UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





(Mark
One)





RQUARTERLY REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the
Quarterly Period Ended June 30, 2008





OR





£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 000-32249





SKYPEOPLE
FRUIT JUICE, INC.


(Exact
name of registrant as specified in its charter)








Florida
            
            98-0222013(State
      or other jurisdiction of
            
            (I.R.S.
      Employerincorporation
      or organization)
            
            Identification
      Number)16F, National
      Development Bank Tower
              Gaoxin
      2nd
      Road
              Hi-Tech
      Industrial Zone, Xi’an,Shaanxi
      Province, PRC
            
            710075(Address
      of principle executive offices)
            
            (Zip
      Code)





Registrant's
Telephone Number, Including Area
Code:  011-86-29-88386415





Entech
Environmental Technologies, Inc.


A-4F
Tongxinge, Xietong Building, Gaoxin 2nd
Road,


Hi-Tech
Industrial Zone, Xi’an, Shaanxi province, PRC
710065__                _______________


(Former
Name, Former Address and Former Fiscal Year if Changed Since Last
Report)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.Yes
R No £







Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large accelerated filer
            
             ̈
            
            Accelerated filer
            
             ̈Non-accelerated
      filer
            
             ̈  (Do
      not check if a smaller reporting company)
            
            Smaller reporting company
            
            x








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





APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY


PROCEEDINGS
DURING THE PRECEDING FIVE YEARS





Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes [   ] No[   ]





APPLICABLE
ONLY TO CORPORATE ISSUERS


Indicate
the number of shares outstanding of each of the issuer's classes of Common
Stock, as of the latest practicable date: the number of shares of Common Stock
of the Company outstanding as of August 2, 2008 was 22,271,684.








SKYPEOPLE
FRUIT JUICE, INC.





TABLE
      OF CONTENTS
              
              Forward
      Looking Statements
            PagePart
      I.
            Financial
      Information
            1Item
      1.
            Financial
      Statements
            2(a)
      Condensed Consolidated Balance Sheets as of June 30, 2008 (Unaudited) and
      December 31, 2007
            2(b)
      Condensed Consolidated Statements of Operations and Comprehensive Income
      for the Three and Six Months Ended June 30, 2008 (Unaudited) and June 30,
      2007 (Unaudited)
            3(c)
      Condensed Consolidated Statements of Cash Flows for the Six Months Ended
      June 30, 2008 (Unaudited) and June 30, 2007 (Unaudited)
            4(d)
      Notes to Consolidated Financial Statements (Unaudited)
            5Item
      2.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            15Item
      3.
            Quantitative
      and Qualitative Disclosures About Market Risk
            21Item
      4T.
            Controls
      and Procedures
            21Signatures
            
            22


-i-


FORWARD-LOOKING
STATEMENTS





The discussions of the business and activities of SkyPeople Fruit Juice, Inc.
(“we,” “us,” “our” or “the Company”) set forth in this Form 10-Q and in other
past and future reports and announcements by the Company may contain
forward-looking statements and assumptions regarding future activities and
results of operations of the Company.  You can identify these
statements by the fact that they do not relate strictly to historical or current
facts. Forward-looking statements involve risks and uncertainties.
Forward-looking statements include statements regarding, among other things, (a)
our projected sales, profitability, and cash flows, (b) our growth strategies,
(c) anticipated trends in our industry, (d) our future financing plans and (e)
our anticipated needs for working capital. They are generally identifiable by
use of the words "may," "will," "should," "anticipate," "estimate," "plans,"
“potential," "projects," "continuing," "ongoing," "expects," "management
believes," "we believe," "we intend" or the negative of these words or other
variations on these words or comparable terminology. These statements may be
found under "Management's Discussion and Analysis of Financial Condition and
Results of Operations” as well as in this Form 10-Q generally. In particular,
these include statements relating to future actions, prospective products or
product approvals, future performance or results of current and anticipated
products, sales efforts, expenses, the outcome of contingencies such as legal
proceedings, and financial results.




Any or
all of our forward-looking statements in this report may turn out to be
inaccurate. They can be affected by inaccurate assumptions we might make or by
known or unknown risks or uncertainties. Consequently, no forward-looking
statement can be guaranteed. Actual future results may vary materially as a
result of various factors, including, without limitation, the risks outlined
under "Risk Factors" and matters described in the Form S-1 recently filed by the
Company. In light of these risks and uncertainties, there can be no assurance
that the forward-looking statements contained in this filing will in fact occur.
You should not place undue reliance on these forward-looking
statements.





We undertake no obligation to update
forward-looking statements to reflect subsequent events, changed circumstances,
or the occurrence of unanticipated events.





-1-


PART
I. FINANCIAL INFORMATION




ITEM
1. FINANCIAL STATEMENTS





SKYPEOPLE
FRUIT JUICE, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED
BALANCE SHEETS, UNAUDITED


June
      30,
            
            
            December
      31,2008
            
            
            2007ASSETS
            
            (Unaudited)CURRENT
      ASSETSCash
      and equivalents
            
            $
            9,141,322
            
            
            $
            4,094,238Accounts
      receivable, net
            
            
            4,821,445
            
            
            
            9,153,687Other
      receivables
            
            
            46,449
            
            
            
            55,737Inventories,
      net
            
            
            1,801,539
            
            
            
            4,460,149Prepaid
      expenses and other current assets
            
            
            1,473,440
            
            
            
            101,628Total
      current assets
            
            
            17,284,195
            
            
            
            17,865,439RELATED
      PARTY RECEIVABLE
            
            
            -
            
            
            
            4,970,427PROPERTY,
      PLANT AND EQUIPMENT, Net
            
            
            20,615,419
            
            
            
            17,564,147LAND
      USAGE RIGHTS (Note 10)
            
            
            6,465,964
            
            
            
            6,138,297OTHER
      ASSETS
            
            
            2,657,930
            
            
            
            71,818TOTAL
      ASSETS
            
            $
            47,023,508
            
            
            $
            46,610,128LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIESAccounts
      payable
            
            $
            1,025,163
            
            
            $
            2,997,740Accrued
      expenses
            
            
            337,693
            
            
            
            339,818Related
      party payable
            
            
            -
            
            
            
            143,366Income
      taxes payable
            
            
            185,287
            
            
            
            114,909Other
      payable
            
            
            486,258
            
            
            
            217,759Advances
      from customers
            
            
            883,706
            
            
            
            708,291Short-term
      notes payable
            
            
            7,289,586
            
            
            
            6,406,922Total
      current liabilities
            
            
            10,207,693
            
            
            
            10,
      928,805NOTE
      PAYABLE, net of current portion
            
            
            2,186,876
            
            
            
            2,053,501-TOTAL
      LIABILITIES
            
            $
            12,394,569
            
            
            $
            12,982,306MINORITY
      INTEREST
            
            
            949,847
            
            
            
            1,073,364MINORITY
      INTEREST-Variable interest entity (Note 7)
            
            
            -
            
            
            
            6,308,591STOCKHOLDERS'
      EQUITYPreferred
      Stock, $0.001 par value; 10,000,000 shares authorized
              3,448,480
      Series B Preferred Stock issued and outstanding
            
            
            3,448
            
            
            
            -Common
      Stock, $0.01 par value; 100,000,000 shares authorized
              22,271,684
      and 22,006,173 shares issued and outstanding as of
              June
      30, 2008 and December 31, 2007, respectively
            
            
            222,717
            
            
            
            220,062Additional
      paid-in capital
            
            
            13,791,724
            
            
            
            10,682,755Accumulated
      retained earnings
            
            
            15,173,672
            
            
            
            12,458,632Accumulated
      other comprehensive income
            
            
            4,487,531
            
            
            
            2,884,418Total
      stockholders' equity
            
            
            33,679,092
            
            
            
            26,245,867TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
            
            $
            47,023,508
            
            
            $
            46,610,128





See
accompanying notes to condensed consolidated financial
statements


-2-





SKYPEOPLE
FRUIT JUICE, INC. AND SUBSIDIARIES





CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME,
 UNAUDITED


Three
      Months Ended
                
                
                Six
      Months EndedJune
      30,
                
                
                June
      30,
                
                
                June
      30,
                
                
                June
      30,2008
                
                
                2007
                
                
                2008
                
                
                2007(Unaudited)
                
                
                (Unaudited)
                
                
                (Unaudited)
                
                
                (Unaudited)Revenue
                
                $
                7,245,967
                
                
                $
                3,485,726
                
                
                $
                16,096,551
                
                
                $
                8,722,912Cost of
      Sales
                
                
                4,329,370
                
                
                
                2,281,264
                
                
                
                11,320,336
                
                
                
                5,270,685Gross
      Profit
                
                
                2,916,597
                
                
                
                1,204,462
                
                
                
                4,776,215
                
                
                
                3,452,227Operating
      ExpensesGeneral
      and administrative
                
                
                455,278
                
                
                
                143,211
                
                
                
                1,029,469
                
                
                
                252,416Selling
      expenses
                
                
                255,300
                
                
                
                71,568
                
                
                
                496,645
                
                
                
                239,211Total
      operating expenses
                
                
                710,578
                
                
                
                214,779
                
                
                
                1,526,114
                
                
                
                491,627Income
      from Operations
                
                
                2,206,019
                
                
                
                989,683
                
                
                
                3,250,101
                
                
                
                2,960,600Other
      Income (Expense)Interest
      expense
                
                
                (386,075
                )
                
                
                -
                
                
                
                (445,103
                )
                
                
                -Interest
      income
                
                
                16,801
                
                
                
                4,916
                
                
                
                22,965
                
                
                
                7,499Subsidy
      income
                
                
                -
                
                
                
                -
                
                
                
                48,778
                
                
                
                -Other
      income (expense)
                
                
                142,102
                
                
                
                (821
                )
                
                
                332,280
                
                
                
                (42,277
                )Total
      other income (expense)
                
                
                (227,172
                )
                
                
                4,095
                
                
                
                (41,080
                )
                
                
                (34,778
                )Income
      Before Income Taxes
                
                
                1,978,847
                
                
                
                993,778
                
                
                
                3,209,021
                
                
                
                2,925,822Income
      Tax Provision
                
                
                180,678
                
                
                
                83,505
                
                
                
                311,198
                
                
                
                456,983Income
      Before Minority Interest
                
                
                1,798,169
                
                
                
                910,273
                
                
                
                2,897,823
                
                
                
                2,468,839Minority
      interest
                
                
                134,948
                
                
                
                11,389
                
                
                
                182,783
                
                
                
                89,724Net
      Income
                
                $
                1,663,221
                
                
                $
                898,884
                
                
                $
                2,715,040
                
                
                $
                2,379,115Earnings
      Per Share:Basic
      earnings per share
                
                $
                0.06
                
                
                $
                0.04
                
                
                $
                0.10
                
                
                $
                0.11Diluted
      earnings per share
                
                $
                0.06
                
                
                $
                0.04
                
                
                $
                0.10
                
                
                $
                0.11Weighted
      Average Shares Outstanding:Basic
                
                
                22,271,684
                
                
                
                22,006,173
                
                
                
                22,188,529
                
                
                
                22,006,173Diluted
                
                
                30,096,324
                
                
                
                22,006,173
                
                
                
                28,310,157
                
                
                
                22,006,173Comprehensive
      Income:Net
      income
                
                $
                1,663,221
                
                
                $
                898,884
                
                
                $
                2,715,040
                
                
                $
                2,379,115Foreign
      currency translation adjustment
                
                
                182,813
                
                
                
                270,125
                
                
                
                1,603,113
                
                
                
