we may not be able to maintain
        all
        requisite licenses and permits and remain in compliance with all applicable
        regulations. Any failure to satisfy those and other regulatory requirements
        could have a material adverse effect on our financial condition and results
        of
        operations.
 
 **Marketing**
 
 We
        sell
        our agricultural application products to both direct consumers and indirect
        consumers. Direct consumers are farmers and indirect consumers are retail
        dealers. Because retail dealers have their own sales network and customers,
        we
        believe that developing a retail dealer network provides the same sales that
        we
        could generate by developing our own customer base of farmers. Accordingly,
        we
        are focused on developing our retail dealer network.
 
 In
        order
        to market our products, we have placed hundreds of advertisements in newspapers,
        including national publications. We have also utilized a limited amount of
        television advertising, and distribute brochures, company profiles and CDs
        to
        farmers.
 
 As
        part
        of our marketing efforts, we have sponsored over 60 promotional programs
        including informational sessions, product demonstrations and sales meetings.
 
 We
        currently have approximately 60 sales and marketing employees, half of which
        are
        full time employees, and the other half of which are part time or seasonal
        employees.
 
 **Competition**
 
 The
        organic agricultural chemistry products industry in which we operate is highly
        competitive. We compete largely on the basis of the quality of our products,
        which we make by processing and combining raw materials using unique,
        proprietary methods. Each of our products contains more than twenty ingredients
        and a minimum of 50 grams of chitosan per liter. Chitosan helps soil retain
        nutrients and improves soil structure at the same time.
 
 We
        consider the following companies to be among our primary
        competitors:
  COMPANY
                NAME
              
              LOCATION
                WITHIN PRCWeifang Xinde Bio-tech
                Co.,
                Ltd.
              
              Shandong ProvinceShaanxi Haide'er Bio-tech
                Co.,
                Ltd.
              
              Shaanxi ProvinceWeifang Hengsheng Bio-tech
                Co.,
                Ltd.
              
              Shandong ProvinceZhejiang Lanhai Bio-engineering
                Co., Ltd.
              
              Zhejiang ProvinceAiwo
                  Beijing Agricultural Technology Co., Ltd.
              
              Beijing
                  City
   We
        seek
        to gain a competitive advantage by producing high-quality products. Our products
        contain 5% chitosan while our competitors' products have approximately 0.3%
        to
        0.5% chitosan. Higher chitosan content translates into increased cost of
        production, and accordingly our products are priced approximately 10% to
        15%
        higher than those of our competitors. However, our customers choose our products
        because their greater efficiency offsets the customers' greater cost, as
        evidenced by the Field Trial Reports. We also offer free field trials to
        our
        potential customers for the purpose of comparing plantings that have applied
        our
        products to plantings that have not.. We believe that potential customers
        are
        more inclined to purchase our products after seeing the comparison results.
        We
        have a marketing team comprised of approximately 60 people who demonstrate
        to
        our dealers and our direct customers the correct methods of using our products,
        and who help address issues that arise for our dealers and customers in using
        our products and collect feedback from them.
 
 6
 **Intellectual
        Property**
 
 We
        currently own the rights to one patent for "Zero-tillage Fertilizing Equipment"
        (PRC Patent Number: 330398), which is a type of seeding machine, the use
        of
        which prevents soil erosion. We do not currently use this patent or the
        Zero-tillage Fertilizing Equipment in our business. We have not yet determined
        whether and when this patent may be utilized in our business.
 
 We
        also
        own the rights to the registered trademark which we use in our business and
        which appears on our product packaging.
 
 **Seasonality**
 
 Our
        business is seasonal. Generally, our sales peak occurs at the beginning of
        the
        planting season when farmers buy the most organic biochemical agricultural
        application products, which generally occurs during the period from March
        though
        June. Our sales are the lowest in the period from December through January
        and
        are relatively stable for the rest of the year.
 
 **Research
        and Development**
 
 We
        have a
        research and development team consisting of six full time employees and five
        outside personnel. This team is responsible for formulating our organic
        biochemical agricultural application products and researching new products.
 
 **Employees**
 
 We
        have
        approximately 120 employees as of March 2008. Approximately half of our
        employees are full-time employees and the remaining half are part-time or
        seasonal employees.
 
 **RISK
        FACTORS**
 
 *You
        should carefully consider the risks described below in conjunction with
        our*  *forward
        looking statement related risks as set forth in the beginning of this
        report,*  *as
        well as the other information in this report, when evaluating our business
        and*  *future
        prospects. Should any of the following risks actually occur, our
        business,*  *financial
        condition and results of operations could be seriously harmed. In
        that*  *event,
        the market price of our common stock could decline and investors could
        lose*  *all
        or a portion of the value of their investment in our common
        stock.*
 
 **RISKS
        RELATED TO OUR BUSINESS:**
 
 **WE
        OPERATE IN A HIGHLY-COMPETITIVE INDUSTRY AND OUR FAILURE TO COMPETE EFFECTIVELY
        MAY ADVERSELY AFFECT OUR ABILITY TO GENERATE REVENUE.**
 
 We
        are
        principally engaged in the manufacture and marketing of organic biochemical
        agricultural application products and we face competition from numerous other
        companies. Many of our competitors are better capitalized and more experienced
        with a larger customer base and have deeper ties in the PRC marketplace.
        We may
        be unsuccessful in our attempts to compete, which would have a material adverse
        impact on our business and financial condition.
 
 **THE
        FERTILIZER REGISTRATION CERTIFICATE WE REQUIRE TO OPERATE IN THE PRC IS SUBJECT
        TO ANNUAL RENEWAL AND WE HAVE NO ASSURANCE THAT THE CERTIFICATE WILL BE
        RENEWED.**
 
 In
        the
        PRC, producers of fertilizers and related products must obtain a government
        approval known as a fertilizer registration certificate. Since 2004, we have
        obtained a temporary certificate each year from the PRC’s Ministry of
        Agriculture authorizing us to manufacture and distribute our agricultural
        application products throughout China. This certificate is reviewed by the
        PRC’s
        Ministry of Agriculture on an annual basis.
 
 7
 **OUR
        SUCCESS DEPENDS UPON THE DEVELOPMENT OF THE PRC'S AGRICULTURAL
        INDUSTRY.**
 
 The
        PRC
        is currently the world's most populous country and one of the largest producers
        and consumers of agricultural products. Roughly half of the PRC's labor force
        is
        engaged in agriculture, even though only about 10% of the land is suitable
        for
        cultivation. Although the PRC hopes to further increase agricultural production,
        incomes for Chinese farmers are stagnating. Despite the Chinese government's
        continued emphasis on agricultural self-sufficiency, inadequate port facilities
        and lack of warehousing and cold storage facilities impedes the growth of
        the
        domestic agricultural trade. We rely on local farmers in the PRC to purchase
        our
        products, which are generally purchased under a cash-on-delivery basis or
        on
        9-12 months credit. Accordingly, any difficulties farmers in the PRC experience
        in selling their produce could reduce the demand for our products and hinder
        the
        ability of the farmers to pay their credit obligations to us on a timely
        basis.
 
 **OUR
        PRODUCTS MAY BE SUBJECT TO COUNTERFEITING AND/OR IMITATION, WHICH COULD HARM
        OUR
        BUSINESS AND COMPETITIVE POSITION.**
 
 Although
        we do not own any patents relating to products we market, our success depends,
        in part, on our ability to protect our proprietary rights in our products.
        We
        cannot guarantee that counterfeiting or imitation of our products will not
        occur
        in the future or that we will be able to detect it and deal with it effectively.
        Any occurrence of counterfeiting or imitation could impact negatively upon
        our
        corporate and brand image. In addition, counterfeit or imitation products
        could
        result in a reduction in our market share, a loss of revenues or an increase
        in
        our administrative expenses in respect of detection or prosecution.
 
 **WE
        MAY NOT BE ABLE TO EFFECTIVELY CONTROL AND MANAGE OUR
        GROWTH.**
 
 If
        our
        business and markets grow and develop, it will be necessary for us to finance
        and manage expansion in an orderly fashion. In addition, we may face challenges
        in managing expanding product and service offerings and in integrating acquired
        businesses with our own. Such eventualities will increase demands on our
        existing management, workforce and facilities. Failure to satisfy such increased
        demands could interrupt or adversely affect our operations and cause production
        backlogs, longer product development time frames and administrative
        inefficiencies.
 
 **OUR
        PROFITABILITY DEPENDS ON OUR SUCCESS ON BRAND RECOGNITION AND WE COULD LOSE
        OUR
        COMPETITIVE ADVANTAGE IF WE ARE NOT ABLE TO PROTECT OUR TRADEMARKS AGAINST
        INFRINGEMENT, AND ANY RELATED LITIGATION COULD BE TIME-CONSUMING AND
        COSTLY.**
 
 Our
        trademarked brands have gained substantial recognition to our customers in
        various areas. However, the protection of intellectual property rights in
        the
        PRC may not be as effective as those in the U.S. or other countries. The
        unauthorized use of our brands could enable some other manufacturers to take
        unfair advantage, which could harm our business and competitive
        position.
 
 **WE
        MAY NOT BE ABLE TO HIRE AND RETAIN QUALIFIED PERSONNEL TO SUPPORT OUR GROWTH
        AND
        IF WE ARE UNABLE TO RETAIN OR HIRE SUCH PERSONNEL IN THE FUTURE, OUR ABILITY
        TO
        IMPROVE OUR PRODUCTS AND IMPLEMENT OUR BUSINESS OBJECTIVES COULD BE ADVERSELY
        AFFECTED.**
 
 Competition
        for senior management and senior research and development personnel is intense,
        the pool of qualified candidates is very limited, and we may not be able
        to
        retain the services of our senior executives or senior technology personnel,
        or
        attract and retain high-quality senior executives or senior technology personnel
        in the future. Such failure could materially and adversely affect our future
        growth and financial condition.
  **WE
        DO NOT PRESENTLY MAINTAIN FIRE, THEFT, PRODUCT LIABILITY OR ANY
        OTHER****PROPERTY INSURANCE, WHICH LEAVES US WITH EXPOSURE IN THE EVENT OF LOSS OR
        DAMAGE
        TO OUR PROPERTIES OR CLAIMS FILED AGAINST US.**
 We
          do not
          maintain fire, theft, product liability or other insurance of any kind.
          We bear
          the economic risk with respect to loss of or damage or destruction to our
          property and to the interruption of our business as well as liability to
          third
          parties for damage or destruction to them or their property that may be
          caused
          by our personnel or products. Such liability could be substantial and the
          occurrence of such loss or liability may have a material adverse effect
          on our
          business, financial condition and prospects. While product liability lawsuits
          in
          the PRC are rare, and we have never experienced significant failure of
          our
          products, there can be no assurance that we would not face liability in
          the
          event of the failure of any of our products.
 
 8
 **RISK
        RELATED TO OUR INDUSTRY:**
 
 **WE
        ARE DEPENDENT UPON THE PRC GOVERNMENT'S APPROVAL OF OUR PRODUCTS AS
        "GREEN".**
 
 All
        of
        our organic agricultural enhancement are qualified for being used for production
        of "Green food” because they meet the requirements of the Green Food Research
        Center of the PRC Ministry of Agriculture for being safe and chemical free.
        Should the government change the current standards for Green foods, we may
        not
        qualify for the Green food labeling which may lead to a significant decrease
        in
        our sales prices, sales and profits, which would materially and adversely
        affect
        our business.
 
 **RISKS
        RELATED TO DOING BUSINESS IN THE PRC:**
 
 **WE
        FACE THE RISK THAT CHANGES IN THE POLICIES OF THE PRC GOVERNMENT COULD HAVE
        A
        SIGNIFICANT IMPACT UPON THE BUSINESS WE MAY BE ABLE TO CONDUCT IN THE PRC
        AND
        THE PROFITABILITY OF SUCH BUSINESS.**
 
 The
        PRC's
        economy is in a transition from a planned economy to a market-oriented economy
        subject to five-year and annual plans adopted by the government that set
        national economic development goals. Policies of the PRC government can have
        significant effects on the economic conditions of the PRC. The PRC government
        has confirmed that economic development will follow the model of a market
        economy. Under this direction, we believe that the PRC will continue to
        strengthen its economic and trading relationships with foreign countries
        and
        business development in the PRC will follow market forces. While we believe
        that
        this trend will continue, there can be no assurance that this will be the
        case.
        A change in policies by the PRC government could adversely affect our interests
        by, among other factors: changes in laws, regulations or the interpretation
        thereof, confiscatory taxation, restrictions on currency conversion, imports
        or
        sources of supplies, or the expropriation or nationalization of private
        enterprises. Although the PRC government has been pursuing economic reform
        policies for more than two decades, there is no assurance that the government
        will continue to pursue such policies or that such policies may not be
        significantly altered, especially in the event of a change in leadership,
        social
        or political disruption, or other circumstances affecting the PRC's political,
        economic and social life.
 
 **THE
        PRC LAWS AND REGULATIONS GOVERNING OUR CURRENT BUSINESS OPERATIONS ARE SOMETIMES
        VAGUE AND UNCERTAIN. ANY CHANGES IN SUCH PRC LAWS AND REGULATIONS MAY HAVE
        A
        MATERIAL AND ADVERSE EFFECT ON OUR BUSINESS.**
 
 There
        are
        substantial uncertainties regarding the interpretation and application of
        PRC
        laws and regulations, including but not limited to the laws and regulations
        governing our business, or the enforcement and performance of our arrangements
        with customers in the event of the imposition of statutory liens, death,
        bankruptcy and criminal proceedings. We and any future subsidiaries are
        considered foreign persons or foreign funded enterprises under PRC laws,
        and as
        a result, we are required to comply with PRC laws and regulations. These
        laws
        and regulations are sometimes vague and may be subject to future changes,
        and
        their official interpretation and enforcement may involve substantial
        uncertainty. The effectiveness of newly enacted laws, regulations or amendments
        may be delayed, resulting in detrimental reliance by foreign investors. New
        laws
        and regulations that affect existing and proposed future businesses may also
        be
        applied retroactively. We cannot predict what effect the interpretation of
        existing or new PRC laws or regulations may have on our business.
 
