UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549





**FORM
      10-Q**





(Mark
      One)


**xQUARTERLY
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**





For
      the
      quarterly period ended March 31, 2008





or





**oTRANSITION
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**





For
                the transition period from
            to





Commission
                File Number :
            333-112111





Zhongpin
                Inc.(Exact
                name of registrant as specified in its
                charter)




Delaware
            
            54-2100419(State
                or other jurisdiction of incorporation or organization)
            
            (I.R.S.
                Employer Identification No.)




21
                Changshe Road, Changge City, Henan Province, People’s Republic of
                China(Address
                of principal executive offices)
            
            (Zip
                Code)




011
                86 374-6216633(Registrant’s
                telephone number, including area
                code)




Not
                Applicable(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 ninety (90) days. YES x NO
o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      One):





Large
      accelerated filer o Accelerated
      filer x Non-accelerated
      filer o





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





As
      of May
      1, 2008, 26,274,470 shares of the registrant’s common stock, and 3,125,000
      shares of the registrant’s Series A preferred stock, each such share convertible
      into one share of the registrant’s common stock, were
      outstanding.





**ZHONGPIN
      INC.**





**FORM
      10-Q**





**INDEX**





**Page****Part
                I**
            **Financial
                Information**Item
                1.
            Unaudited
                Financial Statements:Consolidated
                Balance Sheets as of March 31, 2008 (unaudited) and December 31,
                2007
            2Consolidated
                Statements of Operations and Comprehensive Income (unaudited) for
                the
                three months ended March 31, 2008 and 2007
            3Consolidated
                Statement of Changes in Stockholders’ Equity (unaudited) for the three
                months ended March 31, 2008
            4Consolidated
                Statements of Cash Flows (unaudited) for the three months ended March
                31,
                2008 and 2007
            5Notes
                to Consolidated Financial Statements (unaudited)
            6Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            27Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            39Item
                4.
            Controls
                and Procedures
            40**Part
                II**
            **Other
                Information**Item
                1.
            Legal
                Proceedings
            42Item
                1A.
            Risk
                Factors
            42Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            42Item
                3.
            Defaults
                Upon Senior Securities
            42Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            42Item
                5.
            Other
                Information
            42Item
                6.
            Exhibits
            42**Signatures**
            43




i


**ZHONGPIN
      INC.**





**Part
      I – Financial Information**




**Item
      1.**  **Financial
      Statements**





The
      accompanying unaudited consolidated balance sheets, statements of operations
      and
      comprehensive income, of changes in stockholders’ equity, and of cash flows and
      related notes thereto, have been prepared in accordance with generally accepted
      accounting principles (“GAAP”) for interim financial information and in
      conjunction with the rules and regulations of the Securities and Exchange
      Commission (“SEC”). Accordingly, they do not include all of the disclosures
      required by GAAP for complete financial statements. The financial statements
      reflect all adjustments consisting only of normal, recurring adjustments, which
      are, in the opinion of management, necessary for a fair presentation for the
      interim periods.





The
      accompanying financial statements should be read in conjunction with the notes
      to the aforementioned financial statements and Management’s Discussion and
      Analysis of Financial Condition and Results of Operations and the financial
      statements and notes thereto included in our Annual Report on Form 10-K for
      the
      year ended December 31, 2007.





The
      results of operations for the three-month period ended March 31, 2008 are not
      necessarily indicative of the results to be expected for the entire fiscal
      year
      or any other period.