                402,294Comprehensive
      Income
                
                $
                1,846,034
                
                
                $
                1,169,009
                
                
                $
                4,318,153
                
                
                $
                2,781,409





See accompanying notes to condensed
consolidated financial statements


-3-


SKYPEOPLE
FRUIT JUICE, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS, UNAUDITED


June
      30,
            
            
            June
      30,2008
            
            
            2007(Unaudited)
            
            
            (Unaudited)Cash
      Flow from Operating ActivitiesNet
      income
            
            $
            2,715,040
            
            
            $
            2,379,115Adjustments
      to reconcile net income tonet
      cash flow provided by operating activitiesDepreciation
      and amortization
            
            
            931,617
            
            
            
            450,965Minority
      interest
            
            
            182,783
            
            
            
            89,724Changes
      in operating assets and liabilities,net
      of acquisition effectsAccounts
      receivable
            
            
            4,767,805
            
            
            
            663,311Other
      receivables
            
            
            11,829
            
            
            
            (125,485
            )Prepaid
      expenses and other current assets
            
            
            (1,345,081
            )
            
            
            (70,235
            )Inventories
            
            
            2,853,165
            
            
            
            481,049Accounts
      payable
            
            
            (2,097,350
            )
            
            
            (396,504
            )Accrued
      expenses
            
            
            (22,342
            )
            
            
            8,584Advances
      from customers
            
            
            125,235
            
            
            
            287,902Other
      payables
            
            
            243,820
            
            
            
            85,326Taxes  payable
            
            
            60,885
            
            
            
            (1,540,586
            )Net
      cash provided by operating activities
            
            
            8,427,406
            
            
            
            2,313,166Cash
      Flow from Investing ActivitiesPrepayment
      for lease improvement
            
            
            (364,479
            )
            
            
            -Deposits
      to purchase target company
            
            
            (2,116,313
            )
            
            
            -Loan
      repayment from related parties
            
            
            5,411,560
            
            
            
            -Loan
      advanced to related parties
            
            
            (7,096,571
            )
            
            
            (36,270
            )Additions
      to property, plant and equipment
            
            
            (2,702,172
            )
            
            
            (297,287
            )Net
      cash used in investing activities
            
            
            (6,867,975
            )
            
            
            (333,557
            )Cash
      Flow from Financing ActivitiesProceeds
      from stock issuance
            
            
            3,115,072
            
            
            
            -Proceeds
      from bank loans
            
            
            5,502,413
            
            
            
            -Repayment
      of bank loans
            
            
            (5,050,933
            )
            
            
            -Dividend
      paid to minority interest
            
            
            (306,300
            )
            
            
            -Repayments
      of related party loan
            
            
            (147,751
            )
            
            
            (1,469,274
            )Net
      cash provided by (used in) financing activities
            
            
            3,112,501
            
            
            
            (1,469,274
            )Effect
      of Changes in Exchange Rate
            
            
            375,152
            
            
            
            54,764NET
      INCREASE IN CASH
            
            
            5,047,084
            
            
            
            565,099CASH
      AND CASH EQUIVALENTS, BEGINNING OF PERIOD
            
            
            4,094,238
            
            
            
            2,135,173CASH
      AND CASH EQUIVALENTS, END OF PERIOD
            
            $
            9,141,322
            
            
            $
            2,700,272Supplementary
      Information of Cash FlowsCash
      paid for interest
            
            $
            377,717
            
            
            $
            -Cash
      paid for income tax
            
            $
            858,047
            
            
            $
            1,664,694Purchase
      of Huludao, offset by related party receivables
            
            $
            6,807,472
            
            
            $
            -





See
accompanying notes to condensed consolidated financial
statements.


-4-


SKYPEOPLE
FRUIT JUICE, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)





1.
            CORPORATE
      INFORMATION





SkyPeople Fruit Juice,
Inc.





SkyPeople
Fruit Juice, Inc. ("SkyPeople" or the "Company"), formerly Entech Environment
Technology, Inc. (“Entech”), was formed in June 1998 under the laws of the State
of Florida. From July 2007 until February 26, 2008, our operations consisted
solely of identifying and completing a business combination with an operating
company and compliance with our reporting obligations under federal securities
laws.





Between
February 22, 2008 and February 25, 2008, we entered into a series of
transactions whereby we acquired 100% of the ownership interest in Pacific
Industry Holding Group Co., Ltd. (“Pacific”) from a share exchange transaction
and raised $3,400,000 gross proceeds from certain accredited investors in a
private placement transaction. As a result of the consummation of these
transactions, Pacific is now a wholly owned subsidiary of the
Company.





Pacific
was incorporated under the laws of the Republic of Vanuatu on November 30, 2006.
Pacific’s only business is acting as a holding company for Shaanxi Tianren
Organic Food Co., Ltd. (“Shaanxi Tianren”), a company organized under the laws
of the People’s Republic of China (“PRC”), in which Pacific holds a 99%
ownership interest.





This
share exchange transaction resulted in Pacific obtaining a majority voting and
control interest in the Company. Generally accepted accounting principles
require that the company whose stockholders retain the majority controlling
interest in a combined business be treated as the acquirer for accounting
purposes, resulting in a reverse acquisition with Pacific as the accounting
acquirer and SkyPeople as the acquired party. Accordingly, the share exchange
transaction has been accounted for as a recapitalization of Pacific. The equity
sections of the accompanying financial statements have been restated to reflect
the recapitalization due to the reverse acquisition as of the first day of the
first period presented. All references to Common Stock of Pacific Common Stock
have been restated to reflect the equivalent numbers of SkyPeople equivalent
shares.





On May
23, 2008, we amended the Company’s Articles of Incorporation and changed our
name to SkyPeople Fruit Juice, Inc. to better reflect our business. A
1-for-328.72898 reverse stock split of the outstanding shares of Common Stock
and a mandatory 22.006 for 1 conversion of Series A Preferred Stock into Common
Stock, which had been approved by written consent of the holders of a majority
of the outstanding voting stock, also became effective on May 23,
2008.




Shaanxi Tianren Organic Food
Co., Ltd.





Shaanxi
Tianren was formed on August 8, 2001 under PRC law. Currently, Shaanxi Tianren
is engaged in the business of research and development, production and sales of
special concentrated fruit juices, fast-frozen and freeze-dried fruits and
vegetables and fruit juice drinks.





On May
27, 2006, Shaanxi Tianren purchased 91.15% of the ownership interest of Xi’an
Tianren Modern Organic Co., Ltd. (“Xi’an Tianren”) for a purchase price in the
amount of RMB 36,460,000, or approximately U.S. $5,114,050. The acquisition was
accounted for using the purchase method, and the financial statements of Shaanxi
Tianren and Xi’an Tianren have been consolidated on the purchase date and
forward.





On June
10, 2008, Shaanxi Tianren completed the acquisition of Huludao Wonder Fruit Co.,
Ltd. (“Huludao”) for a total purchase price of RMB 48,250,000, or approximately
U.S. $6,807,472. The payment was made through the offset of related party
receivables from Shaanxi Hede Investment Management Co., Ltd. (“Hede”). Before
the acquisition, Huludao had been a variable interest entity of Shaanxi Tianren
for accounting purposes according to FASB Interpretation No. 46: Consolidation of Variable Interest
Entities, an interpretation of ARB 51 (“FIN 46”), since June 1, 2007, and
the financial statements of Shaanxi Tianren and Huludao have been consolidated
as of June 1, 2007 and forward.


-5-


The
Company’s current structure is set forth in the diagram below:










2.SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES





Financial
Statements




The
accompanying unaudited interim condensed consolidated financial statements for
SkyPeople have been prepared in accordance with generally accepted accounting
principles in the United States of America (“GAAP”) for interim financial
information and do not include all information and footnotes required by GAAP
for complete financial statements. All significant inter-company balances have
been eliminated in consolidation.





In the
opinion of management, all adjustments, consisting of normal recurring accruals,
considered necessary for a fair presentation have been included. Due to the
seasonal nature of our business and other factors, interim results are not
necessarily indicative of the results that may be expected for the entire fiscal
year.





Certain
prior year balances on the Balance Sheet have been reclassified to conform to
the current presentation. The reclassification had no impact on net income for
the six months ended June 30, 2008 and 2007.





Consolidation





The
accompanying condensed consolidated financial statements include the accounts of
SkyPeople, Pacific, Shaanxi Tianren, Xi’an Tianren, and the newly acquired
Huludao. All material inter-company accounts and transactions have been
eliminated in consolidation.





The
pooling method (entity under common control) is applied to the consolidation of
Pacific with Shaanxi Tianren and Shaanxi Tianren with Huludao. The reverse
merger accounting is applied to the consolidation of SkyPeople with
Pacific.





Cash and Cash
Equivalents





For
purposes of the statements of cash flows, cash and cash equivalents include cash
on hand and demand deposits held by banks. Deposits held in financial
institutions in the PRC are not insured by any government entity or
agency.





Accounting for the
Impairment of Long-Lived Assets





The
long-lived assets held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
assets may not be recoverable. It is reasonably possible that these assets could
become impaired as a result of technological or other industrial changes. The
determination of recoverability of assets to be held and used is made by
comparing the carrying amount of an asset to future net undiscounted cash flows
to be generated by the assets.





If such
assets are considered to be impaired, the impairment to be recognized is
measured as the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less cost to sell. During the reporting
periods there was no impairment loss.


-6-


Earnings Per
Share





Basic
earnings per Common Stock (“EPS”) are calculated by dividing net income
available to common stockholders by the weighted average number of Common Stock
outstanding during the period.  Our Series B Convertible Preferred
Stock is a participating security. Consequently, the two-class method of income
allocation is used in determining net income available to common
stockholders.





Diluted
EPS is calculated by using the treasury stock method, assuming conversion of all
potentially dilutive securities, such as stock options and warrants. Under this
method, (i) exercise of options and warrants is assumed at the beginning of the
period and shares of Common Stock are assumed to be issued, (ii) the proceeds from
exercise are assumed to be used to purchase Common Stock at the average market
price during the period, and (iii) the incremental shares (the difference
between the number of shares assumed issued and the number of shares assumed
purchased) are included in the denominator of the diluted EPS
computation. The numerators and denominators used in the
computations of basic and diluted EPS are presented in the following
table:





Three
      Months Ended
            
            
            Six
      Months EndedJune
      30,
            
            
            June
      30,
            
            
            June
      30,
            
            
            June
      30,2008
            
            
            2007
            
            
            2008
            
            
            2007NUMERATOR
      FOR BASIC AND DILUTED EPSNet
      income (numerator for Diluted EPS)
            
            $
            1,663,221
            
            
            $
            898,884
            
            
            $
            2,715,040
            
            
            $
            2,379,115Net
      income allocated to Preferred Stock
            
            
            (326,989
            )
            
            
            -
            
            
            
            (533,777
            )
            
            
            -Net
      income to common stockholders (Basic)
            
            $
            1,336,232
            
            
            $
            898,884
            
            
            $
            2,181,263
            
            
            $
            2,379,115DENOMINATOR
      FOR BASIC AND DILUTED EPSCommon
      Stock outstanding
            
            
            22,271,684
            
            
            
            22,006,173
            
            
            
            22,188,529
            
            
            
            22,006,173DENOMINATOR
      FOR BASIC EPSAdd:  Weighted
      average preferred as if converted
            
            
            5,448,480
            
            
            
            -
            
            
            
            3,745,468
            
            
            
            -Add:  Weighted
      average stock warrants outstanding
            
            
            2,376,160
            
            
            
            -
            
            
            
            2,376,160
            
            
            
            -DENOMINATOR
      FOR DILUTED EPS
            
            
            30,096,324
            
            
            
            22,006,173
            
            
            
            28,310,157
            
            
            
            22,006,173EPS
      – Basic
            
            $
            0.06
            
            
            $
            0.04
            
            
            $
            0.10
            
            
            $
            0.11EPS
      – Diluted
            
            $
            0.06
            
            
            $
            0.04
            
            
            $
            0.10
            
            
            $
            0.11




Shipping and Handling
Costs





Shipping
and handling amounts billed to customers in related sales transactions are
included in sales revenues. The shipping and handling expenses of $408,095 and
$223,116 for the six months ended June 30, 2008 and 2007, respectively, are
reported in the Consolidated Statement of Income as a component of selling
expenses.