 **A
        SLOWDOWN OR OTHER ADVERSE DEVELOPMENTS IN THE PRC ECONOMY MAY MATERIALLY
        AND
        ADVERSELY AFFECT OUR CUSTOMERS, DEMAND FOR OUR SERVICES AND OUR
        BUSINESS.**
 
 All
        of
        our operations are conducted in the PRC and all of our revenues are generated
        from sales in the PRC. Although the PRC economy has grown significantly in
        recent years, we cannot assure you that such growth will continue. The Green
        food industry in the PRC is relatively new and growing, but we do not know
        how
        sensitive we are to a slowdown in economic growth or other adverse changes
        in
        the PRC economy which may affect demand for Green food products. A slowdown
        in
        overall economic growth, an economic downturn or recession or other adverse
        economic developments in the PRC may materially reduce the demand for our
        products and materially and adversely affect our business.
 
 **INFLATION
        IN THE PRC COULD NEGATIVELY AFFECT OUR PROFITABILITY AND
        GROWTH.**
 
 While
        the
        PRC economy has experienced rapid growth, such growth has been uneven among
        various sectors of the economy and in different geographical areas of the
        country. Rapid economic growth can lead to growth in the money supply and
        rising
        inflation. If prices for our products rise at a rate that is insufficient
        to
        compensate for the rise in the costs of supplies, it may have an adverse
        effect
        on profitability. In order to control inflation in the past, the PRC government
        has imposed controls on bank credits, limits on loans for fixed assets and
        restrictions on state bank lending. Such an austere policy can lead to a
        slowing
        of economic growth. In October 2004, the People's Bank of China, the PRC's
        central bank, raised interest rates for the first time in nearly a decade
        and
        indicated in a statement that the measure was prompted by inflationary concerns
        in the Chinese economy. Repeated rises in interest rates by the central bank
        would likely slow economic activity in China which could, in turn, materially
        increase our costs and also reduce demand for our products.
 
 9
 **GOVERNMENTAL
        CONTROL OF CURRENCY CONVERSION MAY AFFECT THE VALUE OF AN INVESTMENT IN THE
        COMPANY.**
 
 The
        PRC
        government imposes controls on the convertibility of Renminbi ("RMB") into
        foreign currencies and, in certain cases, the remittance of currency out
        of the
        PRC. We receive substantially all of our revenues in RMB, which is currently
        not
        a freely convertible currency. Shortages in the availability of foreign currency
        may restrict our ability to remit sufficient foreign currency to pay dividends,
        or otherwise satisfy foreign currency dominated obligations. Under existing
        PRC
        foreign exchange regulations, payments of current account items, including
        profit distributions, interest payments and expenditures from the transaction,
        can be made in foreign currencies without prior approval from the PRC State
        Administration of Foreign Exchange by complying with certain procedural
        requirements. However, approval from appropriate governmental authorities
        is
        required where RMB is to be converted into foreign currency and remitted
        out of
        China to pay capital expenses, such as the repayment of bank loans denominated
        in foreign currencies.
 
 The
        PRC
        government may also at its discretion restrict access in the future to foreign
        currencies for current account transactions. If the foreign exchange control
        system prevents us from obtaining sufficient foreign currency to satisfy
        our
        currency demands, we may not be able to pay certain expenses as they come
        due.
 
 **THE
        FLUCTUATION OF THE RMB MAY MATERIALLY AND ADVERSELY AFFECT AN INVESTMENT
        IN THE
        COMPANY.**
 
 The
        value
        of the RMB against the U.S. Dollar and other currencies may fluctuate and
        is
        affected by, among other things, changes in the PRC's political and economic
        conditions. As we rely entirely on revenues earned in the PRC, any significant
        revaluation of the RMB may materially and adversely affect our cash flows,
        revenues and financial condition. For example, to the extent that we need
        to
        convert U.S. Dollars we receive from an offering of our securities into RMB
        for
        our operations, appreciation of the RMB against the U.S. Dollar could have
        a
        material adverse effect on our business, financial condition and results
        of
        operations. Conversely, if we decide to convert our RMB into U.S. Dollars
        for
        the purpose of making payments for dividends on our common shares or for
        other
        business purposes and the U.S. Dollar appreciates against the RMB, the U.S.
        Dollar equivalent of the RMB we convert would be reduced. In addition, the
        depreciation of significant U.S. Dollar denominated assets could result in
        a
        charge to our income statement and a reduction in the value of these
        assets.
 
 On
        July
        21, 2005, the PRC government changed its decade-old policy of pegging the
        value
        of the RMB to the U.S. Dollar. Under the new policy, the RMB is permitted
        to
        fluctuate within a narrow and managed band against a basket of certain foreign
        currencies. This change in policy has resulted in an approximately 13.5%
        appreciation of the RMB against the U.S. Dollar as of December 31, 2007.
        While
        the international reaction to the RMB revaluation has generally been positive,
        there remains significant international pressure on the PRC government to
        adopt
        an even more flexible currency policy, which could result in a further and
        more
        significant appreciation of the RMB against the U.S. Dollar.
 
 **RECENT
        PRC STATE ADMINISTRATION OF FOREIGN EXCHANGE ("SAFE") REGULATIONS REGARDING
        OFFSHORE FINANCING ACTIVITIES BY PRC RESIDENTS HAVE UNDERGONE A NUMBER OF
        CHANGES WHICH MAY INCREASE THE ADMINISTRATIVE BURDEN WE FACE. THE FAILURE
        BY OUR
        SHAREHOLDERS WHO ARE PRC RESIDENTS TO MAKE ANY REQUIRED APPLICATIONS AND
        FILINGS
        PURSUANT TO SUCH REGULATIONS MAY PREVENT US FROM BEING ABLE TO DISTRIBUTE
        PROFITS AND COULD EXPOSE US AND OUR PRC RESIDENT SHAREHOLDERS TO LIABILITY
        UNDER
        PRC LAW.**
 
 SAFE
        issued a public notice ("October Notice") effective from November 1, 2005,
        which
        requires registration with SAFE by the PRC resident shareholders of any foreign
        holding company of a PRC entity. Without registration, the PRC entity cannot
        remit any of its profits out of the PRC as dividends or otherwise; however,
        it
        is uncertain how the October Notice will be interpreted or implemented regarding
        specific documentation requirements for a foreign holding company formed
        prior
        to the effective date of the October Notice, such as in our case. In addition,
        the October Notice requires that any monies remitted to PRC residents outside
        of
        the PRC be returned within 180 days; however, there is no indication of what
        the
        penalty will be for failure to comply or if shareholder non-compliance will
        be
        considered to be a violation of the October Notice by us or otherwise affect
        us.
 
 10
 In
        the
        event that the proper procedures are not followed under the SAFE October
        Notice,
        we could lose the ability to remit monies outside of the PRC and would therefore
        be unable to pay dividends or make other distributions. Our PRC resident
        shareholders could be subject to fines, other sanctions and even criminal
        liabilities under the PRC Foreign Exchange Administrative Regulations
        promulgated January 29, 1996, as amended.
 
 **ANY
        RECURRENCE OF SEVERE ACUTE RESPIRATORY SYNDROME, OR SARS, OR ANOTHER WIDESPREAD
        PUBLIC HEALTH PROBLEM, COULD ADVERSELY AFFECT OUR
        OPERATIONS.**
 
 A
        renewed
        outbreak of SARS or another widespread public health problem in the PRC,
        such as
        bird flu where all of the Company's revenue is derived, could have an adverse
        effect on our operations. Our operations may be impacted by a number of
        health-related factors, including quarantines or closures of some offices
        that
        would adversely disrupt our operations. Any of the foregoing events or other
        unforeseen consequences of public health problems could adversely affect
        our
        operations.
 
 **BECAUSE
        OUR PRINCIPAL ASSETS ARE LOCATED OUTSIDE OF THE U.S. AND ALL OF OUR DIRECTORS
        AND NEARLY ALL OUR OFFICERS RESIDE OUTSIDE OF THE U.S., IT MAY BE DIFFICULT
        FOR
        YOU TO ENFORCE YOUR RIGHTS BASED ON U.S. FEDERAL SECURITIES LAWS AGAINST
        US AND
        OUR OFFICERS AND SOME DIRECTORS IN THE U.S. OR TO ENFORCE A U.S. COURT JUDGMENT
        AGAINST US OR THEM IN THE PRC.**
 
 Nearly
        all of our directors and officers reside outside of the U.S. In addition,
        our
        operating subsidiary is located in the PRC and substantially all of its assets
        are located outside of the U.S. It may therefore be difficult for investors
        in
        the U.S. to enforce their legal rights based on the civil liability provisions
        of the U.S. Federal securities laws against us in the courts of either the
        U.S.
        or the PRC and, even if civil judgments are obtained in U.S. courts, to enforce
        such judgments in PRC courts. Further, it is unclear if extradition treaties
        now
        in effect between the U.S. and the PRC would permit effective enforcement
        against us or our officers and directors of criminal penalties under the
        U.S.
        Federal securities laws or otherwise.
 
 **WE
        MAY HAVE DIFFICULTY ESTABLISHING ADEQUATE MANAGEMENT, LEGAL AND FINANCIAL
        CONTROLS IN THE PRC.**
 
 The
        PRC
        historically has not adopted a western style of management and financial
        reporting concepts and practices, as well as in modern banking, computer
        and
        other control systems. We may have difficulty in hiring and retaining a
        sufficient number of qualified employees to work in the PRC. As a result
        of
        these factors, we may experience difficulty in establishing management, legal
        and financial controls, collecting financial data and preparing financial
        statements, books of account and corporate records and instituting business
        practices that meet Western standards.
 
 **LACK
        OF BANK DEPOSIT INSURANCE PUTS OUR FUNDS AT RISK OF LOSS FROM BANK FORECLOSURE
        OR INSOLVENCIES.**
 
 China
        Agri-Business maintains certain bank accounts in China that are not insured
        and
        are not protected by FDIC insurance or other insurance. As of March 24, 2008,
        China Agri-Business held approximately $5,918,949 in bank accounts in China.
        If
        a Chinese bank holding our funds experienced insolvency, it may not permit
        us to
        withdraw our funds which would result in a loss of such funds and reduction
        of
        our net assets.
 
 **RISKS
        RELATED TO OUR STOCK:**
 
 **MARKET
        VOLATILITY MAY AFFECT OUR STOCK PRICE AND THE VALUE OF YOUR
        INVESTMENT.**
 
 The
        market prices for securities of companies with business activities in the
        PRC in
        general have been highly volatile and may continue to be highly volatile
        in the
        future. The following factors, in addition to other risk factors described
        in
        this section, may have a significant impact on the market price of our common
        stock:
 
 ·
              announcements
                  of innovations or new products by us or our
                  competitors;
 ·
              announcement
                  of PRC regulatory approval or non-approval of our
                  products;
 ·
              actions
                  taken by regulatory agencies with respect to our products, manufacturing
                  process or sales and marketing
                  activities;
 ·
              regulatory
                  developments in the PRC or the United States of
                  America;
 ·
              the
                  success of our research and development
                  efforts;
   11
  ·
              any
                  intellectual property infringement action, or any other litigation,
                  involving us;
 ·
              announcements
                  concerning our competitors, or the agricultural or Green foods
                  industries
                  in general;
 ·
              actual
                  or anticipated fluctuations in our operating
                  results;
 ·
              changes
                  in financial estimates or recommendations by securities
                  analysts;
 ·
              our
                  ability to remain quoted on the
                  OTCBB;
 ·
              sales
                  of large blocks of our common
                  stock;
 ·
              sales
                  of our common stock by our executive officers, directors and significant
                  stockholders; and
 ·
              the
                  loss of any of our key personnel.
 
 The
        occurrence of one or more of these factors may cause our stock price to decline,
        and investors may not be able to resell their shares at or above the price
        that
        they paid for the shares. In addition, the stock markets in general, and
        the
        markets for PRC related stocks in particular, have experienced extreme
        volatility that has often been unrelated to the operating performance of
        particular companies. These broad market fluctuations may adversely affect
        the
        trading price of our common stock.
 
 **WE
        ARE NOT LIKELY TO PAY CASH DIVIDENDS IN THE FORESEEABLE
        FUTURE.**
 
 We
        currently intend to retain any future earnings for use in the operation and
        expansion of our business. We do not expect to pay any cash dividends in
        the
        foreseeable future but will review this policy as circumstances dictate.
        Should
        we decide in the future to do so, as a holding company, our ability to pay
        dividends and meet other obligations depends upon the receipt of dividends
        or
        other payments from our operating subsidiary. In addition, our operating
        subsidiary, from time to time, may be subject to restrictions on its ability
        to
        make distributions to us, including restrictions on the conversion of local
        currency into U.S. Dollars or other hard currency and other regulatory
        restrictions.
 
 **THE
        PRICE OF OUR COMMON SHARES MAY DECLINE DUE TO THE LARGE NUMBER OF OUTSTANDING
        SHARES ELIGIBLE FOR RESALE TO THE PUBLIC.**
 
 On
        April
        22, 2006, we issued 5,389,221 shares of our common stock (approximately
        10,950,897 shares after giving effect to our forward stock split on October
        31,
        2006) as consideration for the Management Agreement. Of this amount, 9,099,749
        shares are presently held in a trust and can be released from the trust and
        are
        eligible for resale pursuant to Rule 144 ("Rule 144") promulgated under the
        Securities Act of 1933, as amended (the "Securities Act"). Such sales, or
        the
        possibility of such sales, may adversely affect the price of our common stock
        and may make it more difficult for us to raise capital through the issuance
        of
        equity securities.
 