**ZHONGPIN
      INC.**


**CONSOLIDATED
      BALANCE SHEETS**


*(Amounts
      in U.S. dollars)*





**March 31, 2008**
            
            **December 31, 2007**(Unaudited)**ASSETS**Current
                assetsCash
                and cash equivalents
            
            $
            50,020,362
            
            $
            48,701,536Accounts
                receivable and other receivables (net)
            
            
            15,146,289
            
            
            18,982,312Purchase
                deposits
            
            
            5,010,054
            
            
            6,059,782Prepaid
                expenses and deferred charges
            
            
            1,854,928
            
            
            1,680,679Inventories
            
            
            24,249,233
            
            
            25,922,125Tax
                refund receivables
            
            
            2,341,377
            
            
            4,148,119Total
                current assets
            
            
            98,622,243
            
            
            105,494,553Property,
                plant and equipment (net)
            
            
            79,705,309
            
            
            66,429,654Other
                receivables
            
            
            7,341,076
            
            
            4,826,279Construction
                contracts
            
            
            31,118,712
            
            
            16,811,740Intangible
                assets
            
            
            24,502,643
            
            
            23,339,142Total
                assets
            
            $
            241,289,983
            
            $
            216,901,368**LIABILITIES
                AND EQUITY**Current
                liabilitiesAccounts
                payable
            
            $
            8,884,034
            
            $
            10,306,344Other
                payables
            
            
            10,522,471
            
            
            8,746,845Accrued
                liabilities
            
            
            4,221,820
            
            
            3,014,600Short
                term loans payable
            
            
            50,890,440
            
            
            47,668,592Deposits
                from clients
            
            
            6,625,658
            
            
            1,876,665Research
                and development grants payable
            
            
            478,776
            
            
            490,288Long
                term loans payable-current portion
            
            
            145,671
            
            
            145,671Total
                current liabilities
            
            
            81,768,870
            
            
            72,249,005Long
                term loans payable
            
            
            1,634,769
            
            
            1,634,769Total
                liabilities
            
            
            83,403,639
            
            
            73,883,774EquityPreferred
                stock: par value $0.001; 25,000,000 authorized; 3,125,000 and 3,125,000
                shares issued and outstanding
            
            
            3,125
            
            
            3,125Common
                stock: par value $0.001; 100,000,000 authorized; 26,274,470 and 25,891,567
                shares issued and outstanding
            
            
            26,274
            
            
            25,892Additional
                paid in capital
            
            
            101,711,685
            
            
            100,070,571Retained
                earnings
            
            
            42,019,809
            
            
            34,732,049Accumulated
                other comprehensive income
            
            
            14,125,451
            
            
            8,185,957Total
                equity
            
            
            157,886,344
            
            
            143,017,594Total
                liabilities and equity
            
            $
            241,289,983
            
            $
            216,901,368





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




2





**ZHONGPIN
      INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME**


*(Amount
      in U.S. dollars) (Unaudited)*




**Three
                Months Ended**
              **March
                31,****2008**
            
            **2007****(Restated)**RevenuesSales
                revenues
            
            $
            108,727,750
            
            $
            55,791,778Cost
                of sales
            
            
            94,536,207
            
            
            48,049,622Gross
                profit
            
            
            14,191,543
            
            
            7,742,156Operating
                expensesGeneral
                and administrative expenses
            
            
            4,404,661
            
            
            1,967,248Operating
                expenses
            
            
            1,984,233
            
            
            1,125,945Total
                operating expenses
            
            
            6,388,894
            
            
            3,093,193Income
                from operations
            
            
            7,802,649
            
            
            4,648,963Other
                income (expense)Interest
                income
            
            
            635,777
            
            
            21,904Other
                income (expenses)
            
            
            65,893
            
            
            (4,428
            )Allowances
                income
            
            
            139,544
            
            
            —Exchange
                gain (loss)
            
            
            (23,758
            )
            
            3,484Interest
                expense
            
            
            (806,264
            )
            
            (442,811
            )Total
                other income (expense)
            