Accumulated Other
Comprehensive Income





Accumulated other comprehensive income
represents foreign currency translation adjustments.





Accounts
Receivable





During
the normal course of business, we extend unsecured credit to our
customers.  Accounts receivable and other receivables are recognized
and carried at the original invoice amount less an allowance for any
uncollectible amount. Allowance is made when collection of the full amount is no
longer probable. Management reviews and adjusts this allowance periodically
based on historical experience, the current economic climate, as well as its
evaluation of the collectability of outstanding accounts. After all attempts to
collect a receivable have failed, the receivable is written off against the
allowance.  Based on the information available to management, the
Company believed that its allowance for doubtful accounts was adequate as of
June 30, 2008. The Company evaluates the credit risks of its customers utilizing
historical data and estimates of future performance.




Inventories





Inventories
consist primarily of raw materials and packaging (which include ingredients and
supplies) and finished goods (which includes finished juice in our bottling and
canning operations). Inventories are valued at the lower of cost or market. We
determine cost on the basis of the average cost or first-in, first-out
methods.





Intangible
Assets





The
Company adopted the provisions of SFAS No. 142, Goodwill and Other Intangible
Assets (“SFAS 142”), effective January 1, 2002. Under SFAS 142, goodwill
and indefinite lived intangible assets are not amortized, but are reviewed
annually for impairment, or more frequently, if indications of possible
impairment exist. The Company has no indefinite lived intangible
assets.


-7-





Revenue
Recognition





The
Company recognizes revenue on the sales of its products as earned when the
customer takes delivery of the product according to previously agreed upon
pricing and delivery arrangements, and when the Company believes that
collectability is reasonably assured. The Company sells primarily perishable and
frozen food products. As such, any right of return is only for a few days and
has been determined to be insignificant by management. Accordingly, no provision
has been made for returnable goods.





Advertising and Promotional
Expense





Advertising
and promotional costs are expensed as incurred. The Company incurred $162 and
$2,092 in advertising and promotional costs for the period ended June 30, 2008
and 2007, respectively.





Estimates





The
preparation of financial statements in conformity with United States’ Generally
Accepted Accounting Principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.





Property, Plant and
Equipment





Property,
plant and equipment are carried at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the useful lives of
the assets. Major renewals and betterments are capitalized and depreciated;
maintenance and repairs that do not extend the life of the respective assets are
charged to expense as incurred. Upon disposal of assets, the cost and related
accumulated depreciation are removed from the accounts and any gain or loss is
included in income. Depreciation related to property and equipment used in
production is reported in cost of sales. Property and equipment are depreciated
over their estimated useful lives as follows:







Buildings
            20-30
      yearsMachinery
      and equipment
            10
      yearsFurniture
      and office equipment
            5
      yearsMotor
      vehicles
            5
      years








June
      30,
            
            
            December
      31,2008
            
            
            2007Machinery
      and equipment
            
            $
            14,422,973
            
            
            $
            13,672,861Furniture
      and office equipment
            
            
            215,871
            
            
            
            200,266Motor
      vehicles
            
            
            206,492
            
            
            
            193,899Buildings
            
            
            7,249,028
            
            
            
            6,489,513Construction
      in progress
            
            
            2,599,466
            
            
            
            -Subtotal
            
            
            24,693,830
            
            
            
            20,556,539Less:
      accumulated depreciation
            
            
            (4,078,411
            )
            
            
            (2,992,392
            )Net
      property and equipment
            
            $
            20,615,419
            
            
            $
            17,564,147





Depreciation
expense included in general and administration expenses for the six months ended
June 30, 2008 and 2007 was $364,267 and $30,098, respectively. Depreciation
expense included in cost of sales for the period ended June 30, 2008 and 2007
was $498,624 and $384,841, respectively.





Long-term
assets of the Company are reviewed annually to assess whether the carrying value
has become impaired according to the guidelines established in Statement of
Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. No impairment of assets was recorded in
the periods reported.





Foreign Currency and
Comprehensive Income





The
accompanying financial statements are presented in U.S. dollars. The functional
currency is the renminbi (“RMB”) of the PRC. The financial statements are
translated into U.S. dollars from RMB at year-end exchange rates for assets and
liabilities, and weighted average exchange rates for revenues and expenses.
Capital accounts are translated at their historical exchange rates when the
capital transactions occurred.





On July
21, 2005, the PRC changed its foreign currency exchange policy from a fixed
RMB/USD exchange rate into a flexible rate under the control of the PRC’s
government. We use the closing rate method in currency translation of the
financial statements of the Company.





The RMB
is not freely convertible into the currency of other nations. All such exchange
transactions must take place through authorized institutions. There is no
guarantee the RMB amounts could have been, or could be, converted into U.S.
dollars at rates used in translation.


-8-





Taxes





Income
tax expense is based on reported income before income taxes. Deferred income
taxes reflect the effect of temporary differences between assets and liabilities
that are recognized for financial reporting purposes and the amounts that are
recognized for income tax purposes. In accordance with Statement of Financial
Accounting Standards (“SFAS”) No.109, Accounting for Income Taxes,
these deferred taxes are measured by applying currently enacted tax
laws.





The
Company has implemented SFAS No.109, Accounting for Income Taxes,
which provides for a liability approach to accounting for income taxes. Deferred
income taxes result from the effect of transactions that are recognized in
different periods for financial and tax reporting purposes. The Company had no
material adjustments to its liabilities for unrecognized income tax benefits
according to the provisions of FIN 48.




Restrictions on Transfer of
Assets Out of the PRC





Dividend
payments by Shaanxi Tianren and its subsidiaries are limited by certain
statutory regulations in the PRC. No dividends may be paid by Shaanxi Tianren
without first receiving prior approval from the Foreign Currency Exchange
Management Bureau. Dividend payments are restricted to 85% of profits, after
tax.





Minority Interest in
Subsidiary





Minority
interest represents the minority stockholders’ proportionate share of 1% of the
equity of Shaanxi Tianren and 8.85% of the equity of Xi’an Tianren.





Accounting Treatment of the
February 26, 2008 Private Placement





The
shares held in escrow as Make Good Escrow Shares will not be accounted for on
our books until such shares are released from escrow pursuant to the terms of
the Make Good Escrow Agreement. During the time such Make Good Escrow Shares are
held in escrow, they will be accounted for as contingently issuable shares in
determining the diluted EPS denominator in accordance with SFAS
128.





Liquidated
damages potentially payable by the Company under the Stock Purchase Agreement
and the Registration Rights Agreement will be accounted for in accordance with
Financial Accounting Standard Board Staff Position EITF 00-19-2. Estimated
damages at the time of closing will be recorded as a liability and deducted from
additional paid-in capital as costs of issuance. Estimated damages determined
later pursuant to the criteria for SFAS 5 will be recorded as a liability and
deducted from operating income.





Research and
Development





Shaanxi
Tianren has established a research and development institution with nearly 30
research and development personnel as of June 30, 2008. Shaanxi Tianren also
from time to time retains external experts and research institutions. The
research and development expenses were $23,625 and $39,142 for the six months
ended June 30, 2008 and June 30, 2007, respectively.





New Accounting
Pronouncements





In March
2008, The Financial Accounting Standards Board (“FASB”) issued SFAS No. 161,
Disclosures about Derivative
Instruments and Hedging Activities. The new standard is intended to
improve financial reporting about derivative instruments and hedging activities
by requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. The Company does not expect that the adoption of SFAS No. 161 will
have a material impact on its consolidated results of operations or financial
position.





In
February 2008, FASB issued Staff Position No. FAS 157-2, which provides for a
one-year deferral of the effective date of SFAS No. 157, Fair Value Measurements, for
non-financial assets and liabilities that are recognized or disclosed at fair
value in the financial statements on a nonrecurring basis, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis.  The Company is evaluating the impact of this standard as it
relates to the Company’s financial position and results of
operations.





In
December 2007, the SEC published Staff Accounting Bulletin (“SAB”)
No. 110, which amends SAB No. 107 by extending the usage of a
“simplified” method, as discussed in SAB No. 107, in developing an estimate
of expected term of “plain vanilla” share options in accordance with SFAS
No. 123 (revised 2004), Share-Based Payment. In
particular, the SEC indicated in SAB 107 that it will accept a company’s
election to use the simplified method, regardless of whether the company has
sufficient information to make more refined estimates of expected term. The
Company does not expect that the adoption of this EITF will have a material
impact on its consolidated results of operations or financial
position.


-9-





In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations, (“SFAS
No. 141(R)”), and SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51 (“SFAS
No. 160”). These new standards are the U.S. GAAP outcome of a joint project
with the International Accounting Standards Board (“IASB”). SFAS No. 141(R)
and SFAS No. 160 introduce significant changes in the accounting for and
reporting of business acquisitions and noncontrolling interests in a subsidiary.
SFAS No. 141(R) and SFAS No. 160 continue the movement toward the
greater use of fair values in financial reporting and increased transparency
through expanded disclosures. SFAS No. 141(R) changes how business
acquisitions are accounted for and will impact financial statements at the
acquisition date and in subsequent periods. SFAS No. 160 requires
noncontrolling interests (previously referred to as minority interests) to be
reported as a component of equity, which changes the accounting for transactions
with noncontrolling interest holders. SFAS No. 141(R) and SFAS No. 160
are effective for our fiscal 2009. The Company has not completed its evaluation
of the potential impact, if any, of the adoption of SFAS No. 141(R) and
SFAS No. 160 on its consolidated financial position, results of operations
and cash flows.





3.            SHARE
EXCHANGE AND PRIVATE PLACEMENT FINANCING





Between
February 22, 2008 and February 25, 2008, we entered into a series of
transactions whereby we acquired 100% of the ownership interest in Pacific from
the shareholders of Pacific in a share exchange transaction and raised
$3,400,000 gross proceeds from certain accredited investors in a private
placement transaction. These transactions, collectively hereinafter referred to
as “Reverse Merger Transactions,” were consummated simultaneously on February
26, 2008, and as a result of the consummation of these transactions Pacific is
now a wholly owned subsidiary of the Company. The following sets forth the
material agreements that the Company entered into in connection with the Reverse
Merger Transactions and the material terms of these agreements:





Share
Exchange Agreement





On
February 22, 2008, the Company and Terrence Leong, the Company’s then Chief
Executive Officer, entered into a Share Exchange Agreement with Pacific and all
of the shareholders of Pacific (the “Share Exchange Agreement”). Pursuant to the
Share Exchange Agreement, the shareholders of Pacific agreed to exchange 100
ordinary shares of Pacific, representing a 100% ownership interest in Pacific,
for 1,000,000 shares of a newly designated Series A Convertible Preferred Stock
of the Company, par value $0.001 per share (the “Share Exchange” or the “Share
Exchange Transaction”).