 In
        addition, on May 31, 2006, we sold 10,000 shares of our Series A convertible
        preferred stock and warrants to purchase 10,000 shares of our common stock
        at
        $1.50 per share. Such Series A convertible preferred stock was automatically
        converted into 300,000 shares of our common stock upon completion of our
        initial
        public offering on October 11, 2007. The shares of our common stock issued
        upon
        conversion of the Series A convertible preferred stock are eligible for resale
        pursuant to Rule 144 under the Securities Act. The shares of our common stock
        issuable upon exercise of the warrants may be sold under Rule 144 beginning
        six
        months after exercise.
 
 In
        addition, on October 11, 2007, we completed an underwriter initial public
        offering of an aggregate of $379,800 in gross proceeds from the sale of 379,800
        units for $1.00 per unit. Each unit consists of (i) one share of common stock,
        par value $0.001 per share, (ii) one warrant to purchase one share of the
        Company's common stock at $1.50 per share and (iii) one warrant to purchase
        one
        share of the Company's common stock at $2.00 per share.
 
 This
        large number of shares of common stock available for future resale could
        create
        an overhang effect that may depress the trading price of our common
        stock.
 
 **WE
        ARE AUTHORIZED TO ISSUE 4,900,000 SHARES OF AN "UNDESIGNATED" CLASS OF STOCK
        WHICH MAY ADVERSELY AFFECT THE VOTING POWER OR OTHER RIGHTS OF THE HOLDERS
        OF
        COMMON STOCK.**
 
 Our
        certificate of incorporation authorizes us to issue 4,900,000 shares of an
        undesignated class of stock. With respect to these shares, our board of
        directors may make designations and define various powers, preferences, rights,
        qualifications, limitations and restrictions, consistent with Maryland law.
        Our
        board of directors is empowered, without stockholder approval, to issue this
        stock with rights that could adversely affect the voting power or other rights
        of the holders of our common stock. In addition, the undesignated stock could
        be
        utilized, under certain circumstances, as a method of discouraging, delaying
        or
        preventing a change in control. We do not presently intend to issue any shares
        of undesignated stock. Nevertheless, there can be no assurance we will not
        do so
        in the future. As of this date, no shares of the undesignated stock are
        outstanding and no designation has been made as to any characteristics these
        shares may have in the future.
 
 12
  **Item 2.** ***Description
        of Property.***
 
 Our
        subsidiary, Xinsheng, leases its office space (use area of 678.50 square
        meters,
        or approximately 7,303.3 square feet) at the Finance Plaza 9th Floor, Hi-tech
        Road No. 42, Hi-tech Industrial Development Zone in Xi'an, Shaan Xi Province,
        for an annual rent of RMB 366,390 (approximately US$ 50,228) from Shaanxi
        Heng
        Xing Property Management Co., Ltd. The term of the lease is three years from
        April 1, 2005 through March 31, 2008.
 
 Xinsheng
        leases its operating space (construction area of 246.8 square meters, or
        approximately 2,656.5 square feet) located at the Xi'an Vegetable Research
        Institute ("XVRI") for an annual rent of RMB 38,500 (approximately US$ 5,278).
        The lease expires in March 31, 2010.
 
 Xinsheng
        does not own any land use rights.
 
 China
        Agri’s offices are located at 11 East 86th Street, New York, New York 10028 from
        Michael Segal, one of our directors. Mr. Segal allows us to use the space
        rent
        free.
 
 **Item 3.** ***Legal
        Proceedings.***
 
 There
        are
        no material pending legal proceedings to which we are a party or to which
        any of
        our property is subject and to the best of our knowledge, no such actions
        against us are contemplated or threatened.
 
 **Item 4.** ***Submission
        of Matters to a Vote of Security Holders.***
 
 There
        were no matters to a vote of security holders in the fourth quarter of 2007
        or
        thereafter.
 
 **PART II**
 
 **Item 5.** ***Market
        for Common Equity and Related Stockholder Matters and***  ***Small
        Business Issuer Purchases of Equity Securities.***
 
 Our
        common stock began quoting on the Over the Counter Bulletin Board (“OTCBB”) on
        October 17, 2007 under the symbol CHBU.OB. The price range per share of common
        stock presented below represents the highest and lowest intra-day sales prices
        for the Company's common stock on the OTCBB. Since our common stock is traded
        infrequently, such over-the-counter market quotations may reflect inter-dealer
        prices, without markup, markdown or commissions and may not necessarily
        represent a liquid trading market.
 
 **High
                  Sales**
                **Price**
              
              
              **Low
                  Sales**
                **Price**Year
                  Ended December 31, 2008:1st
                  Quarter (through March 18, 2008)
              
              $
              1.00
              
              $
              0.40Year
                  Ended December 31, 2007:4th
                  Quarter (from October 17, 2007 to December 31, 2007)
              
              $
              2.00
              
              $
              0.62
 
 **Number
        of Shareholders**
 
 As
        of
        March 24, 2008, there were 12,958,574 shares of our common stock issued and
        outstanding and 10 active holders of record of our common stock. The number
        of
        active record holders was determined from the records of our transfer agent
        and
        does not include beneficial owners of common stock whose shares are held
        in the
        names of various security brokers, dealers, and registered clearing agencies.
        The Company's transfer agent is Securities Transfer Corporation, 2591 Dallas
        Parkway, Suite 102, Frisco, TX 75034, Attention: Mr. Kevin Halter. Telephone
        Number: (469) 633-0101.
 
 **Dividends**
 
 The
        payment of dividends, if any, is to be within the discretion of our board
        of
        directors. We presently intend to retain all earnings, if any, for use in
        our
        business operations and accordingly, the board of directors does not anticipate
        declaring any dividends in the near future. Dividends, if any, will be
        contingent upon our revenues and earnings, capital requirements, financial
        conditions and our ability to obtain approval to get monies out of the PRC.
        The
        PRC's national currency, the Yuan, is not a freely convertible currency.
 
 13
 **Equity
        Compensation Plan** **Information**
 
 We
        do not
        have any stock option, bonus, profit sharing, pension or similar plan. However,
        we may adopt such a plan in the future to attract and retain members of
        management, directors or key employees.
 
 **Item 6.** ***Management’s
        Discussion and Analysis or Plan of Operation.***
 
 *WE
        URGE YOU TO READ THE FOLLOWING DISCUSSION IN CONJUNCTION WITH OUR
        CONSOLIDATED*  *FINANCIAL
        STATEMENTS AND THE NOTES THERETO BEGINNING ON PAGE F-1.
        THIS*  *DISCUSSION
        MAY CONTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE SUBSTANTIAL RISKS
        AND*  *UNCERTAINTIES.
        OUR ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS COULD DIFFER*  *MATERIALLY
        FROM THOSE EXPRESSED OR IMPLIED BY THE FORWARD-LOOKING STATEMENTS AS
        A*  *RESULT
        OF A NUMBER OF FACTORS, INCLUDING BUT NOT LIMITED TO THE RISKS
        AND*  *UNCERTAINTIES
        DISCUSSED UNDER THE HEADING “* *RISK
        FACTORS” IN THIS*  *FORM 10K-SB
        AND IN OUR OTHER FILINGS WITH THE SEC. SEE “CAUTIONARY*  *STATEMENT
        REGARDING FORWARD-LOOKING STATEMENTS* .”
 
 **Overview**
 
 China
        Agri-Business, Inc. (“China Agri,” “we,” “us,” or the “Company”) was
        incorporated in the State of Maryland on December 7, 2005. On March 24, 2006,
        we
        formed a wholly-owned subsidiary under the laws of China, registered in the
        city
        of Xi’an, called Mei Xin Agri Technology (Shaanxi) Co., Ltd. (“Meixin”). On
        April 18, 2006, Meixin signed a Management Entrustment Agreement with Shaanxi
        Xin Sheng Centennial Agricultural and Technology Co., Ltd. (“Xinsheng”), a
        company organized under the laws of China that manufactures organic agricultural
        chemistry products in China. Under that agreement, Meixin acquired management
        control of Xinsheng, to the same effect as if Xinsheng were a wholly owned
        subsidiary of Meixin under Chinese law. Consequently, Xinsheng is our operating
        company in China.
 
 In
        consideration of Xinsheng’s entry into the Management Entrustment Agreement, we
        issued to the shareholders of Xinsheng an aggregate of 5,389,221 shares of
        our
        common stock, which were converted into 10,950,897 shares, or 89% of our
        total
        outstanding common stock, after a 2.032-for-1 forward stock split in October
        2006. Those shares are held by trustees on behalf of the shareholders of
        Xinsheng. Because the transaction resulted in Xinsheng shareholders owning
        a
        majority of China Agri’s common stock, the transaction is accounted for as a
“reverse merger” for financial reporting purposes, with Xinsheng being deemed
        the acquirer and continuing entity.
 
 Xinsheng
        develops, manufactures and markets organic agricultural chemistry products
        used
        for farming in China. Those products have been shown to contain no toxins
        and to
        have no adverse effects on the environment, and are suitable for use in farming
        without harsh chemical fertilizers or pesticides and the production of crops
        considered to be “all-natural,” “organic,” or “green.” Crops grown with our
        products may qualify for the “AA green food” rating in China. It has been
        demonstrated that by using our products, farmers can increase agricultural
        output and effectively reduce costs.
 
 We
        introduced our first two organic agricultural chemistry products to market
        under
        the brands “Xinsheng Luyuan” and “Xinsheng Lufeng” in October 2004. Xinsheng
        Luyuan is an organic fungicide whose primary function is to increase
        agricultural production. Xinsheng Lufeng is an organic bactericide. At the
        beginning of 2006, we introduced our “Xinsheng Dadang” product, an organic
        fungicide with additional ingredients to enhance anti-fungal effects. In
        November of 2007, we introduced three new organic products at the 23 rd annual
“China Agriculture Fertilizer and Machine Trade Show”. “Xinsheng Huang-jin-gai”
is designed to help crops to absorb calcium and to improve the quality of
        crops.
        Its primary ingredient is amino acid calcium. “Xinsheng Jia-tian-xia” is an
        organic potassium fertilizer designed to help farmers to improve the quality
        and
        increase the production of crops. “Xinsheng Bai-le” is designed to provide
        supplementary micro-nutrients to crops and to help crops grow with balanced
        nutrition.
 
 **Results
        of Operations - 2007 versus 2006**
 
 During
        2007, our sales increased 41% and our net income increased 16% as compared
        to
        2006. The number of retail locations that sell our products surpassed 800
        in
        2007, an increase of 60% as compared to approximately 500 such locations
        in
        2006. Our sales network, directly or indirectly, reaches more than twenty
        provinces in the PRC. In order to expand our operations and to establish
        the
        Company as one of the leading participants in China’s growing organic
        agricultural application sector, we plan to focus on the following four aspects
        of our business. First, we plan to fully utilize our current manufacturing
        capacity by purchasing additional manufacturing equipment, automatic package
        filling lines and research facilities, contingent on market demand. Second,
        we
        plan to strengthen sales efforts through our dedicated in-house sales team
        and
        retail dealer network. We plan to expand sales into the southern part of
        China,
        including the provinces of Hunan, Hubei, Anhui and Jiangsu. These provinces
        typically have a warmer climate, and a longer growing season for agriculture,
        which we believe could generate greater demand for our products. Third, we
        plan
        to intensify our efforts to develop new products, and continue to base our
        research and development efforts on the needs of our customers in order to
        identify additional areas of demand for our products. Fourth, we plan to
        enhance
        our management system, including our financial and accounting infrastructure,
        in
        order to manage our planned future growth.
 
 14
 **Revenues**
 
 Sales
        for
        the year ended December 31, 2007 amounted to $3,037,414, representing an
        increase of $883,220, or 41% as compared to sales of $2,154,194 for the year
        ended December 31, 2006.
  We
        introduced our organic agricultural chemistry products in the fourth quarter
        of
        2004. In the year 2005, we realized revenue of $650,000 from our core organic
        applications. In 2006, our sales from organic applications tripled, to
        approximately $1,900,000. In 2007, all our revenues were generated from core
        organic applications, an increase of 60% as compared to 2006.
 
 In
        2007,
        about 92% of our revenue was generated from our organic fungicidal products
        under the brand “Xinshen Luyuan”, and the remaining 8% of revenue was generated
        from our products under the brand of “Xinsheng Lufeng” and “Xinsheng Dadang”.
        Geographically, 32% of revenue was generated locally in China’s Shaanxi Province
        and 68% of the revenue was from other provinces in China.
 
 **Cost
        of goods sold and Gross margins**
 
 Cost
        of
        goods sold for the year ended December 31, 2007 was $964,961, an increase
        of
        $309,431, or 47.2% **** as
        compared to $655,530 in 2006. Gross margin rate was 68.2% in 2007, a drop
        of 1.4
        % compared to the gross margin rate of 69.6% in 2006. Of the cost of goods
        sold,
        69% was raw material cost, 25% was packing material cost, 4% was labor cost,
        and
        2% was utilities and other cost. Compared to the beginning of the year, the
        price of certain packing material increased slightly during the year. This
        resulted in the percentage of packing material cost included in the cost
        of
        goods sold to increase from 20% to 25%. This affected our gross margin directly.
        Due to anticipated increases in packing and labor costs, we anticipate that
        our
        gross margin will be adversely affected in 2008.
 