            
            11,192
            
            
            (421,851
            )Net
                income before taxes
            
            
            7,813,841
            
            
            4,227,112Provision
                for income taxes
            
            
            526,081
            
            
            217,353Net
                income
            
            $
            7,287,760
            
            $
            4,009,759Foreign
                currency translation adjustment
            
            $
            5,939,494
            
            $
            545,541Comprehensive
                income
            
            $
            13,227,254
            
            $
            4,555,300Basic
                earnings per common share
            
            $
            0.25
            
            $
            0.21Diluted
                earnings per common share
            
            $
            0.24
            
            $
            0.19Basic
                weighted average shares outstanding
            
            
            26,208,383
            
            
            12,627,854Diluted
                weighted average shares outstanding
            
            
            30,748,961
            
            
            20,982,304





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




3





**ZHONGPIN
      INC.**


**CONSOLIDATED
      STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY**


*(Amount
      in U.S. dollars) ( Unaudited)*




Preferred
                Stock
            
            Common
                Stock
            
            Additional
              Paid
                In
            
            Retained
            
            Accumulated
              Other
              ComprehensiveShares
            
            Par value
            
            Shares
            
            Par value
            
            Capital
            
            Earnings
            
            Income
            
            TotalJanuary
                1, 2007
            
            
            6,900,000
            
            $
            6,900
            
            
            12,132,311
            
            $
            12,133
            
            $
            34,788,651
            
            $
            16,206,768
            
            $
            1,682,767
            
            $
            52,697,219Preferred
                stock converted to common
            
            
            (3,775,000
            )
            
            (3,775
            )
            
            3,775,000
            
            
            3,775
            
            
            -
            
            
            -
            
            
            -
            
            
            -Common
                Stock and warrants (net of offering cost)
            
            
            -
            
            
            -
            
            
            9,984,256
            
            
            9,984
            
            
            62,818,776
            
            
            -
            
            
            -
            
            
            62,828,760Compensation
                expense-release of escrow shares
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            2,250,116
            
            
            -
            
            
            -
            
            
            2,250,116Warrant
                expense
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            15,950
            
            
            -
            
            
            -
            
            
            15,950Compensation
                expense-option granted
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            197,078
            
            
            -
            
            
            -
            
            
            197,078Net
                income for the year
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            18,525,281
            
            
            -
            
            
            18,525,281Foreign
                currency translation adjustment
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            6,503,190
            
            
            6,503,190Balance
                December 31, 2007
            
            
            3,125,000
            
            
            3,125
            
            
            25,891,567
            
            
            25,982
            
            
            100,070,571
            
            
            34,732,049
            
            
            8,185,957
            
            
            143,017,594Common
                stock and warrants (net of offering cost)
            
            
            -
            
            
            -
            
            
            382,903
            
            
            382
            
            
            1,236,541
            
            
            -
            
            
            -
            
            
            1,236,923Compensation
                expense-option granted
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            404,573
            
            
            -
            
            
            -
            
            
            404,573Net
                income for the period
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            7,287,760
            
            
            -
            
            
            7,287,760Foreign
                currency translation adjustment
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            5,939,494
            
            
            5,939,494Balance
                March 31, 2008
            
            
            3,125,000
            
            $
            3,125
            
            
            26,274,470
            
            $
            26,274
            
            $
            101,711,685
            
            $
            42,019,809
            
            $
            14,125,451
            
            $
            157,886,344





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




4





**ZHONGPIN
      INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


*(Amount
      in U.S. dollars) ( Unaudited)*





**Three Months Ended March 31,****2008**
            
            **2007**Cash
                flows from operating activities:
            
            
            
            
            
            (Restated
            )Net
                income
            
            $
            7,287,760
            
            $
            4,009,759Adjustments
                to reconcile net income to net cash provided by (used in)
                operations:Depreciation
            
            
            883,113
            
            
            415,186Amortization
            
            
            145,662
            
            
            47,177Warrant
                expense
            
            
            —
            
            
            9,570Non-cash
                compensation expense
            
            
            404,573
            
            
            562,529Changes
                in operating assets and liabilities:Accounts
                receivable and other receivables
            
            
            4,513,744
            
            
            (3,575,562
            )Other
                receivables
            
            
            (2,271,651
            )
            