Stock
Purchase Agreement





In
connection with the Share Exchange Transaction, on February 26, 2008, the
Company entered into a Series B Convertible Preferred Stock Purchase Agreement
(the “Stock Purchase Agreement”) with certain accredited investors (the
“Investors”), pursuant to which the Company agreed to issue 2,833,333 shares of
Series B Convertible Preferred Stock of the Company, par value $0.001 per share
(“Series B Stock”) and warrants to purchase 7,000,000 shares of the Company’s
Common Stock (the “Warrants”) to the investors, in exchange for a cash payment
in the amount of $3,400,000. Under the Stock Purchase Agreement, the Company
also deposited 2,000,000 shares of the Series B Stock into an escrow account
held by an escrow agent as Make Good Shares in the event the Company’s
consolidated pre-tax income and pre-tax income per share, on a fully-diluted
basis, for the years ended December 31, 2007, 2008 or 2009 are less than certain
pre-determined target numbers.





On May
23, 2008, we amended the Company’s Articles of Incorporation and changed its
name to SkyPeople Fruit Juice, Inc. to better reflect our business. A
1-for-328.72898 reverse stock split of the outstanding shares of Common Stock
and a mandatory 22.006 for 1 conversion of Series A Preferred Stock into Common
Stock, which had been approved by written consent of the holders of a majority
of the outstanding voting stock, also became effective on May 23,
2008.





4.
            CONVERTIBLE
      PREFERRED STOCK





In
connection with the Share Exchange Transaction, we designated 1,000,000 shares
of Series A Convertible Preferred Stock out of our total authorized number of
10,000,000 shares of Preferred Stock, par value $0.001 per share. Upon
effectiveness of the 1-for-328.72898 reverse stock split of the outstanding
shares of Common Stock on May 23, 2008, all the outstanding shares of Series A
Preferred Stock were immediately and automatically converted into shares of
Common Stock without any notice or action required by us or by the holders of
Series A Preferred Stock or Common Stock (the “Mandatory Conversion”). In the
Mandatory Conversion, each holder of Series A Preferred Stock received twenty
two and 62/10,000 (22.0062) shares of fully paid and non-assessable Common Stock
for every one (1) share of Series A held (the “Conversion Rate”).





Series
B Convertible Preferred Stock





In
connection with the Share Exchange Transaction, we designated 7,000,000 shares
of Series B Convertible Preferred Stock out of our total authorized number of
10,000,000 shares of Preferred Stock, par value $0.001 per share. The Series B
Convertible Preferred Stock is a participating security. No dividends are
payable with respect to the Series B Preferred Stock and no dividends can be
paid on our Common Stock while the Series B Preferred Stock is outstanding. Upon
liquidation the holders are entitled to receive $1.20 per share (out of
available assets) before any distribution or payment can be made to the holders
of any junior securities.





Upon
effectiveness of the Reverse Split on May 23, 2008, each share of Series B
Preferred Stock is convertible at any time into one share of Common Stock at the
option of the holder. If the conversion price (initially $1.20) is adjusted, the
conversion ratio will likewise be adjusted and the new conversion ratio will be
determined by multiplying the conversion ratio in effect by a fraction, the
numerator of which is the conversion price in effect before the adjustment and
the denominator of which is the new conversion price.





-10-


5.
            WARRANTS





In
connection with the Share Exchange Transaction, on February 26, 2008, the
Company entered into a Series B Convertible Preferred Stock Purchase Agreement
(the “Stock Purchase Agreement”) with certain accredited investors (the
“Investors”), pursuant to which the Company agreed to issue 2,833,333 shares of
a newly designated Series B Convertible Preferred Stock of the Company, par
value $0.001 per share (“Series B Stock”) and warrants to purchase 7,000,000
shares of the Company’s Common Stock (the “Warrants”) to the Investors, in
exchange for a cash payment in the amount of $3,400,000.





The
Warrants became exercisable after the consummation of a 1-for-328.72898 reverse
split of our outstanding Common Stock, which was effective on May 23, 2008, and
the 7,000,000 shares issuable upon exercise of such Warrants were not adjusted
as a result of such reverse split.





6.
            NOTE
      PURCHASE AGREEMENT





On
February 26, 2008, the Company issued to Barron Partners an aggregate of 615,147
shares of Series B Stock in exchange for the cancellation of all principal and
accrued interest aggregating approximately $5,055,418 on certain promissory
notes of the Company held by Barron.





On
February 22, 2008, the Company issued to Grover Moss an aggregate of 59,060
shares of Common Stock (post split) in exchange for the conversion of principal
aggregating $398,000.





7.
            ACCQUISITION OF A
      BUSINESS





On June
10, 2008, the Company completed the acquisition of Huludao for a total purchase
price of RMB 48,250,000 or approximately U.S. $6,807,472. The payment was made
through the offset of related party receivables from Shaanxi Hede Investment
Management Co. Ltd. (“Hede”). Before the acquisition, Huludao was classified as
a variable entity of Shaanxi Tianren according to FASB Interpretation No.
46: Consolidation of Variable
Interest Entities (“V.I.E.”), an interpretation of ARB 51 (“FIN 46”),
since June 2, 2007. FIN 46R requires the primary beneficiary of the variable
interest entity to consolidate its financial results with the variable interest
entity.  The Company had evaluated its relationship with Huludao and
had concluded that Huludao was a variable interest entity for accounting
purposes.





Yongke
Xue, the Chairman of the Board and Chief Executive Officer of the Company, owns
80% of the equity interest of Hede, and Xiaoqin Yan, a director of Shaanxi
Tianren, owns the remaining 20% of Hede. Hede leased to Shaanxi Tianren all of
the assets and facilities of Huludao under a Lease Agreement dated June 2, 2007
between Hede and Shaanxi Tianren. The lease was for a term of one year from July
1, 2007 to June 30, 2008. The monthly rent under the lease is RMB 300,000
(approximately $42,326). In 2007, Shaanxi Tianren loaned to Hede an aggregate of
RMB 27 million (approximately $3,809,363) interest-free loan pursuant to a Loan
Agreement entered into by the parties on June 5, 2007. The loan was made to
enable Hede to purchase Huludao. The loan was due on August 1, 2008. On the date
of the purchase, the outstanding loan was deducted from the purchase price
according to the Loan Agreement.





The
contractual agreement with Hede was in effect on June 1, 2007. As a result of
the contractual arrangements, Shaanxi Tianren became the primary beneficiary of
Huludao. Accordingly, Shaanxi Tianren adopted the provisions of FIN 46R and
consolidated the financial results of Huludao from June 1, 2007.





The
Company used the purchase method to consolidate Huludao with the current assets
and liabilities recorded at fair value. The fair value of the acquired net
assets of Huludao was RMB 48,250,000 (approximately $6,807,472).





The following table summarizes the fair
value of HuludaoWonder
Fruit Co., Ltd.’s assets
and liabilities as of June 1, 2007 (based on the exchange rate of June 1,
2007):








ASSETSCash
            
            $
            7,567Accounts receivable, net
            
            
            2,387,711Other receivables
            
            
            29,244Inventory
            
            
            57,948Fixed assets
            
            
            6,934,219Intangible
      asset
            
            
            3,262,566Other assets
            
            
            27,486TOTAL
      ASSETS
            
            $
            12,706,741LIABILITIESAccounts payable
            
            $
            20,642Other
      payables
            
            
            101,603Loans
      payable
            
            
            6,275,905TOTAL
      LIABILITIES
            
            $
            6,398,150NET
      ASSETS
            
            $
            6,308,591





-11-


Pro
Forma Financial Information





The
unaudited pro forma financial information presented below summarizes the
combined operating results of the Company and Huludao for the three months and
six months ended June 30, 2007, respectively, as if the acquisition had occurred
on January 1, 2007.





The pro
forma financial information is presented for informational purposes only and is
not necessarily indicative of the results of operations that would have been
achieved had the acquisition taken place on January 1, 2007.  The
unaudited pro forma combined statements of operations combine the historical
results of the Company and the historical results of the acquired entity
for the periods described above.








PRO
FORMA STATEMENT OF OPERATIONS


FOR
THE THREE MONTHS ENDED JUNE 30, 2007





Historical
      Information of the Company (1)
            
            
            Historical
      Information of the Acquired Entity (2)
            
            
            Pro
      Forma Adjustments (3)
            
            
            Pro
      Forma(Unaudited)
            
            
            (Unaudited)
            
            
            
            
            
            (Unaudited)Net
      sales
            
            $
            3,485,726
            
            
            $
            397,461
            
            
            $
            --
            
            
            $
            3,883,187Net
      income (loss)
            
            $
            898,884
            
            
            $
            (181,326
            )
            
            $
            (17,317
            )
            
            $
            700,241Basic
      earnings per share
            
            $
            0.04
            
            
            
            
            
            
            
            
            
            
            $
            0.03Diluted
      earnings per share
            
            $
            0.04
            
            
            
            
            
            
            
            
            
            
            $
            0.03Basic
      weighted average common shares outstanding
            
            
            22,006,173
            
            
            
            
            
            
            
            
            
            
            
            22,006,173Diluted
      weighted average common shares outstanding
            
            
            22,006,173
            
            
            
            
            
            
            
            
            
            
            
            22,006,173







PRO
FORMA STATEMENT OF OPERATIONS


FOR
THE SIX MONTHS ENDED JUNE 30, 2007





Historical
      Information of the Company (1)
            
            
            Historical
      Information of the Acquired Entity (2)
            
            
            Pro
      Forma Adjustments (3)
            
            
            Pro
      Forma(Unaudited)
            
            
            (Unaudited)
            
            
            
            
            
            (Unaudited)Net
      sales
            
            $
            8,722,912
            
            
            $
            1,776,294
            
            
            $
            --
            
            
            $
            10,499,206Net
      income (loss)
            
            $
            2,379,115
            
            
            $
            (271,374
            )
            
            $
            (34,453
            )
            
            $
            2,073,288Basic
      earnings per share
            
            $
            0.11
            
            
            
            
            
            
            
            
            
            
            $
            0.09Diluted
      earnings per share
            
            $
            0.11
            
            
            
            
            
            
            
            
            
            
            $
            0.09Basic
      weighted average common shares outstanding
            
            
            22,006,173
            
            
            
            
            
            
            
            
            
            
            
            22,006,173Diluted
      weighted average common shares outstanding
            
            
            22,006,173
            
            
            
            
            
            
            
            
            
            
            
            22,006,173





Note:  The
currency exchange rate is based on the average exchange rate of the related
period.





1.
            The
      historical operating results of the Company were based on the Company’s
      unaudited financial statements for the three and six months ended June 30,
      2007, respectively.


2.
            The
      three and six months historical information of Huludao was derived from
      the books and the records of  Huludao for the three and six
      months ended June 30, 2007,
respectively.


3.
            Pro
      forma adjustment was based on the assumption that the fair value of the
      fixed assets and intangible assets    were amortized
      over the life of the assets, assuming the acquisition took place on
      January 1, 2007.





-12-


8.           INVENTORIES





Inventories
consisted of:




June
      30,
            
            
            December
      31,2008
            
            
            2007Raw
      materials and packaging
            
            $
            628,300
            
            
            $
            255,936Finished
      goods
            
            
            1,173,239
            
            
            
            4,204,213Inventories
            
            $
            1,801,539
            
            
            $
            4,460,149





9.           INCOME
TAX





Prior to
2007, the Company was subject to a 33% income tax rate by the PRC. The Company
had no material adjustments to its liabilities for unrecognized income tax
benefits according to the provisions of FIN 48. Shaanxi Tianren was awarded the
status of a nationally recognized High and New Technology Enterprise in December
2006, which entitled Shaanxi Tianren to tax-free treatment for two years
starting from 2007, and thereafter reduced income taxes at 50% of its regular
income tax rate then effective from 2009 to 2010. In December 2007, Xi’an was
awarded the same status and the tax rate was reduced from 33% to 25%, effective
from January 2008.