 **Selling
        and marketing expenses**
 
 Selling
        and marketing expenses amounted to $146,178 for the year ended December 31,
        2007, an increase of 70.6% compared to $85,703 for the year ended December
        31,
        2006, which was attributable to our increased marketing efforts. The increase
        in
        selling and marketing expenses is primarily attributable to increases in
        the
        following: advertisement expenses, product promotion expenses, and salaries
        paid
        to sales personnel. These three types of expenses increased by an aggregate
        amount of $70,267 in 2007 as compared to 2006.
 
 **General
        and administrative expenses**
 
 General
        and administrative (“G&A”) expenses amounted to $883,052 for the year ended
        December 31, 2007, an increase of 74% compared to $507,091 for 2006. The
        largest
        components of G&A expenses were legal, audit, consulting and other
        professional fees incurred relating to regulatory compliance, including SEC
        compliance. Those expenses totaled $473,809, which represents approximately
        54%
        of total G&A expenses during 2007. We expect that professional fees will
        continue to increase in the year 2008.
 
 **Net
        income**
 
 Net
        income for the year ended December 31, 2007 was $1,058,882, an increase of
        $146,056, or 16% as compared to $912,853 for 2006. Net income as a percentage
        of
        sales decreased 7% from 42% in 2006 to 35% in 2007, due primarily to the
        increase of G&A expenses, especially professional fees.
  15
 **Research
        and development**
 
 Our
        research and development expenditures totaled $9,622 in 2007, as compared
        to
        $1,893 in 2006 .
 
 **Liquidity
        and Capital Resources**
 
 As
        of
        December 31, 2007, our cash and cash equivalents amounted to $5,984,448,
        an
        increase of $2,198,913, or 58%, as compared to the balance of $3,785,535
        at
        December 31, 2006.
 
 Cash
        provided by operating activities was $1,334,019 for the year ended December
        31,
        2007, a decrease of $253,864, or 16%, as compared to $1,587,883 for the year
        ended December 31, 2006. The decrease is due to the fact that for the year
        ended
        December 31, 2006, cash provided by operating activities included $301,447
        from
        the collection of a short term loan and $267,229 due to the reduction of
        prepaid
        expenses. Absent these factors, cash provided by operating activities would
        have
        been $1,019,207 for the year ended December 31, 2006.
 
 Cash
        provided by investing activities was $268,545 in 2007, which was from
        collections of a short term loan and offset by the purchase of fixed assets
        of
        $32,902.
 
 Cash
        provided by financing activities was $221,607, which resulted from the proceeds
        of $379,800 from the sale of our securities, offset by related costs of
        $158,193.
 
 Foreign
        currency translation had a positive effect on our cash flow. The increase
        of
        $374,742 was due to the appreciation of the Chinese yuan in 2007.
  The
        Chinese local government previously waived the income tax obligations of
        the
        Company for two years until August 31, 2007 and extended it to the calendar
        year
        ended December 31, 2007. The Company applied for another annual income tax
        exemption for the calendar year of 2008. The local taxation authority has
        granted us tax exemption status for the year of 2008. We expect that we will
        be
        successful in obtaining tax exempted status on an ongoing basis as long as
        our
        products are used for agriculture in the future. However, if we lose the
        tax
        exempt status for the year of 2008, we will be subject to a 25% standard
        enterprise income tax. If we had lost tax exemption status in 2007, it would
        have reduced our cash flow by approximately $349,431 for the year ended December
        31, 2007.
 
 We
        completed a public offering of our securities in October, 2007. The offering
        consisted of 379,800 units sold for $1.00 per unit. Each unit consists of
        (i)
        one share of common stock, par value $0.001 per share, (ii) one warrant to
        purchase one share of the Company's common stock at $1.50 per share and (iii)
        one warrant to purchase one share of the Company's common stock at $2.00
        per
        share (see Note 10 to Consolidated Financial Statements). We received gross
        proceeds of $379,800 from the offering. We plan to use the offering proceeds
        to
        pursue our expansion plan. We anticipate that the costs of being a public
        company, including attorney fees, audit and review fees, transfer agent fees
        and
        investor relations fees, will continue to have an adverse effect on our cash
        flows going forward.
 
 **Critical
        Accounting Policies**
 
 The
        discussion and analysis of our financial condition and results of operations
        is
        based upon our financial statements, which have been prepared in accordance
        with
        accounting principles generally accepted in the United States (or “GAAP”). The
        preparation of those financial statements requires us to make estimates and
        judgments that affect the reported amount of assets and liabilities at the
        date
        of our financial statements. Actual results may differ from these estimates
        under different assumptions or conditions.
 
 Critical
        accounting policies are those that reflect significant judgments or
        uncertainties, and potentially result in materially different results under
        different assumptions and conditions. See also Note 2 to Consolidated Financial
        Statements.
 
 **Inventory**
 
 Inventory
        is stated at the lower of cost (first-in, first-out method) or market. The
        Company physically counts inventory at the end of the calendar year. To prepare
        the quarterly financial statements, we used book recorded balance.
 
 16
 **Accounts
        Receivable and Allowance for Doubtful Accounts**
 
 The
        Company performs ongoing credit evaluations of its customers’ financial
        condition, but generally does not require collateral to support customer
        receivables. The credit risk is controlled through credit approvals, limits
        and
        monitoring procedures. The Company establishes an allowance for doubtful
        accounts based upon age of receivables and other factors. As of December
        31,
        2007, trade receivables aged between 90 to 120 days were approximately 26%
        of
        total trade receivables; trade receivables aged between 121-365 days were
        approximately 14%. The Company reserved 50% of accounts receivable aged between
        90 to 120 days and 100% of accounts receivable aged over 120 days as an
        allowance for doubtful accounts.
 
 **Revenue
        Recognition and Deferred Income**
 
 Sales
        of
        products are recorded when title passes to the customer, which is generally
        at
        time of shipment. The Company does not routinely permit customers to return
        products.
 
 **Off-Balance
        Sheet Arrangements**
 
 We
        do not
        have any off balance sheet arrangements that are reasonably likely to have
        a
        current or future effect on our financial condition, revenues, results of
        operations, liquidity or capital expenditures.
 
 17
  **Item 7.** ***Financial
        Statements***
 
 **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 To
        the
        Board of Directors and Stockholders of
 China
        Agri-Business, Inc.
 
 I
        have
        audited the accompanying consolidated balance sheets of China Agri-Business,
        Inc. and subsidiaries (the “Company”) as of December 31, 2007 and 2006 and the
        related consolidated statements of operations, stockholders’ equity, and cash
        flows for the years then ended. These financial statements are the
        responsibility of the Company’s management. My responsibility is to express an
        opinion on these financial statements based on my audits.
 
 I
        conducted my audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that I plan
        and perform the audit to obtain reasonable assurance about 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. I believe that my audits provide a reasonable
        basis for my opinion.
 
 In
        my
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the financial position of China Agri-Business,
        Inc.
        and subsidiaries as of December 31, 2007 and 2006 and the results of their
        operations and cash flows for the years then ended in conformity with accounting
        principles generally accepted in the United States.
 
 Michael
                T. Studer, CPA, P.C.Freeport, New YorkMarch 20, 2008
 
 18
  **China
            Agri-Business, Inc.**
 **Consolidated
            Balance Sheets**
 
 December
                      31,
                  
                  December
                      31,2007
                  
                  2006**Assets****Current
                      Assets**Cash
                      and cash equivalents
                  
                  $
                  5,984,448
                  
                  $
                  3,785,535Accounts
                      receivable, net of allowance for doubtfulaccounts
                      of $23,991 and $2,665, respectively
                  
                  
                  65,118
                  
                  
                  103,844Inventory
                  
                  
                  60,582
                  
                  
                  92,253Other
                      receivables
                  
                  
                  6,855
                  
                  
                  18,476Loans
                      receivable
                  
                  
                  -
                  
                  
                  301,447Prepaid
                      expenses
                  
                  
                  5,735
                  
                  
                  22,137**Total
                      Current Assets**
                  
                  
                  6,122,738
                  
                  
                  4,323,692**Property,
                      plant and equipment, net**
                  
                  
                  276,000
                  
                  
                  296,344**Investment
                      in Tienwe Technology**
                  
                  
                  822,540
                  
                  
                  769,477**Intangible
                      assets, net**
                  
                  
                  73,554
                  
                  
                  86,014**Total
                      Assets**
                  
                  $
                  7,294,832
                  
                  $
                  5,475,527**Liabilities
                      and Stockholders' Equity****Current
                      Liabilities**Accounts
                      payable and accrued liabilities
                  
                  $
                  166,200
                  
                  $
                  51,276**Total
                      Current Liabilities**
                  
                  
                  166,200
                  
                  
                  51,276Redeemable
                      Series A preferred stock, par value $.001 per share;
                      authorized
                    100,000
                      shares; issued and outstanding 0 and 10,000 shares,
                      respectively
                  
                  
                  -
                  
                  
                  100,000**Stockholders'
                      Equity**Undesignated
                      preferred stock, par value $.001 per share; authorized 4,900,000
                      shares;
                      none issued
                  
                  
                  -
                  
                  
                  -Common
                      stock par value $.001 per share; authorized 100,000,000 shares;
                      issued and
                      outstanding 12,958,574 and 12,278,774 shares, respectively
                  
                  
                  12,959
                  
                  
                  12,279Additional
                      paid-in capital
                  
                  
                  4,150,636
                  
                  
                  3,629,709Retained
                      earnings
                  
                  
                  2,308,873
                  
                  
                  1,449,991Accumulated
                      other comprehensive income
                  
                  
                  656,164
                  
                  
                  232,272**Total
                      stockholders' equity**
                  
                  
                  7,128,632
                  
                  
                  5,324,251**Total
                      Liabilities and Stockholders' Equity**
                  
                  $
                  7,294,832
                  
                  $
                  5,475,527
 
 The
            accompanying notes are an integral part of these financial
            statements.
  F-1
  **China
            Agri -Business, Inc.**
 **Consolidated
            Statements of Operations**
 
 Year
                      EndedDecember
                      312007
                  
                  2006Sales
                      of products
                  
                  $
                  3,037,414
                  
                  $
                  2,154,894Cost
                      of goods sold
                  
                  
                  964,961
                  
                  
                  655,530Gross
                      profit
                  
                  
                  2,072,453
                  
                  
                  1,499,364Selling,
                      general and administrative expenses
                  
                  
                  1,029,230
                  
                  
                  592,794Income
                      from operations
                  
                  
                  1,043,223
                  
                  
                  906,570Interest
                      income
                  
                  
                  15,659
                  
                  
                  6,283Income
                      before income taxes
                  
                  
                  1,058,882
                  
                  
                  912,853Income
                      taxes
                  
                  
                  -
                  
                  
                  -Net
                      income
                  
                  
                  1,058,882
                  
                  
                  912,853Deemed
                      dividend relating to beneficial conversion feature of Series
                      A preferred
                      stock
                  
                  
                  (200,000
                  )
                  
                  -Net
                      income attributable to common stockholders
                  
                  $
                  858,882
                  
                  $
                  912,853Earnings
                      per common share:Basic
                  
                  $
                  0.07
                  
                  $
                  0.08Diluted
                  
                  $
                  0.07
                  
                  $
                  0.08Weighted
                        average number of common shares used to compute earnings
                        per common
                        share:Basic
                  
                  
                  12,431,496
                  
                  
                  11,874,954Diluted
                  
                  
                  12,664,099
                  
                  
                  11,874,954
 
 The
            accompanying notes are an integral part of these financial
            statements.
  F-2
 **China
            Agri -Business, Inc.**
 **Consolidated
            Statements of Stockholders' Equity**
  AccumulatedAdditional
                  
                  
                  Retained
                  
                  
                  OtherCommon
                      Stock
                  
                  
                  Paid-in
                  
                  
                  Earnings
                  
                  
                  ComprehensiveShares
                  
                  
                  Amount
                  
                  
                  Capital
                  
                  
                  (Deficit)
                  
                  
                  Income
                  
                  
                  TotalBalance,
                      December 31, 2004
                  
                  
                  10,950,897
                  
                  $
                  10,951
                  
                  $
                  3,631,037
                  
                  $
                  60,021
                  
                  $
                  (786
                  )
                  $
                  3,701,223Net
                      income for the year endedDecember
                      31, 2005
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  477,117
                  
                  
                  -
                  
                  
                  477,117Foreign
                      currency translation adjustment
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  202,442
                  
                  
                  202,442Balance,
                      December 31, 2005
                  
                  
                  10,950,897
                  
                  
                  10,951
                  
                  
                  3,631,037
                  
                  
                  537,138
                  
                  
                  201,656
                  
                  
                  4,380,782Reverse
                      acquisition of Xinshengeffective
                      April 22, 2006
                  
                  
                  1,327,877
                  
                  
                  1,328
                  
                  
                  (1,328
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  -Net
                      income for the year endedDecember
                      31, 2006
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  912,853
                  
                  
                  -
                  
                  
                  912,853Foreign
                      currency translation adjustment
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  30,616
                  
                  
                  30,616Balance,
                      December 31, 2006
                  
                  
                  12,278,774
                  
                  
                  12,279
                  
                  
                  3,629,709
                  
                  
                  1,449,991
                  
                  
                  232,272
                  
                  
                  5,324,251Sales
                      of Units in public offering
                  
                  
                  379,800
                  
                  
                  380
                  
                  
                  379,420
                  
                  
                  -
                  
                  
                  -
                  
                  
                  379,800Costs
                      relating to the public offering
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (158,193
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  (158,193
                  )Conversion
                      of Series A preferred stock
                  
                  
                  300,000
                  
                  
                  300
                  
                  
                  99,700
                  
                  
                  -
                  
                  
                  -
                  
                  
                  100,000Deemed
                      dividend relating to beneficial conversion featureof
                      Series A preferred stock
                  
                  
                  -
                  
                  
                  -
                  
                  
                  200,000
                  
                  
                  (200,000
                  )
                  
                  -
                  
                  
                  -Net
                      income for the year ended December 31, 2007
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,058,882
                  
                  
                  -
                  
                  
                  1,058,882Foreign
                      currency translation adjustment
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  423,892
                  
                  
                  423,892Balance,
                      December 31, 2007
                  
                  
                  12,958,574
                  
                  $
                  12,959
                  
                  $
                  4,150,636
                  
                  $
                  2,308,873
                  
                  $
                  656,164
                  
                  $
                  7,128,632
 
 The
            accompanying notes are an integral part of these financial
            statements.
  