            (389,352
            )Purchase
                deposits
            
            
            1,269,671
            
            
            (336,695
            )Prepaid
                expense and deferred charges
            
            
            (105,914
            )
            
            (72,955
            )Inventories
            
            
            2,671,624
            
            
            (1,387,368
            )Tax
                refunds receivable
            
            
            1,934,948
            
            
            (164,275
            )Accounts
                payable
            
            
            (408,402
            )
            
            2,779,252Other
                payables
            
            
            1,410,183
            
            
            382,072Research
                and development grants payable
            
            
            10,504
            
            
            462Accrued
                liabilities
            
            
            1,071,048
            
            
            344,605Taxes
                payable
            
            
            —
            
            
            665,654Deposits
                from clients
            
            
            4,576,652
            
            
            1,355,831Net
                cash provided by operating activities
            
            
            23,393,515
            
            
            4,645,890Cash
                flows from investing activities:Construction
                in progress
            
            
            (23,039,757
            )
            
            (9,534,346
            )Additions
                to property and equipment
            
            
            (1,560,363
            )
            
            (497,433
            )Additional
                to intangible assets
            
            
            (355,111
            )
            
            (87,143
            )Proceeds
                on sale of fixed assets
            
            
            18,433
            
            
            —Net
                cash used in investing activities
            
            
            (24,936,798
            )
            
            (10,118,922
            )Cash
                flows from financing activities:Repayment
                of Bank notes
            
            
            (1,395,440
            )
            
            —Proceeds
                from short-term loans
            
            
            15,768,468
            
            
            11,724,610Repayment
                of short-term loans
            
            
            (14,518,378
            )
            
            (2,573,506
            )Proceeds
                from common stock
            
            
            1,236,923
            
            
            1,271Net
                cash provided by financing activities
            
            
            1,091,573
            
            
            9,152,375Effect
                of rate changes on cash
            
            
            1,770,536
            
            
            545,541Increase
                in cash and cash equivalents
            
            
            1,318,826
            
            
            4,224,884Cash
                and cash equivalents, beginning of period
            
            
            48,701,536
            
            
            21,692,814Cash
                and cash equivalents, end of period
            
            $
            50,020,362
            
            $
            25,917,698Supplemental
                disclosures of cash flow information:Cash
                paid for interest
            
            $
            901,674
            
            $
            428,320Cash
                paid for income taxes
            
            $
            424,919
            
            $
            106,925





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




5


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with accounting principles generally accepted in the
      United States of America for interim financial information and with the
      instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
      do
      not include all of the information and footnotes required by accounting
      principles generally accepted in the United States of America for annual
      financial statements. In the opinion of management, all adjustments (consisting
      of normal recurring accruals) considered necessary for a fair presentation
      have
      been included. The consolidated operating results for the three months ended
      March 31, 2008 are not necessarily indicative of the results that may be
      expected for the year ending December 31, 2008. For further information, refer
      to the financial statements and footnotes thereto included in our Annual Report
      on Form 10-K for the three years ended December 31, 2007.





1.  ORGANIZATION
      AND NATURE OF OPERATIONS




Zhongpin
      Inc. (“Zhongpin”) was incorporated on February 4, 2003 as Strong Technical Inc.
      in the State of Delaware for the purpose of operating a personnel outsourcing
      service that provides skilled workers to industry. On March 30, 2005, an 82.4%
      controlling interest in our company was acquired by Halter Capital Corporation
      and all previous operations were discontinued. On January 30, 2006, we acquired
      Falcon Link Investment Limited (“Falcon”) in a stock exchange by issuing
      11,250,000 shares of our common stock in exchange for all of the issued and
      outstanding capital stock of Falcon. The acquisition transaction was accounted
      for as a reverse acquisition resulting in the recapitalization of Falcon.
      Accordingly, the historical financial statements of Falcon have been
      retroactively restated to give effect to the recapitalization as if it had
      occurred at the beginning of the first period presented. Zhongpin and its
      subsidiaries are collectively referred to herein as “our company,” “we,” “us”
and “our.”