The
Company had no material adjustments to its liabilities for unrecognized income
tax benefits according to the provisions of FIN 48. The income tax expense was
$180,678 and $311,198 for the three and six months ended June 30, 2008,
respectively, and was $83,505 and $456,983 for the three and six months ended
June 30, 2007, respectively. The Company had recorded no deferred tax assets or
liabilities as of June 30, 2008 and 2007, since nearly all differences in tax
basis and financial statement carrying values are permanent
differences.





Three
      Months Ended June 30,
            
            
            Six
      Months Ended June 30,Income
      Tax Expenses
            
            2008
            
            
            2007
            
            
            2008
            
            
            2007Current
            
            $
            180,678
            
            
            $
            83,505
            
            
            $
            311,198
            
            
            $
            456,983Deferred
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Total
            
            $
            180,678
            
            
            $
            83,505
            
            
            $
            311,198
            
            
            $
            456,983




10.         LAND
USAGE RIGHTS





According
to the laws of the PRC, the government owns all of the land in the PRC.
Companies or individuals are authorized to possess and use the land only through
land use rights granted by the PRC government.  Accordingly, the
Company paid in advance for land use rights. Prepaid land use rights are being
amortized and recorded as lease expenses using the straight-line method over the
use terms of the lease which is 20 to 50 years. The land usage rights as of June
30, 2008 were $6,465,964 and $6,138,297 as of December 31, 2007. The
amortization expense was $68,726 and $36,026 for the six months ended June 30,
2008 and 2007, respectively.





11.        AMOUNTS
DUE FROM (TO) RELATED PARTIES





As of
June 30, 2008, the Company had no outstanding loans to related entities with
common owners and directors. During the six months ended June 30, 2008, Pacific
erroneously paid $4,916,617 to its former shareholders, the Company’s director
Xiaoqing Yan and its CEO, Yongke Xue as the result of a dividend declaration by
Pacific in February 2008 (See Note 14). Because the recipients of the money were
no longer shareholders of Pacific, the transaction has been treated for
accounting purposes as an interest free loan.  In June 2008, the
directors and other related parties returned the monies they received (along
with amount loaned to related parties prior to January 1, 2008) in cash in the
amount of $5,411,560. During the six months ended June 30, 2008, the Company
made an interest free loan of $2,179,954 to Hede and the total $6,807,472
interest free loans made to Hede by the Company (including amounts loaned to
Hede prior to January 1, 2008) were credited against the purchase price that the
Company paid for Huludao on June 10, 2008. The Company also paid off
approximately $147,751 of its loans payable to related parties in the six months
ended June 30, 2008. The indebtedness of the Company to related entities with
common owners and directors as of December 31, 2007 totaled $4,970,427 as
follows. The loans are unsecured and bear no interest. These loans have no fixed
payment terms.





Name
      of Related Party
            
            December
      31, 2007
            
            RelationMr.
      Liu An Du
            
            $
            22,177
            
            Former
      shareholder of Shaanxi TianrenMr.
      Lu Ke
            
            $
            7,734
            
            Manager
      of Shaanxi TianrenShaanxi
      Hede Investment Management Co., Ltd.
            
            $
            4,490,173
            
            Former
      shareholder of  Shaanxi TianrenXi’an
      Hede Investment Consultation Company Limited
            
            $
            101,286
            
            The
      Managing Director of  Xi’an Hede is one of the family members
      of  Shaanxi TianrenShaanxi
      Xirui Group Co., Ltd
            
            $
            198,216
            
            Shareholder
      of Xi’an TianrenYingkou
      Trusty Fruits Co., Ltd. (“Yingkou”)
            
            $
            77,212
            
            Hede
      is one of the shareholders of YingkouShaanxi
      Fruits Processing Co., Ltd.
            
            $
            73,629
            
            Former
      Shaanxi TianrenTotal
            
            $
            4,970,427





-13-


As of
December 31, 2007, the indebtedness of the Company to its shareholders and
related entities with common owners and directors was $143,366 as
follows:





Name
      of Related Party
            
            December
      31, 2007
            
            RelationMr.
      Li Guang
            
            $
            137
            
            Director
      of  Shaanxi TianrenMr.
      Xue, Yongke
            
            $
            32,308
            
            Former
      shareholder of Shaanxi TianrenMs.
      Cui, Yuan
            
            $
            62,387
            
            Former
      shareholder of Shaanxi TianrenMr.
      Xue, Hongke
            
            $
            48,397
            
            President
      of  Shaanxi TianrenMs.
      Yan, Xiaoqin
            
            $
            137
            
            Former
      shareholder of Shaanxi TianrenTotal
            
            $
            143,366




12.         COMMON
STOCK





As of
June 30, 2008, the Company had 22,271,684 shares of Common Stock issued and
outstanding and 3,448,480 shares of Series B Preferred Stock issued and
outstanding. (2,000,000 shares of the Series B Preferred Stock deposited in the
escrow account are not included.), Assuming all five year warrants to purchase
7,000,000 shares of Common Stock with an exercise price of $3.00 per share are
exercised and all shares of Series B Preferred Stock are converted, the total
number of shares of Common Stock to be issued and outstanding will be
32,720,164.







In the
first quarter of 2008, the Company issued 31,941 shares of Common Stock as part
of the settlement with its prior Chief Executive Officer, Burr D. Northrop,
37,098 shares of Common Stock to Walker Street Associates and its prior
director, Joseph I. Emas, for the professional services that they provided and
59,060 shares of Common Stock to Grover Moss for the conversion of principal
under the obligation of $398,000 with the Company.







On
February 26, 2008, the Company issued to Barron Partners an aggregate of 615,147
shares of Series B Stock in exchange for the cancellation of all principal and
accrued interest aggregating approximately $5,055,418 on certain promissory
notes of the Company held by Barron Partners. The shares issued to Barron
Partners were not affected by the 1-for-328.72898 reverse split of our
outstanding Common Stock, which was effective on May 23, 2008.





In
connection with the Share Exchange Transaction in February, 2008, the Company
designated 1,000,000 shares of Series A Convertible Preferred Stock out of its
total authorized number of 10,000,000 shares of Preferred Stock, par value
$0.001 per share. In the Mandatory Conversion, each holder of Series A Preferred
Stock was entitled to receive twenty two and 62/10,000 (22.0062) shares of fully
paid and non-assessable Common Stock for every one (1) share of Series A held.
The Company also agreed to issue 2,833,333 shares of a newly designated Series B
Convertible Preferred Stock of the Company, par value $0.001 per share and
warrants to purchase 7,000,000 shares of the Company’s Common Stock. Upon
effectiveness of the 1-for-328.72898 reverse stock split of the outstanding
shares of Common Stock on May 23, 2008 (the “Reverse Split”), all the
outstanding shares of Series A Preferred Stock were immediately and
automatically converted into 22,006,173 shares of Common Stock. Each share of
Series B Preferred Stock will be convertible at any time into one share of
Common Stock at the option of the holder. The Warrants are exercisable after the
Reverse Split. The 2,833,333 shares of Series B Convertible Preferred Stock and
7,000,000 shares issuable upon exercise of such Warrants were not adjusted as a
result of the Reverse Split.





13.         NOTE
PAYABLE





In the
first quarter of 2008, the Company paid off the balance of a long term loan of
RMB 15,000,000, or approximately $2,116,313, and entered a new long-term loan
agreement with a local bank in China.  The term loan facility was RMB
15,000,000, or approximately $2,186,876, based on the exchange rate of June 30,
2008, with a fixed interest rate of 0.79% per month. The loan has a term of two
years from the date of draw down. The principal of RMB 10,000,000 ($1,457,917)
is due on July 10, 2009 and the balance of RMB 5,000,000 ($728,959) is due on
September 20, 2009, totaling $2,186,876 due in fiscal year 2009.





In the
second quarter of 2008, the Company paid off RMB 20,800,000, or approximately
$2,934,620 of short term loan payable, and entered two new short term loan
agreements with a local bank in China. The term facility of RMB 12,000,000, or
approximately $1,749,501, based on the exchange rate of June 30, 2008, with a
fixed annual interest rate of 7.47%, is due on June 26, 2009. The other term
facility is of the same amount, with a fixed annual interest rate of 6.57% and
is due on September 17, 2008.





14.
            DIVIDEND
      PAYMENT





On February 4, 2008, before the Share
Exchange Transaction, the Board of Directors of Xi’an Tianren declared a cash
dividend of $2,869,732 to its former shareholders. Since Shaanxi Tianrenholds a 91.15% interest
in Xi’an Tianren, $2,615,760 was paid to Shaanxi Tianren and $253,971 was paid
to its minority interest holders. On the same date, the Board of
Directors of Shaanxi Tianren declared a cash dividend of $4,914,691 to its
shareholders. Since Pacific holds a 99% interest in
Shaanxi Tianren, $4,865,544 was paid to Pacific and $49,147 was paid to its
minority interest holders. The inter-company dividend was eliminated in
the consolidated statement. The dividend paid to minority interest holders was
$306,300.





In May
2008, Pacific erroneously paid monies to its former shareholders as the result
of a dividend declaration in February 2008.  The monies were then
returned to the Company in June 2008 (See Note 11).




-14-




15.
            NEW
      LEASE AGREEMENT


On June
23, 2008, Shaanxi Tianren entered into a lease agreement for China office space.
The lease has a term of one year, with a commencement date of July 1, 2008 and
covers approximately 1,400 total rentable square meters. The annual rent is
approximately $106,662. Our new address is 16F, National Development Bank
Tower, No.2 Gaoxin 1st Road, Hi-Tech Industrial Zone, Xi’an, Shaanxi Province,
PRC 710075. Our phone number is 011-86-29-88377001.





16.
            DEPOSITS
      TO PURCHASE TARGET COMPANY





On June
1, 2008, Shaanxi Tianren entered into a memorandum agreement with Xi’an Dehao
Investment Consultation Co. Ltd. (“Dehao”). Under the term of the agreement,
Dehao agreed to transfer 100% of the ownership interest of Yingkou Trusty Fruits
Co., Ltd. (“Yingkou”) to Shaanxi Tianren. Shaanxi Tianren is required to make a
refundable down payment of RMB 15,000,000, or approximately $2,116,313, to Dehao
as a deposit for the purchase. The acquisition is targeted to be complete at the
end of August 2008 after the third party market value
evaluation.


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





The
following discussion and analysis of the consolidated financial condition and
results of operations should be read in conjunction with the condensed
consolidated financial statements and notes in Item I above and with the audited
consolidated financial statements and notes, and with the information under the
headings “Risk Factors” and “Management’s Discussion and Analysis of Financial
Conditions and Results of Operations” in our most recent registration statement
on Form S-1.





Overview





We are
engaged in the business of research and development, production and sales of
special concentrated fruit juices, fast-frozen and freeze-dried fruits and
vegetables and fruit juice drinks through our indirect subsidiary, Shaanxi
Tianren, in the PRC. Shaanxi Tianren is wholly owned by Pacific. Previously, we
were a shell company with no significant business operations. As a result of the
consummation of a reverse merger transaction, on February 26, 2008 we ceased to
be a shell company and became an indirect holding company for Shaanxi Tianren
through Pacific. Pacific acquired a 99% ownership interest in Shaanxi Tianren in
September 2007 through a reorganization between entities under common control.
Because Shaanxi Tianren’s operations are the only significant operations of the
Company and its affiliates, the business and financial results of Pacific
reflect those of Shaanxi Tianren. As a result, this discussion and analysis
focuses on the business results of Shaanxi Tianren, comparing its results in the
three-months and six-months ended June 30, 2008 with its results in the
corresponding period of 2007.