 F-3
  **China
            Agri-Business, Inc.**
 **Consolidated
            Statements of Cash Flows**
  Year
                      EndedDecember
                      312007
                  
                  2006**Operating
                      activities**Net
                      income
                  
                  $
                  1,058,882
                  
                  $
                  912,853Adjustments
                      to reconcile net income to net cashprovided
                      by (used in) operating activities:Depreciation
                      of property, plant and equipment
                  
                  
                  44,157
                  
                  
                  38,225Amortization
                      of intangible assets
                  
                  
                  17,636
                  
                  
                  1,730Changes
                      in operating assets and liabilities:Accounts
                      receivable, net
                  
                  
                  38,726
                  
                  
                  403,572Other
                      receivables
                  
                  
                  11,621
                  
                  
                  (18,476
                  )Inventory
                  
                  
                  31,671
                  
                  
                  (36,764
                  )Prepaid
                      expenses
                  
                  
                  16,402
                  
                  
                  267,229Accounts
                      payable and accrued liabilities
                  
                  
                  114,924
                  
                  
                  19,514Net
                      cash provided by operating activities
                  
                  
                  1,334,019
                  
                  
                  1,587,883**Investing
                      activities**Loans
                      receivable collections
                  
                  
                  301,447
                  
                  
                  1,082,863Property,
                      plant and equipment additions
                  
                  
                  (32,902
                  )
                  
                  (118,212
                  )Property,
                      plant and equipment disposals
                  
                  
                  -
                  
                  
                  2,611Intangible
                      assets additions
                  
                  
                  -
                  
                  
                  (78,874
                  )Net
                      cash provided by (used in) investing activities
                  
                  
                  268,545
                  
                  
                  888,388**Financing
                      activities**Proceeds
                      from sale of Units in public offering
                  
                  
                  379,800
                  
                  
                  -Costs
                      relating to public offering
                  
                  
                  (158,193
                  )
                  
                  -Proceeds
                      from sale of Series A preferred stock
                  
                  
                  -
                  
                  
                  100,000Net
                      cash provided by (used in) financing activities
                  
                  
                  221,607
                  
                  
                  100,000**Effect
                      of exchange rate changes on cash and cash
                      equivalents**
                  
                  
                  374,742
                  
                  
                  (7,485
                  )**Increase
                      in cash and cash equivalents**
                  
                  
                  2,198,913
                  
                  
                  2,568,786**Cash
                      and cash equivalents, beginning of period**
                  
                  
                  3,785,535
                  
                  
                  1,216,749**Cash
                      and cash equivalents, end of period**
                  
                  $
                  5,984,448
                  
                  $
                  3,785,535
 
 The
            accompanying notes are an integral part of these financial
            statements.
 F-4
  CHINA
        AGRI-BUSINESS, INC
 NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE
        1 -
        ORGANIZATION AND NATURE OF BUSINESS
 
 China
        Agri-Business, Inc. (“China Agri”) was incorporated in the State of Maryland on
        December 7, 2005. On October 31, 2006, China Agri effectuated a 2.032 to
        1
        forward stock split. All share and per share amounts have been retroactively
        adjusted to reflect the stock split.
 
 On
        March
        16, 2006, China Agri executed a Corporate Finance Advisory Services Agreement
        (the “China Agri Advisory Agreement”) with Friedland Corporate Investor Services
        LLC (“Friedland”). The China Agri Advisory Agreement provided that Friedland
        will assist China Agri in forming a Wholly-Owned Foreign Enterprise (“Meixin”)
        under the laws of the People’s Republic of China (the “PRC”), in acquiring
        control of a PRC business enterprise, and in becoming publicly traded in
        the
        United States. As consideration for these services, China Agri issued 1,327,877
        shares of China Agri common stock to 7 Friedland designees (including 10,000
        shares to the then sole director of China Agri) and paid Friedland 750,000
        PRC
        Renminbi (“RMB”) (or $98,610 translated at the year 2007 average exchange rate)
        upon the establishment of a trading market in the United States for China
        Agri’s
        shares of common stock.
 
 On
        March
        24, 2006, China Agri formed Mei Xin Agri Technology (Shaanxi) Co., Ltd.
        (“Meixin”). Meixin is a wholly-owned subsidiary of China Agri and a limited
        liability company organized under the laws of PRC. Pursuant to measures passed
        by the stockholders of Shaanxi Xin Sheng Centennial Agriculture and Technology
        Co., Ltd. (“Xinsheng”), a corporation formed under the laws of the PRC on April
        22, 2002, on April 10, 2006, a Management Entrustment Agreement dated April
        18,
        2006 between Meixin and Xinsheng, and a Stock Purchase Agreement dated April
        22,
        2006 between China Agri and Xinsheng (collectively, the “Transaction”), Meixin
        acquired management control of ****** Xinsheng,
        in the same manner as if it were a wholly owned subsidiary under PRC law,
        and
        China Agri issued 10,950,897 shares of China Agri common stock, representing
        approximately 89% of the 12,278,774 shares of China Agri common stock
        outstanding after the Transaction, to a trustee of a trust for the benefit
        of
        the Xinsheng stockholders. The Transaction is being accounted for as a “reverse
        merger”, since the stockholders of Xinsheng owned a majority of China Agri’s
        common stock immediately following the Transaction. Xinsheng is deemed to
        be the
        acquirer in the reverse merger. Consequently, the assets and liabilities
        and the
        historical operations that are reflected in the financial statements prior
        to
        the Transaction are those of Xinsheng and are recorded at the historical
        cost
        basis of Xinsheng, and the consolidated financial statements after completion
        of
        the Transaction include the assets and liabilities of China Agri, Meixin,
        and
        Xinsheng (collectively, the “Company”), historical operations of Xinsheng, and
        operations of China Agri and Meixin from the date of the
        Transaction.
 
 Xinsheng’s
        primary activities are the manufacture, marketing and sale of organic and
        environmentally friendly “Green” agricultural enhancement products in
        China.
 
 F-5
 
 CHINA
        AGRI-BUSINESS, INC
 NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE
        2 -
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 (a) Basis
        of
        presentation
 
 The
        consolidated financial statements have been prepared in accordance with
        accounting principles generally accepted in the United States (“US
        GAAP”).
 
 (b)
        Principles of Consolidation
  The
        consolidated financial statements of 2007 and 2006 include the financial
        statements of China Agri, Meixin, and Xinsheng. All intercompany balances
        and
        transactions have been eliminated in consolidation.
 
 (c)
        Use
        of Estimates
 
 The
        preparation of financial statements in conformity with US GAAP requires
        management to make estimates and assumptions that affect the reported amounts
        of
        assets and liabilities and disclosure of contingent assets and liabilities
        at
        the dates of the financial statements and the reported amounts of revenues
        and
        expenses during the reporting periods. Actual results could differ from those
        estimates.
 
 (d)
        Fair
        Value of Financial Instruments
 
 The
        Company’s financial instruments consist of cash and cash equivalents, accounts
        receivable, net, other receivables, loans receivable, and accounts payable
        and
        accrued liabilities. The fair value of these financial instruments approximate
        their carrying amounts reported in the consolidated balance sheets due to
        the
        short term maturity of these instruments.
 
 (e)
        Foreign Currency Translation
 
 The
        functional currency of China Agri is the United States dollar. The functional
        currency of Xinsheng and Meixin is the RMB. The reporting currency of the
        Company is the United States dollar.
 
 The
        assets and liabilities of Xinsheng and Meixin are translated into United
        States
        dollars at period-end exchange rates ($0.13709 and $0.12825 at December 31,
        2007
        and 2006, respectively). The revenues and expenses are translated into United
        States dollars at average exchange rates for the period ($0.13148 and $0.12557
        for the years ended December 31, 2007 and 2006, respectively). Resulting
        translation adjustments are recorded as a component of accumulated other
        comprehensive income within stockholders’ equity.
 
 F-6
 
 CHINA
        AGRI-BUSINESS, INC
 NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
  NOTE
        2 -
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 (f)
        Cash
        and Cash Equivalents
 
 Cash
        and
        cash equivalents consist of cash on hand, cash on deposit with banks, and
        highly
        liquid debt investments with a maturity of three months or less when purchased.
 
 (g)
        Inventory
 
 Inventory is stated at the lower of cost (first-in, first-out method) or
        market.
 
 (h) Property,
        Plant and Equipment, Net
 
 Property,
        plant and equipment is stated at cost less accumulated depreciation.
        Depreciation is calculated on a straight-line basis over the estimated useful
        lives of the respective assets.
 
 (i) Intangible
        and Other Long-Lived Assets, Net
 
 Intangible
        and other long-lived assets are stated at cost, less accumulated amortization
        and impairments. The intangible assets are being amortized over their expected
        useful economic lives ranging from 5 to 10 years.
 
 The
        Company reviews its long-lived assets for impairment whenever events or changes
        in circumstances indicate that the carrying amount of an asset may no longer
        be
        recoverable. When these events occur, the Company measures impairment by
        comparing the carrying value of the long-lived assets to the estimated
        undiscounted future cash flows expected to result from the use of the assets
        and
        their eventual disposition. If the sum of the expected undiscounted cash
        flow is
        less than the carrying amount of the assets, the Company would recognize
        an
        impairment loss based on the fair value of the assets.
 
 (j)
        Revenue Recognition
 
 Sales
        of
        products are recorded when title passes to the customer, which is generally
        at
        time of shipment. The Company performs ongoing credit evaluations of its
        customers’ financial condition, but generally does not require collateral to
        support customer receivables. The credit risk is controlled through credit
        approvals, limits and monitoring procedures. The Company establishes an
        allowance for doubtful accounts based upon factors surrounding the credit
        risk
        of specific customers, historical trends and other factors. Accounts receivable
        are charged against the allowance for doubtful accounts once all collection
        efforts have been exhausted. The Company does not routinely permit customers
        to
        return product.
 
 Freight
        and other transportation costs are included in cost of goods sold.
  F-7
 
 CHINA
        AGRI-BUSINESS, INC
 NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE
        2 -
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 (k)
        Stock-Based Compensation
 
 Stock-based
        compensation is accounted for at fair value in accordance with SFAS No. 123(R)
        “Accounting for Stock-Based Compensation”. No stock options have been granted
        and none are outstanding.
 
 (l)
        Advertising
 
 Advertising
        costs are expensed as incurred. For the years ended December 31, 2007 and
        2006,
        advertising expenses were $21,236 and $18,008, respectively.
 
 (m)
        Income Taxes
 
 Deferred
        income taxes are recognized for temporary differences between the tax basis
        of
        assets and liabilities and their reported amounts in the financial statements,
        net of operating loss carry forwards and credits, by applying enacting statutory
        tax rates applicable to future years. Deferred tax assets are reduced by
        a
        valuation allowance when, in the opinion of management, it is not more likely
        than not that some portion or all of the deferred tax assets will be realized.
        Current income taxes are provided for in accordance with the laws of the
        relevant taxing authorities.
 
 (n)
        Earnings (Loss) Per Common Share
 
 Basic
        earnings (loss) per common share are computed on the basis of the weighted
        average number of common shares outstanding during the period.
 
 Diluted
        earnings (loss) per share are computed on the basis of the weighted average
        number of common shares and dilutive securities (such as convertible preferred
        stock) outstanding. Dilutive securities having an anti-dilutive effect on
        diluted earnings (loss) per share are excluded from the
        calculation.
 
 A
        reconciliation of the weighted average number of common shares used to compute
        basic and diluted earnings per share for the year ended December 31, 2007
        and
        2006 follows:
 2007
                
                2006Weighted
                    average number of common shares
                  outstanding
                    (used to compute basic EPS)
                
                
                12,431,496
                
                
                11,874,954Assumed
                    conversion of redeemable
                  Series
                    A preferred stock - See Note 9
                
                
                232,603
                
                
                -Weighted
                    average number of common shares
                  and
                    dilutive common stock equivalents outstanding
                  (used
                    to compute diluted EPS)
                
                
                12,664,099
                
                
                11,874,954


F-8
 CHINA
        AGRI-BUSINESS, INC
 NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
  NOTE
        2 -
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 (o)
        Recently Issued Accounting Pronouncements
 
 Certain
        accounting pronouncements have been issued by the FASB and other standard
        setting organizations which are not yet effective and have not yet been adopted
        by the Company.
 The
        impact on the Company’s financial position and results of operations from
        adoption of these standards is not expected to be material.
  (p)
        Reclassifications
 
 Certain
        prior period amounts have been reclassified to conform to the current period
        presentation.
 
 NOTE
        3 -
        REVERSE ACQUISITION OF XINSHENG
 
 As
        discussed in Note 1, China Agri, through its wholly owned subsidiary Meixin,
        acquired management control of Xinsheng on April 18, 2006 in exchange for
        10,950,897 shares of China Agri common stock. At April 18, 2006 (date of
        acquisition), China Agri and Meixin had $0 identifiable net assets.
 