Falcon
      was incorporated in the Territory of the British Virgin Islands (“BVI”) on July
      21, 2005 as a holding company for the purpose of owning all of the equity
      interests of Henan Zhongpin Food Co., Ltd. (“HZFC”), a People’s Republic of
      China (“PRC”) company. Falcon acquired 100% ownership of HZFC by paying
      20,940,000 Renminbi (“RMB”) ($2,528,986) to the stockholders of HZFC, who also
      were the stockholders of Falcon. The transaction was accounted for as a transfer
      of entities under common control, wherein HZFC was the continuing entity. The
      historical financial statements of Falcon are essentially those of HZFC and
      are
      shown as if the transfer had taken place at the beginning of the first period
      presented.





HZFC
      was
      established in the PRC on May 20, 2005 for the sole purpose of holding the
      capital stock of Henan Zhongpin Food Share Company Limited (“Food Share”) and
      its subsidiaries. The owners of Food Share formed HZFC by investing 16,000,000
      RMB ($1,932,367). HZFC acquired Food Share by paying 15,040,000 RMB ($1,816,425)
      to the stockholders of Food Share, who were also the stockholders of HZFC,
      in
      exchange for 100% ownership of Food Share. The transaction was accounted for
      as
      a transfer of entities under common control, wherein Food Share was the
      continuing entity with an increase in registered capital of 960,000 RMB
      ($115,942). The historical financial statements of HZFC are essentially those
      of
      Food Share shown with an increase in capital as if the transfer had taken place
      at the beginning of the first period presented.





Food
      Share was incorporated in the PRC. It is headquartered in Henan Province in
      the
      PRC and its corporate office is in Changge City. Through our subsidiaries,
      we
      are principally engaged in the production of pork, pork products and fruits and
      vegetables, and the retail sales of pork, processed pork products, fruits and
      vegetables and other grocery items to customers throughout the PRC and other
      export countries, either directly or through our subsidiaries.





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




6


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





1.  ORGANIZATION
      AND NATURE OF OPERATIONS (continued)




On
      January 30, 2006, we consummated an agreement with the shareholders of Falcon
      whereby we issued 11,250,000 shares of our common stock in exchange for all
      of
      the issued and outstanding stock of Falcon. Immediately prior to the transaction
      there were 502,568 shares outstanding as compared to 11,752,568 shares
      outstanding immediately following the transaction. Consequently, Falcon became
      a
      wholly-owned subsidiary of our company. The transaction was accounted for as
      a
      reverse acquisition resulting in a recapitalization of Falcon, wherein Falcon’s
      historical financial statements became those of our company, retrospectively
      restated to reflect the adopted capital structure of our company as if the
      transaction had occurred at the beginning of the first period presented. These
      financial statements have been adjusted to reflect such restatement.




In
      conjunction with our acquisition of Falcon, on January 31, 2006, we sold for
      $8.00 per unit 3.45 million units, each consisting of two shares of Series
      A
      convertible preferred stock and a five-year warrant to purchase one common
      share
      at a purchase price of $5.00 per share. Each preferred share is convertible
      into
      one common share. The outstanding shares of Series A convertible preferred
      stock
      are convertible into an aggregate of 6,900,000 common shares and the outstanding
      warrants are exercisable to purchase an aggregate of 3,450,000 common shares.





On
      February 16, 2006, we amended our articles of incorporation to change our name
      from Strong Technical, Inc. to Zhongpin Inc. In the same amendment, we changed
      our authorized common stock to 100,000,000 shares with a par value of $0.001
      per
      share and our authorized preferred stock to 25,000,000 shares with a par value
      of $0.001 per share.