Below is
the Company’s corporate structure:








-15-


There are
two general categories of fruit and vegetable juices available on the market.
One is fresh juice canned directly after filtering and sterilization upon
being freshly squeezed out of fresh fruits or vegetables. The other general
category is juice drinks made out of concentrated fruit and vegetable juices.
Concentrated fruit and vegetable juices are produced through the pressing,
filtering, sterilization and evaporation of fresh fruits or vegetables. They are
used as the base material or ingredient for products such as drinks, fruit jam,
fruit wine and other products. Concentrated juices are not drinkable. Instead,
they are used as a basic ingredient for manufacturing juice drinks and as an
additive to fruit wine, fruit jam, cosmetics and medicines.





For
Shaanxi Tianren, the period between each July through February or March is
“squeeze” season, when fresh fruits are available in the market and concentrated
fruit juices are produced out of fresh fruits. We produce and sell both
concentrated fruit juices and juice drinks. Compared to juice drinks, our
concentrated juice products generally achieve a higher gross margin, while that
of juice drinks is lower. Therefore, our core products are concentrated apple,
pear and kiwifruit juices and our production has strategically been focused on
concentrated juice products. Shaanxi Tianren also produces juice drinks and
other derivative products, especially when not in squeeze season. The Company’s
wide range of product offerings and its ability to shift focus among products
based on supply and demand in the market and seasonal factors help to diversify
operational risks and supplement revenue generation.





Shaanxi
Tianren’s main products include concentrated apple juice, concentrated pear
juice, concentrated kiwifruit puree, fruit juice drinks, fresh fruits and
organic fresh fruits. Raw materials mainly consist of apple, pear and kiwifruits
which are procured in the PRC market. Shaanxi Tianren’s pear and kiwifruit
supply mainly sources from its home province, Shaanxi Province, which is known
for its pear and kiwifruit production. Shaanxi Tianren’s kiwifruit processing
facilities are located in Zhouzhi County, Shaanxi Province, where 70% of the
country’s kiwifruit are grown. Shaanxi Tianren’s apple supply mainly sources
from Liaoning Province, where its newly acquired facility Huludao is located.
The Company is committed to continual research and development in new products
and technologies. In June 2008, Shaanxi Tianren began the production of
concentrated peach juice in its Jingyang Branch Office.  It uses
low-temperature pulp breaking technology and low-temperature concentration
technology to produce concentrated white peach pulp, optimizing the production
parameters. The production of peach juice helped the diversification of our
products and prolonged the squeeze season. Because of the seasonal nature in the
growing and harvesting of fruits and vegetables, business is seasonal and can be
greatly affected by weather.




To take
advantage of economies of scale and to enhance our production efficiency, each
of Shaanxi Tianren’s manufacturing facilities has a focus on juice products
centering around one particular fruit according to the proximity of such
manufacturing to the supply center of that fruit. All concentrated juice
products are manufactured using the same type of production line with slight
variations in processing methods. Since June 2007, after leasing the production
facilities of Huludao, Shaanxi Tianren has been operating its pear juice
products business out of the Jingyang Branch Office. The business involving
apple juice products operates out of the newly acquired facility, Huludao, and
the business involving kiwifruit products is run out of Xi’an Tianren Modern
Organic Agriculture Co., Ltd. (“Xi’an Tianren”), in which we have held a 91.15%
ownership interest since May 2006.




On June
2, 2007, Shaanxi Tianren entered into a lease agreement with Shaanxi Hede
Investment Management Co., Ltd. (“Hede”), pursuant to which Shaanxi Tianren, for
a term of one year and for a monthly lease payment of RMB 300,000 (approximately
$42,326), leased all the assets and operating facilities of Huludao, which was
wholly-owned by Hede. On June 10, 2008, Shaanxi Tianren completed the
acquisition of Huludao for a total purchase price of RMB 48,250,000 or
approximately U.S. $6,807,472. The payment was made through the offset of
related party receivables.





Besides
concentrated juice products, we generate other revenue from sales of pear juice,
apple juice, kiwifruit seeds, organic kiwifruit, fresh kiwifruit, kiwifruit
juice, mulberry juice, and apple spice.




The
supply of our raw material fruits has traditionally been fragmented, as we
generally purchase directly from farmers. In addition, because the prices of raw
material fruits change from season to season based on the output of the farms,
the Company does not have long-term supply agreements with suppliers. To secure
fruit supply and lower transportation costs, processing facilities are
strategically located near the various centers of fruit supply.




Shaanxi
Tianren is permitted by the relevant governmental authorities to directly export
its products. More than 70% of its products are exported either through
distributors with good credit or to end-users directly. Shaanxi Tianren’s
distributors are generally domestic export companies. Although distribution
agreements with distributors are generally renewed on a yearly basis, the
Company maintains long-term relationships with its distributors. Shaanxi
Tianren’s main export markets are the U.S., Europe, Russia, and the Middle
East.





Second Quarter Fiscal 2008
Highlights





·
            Total
      revenue increased 107.9% to $7,245,967 for the second quarter of fiscal
      2008, compared with revenue of $3,485,726 for the second quarter of fiscal
      2007, as the result of an increase in sales of concentrated kiwifruit
      juice, kiwifruit puree and kiwifruit seeds and the consolidation of
      Huludao’s operating results since June 1,
2007.


·
            Gross
      profit margins increased by 16.5% to 40.3% from 34.6% for the second
      quarter of fiscal 2007.


·
            Income
      from operations increased by 122.9% to $2,206,019 for the second quarter
      of fiscal 2008 from $989,683 for the second quarter of fiscal 2007 due to
      a significant increase in total revenue, which was offset by an increase
      in operating expenses.


·
            Net
      income increased $764,337, or 85.0%, to $1,663,221 compared with $898,884
      for the second quarter of fiscal
2007.


·
            In
      April 2008, we elected five Board of Directors, a majority of whom are
      independent directors. On April 25, 2008, the Company established an Audit
      Committee and Compensation Committee of its Board of
      Directors.


·
            On
      May 23, 2008, we amended our Articles of Incorporation and changed our
      name to SkyPeople Fruit Juice, Inc. to better reflect our business. The
      1-for-328.72898 reverse stock split of the outstanding shares of Common
      Stock and a mandatory 22.006 for 1 conversion of Series A Preferred Stock
      into Common Stock, which had been approved by written consent of the
      holders of a majority of the outstanding voting stock, were also effective
      on May 23, 2008.


·
            On
      June 10, 2008, we completed the acquisition of Huludao for a total
      purchase price of RMB 48,250,000, or approximately $6,807,472 (U.S.
      dollars). The payment was made through the offset of related party
      receivables.


·
            During
      the second quarter of fiscal 2008, Shaanxi Tianren commenced construction
      on the expansion of its


research
and development center. This project covers an area of 2,000 square meters and
will encompass additional space required for the research and development
laboratories. The Company also started a technology innovation and expansion
project over its original industrial waste water processing facility located in
the factory of Jingyang County in Shaanxi Province.  This 600 square meter
industrial waste water processing facility will increase the capacity of waste
water processing and recycling from the current 100 cubes per day to 300 cubes
per day.   In addition, Xi’an Tianren began construction on an industrial
waste water processing facility in the factory of Zhouzhi County in Shaanxi
Province.  Xi’an Tianren previously leased a waste water processing
facility with an annual fee of approximately $11,600.  This 1,118 square
meter industrial waste water processing facility remains on schedule and once
completed will process 1,200 cubes of waste water per day, which will meet the
increasing production demand of Xi’an Tianren and will improve the use of
recycled waste water.





-16-


The
highlights above are intended to identify some of our more significant events
and transactions during the quarter ended June 30, 2008.  These
highlights are not intended to be a full discussion of our operating results for
this quarter.  These highlights should be read in conjunction with the
following discussion and with our unaudited consolidated financial statements
and notes thereto accompanying this Quarterly Report.





Results of Operations and
Business Outlook





Our
consolidated financial information for the three and six months ended June 30,
2008 should be read in conjunction with our consolidated financial statements
and the notes thereto and the section entitled “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in our most recent
Form S-1.





Revenues





The
following table presents our consolidated net revenues for our main products for
the three and six months ended June 30, 2008 and 2007,
respectively:





Three
      Months Ended June 30,
            
            
            Six
      Months Ended June 30,2008
            
            
            2007
            
            
            %
      Change
            
            
            2008
            
            
            2007
            
            
            %
      ChangeNet
      revenueConcentrated
      apple juice and apple aroma
            
            $
            1,895,798
            
            
            $
            -
            
            
            
            N/A
            
            
            $
            4,286,059
            
            
            $
            -
            
            
            
            N/AConcentrated
      pear juice
            
            
            2,153,430
            
            
            
            1,884,803
            
            
            
            14.3
            %
            
            
            6,117,688
            
            
            
            4,579,297
            
            
            
            33.6
            %Concentrated
      kiwifruit juice and kiwifruit puree
            
            
            907,245
            
            
            
            -
            
            
            
            N/A
            
            
            
            2,397,152
            
            
            
            1,294,622
            
            
            
            85.2
            %Kiwifruit
      seeds
            
            
            547,890
            
            
            
            -
            
            
            
            N/A
            
            
            
            547,890
            
            
            
            -
            
            
            
            N/AFresh
      kiwifruit
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            426,132
            
            
            
            N/AFruit
      beverage
            
            
            1,741,604
            
            
            
            1,600,923
            
            
            
            8.8
            %
            
            
            2,747,762
            
            
            
            2,422,861
            
            
            
            13.4
            %Consolidated
            
            $
            7,245,967
            
            
            $
            3,485,726
            
            
            
            107.9
            %
            
            $
            16,096,551
            
            
            $
            8,722,912
            
            
            
            84.5
            %





Net sales
for the three months ended June 30, 2008 were $7,245,967, an increase of
$3,760,241, or 107.9%, when compared to the same sales period of the prior year.
This increase was primarily due to Shaanxi Tianren’s consolidation of Huludao’s
operating results since June 1, 2007. In June 2007, Shaanxi Tianren entered into
a lease agreement with Hede, pursuant to which Shaanxi Tianren, for a term of
one year and for a monthly lease payment of RMB 300,000 (approximately $42,326),
leased all the assets and operating facilities of Huludao, which is wholly owned
by Hede. This lease arrangement resulted in the combination of Huludao’s
operating results with those of Shaanxi Tianren. Huludao specializes in the
production of clear apple juice. It is located in Liaoning Province in China,
which is famous for the excellent quality of its apples. In the second quarter
of 2008, it generated revenue of $1,895,798 from the sale of concentrated apple
juice and apple aroma. On June 10, 2008, we completed the acquisition of Huludao
for a total purchase price of RMB 48,250,000, or approximately U.S.
$6,807,472.





Squeezing
season for kiwifruit is from
September of each year to January of the next year.Generally, we do not
produce or sell concentrated kiwifruit juice or kiwifruit puree during the
non-squeeze season. However, during the second quarter of 2008, Xi’an Tianren
continued to sell concentrated kiwifruit juice and puree and kiwifruit seeds
which is a byproduct of kiwifruit juice puree. As a result, we saw an increase
in net sales of kiwifruit related products in the second quarter of fiscal 2008.
The net sales in concentrated pear juice and fruit beverage also increased by
14.3% and 8.8%, respectively, as compared to the same quarter of last
year.