 NOTE
        4 -
        INVENTORY
 Inventory
                    consists of:
                
                December
                    31,
                
                December
                    31,2007
                
                2006Raw
                    materials
                
                $
                52,953
                
                $
                36,718Work
                    in progress
                
                
                -
                
                
                3,650Finished
                    goods
                
                
                5,342
                
                
                48,573Other
                
                
                2,287
                
                
                3,312Total
                    inventory
                
                $
                60,582
                
                $
                92,253
  NOTE
        5 -
        LOANS RECEIVABLE
 December
                    31,
                
                December
                    31,Loans
                    receivable consist of:
                
                2007
                
                2006Net
                    Bar, non-interest bearing, due March 31, 2007
                
                $
                -
                
                $
                301,447Total
                
                $
                -
                
                $
                301,447
  F-9
 
 CHINA
        AGRI-BUSINESS, INC
 NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE
        6 -
        PROPERTY, PLANT AND EQUIPMENT, NET
 
 Property,
        plant and equipment, net consist of:
 December
                    31,
                
                December
                    31,2007
                
                2006Building
                
                $
                18,425
                
                $
                17,237Transportation
                    equipment
                
                
                271,081
                
                
                244,480Manufacturing
                    equipment and machinery
                
                
                123,798
                
                
                118,759Office
                    and computer equipment
                
                
                16,448
                
                
                16,322Total
                
                
                429,752
                
                
                396,798Less
                    accumulated depreciation
                
                
                (153,752
                )
                
                (100,506
                )Construction
                    in progress
                
                
                -
                
                
                52Property,
                    plant and equipment, net
                
                $
                276,000
                
                $
                296,344
 
 NOTE
        7 -
        INVESTMENT IN TIENWE TECHNOLOGY INC.
 
 On
        July
        29, 2005, Xinsheng acquired a 13.95% equity interest in Tienwe Technology
        Inc.
        (“Tienwe”), a PRC company, for 6,000,000 RMB ($822,540 translated at the
        December 31, 2007 exchange rate) . The investment is carried at cost. Tienwe
        shares are not quoted or traded on any securities exchange or in any recognized
        over-the-counter market; accordingly, it is not practicable to estimate the
        fair
        value of the investment. Tienwe sells aerospace products to military industry
        customers.
 
 NOTE
        8 -
        INTANGIBLE ASSETS, NET
 
 Intangible
        assets, net consist of:
 December
                    31,
                
                December
                    31,2007
                
                2006Product
                    rights
                
                $
                84,310
                
                $
                78,874Patent
                
                
                13,709
                
                
                12,825Trademark
                
                
                1,555
                
                
                1,212Total
                
                
                99,574
                
                
                92,911Less
                    accumulated amortization
                
                
                26,020
                
                
                6,897Intangible
                    assets, net
                
                $
                73,554
                
                $
                86,014
  F-10
 CHINA
        AGRI-BUSINESS, INC
 NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE
        8 -
        INTANGIBLE ASSETS, NET (Continued)
 
 The
        product rights were acquired by Xinsheng in December 2006 from an unrelated
        third party and relate to six registered fertilizer products.
 
 The
        patent was acquired by Xinsheng in 2002 from three parties (one of the parties
        was an officer, director and significant stockholder of the Company at the
        time
        of the exchange) in exchange for a total of 16.67% of the issued and outstanding
        shares of Xinsheng common stock. The patent (and contributed capital) at
        the
        date of the exchange on April 22, 2002 has been reflected at the transferors’
cost. The patent is for Zero-tillage Fertilizing Equipment (PRC Patent Number
        330398), which is a type of seeding machine, the use of which reduces soil
        erosion.
 
 Estimated
        amortization expense for each of the Company’s five succeeding fiscal years
        ending December 31, 2008, 2009, 2010 and 2011 is $18,388, $18,388, $18,388
        and
        $18,390, respectively.
 
 NOTE
        9 -
        REDEEMABLE SERIES A PREFERRED STOCK
 
 On
        May
        31, 2006, China Agri sold 10,000 Units of securities to an investor at a
        price
        of $10.00 per Unit, or $100,000 total. Each Unit was comprised of one share
        of
        Series A preferred stock and one warrant to purchase one share of Common
        Stock
        at $1.50 per share exercisable through May 31, 2009. Each share of Series
        A
        preferred stock was not entitled to any voting rights, except that the consent
        of the holders of at least 51% of the outstanding shares of Series A preferred
        stock were necessary to permit the authorization or issuance or any increase
        in
        the authorized or issued amount of any class or series of capital stock ranking
        equal to or senior to the Series A preferred stock.
 
 The
        Series A preferred stock (the “Series A Stock”) was not entitled to any
        dividends. In the event of a voluntary or involuntary liquidation of the
        Company, the holders of Series A Stock were entitled to be paid out of the
        assets of the Company available for distribution an amount in cash equal
        to
        $10.00 per share before any payment was made to the holders of Common Stock
        or
        other capital stock of the Company, the terms of which do not specifically
        provide that such securities rank senior to or on a parity with the Series
        A
        Stock as to rights on liquidation. The holders of Series A Stock were not
        entitled to receive liquidation payments until liquidation payments were
        made in
        full to the holders of capital stock ranking senior to the Series A Stock
        as to
        rights on liquidation. The holders of Series A Stock were to share ratably
        in
        liquidation payments with the holders of shares of the Company’s capital stock
        ranking on a parity with the Series A Stock as to rights on
        liquidation.
  F-11
 
 CHINA
        AGRI-BUSINESS, INC
 NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE
        9 -
        REDEEMABLE SERIES A PREFERRED STOCK (Continued)
 
 Each
        share of Series A Stock was automatically convertible into shares of Common
        Stock at a conversion price of one-third of the price per share of the Common
        Stock paid for by the purchasers of Common Stock in a Public Offering pursuant
        to a registration statement under the Securities Act of 1933, as amended
        (the
“Act”). The number of shares of Common Stock issuable upon one share of Series
        A
        Stock in such event was the quotient obtained by dividing $10 by the conversion
        price.
 
 Upon
        completion of the sale of Common Stock for $1.00 per share pursuant to the
        public offering which closed October 11, 2007 (see note 10), each outstanding
        share of Series A Stock automatically converted into 30 shares of Common
        Stock
        (300,000 shares of Common Stock total). The Company recorded as a dividend
        and
        as an increase in additional paid-in capital, the intrinsic value of the
        beneficial conversion feature (the “BCF”). The intrinsic value of the BCF was
        the difference between the $300,000 fair value of the common stock issued
        upon
        conversion and the $100,000 proceeds received, or $200,000.
 
 If
        the
        Company had not consummated an initial public offering pursuant to a
        registration statement under the Act by November 30, 2007, then each holder
        of
        Series A Stock would have had the right to require the Company to redeem
        all or
        any portion of such holder’s Series A Stock at a price of $10 per share
        ($100,000 total). Since the act of having the registration statement declared
        effective by the SEC and having the public offering successfully completed
        was
        outside the control of the Company, the Company classified the Redeemable
        Series
        A Preferred Stock at December 31, 2006 as temporary equity separate and apart
        from stockholders’ equity at its fair value at date of issue.
  NOTE
        10 -
        PUBLIC OFFERING
 
 In
        2006,
        China Agri entered into an Underwriting Agreement with Spencer Edwards, Inc.
        (the “Underwriter”), a NASD-registered broker-dealer, in connection with the
        Company’s public offering (the “Public Offering”) of up to 1,000,000 Units of
        China Agri securities at $1.00 per Unit, or $1,000,000 total. Each Unit
        consisted of one share of Common Stock, one warrant to purchase one share
        of
        Common Stock at $1.50 per share exercisable for three years from the date
        of
        issuance, and one warrant to purchase one share of Common Stock at $2.00
        per
        share exercisable for three years from the date of issuance only if the $1.50
        Unit Warrant was exercised. The Underwriter made no commitment to purchase
        (or
        take down) all or any part of the Units, but agreed to use its best efforts
        on
        an “all or none” basis to sell 300,000 Units within a period of 90 days (which
        may have been extended for up to an additional 60 days upon the mutual consent
        of China Agri and the Underwriter) following the effective date of the related
        Form SB-2 registration statement, which effective date was July 13, 2007.
        Until
        300,000 Units were sold, all funds received by the Underwriter from subscribers
        were placed in an escrow account. In the event that 300,000 Units were not
        sold
        within the 90 day period (150 day period, if extended), the funds deposited
        with
        the escrow agent were to be returned in full to subscribers.
 
 On
        October 11, 2007, China Agri completed its public offering. 379,800 units
        of the
        Company’s securities were sold at a price of $1.00 per unit for gross proceeds
        of $379,800. Net proceeds to the Company, after deducting offering costs
        of
        $158,193, were $221,607.
  F-12
 CHINA
        AGRI-BUSISNESS, INC
 NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE
        10 -
        PUBLIC OFFERING (Continued)
 
 Pursuant
        to the Underwriting Agreement, the underwriter was paid $30,384 (8%) commissions
        and a $11,394 (3%) non-accountable expense allowance. Additionally, China
        Agri
        issued the Underwriter 37,980 warrants, each exercisable into one share of
        common stock at a price of $1.00 per share from January 8, 2008 to July 13,
        2012.
 
 NOTE
        11 -
        WARRANTS
 
 The
        Company has issued warrants (exercisable into shares of common stock) to
        investors and the Underwriter as part of its sale of Series A preferred stock
        and as part of its public offering. Changes in the warrants outstanding are
        as
        follows:
  Year
                    Ended December 31,2007
                
                2006Outstanding
                    at beginning of period
                
                
                10,000
                
                
                -Warrants
                    issued
                
                
                797,580
                
                
                10,000Warrants
                    exercised
                
                
                -
                
                
                -Warrants
                    expired
                
                
                -
                
                
                -Outstanding
                    at end of period
                
                
                807,580
                
                
                10,000Exercisable
                    at end of period
                
                
                807,580
                
                
                10,000
  Warrants
        outstanding at December 31, 2007 consist of:
 
 Date
                    Issued
                
                Expiration
                    Date
                
                Number
                    of
                  Warrants
                
                Weighted
                    Average
                  Exercise
                    PriceMay
                    31, 2006
                
                
                May
                    31, 2009
                
                
                10,000
                
                $
                1.50October
                    11, 2007
                
                
                October
                    10, 2010
                
                
                379,800
                
                
                1.50October
                    11, 2007
                
                
                October
                    10, 2010
                
                
                379,800
                
                
                2.00October
                    11, 2007
                
                
                October
                    10, 2010
                
                
                37,980
                
                
                1.00Total
                
                
                
                
                
                807,580
                
                $
                1.71
  F-13
 CHINA
        AGRI-BUSINESS, INC
 NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE
        12 -
        RESTRICTED NET ASSETS
 
 Relevant
        PRC statutory laws and regulations permit payments of dividends by Xinsheng
        only
        out of its retained earnings, if any, as determined in accordance with PRC
        accounting standards and regulations. In addition, PRC laws and regulations
        require that annual appropriations of 10% of after-tax income should be set
        aside prior to payments of dividends as a reserve fund. As a result of these
        PRC
        laws and regulations Xinsheng is restricted in its ability to transfer a
        portion
        of its net assets in the form of dividends, loans or advances, which restricted
        portion amounted to approximately $4,364,000 at December 31,
        2007.
 
 NOTE
        13 -
        INCOME TAXES
 
 Xinsheng
        is subject to a PRC 25% standard enterprise income tax. However, due to its
        agricultural industry status, the National Tax Bureau in Xi’an High-Tech
        Development Zone granted Xinsheng two annual exemptions from this tax. The
        first
        exemption was granted for the year ended August 31, 2006 and the second
        exemption was granted and adjusted to the year ended December 31, 2007. Xinsheng
        is applying for another annual income tax exemption for the year ending December
        31, 2008.
 
 At
        December 31, 2007, the Company had an unrecognized deferred United States
        income
        tax liability relating to undistributed earnings of Xinsheng. These earnings
        are
        considered to be permanently invested in operations outside the United States.
        Generally, such earnings become subject to United States income tax upon
        the
        remittance of dividends and under certain other circumstances. Determination
        of
        the amount of the unrecognized deferred United States income tax liability
        with
        respect to such earnings is not practicable.
 
 The
        Company did not have any significant temporary differences relating to deferred
        tax liabilities as of December 31, 2007.
 
 The
        provision for income taxes differs from the amount computed by applying the
        statutory United States federal income tax rate to income (loss) before income
        taxes. Reconciliations follow:
 Year
                    Ended December 31,2007
                
                2006Expected
                    tax at 35%
                
                $
                383,724
                
                $
                319,499Tax
                    effect of unutilized losses of China Agri and Meixin
                
                
                135,664
                
                
                -Effect
                    of PRC income tax exemption granted to Xinsheng
                
                
                (349,431
                )
                
                (301,241
                )Permanent
                    difference relating to Xinsheng's earnings
                  to
                    be permanently invested in operations outside the United
                    States
                
                
                (169,957
                )
                
                (18,258
                )Actual
                    provision for income taxes
                
                $
                -
                
                $
                -
   F-14
  CHINA
        AGRI-BUSINESS, INC
 NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE
        14 -
        SEGMENT INFORMATION
 
 The
        Company operates in one industry segment - the manufacturing and sale of
        agricultural enhancement products. Substantially all of the Company’s
        identifiable assets at December 31, 2007 and December 31, 2006 were located
        in
        the PRC. Net sales for the periods presented were all derived from PRC
        customers.
 
 NOTE
        15 - CORPORATE
        FINANCE ADVISORY SERVICES AGREEMENTS
 
 On
        September 3, 2005, Xinsheng executed a Corporate Finance Advisory Services
        Agreement (the “Xinsheng Advisory Agreement”) with Friedland. The agreement
        provided that Friedland would provide certain corporate finance advisory
        services to Xinsheng designed to result in Xinsheng’s shares (or a successor
        entity’s shares) becoming publicly-traded in the United States. As consideration
        for these services, Xinsheng paid Friedland a total of $211,678 ($86,772
        in 2005
        and $124,906 in 2007)
 
 On
        March
        16, 2006, as described in Note 1, China Agri also executed a Corporate Finance
        Advisory Services Agreement (the “China Agri Advisory Agreement”) with
        Friedland. Under this agreement, China Agri paid Friedland $98,610 in 2007
        which
        was due upon the establishment of a trading market in the United States for
        China Agri’s shares of common stock (which occurred October 17, 2007).
 
 NOTE
        16 -
        COMMITMENTS AND CONTINGENCIES
 
 Lease
        Agreements
 
 Xinsheng
        leases its office space (approximately 7300 square feet) at an annual rent
        of
        366,390 RMB ($50,228 translated at the December 31, 2007 exchange rate) under
        a
        lease with a three year term expiring March 31, 2008.
 
 Xinsheng
        leases its operating space (approximately 2600 square feet) at an annual
        rent of
        38,500 RMB ($5,278 translated at the December 31, 2007 exchange rate) under
        a
        lease expiring March 31, 2010.
 
 China
        Agri utilizes office space provided by one of its directors at no
        cost.
 
 For
        the
        year ended December 31, 2007 and 2006, rental expenses for all operating
        leases
        amounted to $65,382 and $60,672, respectively.
 
 F-15
 CHINA
        AGRI-BUSINESS, INC
 NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
 NOTE
        16 -
        COMMITMENTS AND CONTINGENCIES (Continued)
 
 At
        December 31, 2007, future minimum rental commitments under all non-cancelable
        operating leases are:
 Year
                    ending December 31,2008
                
                $
                17,3672009
                
                
                5,1402010
                
                
                1,285Total
                
                $
                23,792
 
 PRC
        Risks
 
 Substantially
        all of the Company’s business operations are conducted in the PRC and governed
        by PRC laws and regulations. Meixin and Xinsheng are generally subject to
        laws
        and regulations applicable to foreign investments and foreign-owned enterprises.
        Because these laws and regulations are relatively new, the interpretation
        and
        enforcement of these laws and regulations involve uncertainties.
 
 The
        PRC
        government imposes controls on the convertibility of RMB into foreign currencies
        and, in certain cases, the remittance of currency out of the PRC. The Company
        receives substantially all of its revenues in RMB, which is currently not
        a
        freely convertible currency. Under existing PRC foreign exchange regulations,
        payment of current account items, including profit distributions, interest
        payments and expenditures from the transaction, can be made in foreign
        currencies without prior approval from the PRC State Administration of Foreign
        Exchange by complying with certain procedural requirements. However, approval
        from appropriate governmental authorities is required where RMB is to be
        converted into foreign currency and remitted out of the PRC to pay capital
        expenses, such as the repayment of bank loans denominated in foreign currencies.
        The PRC government may also at its discretion restrict access in the future
        to
        foreign currencies for current account transactions
  F-16
 **Item 8.** ***Changes
        In and Disagreements With Accountants on Accounting
        and***  ***Financial
        Disclosure.***
 
 Moen
        and
        Company, LLP (“MC”) resigned as our independent auditors on July 21, 2006, due
        to the retirement of the principal of MC. On January 18, 2007, we engaged
        Michael T. Studer CPA P.C. ("Studer") as our independent auditor. This change
        of
        our independent auditor was approved by our Board of Directors. We are unaware
        of any past disagreements between us and MC on any matter of accounting
        principles or practices, financial statement disclosure or auditing scope
        or
        procedure, which, if not resolved to the satisfaction of MC, would have caused
        MC to make reference to the subject matter of the disagreements for the
        financial statements they audited. During the Company's two most recent fiscal
        years and any subsequent interim period prior to the engagement of Studer,
        neither the Company nor anyone on the Company's behalf consulted with Studer
        regarding either (i) the application of accounting principles to a specified
        transaction, either contemplated or proposed, or the type of audit opinion
        that
        might be rendered on the Company's financial statements or (ii) any matter
        that
        was either the subject of a disagreement or a reportable event.
 
 **Item 8A.** ***Controls
        and Procedures.***
 
 **a.
        Evaluation of Disclosure Controls and Procedures**
 
 Based
        on
        an evaluation under the supervision and with the participation of the Company's
        management, the Company's principal executive officer and principal financial
        officer have concluded that the Company's disclosure controls and procedures
        as
        defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
        of 1934, as amended ("Exchange Act") were effective as of December 31, 2007
        to
        ensure that information required to be disclosed by the Company in reports
        that
        it files or submits under the Exchange Act is (i) recorded, processed,
        summarized and reported within the time periods specified in the Securities
        and
        Exchange Commission rules and forms and (ii) accumulated and communicated
        to the Company's management, including its principal executive officer and
        principal financial officer, as appropriate to allow timely decisions regarding
        required disclosure.
 
 **b.
        Changes in Internal Controls over Financial Reporting**
 
 The
        Company’s chief executive officer and the Company’s chief financial officer have
        concluded that there were no changes in the Company’s internal controls over
        financial reporting during the quarter ended December 31, 2007 that have
        materially affected or are reasonably likely to materially affect the Company’s
        internal controls over financial reporting.
 
 **c.
        Management’s Report on Internal Control Over Financial
        Reporting** ****
 
 Our
        management is responsible for establishing and maintaining adequate internal
        control over financial reporting, as such term is defined in Exchange Act
        Rule
        13a-15(f). The Company’s internal control system was designed to provide
        reasonable assurance to the Company’s management and board of directors
        regarding the preparation and fair presentation of published financial
        statements.
 
 All
        internal control systems, no matter how well designed, have inherent
        limitations. Therefore, even those systems determined to be effective can
        provide only reasonable assurance with respect to financial statement
        preparation and presentation.
 
 The
        Company’s management, including the Company’s Chief Executive Officer and Chief
        Financial Officer, assessed the effectiveness of the Company’s internal control
        over financial reporting as of December 31, 2007. In making this
        assessment, the Company’s management used the criteria set forth by the
        Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
        Internal Control—Integrated Framework. Based on this assessment, management
        believes that, as of December 31, 2007, the Company’s internal control over
        financial reporting was effective based on those criteria.
  **Item
        8B.** ***Other
        Information.***
 
 We
        do not
        have any information required to be disclosed in a report on Form 8-K during
        the
        fourth quarter of 2007 that was not reported.
 
 19
  **PART III**
 
 **Item 9.** ***Directors,
        Executive Officers, Promoters, Control Persons And***  ***Corporate
        Governance; Compliance With Section 16(a) Of The***  ***Exchange
        Act.***
 
 The
        following are our officers and directors as of the date hereof. Some of our
        officers and directors are residents of the PRC and, therefore, it may be
        difficult for investors to effect service of process within the U.S. upon
        them
        or to enforce judgments against them obtained from the U.S. courts.
 
 **Directors
        and Executive Officers of China Agri:**
 NAME
                
                POSITION
                
                AGELiping Deng
                
                Director, Chief Executive Officer
                  and
                  President
                
                36Limin Deng
                
                Chairman of Board ofDirectors
                
                45Xiaolong Zhou
                
                Chief Financial Officer
                
                56Jianhua Wang
                
                Secretary
                
                54Michael
                      Segal
                
                Director
                
                65
  **Directors
        and Executive Officers of WOFE:**
 NAME
                  
                  POSITION
                  
                  AGELiping Deng
                  
                  Chairman of Board of Directors
                  
                  36Limin Deng
                  
                  Vice-Chairman of Board of Directors
                  
                  45Zhengfeng Guo
                  
                  Director
                  
                  38
  **Directors
          and Executive Officers of Xinsheng:**
 NAME
                    
                    POSITION
                    
                    AGELiping Deng
                    
                    Director, and President
                    
                    35Limin Deng
                    
                    Chairman of Board ofDirectors
                    
                    44Yuqin Mao
                    
                    Director
                        and Chief FinancialOfficer
                    
                    58Jianhua Wang
                    
                    Director and Administrative
Department
                      Head
                    
                    53Xiucheng
                          Wang
                    
                    Director and Vice President
                    
                    57Ruixin Zhang
                    
                    Director and Vice President
                    
                    48
 **Mr.
        Liping Deng** was
        appointed as our Director, President and Chief Executive Officer on June
        26,
        2006. He has been a Director and President of Xinsheng since 2002 and Chairman
        of Board of Directors of WOFE since March 2006. Prior to joining us, Mr.
        Deng
        served as a senior manager at Xianyang Tong Lida Electronic Communication
        Co.,
        Ltd. from 1996 to 1998. Prior to that, Mr. Deng served as President of the
        Worker's Union in Xianyang Pottery Factory from 1991 to 1995. Mr.Deng obtained
        a
        technical secondary school degree from Xi'an Construction Company Pottery
        Technology School. Mr. Liping Deng is the brother of Mr. Limin
        Deng.
 
 **Mr.
        Limin Deng** was
        appointed as our Director on June 26, 2006. He founded Xinsheng in 2002 and
        served as Chairman of Xinsheng since that time. Mr. Deng is the Vice Chairman
        of
        the Board of Directors of WOFE. Prior to joining us, he served as a security
        manager in the Xi'An Electronic Technology University for six years. He founded
        Shaanxi Xinsheng Weiye Technology Development Co., Ltd. in 2001, which has
        been
        liquidated. He obtained a junior college degree in Economic Management from
        the
        Continuous Education College of Xi'an Electronic Technology University. Mr.
        Limin Deng is the brother of Mr. Liping Deng.
 
 **Mr.
        Xiaolong Zhou** was
        appointed as our Chief Financial Officer in April 1, 2007. He had been a
        senior
        accountant in Liss Okou Goldstein Okun and Tancer CPA'S P.C. in Great Neck,
        New
        York for the prior nine years. He is a certified public accountant, registered
        in the state of New York, a member of American Institute of Certified Public
        Accountants, and a member of New York State Society of Certified Public
        Accountants. Mr. Zhou obtained an M.B.A. in accountancy degree from Baruch
        College of CUNY and an M.A. in economics degree from City College of CUNY.
        He
        obtained a B.A. in economics degree from Fudan University, Shanghai,
        China.
 
 20
 **Mr.
        Jianhua Wang** was
        appointed as our Secretary on June 26, 2006. Mr. Wang served as a director
        and
        General Administrative Officer for Xinsheng since March 2005. Mr. Wang served
        as
        the head of an office of the Technology Zone of the Xi'an Electronic Technology
        University from 2002 to 2005. Prior to that, he served as the head of a
        department of Xi'an Electronic Technology University from 2001 to 2002. He
        obtained a B.A. degree from North Western University in the PRC.
 
 **Mr.
        Michael Segal** was
        appointed as our Director on June 8, 2006. Since 2001, Mr. Segal has been
        President of Segal Cirone Services Inc., a financial consulting company that
        advises institutions, banks and high net worth individuals. He currently
        is a
        Principal, Options Compliance Principal and Branch Office Manager of Whitaker
        Securities LLC, a member of the Financial Industry Regulatory Authority (FINRA)
        since October 23, 2006. Prior to that, Mr. Segal had served in the following
        capacities: as President of Alexander Westcott & Co., Inc., a Broker/Dealer
        registered with NASD and Secretary of the board of directors of its parent
        company, the Financial Commerce Network Inc., a public company; President
        of
        Lamborn Securities Inc. a Broker/Dealer registered with NASD; Branch Manager
        of
        Geldermann Securities Inc.; President of Greentree Commodities; a Branch
        Manager
        at REFCO, Inc.; a Senior Vice President at Shearson American Express, and;
        a
        Branch Manager at Investors Overseas Services (Bangkok, Thailand). He is
        also
        individually registered as an Introducing Broker with the Commodity Futures
        Trading Commission and a member of the National Futures Association and a
        founding member of the Managed Funds Association. Mr. Segal received a B.B.A.
        in
        marketing and economics from the University of Miami, (Coral Gables)Florida.
        Mr.
        Segal sits on the board of directors of the following privately held companies:
        BioStar Pharmaceuticals Inc.; China Power and Equipment Company Inc.; Jiali
        Pharmaceuticals Inc.; Asia Nutracueticals Consulting Co. Ltd.; China America
        Holdings LLC,; and Kerry Pharmaceuticals Inc.
 
 **Ms.
        Yuqin Mao** was
        appointed as the Chief Financial Officer of Xinsheng since 2001. She is also
        a
        director of Xinsheng. Prior to 2001, she worked as manager of the financial
        department for Shaanxi Xidenghui Technology Industrial Joint Stock Company
        from
        1999 to 2001 and an accountant for Shaanxi Weinan District Financial Bureau
        from
        1998 to 1999. She had served as our Chief Financial Officer from November
        2006
        to March 2007. Ms. Mao received training in accounting at the Shaanxi Weinan
        District Financial Bureau from 1970 to 1971.
 
 **Mr.
        Zhengfeng Guo** was
        appointed as a director of WOFE in Nov 2007. Prior to that, he was industry
        supervisor of Shaanxi Xinsheng Centennial Agriculture & Technology Co., Ltd.
        in the PRC from 2001 to 2007. He obtained his bachelor degree in marketing
        management from Shaanxi Finance & Economics college in the PRC.
 
 **Mr.
        Xiucheng Wang** was
        appointed as a director and Vice President of Xinsheng in 2003. Prior to
        that he
        was an Assistant to the President of Xi'an Kunlun Group Company from 2001
        to
        2003. He obtained his bachelor degree from Central Political Institute in
        the
        PRC.
 