Net sales
for the six months ended June, 2008 were $16,096,551, an increase of $7,373,639,
or 84.5%, when compared to the same sales period of the prior year primarily due
to Shaanxi Tianren’s consolidation of Huludao’s operating results beginning June
1, 2007.  In the six months ended June 30, 2008, it generated revenue
of $4,286,059 from the sale of apple related products. Sales from pear related
products soared in the six months ended June 30, 2008 as a result of increased
consumer demand in both China and internationally. Sales from kiwifruit related
products increased by $1,224,288 as a result of continued sales of concentrated
kiwifruit juice and puree and kiwifruit seeds in the first two quarters of
fiscal year 2008. There was no revenue generated from the sale of concentrated
kiwifruit juice and puree and kiwifruit seeds in the second quarter of fiscal
year 2007.





-17-


Overall
Gross Margin





The
following table presents consolidated gross margin by our main products as a
percentage of related revenues for the three and six months ended June 30, 2008
and 2007, respectively:





Three
      Months Ended June 30,
            
            
            Six
      Months Ended June 30,Gross
      profit margin
            
            2008
            
            
            2007
            
            
            
            
            
            2008
            
            
            2007Concentrated
      apple juice and apple aroma
            
            $
            785,867
            
            
            $
            -
            
            
            
            
            
            $
            905,891
            
            
            $
            -Concentrated
      pear juice
            
            
            738,965
            
            
            
            718,668
            
            
            
            
            
            
            1,676,437
            
            
            
            1,739,643Concentrated
      kiwifruit juice and kiwifruit puree
            
            
            265,559
            
            
            
            -
            
            
            
            
            
            
            669,597
            
            
            
            711,435Kiwifruit
      seeds
            
            
            547,890
            
            
            
            -
            
            
            
            
            
            
            547,890
            
            
            
            -Fresh
      fruits
            
            
            -
            
            
            
            -
            
            
            
            
            
            
            -
            
            
            
            311,898Fruit
      beverage
            
            
            578,316
            
            
            
            485,794
            
            
            
            
            
            
            976,400
            
            
            
            689,251Consolidated
            
            $
            2,916,597
            
            
            $
            1,204,462
            
            
            
            
            
            $
            4,776,215
            
            
            $
            3,452,227%
            
            
            
            
            
            
            
            
            
            
            %Change
            
            
            
            
            
            
            
            
            
            
            ChangeGross
      profit margin in %Concentrated
      apple juice and apple aroma
            
            
            41.5
            %
            
            
            -
            
            
            
            -
            
            
            
            21.1
            %
            
            
            -
            
            
            
            -Concentrated
      pear juice
            
            
            34.3
            %
            
            
            38.1
            %
            
            
            (10.0
            %)
            
            
            27.4
            %
            
            
            38.0
            %
            
            
            (27.9
            %)Concentrated
      kiwifruit juice and  kiwifruit puree
            
            
            29.3
            %
            
            
            -
            
            
            
            -
            
            
            
            27.9
            %
            
            
            55.0
            %
            
            
            (49.27
            %)Kiwifruit
      seeds
            
            
            100.0
            %
            
            
            -
            
            
            
            -
            
            
            
            100.0
            %
            
            
            -
            
            
            
            -Fresh
      fruits
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            73.2
            %
            
            
            -Fruit
      beverage
            
            
            33.2
            %
            
            
            30.3
            %
            
            
            9.4
            %
            
            
            35.5
            %
            
            
            28.4
            %
            
            
            24.9
            %Consolidated
            
            
            40.3
            %
            
            
            34.6
            %
            
            
            16.5
            %
            
            
            29.7
            %
            
            
            39.6
            %
            
            
            (25.0
            %)




Overall
gross margin as a percentage of revenue increased by 16.5% for the three months
ended June 30, 2008, from 34.6% to 40.3%, compared to the same period of fiscal
2007. In terms of dollar amount, gross margin in the three months ended June 30,
2008 was $2,916,597, an increase of $1,712,135, or 142.1 %, compared to
$1,204,462 in the same period of fiscal 2007, primarily due to a huge increase
in sales.




The
increase in gross margin as a percentage of revenue in the second quarter of
fiscal 2008 was primarily due to an increase in the production of kiwifruit
related products, which have a higher gross margin compared with our other
products. In the second quarter of fiscal 2007 we did not produce or sell
concentrated kiwifruit juice or kiwifruit puree during the non-squeeze season.
However, in the same period of 2008, Xi’an Tianren continued to sell
concentrated kiwifruit juice and puree and kiwifruit seeds. The cost incurred in
the production of kiwifruit seeds was absorbed completely by the production of
kiwifruit puree. We separate and remove the kiwifruit seeds when we produce
kiwifruit puree through our advanced technology, so kiwifruit seeds are the
byproduct of kiwifruit puree during production. As a result, the gross margin of
kiwifruit related products is higher than our other products. In addition, we
saw a recovery in the price of apple and pear juice in the second quarter of
2008 when compared with the first quarter of the same year.





Overall
gross margin as a percentage of revenue decreased by 25.0% for the six months
ended June 30, 2008, from 39.6% to 29.7%, compared to the same period of fiscal
2007. Gross margin in the six months ended June 30, 2008 was $4,776,215, an
increase of $1,323,988, or 38.4 %, compared to $3,452,227 for the same period of
fiscal 2007.





The
decrease in gross profit margin as a percentage of revenue for the six months
ended June 30, 2008 was primarily due to a decrease in gross margin in the sales
of concentrated apple and pear juice. In the first two quarters, particularly
the first quarter of 2008, the average selling price of apple and pear juice
decreased compared with the same period of fiscal 2007, which resulted in a
lower gross margin for our products in fiscal 2008.





The gross
profit margin of our fruit beverages increased by 9.4% and 24.9% for the three
and six months ended June 30, 2008, respectively, as compared to the same
periods of fiscal 2007. This increase was primarily due to the change in our
product mix. We sold more concentrated fruit beverages in the first two quarters
of 2008, which have a higher margin, as the result of a change in market demand
in the Chinese market.





Operating
Expense





Three
      Months Ended June 30,
            
            
            Six
      Months Ended June30,(Unaudited)
            
            2008
            
            
            2007
            
            
            %
      Change
            
            
            2008
            
            
            2007
            
            
            %
      ChangeGeneral
      and administrative
            
            $
            455,278
            
            
            $
            143,211
            
            
            
            217.9
            %
            
            $
            1,029,469
            
            
            $
            252,416
            
            
            $
            307.8
            %Selling
      expenses
            
            
            255,300
            
            
            
            71,568
            
            
            
            256.7
            %
            
            
            496,645
            
            
            
            239,211
            
            
            
            107.6
            %Consolidated
            
            $
            710,578
            
            
            $
            214,779
            
            
            
            230.8
            %
            
            $
            1,526,114
            
            
            $
            491,627
            
            
            $
            210.4
            %As
      a percentage of revenueGeneral
      and administrative
            
            
            6.3
            %
            
            
            4.1
            %
            
            
            53.7
            %
            
            
            6.4
            %
            
            
            2.9
            %
            
            
            121.0
            %Selling
      expenses
            
            
            3.5
            %
            
            
            2.1
            %
            
            
            66.7
            %
            
            
            3.1
            %
            
            
            2.7
            %
            
            
            14.8
            %Consolidated
            
            
            9.8
            %
            
            
            6.2
            %
            
            
            59.2
            %
            
            
            9.5
            %
            
            
            5.6
            %
            
            
            68.2
            %




-18-


The
following table presents consolidated operating expenses as a percentage of net
revenues for the three and six months ended June 30, 2008 and 2007,
respectively:





Our
operating expenses consist of general and administrative and selling expenses.
Operating expenses increased by 230.8% to $710,578 and by 210.4% to 1,526,114
for the three and six months ended June 30, 2008, respectively, from $214,779
and $491,627 for the corresponding periods in fiscal 2007, respectively. The
increase in operating expenses was substantially attributable to the
consolidation of Huludao’s operating results with those of Shaanxi Tianren since
June 1, 2007 and forward.





General
and administrative expenses increased by $312,067, or 217.9%, to $455,278 and by
$777,053, or 307.8%, to $1,029,469 for the three and six months ended June 30,
2008, respectively, from $143,211 and $252,416 for the same periods of fiscal
2007, respectively.  Huludao had a large amount of general and
administrative expenses which contributed to the substantial increase of Shaanxi
Tianren’s operating expenses as a result of the operating combination. The
depreciation and amortization expense of Shaanxi Tianren, which was a non-cash
expense, also increased by approximately $366,869 in the six months ended June
30, 2008 as compared to the same period of last year due to an increase in fixed
assets. The other contributing factor was a hike in payroll and related expenses
in Shaanxi Tianren to handle the rise in sales volume. Additionally, the legal
and audit expenses increased by approximately $124,905 and $188,416 in the three
and six months ended June 30, 2008, respectively, as compared to the same
periods of the prior year, which was primarily associated with the early stage
set up of becoming a public company.





The
selling expense increased by $183,732, or 256.7%, to $255,300 and by $257,434,
or 107.6%, to $496,645 for the three and six months ended June 30, 2008,
respectively, from $71,568 and $239,211 for the same period of fiscal year 2007,
respectively. This was mainly due to an increase in freight and transportation
expenses as a result of the increase in sales.





Income
from Operations





In the
second quarter of fiscal 2008, income from operations increased by $1,216,336,
or 122.9%, to $2,206,019 from $989,683 for the second quarter of fiscal 2007. As
a percentage of net sales, income from operations was approximately 30.4% for
the second quarter of fiscal 2008, an increase of 7.2% as compared to 28.4% for
the same quarter of fiscal 2007. The increase in income from operations in the
second quarter of fiscal 2008 was primarily due to an increase in sales in the
second quarter of fiscal 2008, which was offset by an increase in operating
expenses.





In the
six months ended June 30, 2008, income from operations increased by $289,501, or
9.8%, to $3,250,101 from $2,960,600 for the corresponding period in 2007. As a
percentage of net sales, income from operations was approximately 20.2% for the
six months ended June 30, 2008, a decrease of 40.5% as compared to 33.9% for the
corresponding period in fiscal
2007. The decrease in the percentage of net sales was due to a decrease in gross
margin and an increase in operating expenses, as previously
discussed.





Interest
Expense





Interest
expense was $386,075 and $445,103 for the three and six months ended June 30,
2008, respectively, an increase of $386,075 and $445,103, respectively, as
compared with the same periods of fiscal 2007, primarily due to an increase in
term loan facilities in fiscal year 2008 to support expansion plans and
potential business opportunities.





Other
Income





Other
income increased by $142,923 to $142,102 for the three months ended June 30,
2008, from other expenses of $821 in the same quarter of the prior year,
primarily due to an increase in bad debt recovery of $58,948 and rental income
of $39,998, which consisted mainly of freeze storage in Shaanxi Tianren rented
to outside vendors.





Other
income increased by $374,557 to $332,280 for the six months ended June 30, 2008
from other expenses of $42,277 for the same period of the prior year, primarily
due to an increase in bad debt recovery of $298,334 and rental income of
$39,998, as previously discussed.





Income
Tax





Our
provision for income taxes was $180,678 and $311,198 for the three and six
months ended June 30, 2008, respectively, compared to $83,505 and $456,983 for
the corresponding periods in 2007, respectively. The increase in tax provision
for the second quarter of fiscal 2008 was primarily due to an increase in income
generated from Xi’an Tianren.