 **Mr.
        Ruixin Zhang** was
        appointed as a director and Vice President of Xinsheng in 2003. Prior to
        that,
        he served as Executive Vice President of Hebei Lang Green Packaging Co.,
        Ltd.
        from 2001 to 2003. Mr. Zhang obtained his bachelor degree in Regional Economics
        and Geographical Management from Shaanxi Normal University in
        China.
 
 According
        to our By-laws, the term of our directors is from the date of their appointment
        or election until the next annual meeting of shareholders or until his or
        her
        successor shall have been elected and qualified. The terms for our principal
        executive officers are one year, and they serve at the discretion of our
        board
        of directors.
 
 **Audit
        Committee Financial Expert**
 
 Our
        board
        of directors currently acts as our audit committee. We have not yet appointed
        or
        nominated for election a director who qualifies as an "audit committee financial
        expert" as defined in Item 401(e) of Regulation S-B, and is "independent"
        as the
        term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange
        Act of 1934 (the "Exchange Act"). Our board of directors is in the process
        of
        searching for a suitable candidate for this position.
 
 **Family
        Relationships**
 
 Mr.
        Limin
        Deng and Mr. Liping Deng are brothers.
 
 21
  **Involvement
        in Certain Legal Proceedings.**
  None
        of our officers or directors have, during the last five years: (i) been
        convicted in or is currently subject to a pending a criminal proceeding;
        (ii) been a party to a civil proceeding of a judicial or administrative
        body of competent jurisdiction and as a result of such proceeding was or
        is
        subject to a judgment, decree or final order enjoining future violations
        of, or
        prohibiting or mandating activities subject to any federal or state securities
        or banking laws including, without limitation, in any way limiting involvement
        in any business activity, or finding any violation with respect to such law,
        nor
        (iii) has any bankruptcy petition been filed by or against the business of
        which such person was an executive officer or a general partner, whether
        at the
        time of the bankruptcy of for the two years prior thereto.
  **Compliance
        with Section 16(a) of the Exchange Act**
  Our
        executive officers and directors are not subject to the filing requirements
        imposed by Section 16(a) of the Securities Exchange Act of 1934, as
        amended.
 
 **Code
        of Ethics**
 
 We
        have
        not yet adopted a Code of Ethics within the meaning of Item 406(b) of Regulation
        S-B of the Securities Exchange Act of 1934. We intend on adopting a Code
        of
        Ethics which applies to our chief executive officer and our senior financial
        officers in the near future.
 
 **Item 10.** ***Executive
        Compensation.***
 
 The
        following table sets forth all compensation for the most recent two fiscal
        years
        awarded to, or earned by, our Chief Executive Officer and all other executive
        officers serving as such at the end of fiscal year ended December 31, 2007
        whose
        salary and bonus exceeded $100,000 for the year ended December 31, 2007 or
        who,
        as of December 31, 2007, was being paid a salary at a rate of at least $100,000
        per year.
 
 **Summary
        Compensation Table**
 **Name
                    and Principal Position**
                  **(a)**
                
                **Year**
                  **(b)******
                
                **Salary
                    ($)**
                  **(c)******
                
                **Bonus
                    ($)**
                  **(d)******
                
                **Stock**
                  **Awards**
                  **($)**
                  **(e)******
                
                **Option**
                  **Awards**
                  **($)**
                  **(f)******
                
                **Non-Equity**
                  **Incentive**
                  **Plan**
                  **Compensation**
                  **($)**
                  **(g)******
                
                **Change
                    in**
                  **Pension**
                  **Value
                    and**
                  **Nonqualified**
                  **Deferred**
                  **Compensation**
                  **Earnings**
                  **($)**
                  **(h)******
                
                **All
                    Other**
                  **Compensation**
                  **($)**
                  **(i)******
                
                **Total**
                  **($)**
                  **(j)******Liping
                    Deng
                  Chief
                    Executive Officer (1)
                
                2007
                
                5,260
                
                --
                
                --
                
                --
                
                --
                
                --
                
                --
                
                5,2602006
                
                3,994
                
                --
                
                --
                
                --
                
                --
                
                --
                
                --
                
                3,994
 
 **Footnotes:**
 
 (1)
        Mr.
        Liping Deng was appointed our President and CEO on June 8, 2006. Prior to
        that
        time, he was the President of Xinsheng.
 
 **Compensation
        Discussion and Analysis**
 
 The
        Company has three executive officers, Mr. Liping Deng, Mr. Xiaolong Zhou
        and Mr.
        Jianhua Wang. The Board of Directors serves as the Company's compensation
        committee.
 
 The
        Board
        of Directors' goal in determining compensation levels is to adequately reward
        the efforts and achievements of executive officers for the management of
        the
        Company. The Company has no pension plan, stock option plan, non-equity
        incentive plan or deferred compensation arrangement. The Company has not
        used a
        compensation consultant in any capacity, but believes that its executive
        officer
        compensation package is comparable to similar businesses in its location
        of its
        operations.
 
 22
 None
        of
        the executive officers has an employment agreement with the Company, except
        Mr.
        Xiaolong Zhou, our CFO. We entered into a preliminary employment agreement
        with
        Mr. Zhou on April 1, 2007. Pursuant to the preliminary employment agreement,
        Mr.
        Zhou assumed the position of CFO for an initial period of one year at an
        annual
        compensation of $45,000.
 
 In
        the
        absence of such employment agreements, the PRC Labor Laws provide for employment
        related terms such as the term of employment, the provision of labor-related
        insurance, termination for cause, termination on 30 days' notice and termination
        without notice and the labor-related benefits.
 
 **Director
        Compensation**
 
 The
        following table sets forth compensation paid to each named director during
        the
        year end December 31, 2007.
 **DIRECTOR
                    COMPENSATION**Name
                  (a)
                Fees
                    Earned or Paid in Cash
                  ($)
                  (b)
                Stock
                    Awards
                  ($)
                  (c)
                Option
                    Awards ($)
                  (d)
                Non-Equity
                    Incentive
                  Plan
                    Compensation
                  ($)
                  (e)
                Non-Qualified
                    Deferred Compensation Earnings
                  ($)
                  (f)
                All
                  Other
                    Compensation
                  ($)
                  (g)
                Total
                  ($)
                  (j)Limin
                    Deng
                7,140
                --
                --
                --
                --
                --
                7,140
 
 **Item 11.** ***Security
        Ownership of Certain Beneficial Owners and Management***  ***and
        Related Stockholder Matters.***
 
 The
        following table sets forth information regarding the beneficial ownership
        of our
        common stock as of March 24, 2008 by:
 
 l
                each
                    person known by us to be the beneficial owner of more than 5%
                    of our
                    outstanding shares ofcommon
                    stock; l
                each of our officers and directors;
                  and l
                all our officers and directors
                  as a
                  group.
  Based
        on
        information available to us, all persons named in the table have sole voting
        and
        investment power with respect to all shares of common stock beneficially
        owned
        by them, unless otherwise indicated. Beneficial ownership is determined in
        accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
        amended. In computing the number of shares beneficially owned by a person
        or a
        group and the percentage ownership of that person or group, shares of our
        common
        stock subject to options or warrants currently exercisable or exercisable
        within
        60 days after the date of this prospectus are deemed outstanding, but are
        not
        deemed outstanding for the purpose of computing the percentage of ownership
        of
        any other person. Applicable percentage ownership is based upon
        12,958,574 shares of common stock outstanding as of March 24,
        2008.
 
 Unless
        otherwise indicated, the address of each individual named below is c/o China
        Agri-Business, Inc., Finance Plaza, 9th Floor, Hi-tech Road No. 42, Hi-tech
        Industrial Development Zone Xi'an, Shaanxi, CHINA 710068 .
  23
 
 **Name
                  of Beneficial Owner**
              
              
              **Amount
                  and Nature of Beneficial Ownership (1)**
              
              
              **Percent
                  of Class**Michael
                  Segal
                11
                  East 86th Street
                New
                  York, New York 10028
              
              
              63,074
              
              
              0.5
              %Liping
                  Deng
              
              
              1,851,148
              
              
              14.3Liming
                  Deng
              
              
              --
              
              
              --Xialong
                  Zhou
              
              
              --
              
              
              --All
                  Directors and Executive Officers as a group (4 persons)
              
              
              1,914,222
              
              
              14.8
              %Trustees
                  for Xinsheng Shareholders (2)
              
              
              9,099,749
              
              
              70.2
  **Footnotes:**
 
 (1)
        Reflects the ownership of our equity securities after a 2.032-for-1 forward
        split of our common stock during the fourth quarter of 2006.
 
 (2)
        The
        trustees for the trust holding these shares are: Zhihong Yang, Xiaoying Lin,
        Dongdong Ding, Fei Zhao and Junsheng Meng. The trustees are individuals and
        are
        not affiliated with any bank or trust company.
 
 **Item 12.** ***Certain
        Relationships and Related Transactions, and Director***  ***Independence.***
 
 *Director
          Independence*
  Michael
          Segal is an independent director as that term is defined in the applicable
          rules
          and regulations of the Nasdaq Stock Market.
 
 24
  **Item 13.** ***Exhibits.***
 
 **EXHIBIT
                  INDEX****Exhibit
                  No.**
              **Description**1.1
              Underwriting
                  Agreement between the Company and Spencer Edwards, Inc.
                (1)3.1.1
              Articles
                  of Incorporation (2)3.1.1
              Amended
                  Articles of Incorporation (2)3.2
              Bylaws
                  (2)3.3
              Specimen
                  Common Stock Certificate (2)4.1
              Form
                  of $1.50 Unit Warrant (2)4.2
              Form
                  of $2.00 Unit Warrant (2)9.1
              Stock
                  Purchase Agreement between China Agri-Business, Inc. and Xinsheng
                  Shareholders dated April 22, 2006 (2)9.2
              Management
                  Agreement between Xinsheng and WOFE dated April 18, 2006
                  (2)9.3
              Voting
                  Trust and Escrow Agreement with Xinsheng Shareholders and their
                  trustee
                  dated April 22, 2006 (2)10.1
              Form
                  of Escrow Agreement (3)10.2
              Corporate
                  Finance Advisory Services Agreement between the Company and Friedland
                  Corporate Investor Services LLC dated March 16, 2006 and its addendum
                  dated March 17, 2007. (4)21.1
              List
                  of Subsidiaries (2)31.1
              Certification
                  by Chief Executive Officer pursuant to Sarbanes Oxley Section
                  302.*31.2
              Certification
                  by Chief Financial Officer pursuant to Sarbanes Oxley Section
                  302.*32.1
              Certification
                  by Chief Executive Officer pursuant to 18 U.S.C. Section
                  1350.*32.2
              Certification
                  by Chief Financial Officer pursuant to 18 U.S.C. Section
                  1350.*
 
 (1)
        Previously filed as an exhibit to the Company's amendment No. 1 to the
        registration statement on Form SB-2 (File No. 333-140118), as filed with
        the SEC
        on April 2, 2007.
 
 (2)
        Previously filed as an exhibit to the Company's registration statement on
        Form
        SB-2 (File No. 333-140118), as filed with the SEC on January 19,
        2007.
 
 (3)
        Previously filed as an exhibit to the Company's registration statement amendment
        No. 3 on Form SB-2 (File No. 333-140118), as filed with the SEC on June 7,
        2007.
 
 (4)
        Previously filed as an exhibit to the Company's registration statement amendment
        No. 5 on Form SB-2 (File No. 333-140118), as filed with the SEC on July 11,
        2007.
 
 *
        Filed
        herewith.
 
 **Item 14.** ***Principal
        Accountant Fees and Services.***
 
 The
        following table sets forth the fees accrued or paid to the Company's independent
        registered public accounting firm during fiscal years 2007 and 2006. The
        Company’s financial statements for the years 2007 and 2006 were audited by
        Michael T. Studer, CPA, P.C.
 **Audit
        and Non-Audit Fees**
 
 **2007**
              
              **2006**Audit
                  Fees (1)
              
              $
              64,400
              
              $
              73,300Audit-Related
                  Fees
              
              
              --
              
              
              --Tax
                  Fees
              
              
              --
              
              
              --All
                  Other Fees
              
              
              --
              
              
              --Total
              
              $
              64,400
              
              $
              73,300
 
 (1)
        Audit
        fees relate to professional services rendered in connection with the audits
        of
        the Company's annual financial statements and quarterly reviews of financial
        statements included in the Company's Forms 10-QSB, and audit services provided
        in connection with other statutory and regulatory filings.
 
 25
  **SIGNATURES**
 
 Pursuant
        to the requirements of Section 13 or 15(d) of the Exchange Act, the
        registrant has duly caused this Form 10-KSB Annual Report to be signed on
        its behalf by the undersigned on March 28, 2008, thereunto duly
        authorized.
  **CHINA AGRI-BUSINESS, INC.***/s/
                  Liping Deng*Liping
                  DengPresident,
                  Chief Executive Officer, Director (Principal Executive Officer)  */s/
                      Xiaolong Zhou*Xiaolong
                      ZhouChief
                      Financial Officer (Principal Accounting and Financial
                      Officer)
 
 In
        accordance with the requirements of the Securities Exchange Act of 1934,
        this
        Form 10-KSB Annual Report has been signed by the following persons in the
        capacities and on the dates indicated.
 
 **Position**
              
              **Date***/s/
                  Liping Deng*
              
              President,
                  Chief Executive Officer, Director
              
              March
                  28, 2008Liping
                  Deng*/s/
                  Xiaolong Zhou*
              
              Chief
                  Financial Officer
              
              March
                  28, 2008Xiaolong
                  Zhou*/s/
                  Michael Segal*
              
              Director
              
              March
                  28, 2008Michael
                  Segal*/s/
                  Limin Deng*
              
              Director
              
              March
                  28, 2008Limin
                  Deng
 
 26