Shaanxi
Tianren was awarded the status of a nationally recognized High and New
Technology Enterprise in December 2006, which entitled Shaanxi Tianren to
tax-free treatment for two years starting from 2007 and thereafter reduced
income taxes at 50% of its regular income tax rate then effective from 2009 to
2010. In December 2007, Xi’an was awarded the same status and the tax rate was
reduced from 33% to 25%, effective from January 2008. As a result, the income
tax provision decreased by $145,785, or 31.9%, in the six months ended June 30,
2008, compared to the same period of fiscal 2007.





We
adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes (“FIN 48”) on July 1, 2007 and had no material adjustment to
its liabilities to unrecognized income tax benefits since its
adoption.





-19-


Minority
Interest





As of
June 30, 2008, Shaanxi Tianren held a 91.15% interest in Xi’an Tianren, and
Pacific held a 99% percent interest in Shaanxi Tianren. Minority interest in net
income of subsidiaries was $134,948 and $182,783 for the three and six months
ended June 30, 2008,
respectively, an increase of $123,559 and $93,059, respectively, compared
to a minority interest in the net income of $11,389 and $89,724for the
corresponding period of fiscal 2007,
respectively.  The increase in the minority interest was mainly
attributable to the increase in the net income generated from Shaanxi Tianren,
which was primarily due to an increase in sales, as previously
discussed.





Net
Income




Net
income was $1,663,221 and $2,715,040 for the three and six months ended June 30,
2008, respectively, an increase of $764,337, or 85.0%,
and $335,925, or 14.1%, compared to the corresponding periods of 2007,
respectively. Such an increase was primarily due to an increase
in sales, as previously discussed.





Financial
      Condition





During
the six months ended June 30, 2008, total assets increased $413,380 or 0.9%,
from $46,610,128 at December 31, 2007 to $47,023,508 at June 30,
2008.  The majority of the increase was in cash, prepaid expenses,
property plant and equipment, construction in progress and other assets, but
offset by a decrease in accounts receivable, inventory, and related party
receivables.




For the
six months ended June 30, 2008, cash and cash equivalents increased $5,047,084,
or 123.3%, to $9,141,322, as compared to $4,094,238 for the fiscal year ended
December 31, 2007.  The increase in cash was mainly due to net gross
proceeds of $3,115,072 received from certain accredited investors in a private
placement transaction on February 26, 2008 and an increase of $7,373,639 in net
revenue in the six months ended June 30, 2008.





At June
30, 2008, the accounts receivable balance decreased by $4,332,242 from the
balance at December 31, 2007 due primarily to an improvement in accounts
receivable collections in the second quarter of fiscal 2008.  The
accounts receivable turnover was 79 days for the six months ended June 30, 2008,
compared with 88 days for the fiscal year 2007. The decrease in the accounts
receivable turnover was due primarily to improvement in collections in Shaanxi
Tianren.





Our
inventory as of June 30, 2008 was $1,801,539, reflecting a decrease of
$2,658,610 or 59.6%, compared to the balance at December 31, 2007. Inventory
consists of raw materials, merchandise on hand, low-value consumables and
packaging materials and finished products. The decrease in inventory was mainly
from the increase in sales in kiwifruit related products in the second quarter
of fiscal 2008 which was mainly produced in fiscal 2007 and January of fiscal
2008. As the second quarter is our non-squeezing season for kiwifruit related
products, there was no production in Xi’an Tianren.





Prepaid
expenses and other current assets at June 30, 2008 were $1,473,440, an increase
of $1,371,812 from those balances at December 31, 2007. The increase in prepaid
expenses was primarily due to an increase of $971,728 in prepaid raw material of
fresh fruits. Our squeezing season begins each July through February or March of
the next year. To ensure that we have enough fresh fruits for our production
needs, we usually pay 30% to 50% of the estimated purchase amount to suppliers
before the start of squeezing season.





Property,
plant and equipment increased by $451,806 from $17,564,147 at December 31, 2007
to $18,015,953 at June 30, 2008. Construction in progress was $2,599,466 at June
30, 2008. Total capital expenditures were approximately $2,702,172 in the six
months ended June 30, 2008.  During fiscal 2008, Shaanxi Tianren commenced
construction on the expansion of its research
and development center. This project covers an area of 2,000 square meters and
will encompass additional space required for the research and development
laboratories. The expansion is currently in progress on the existing site of the
factory in Jingyang County, Shaanxi Province. Related to this project, we have
capitalized, as construction in progress, $1,166,334
during the six months ended June 30, 2008. This research and development center
is expected to be complete by the end of fiscal 2009. The Company also started a
technology innovation and expansion project over its original industrial waste
water processing facility located in the factory of Jingyang County in Shaanxi
Province.  This 600 square meter industrial waste water processing facility
will increase the capacity of waste water processing and recycling from the
current 100 cubes per day to 300 cubes per day.  We capitalized $801,854 as
construction in progress during the six months ended June 30, 2008. This project
is expected to be operational by the middle of fiscal 2009. In addition, Xi’an
Tianren began construction on an industrial waste water processing facility in
the factory of Zhouzhi County in Shaanxi Province.  Xi’an Tianren
previously leased a waste water processing facility with an annual fee of
approximately $11,600.  This 1,118 square meter industrial waste water
processing facility remains on schedule and once completed will process 1,200
cubes of waste water per day, which will meet the increasing production demand
of Xi’an Tianren and will improve the use of recycled waste water.  We have
capitalized $631,278 as construction in progress during the six months ended
June 30, 2008. This project is expected to be operational by the middle of
fiscal 2009.





Depreciation
and amortization were $931,617 for the six months ended June 30, 2008, compared
with $450,965 for the same period of fiscal 2007.  The increase in
depreciation expenses was due mainly to an increase in property, plant and
equipment acquired after June 30, 2007.





The
related party receivables of $4,970,427 as of December 31, 2007 were fully
collected as of June 30, 2008. The related party receivables as of December 31,
2007 consisted primarily of two interest-free loans in the aggregate amount of
approximately $3,936,376 that we advanced to Hede in June and July 2007 for Hede
to acquire Huludao. On June 10, 2008, Shaanxi Tianren completed the acquisition
of Huludao for a total purchase price of RMB 48,250,000, or approximately U.S.
$6,807,472. The outstanding amount of the loan at the time of the acquisition
was deducted from the purchase price.





-20-


Other
assets were $2,657,930 at June 30, 2008, an increase of $2,586,112 from that
balance at December 31, 2007. The increase in other assets was due primarily due
to a down payment of $2,116,313 for the acquisition of Yingkou Trusty Fruits
Co., Ltd. (“Yingkou”).  On June 1, 2008, Shaanxi Tianren entered into
a memorandum agreement with Xi’an Dehao Investment Consultation Co. Ltd.
(“Dehao”).  Under the term of the agreement, Dehao agreed to transfer
100% of the ownership interest of Yingkou Trusty Fruits Co., Ltd. (“Yingkou”) to
Shaanxi Tianren. Shaanxi Tianren is required to make a down payment of RMB
15,000,000, or approximately $2,116,313, to Dehao as a deposit for the purchase.
The acquisition is targeted to be completed at the end of August after the third
party market value evaluation. In addition, we made a down payment of $364,479
to a construction company for the remolding service that they will provide for
our newly leased office in Shaanxi Tianren.





In the
first quarter of 2008, the Company entered a new loan agreement with a local
bank in China to support expansion plans and potential business opportunities.
The term loan facility was RMB 15,000,000, or approximately $2,186,876, with a
fixed interest rate of 0.79%. The loan has a term of two years from the date of
draw down. The principal of RMB 10,000,000 ($1,457,917) is due on July 10, 2009,
and the balance of RMB 5,000,000 ($728,959) is due on September 20,
2009.





Liquidity and Capital
Resources





Net cash
provided by operating activities increased by $6,114,240 to $8,427,406 for the
six months ended June 30, 2008 from $2,313,166 in the same period of fiscal
2007.  The increase in net cash provided by operating activities was
primarily due to (i) an increase of $335,925 in net income from $2,379,115 to
$2,715,040 during the six months ended June 30, 2008 as compared to the same
period of the prior year, (ii) an increase of $573,711 of adjusting non-cash
items, and (iii) an increase of $8,078,081 in cash inflow from change in
accounts receivables, inventory and tax payables. Offsetting the increase in
cash provided by operating activities was primarily a cash outflow from change
in prepaid expenses and accounts payable.





Net cash
used in investing activities increased by $6,534,418 to $6,867,975 for the six
months ended June 30, 2008 from $333,557 for the same period of fiscal
2007.  The increase in cash used in investing activities was mainly
due to $2,116,313 in deposits paid to Dehao for the acquisition of Yingkou, an
increase of $6,799,284 in loans advanced to related parties, an increase of
$364,479 prepayment for the lease improvement and an increase of $2,665,902 in
the capital expenditures in cash as previously discussed. Offsetting this
increase in cash used in investing activities was an increase of $5,411,560 in
the repayment of loans from related parties.





Net cash
provided by financing activities in the first two quarters of fiscal 2008 was
$3,112,501, representing an increase of $4,581,775 compared to the net cash used
in financing activities of $1,469,274 during the same period of fiscal
2007.  The increase was mainly due to stock sales proceedings of
$3,115,072 received from certain accredited investors in a private placement
transaction on February 26, 2008.





We
believe that we currently have sufficient cash on hand, combined with
anticipated cash receipts, to fund our business for at least the next 12
months.




ITEM
3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK




Not
applicable




ITEM
4T.  CONTROLS AND PROCEDURES




An
evaluation was carried out by the Company’s Chief Executive Officer and Chief
Financial Officer of the effectiveness of the Company’s disclosure controls and
procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities
Exchange Act of 1934, as amended) as of June 30, 2008, the end of the period
covered by this Form 10-Q.  Based upon that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and
procedures were effective in alerting them in a timely manner to information
relating to the Company, required to be disclosed in this report.


During
the quarter ended June 30, 2008, Pacific erroneously paid monies to its former
shareholders as the result of a dividend declaration in February
2008.  The monies were then returned to the
Company.  Because the recipients of the money were no longer
shareholders of Pacific, the transaction has been treated for accounting
purposes as an interest free loan.   The Sarbanes-Oxley Act 2002
makes it unlawful for any public company, directly or indirectly, to extend
credit, maintain credit or arrange for the extension of credit in the form of a
personal loan to or for the benefit of any director or executive officer.
Therefore, the failure of the Company to prevent the loan may be considered a
material weakness in its internal controls. The Company and its Audit Committee
are taking steps to remedy this material weakness. Other than with respect to
the identification of this material weakness, there was no change in our
internal control over financial reporting during the quarter ended June 30,
2008, that materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting. Our internal control system is
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United
States.  There is no assurance that our disclosure controls or our
internal controls over financial reporting can prevent all errors.  An
internal control system, no matter how well designed and operated, has inherent
limitations, including the possibility of human error.  Because of the
inherent limitations in a cost-effective control system, misstatements due to
error may occur and not be detected.  We monitor our disclosure
controls and internal controls and make modifications as
necessary.  Our intent in this regard is that our disclosure controls
and our internal controls will improve as systems change and conditions
warrant.





-21-


SIGNATURES





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








SKYPEOPLE FRUIT JUICE,
INC.


By:           /s/ Spring
Liu


SPRING
LIU


Chief Financial
Officer


(Principal Financial
Officer)


Dated: August 14,
2008


-22-