On
      February 16, 2006, we effected a 1:35.349 reverse split of our outstanding
      common stock. Immediately prior to the split, 415,442,354 common shares were
      outstanding as compared to 11,752,568 common shares outstanding immediately
      following the split. The aggregate number of shares of common stock issuable
      upon conversion of our outstanding shares of Series A convertible preferred
      stock was reduced from 243,908,100 common shares to 6,900,000 common shares,
      and
      the aggregate number of shares of our common stock issuable upon the exercise
      of
      our outstanding warrants was reduced from 121,954,050 common shares to 3,450,000
      common shares. These financial statements have been adjusted to show all stock
      transactions using post-split amounts.





In
      June
      2006, Zhumadian Zhongpin Food Company Limited was registered with a registered
      capital of 5,000,000 RMB ($625,344), which is 100%-owned by Henan Zhongpin
      Food
      Share Company Limited. In August 2006, Anyang Zhongpin Food Company Limited
      was
      registered with a registered capital of 4,800,000 RMB ($606,927), which is
      100%-owned by Henan Zhongpin Food Share Company Limited. In September 2006,
      Henan Zhongpin Fresh Food Logistics Company Limited, Deyang Zhongpin Food
      Company Limited and Henan Zhongpin Business Development Company Limited were
      registered with the registered capitals of 1,500,000 RMB ($189,665), 1,000,000
      RMB ($126,443) and 5,000,000 RMB ($632,215), respectively, which are all
      100%-owned by Henan Zhongpin Food Share Company Limited. In October 2006,
      Heilongjiang Zhongpin Food Company Limited was registered with a registered
      capital of 1,000,000 RMB ($126,406), which is 100%-owned by Henan Zhongpin
      Food
      Share Company Limited. In April 2007, Luoyang Zhongpin Food Company Limited
      was
      registered with a registered capital of 5,000,000 RMB ($647,677), which is
      100%-owned by Henan Zhongpin Food Share Company Limited. In June 2007, Yongcheng
      Zhongpin Food Company Limited was registered with a registered capital of
      1,000,000 RMB ($130,724), which is 100%-owned by Henan Zhongpin Food Share
      Company Limited. In September 2007, Tianjin Zhongpin Food Company Limited was
      registered with a registered capital of 5,000,000 RMB ($664,699), which is
      100%-owned by Henan Zhongpin Food Share Company Limited.





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




7


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





1.  ORGANIZATION
      AND NATURE OF OPERATIONS (continued)




Details
      of Food Share’s subsidiaries are as follows:





**NAME**
            
            **DOMICILE/DATE**
              **OF**
              **INCORPORATION**
            
            **REGISTERED****CAPITAL**
            
            **PERCENTAGE**
              **OF OWNERSHIP**Henan
                Zhongpin Industrial Company Limited
            
            
            PRC/Jan.
                17, 2004
            
            
            18,000,000
                RMB
            
            
            100.00
            %($2,173,913)Henan
                Zhongpin Import and Export Trading Company
            
            
            PRC/Aug.
                11, 2004
            
            
            5,060,000
                RMB
              ($611,111)
            
            
            100.00
            %Zhumadian
                Zhongpin Food Company Limited
            
            
            PRC/June
                7, 2006
            
            
            5,000,000
                RMB
              ($625,344)
            
            
            100.00
            %Anyang
                Zhongpin Food Company Limited
            
            
            PRC/Aug.
                21, 2006
            
            
            4,800,000
                RMB
              ($606,927)
            
            
            100.00
            %Henan
                Zhongpin Fresh Food Logistics Company Limited
            
            
            PRC/Sept.
                14, 2006
            
            
            1,500,000
                RMB
              ($189,665)
            
            
            100.00
            %Deyang
                Zhongpin Food Company Limited
            
            
            PRC/Sept.
                25, 2006
            
            
            15,000,000
                RMB
              ($1,967,799)
            
            
            100.00
            %Henan
                Zhongpin Business Development Company Limited
            
            
            PRC/Sept.
                27, 2006
            
            
            5,000,000
                RMB
              ($632,215)
            
            
            100.00
            %Heilongjiang
                Zhongpin Food Company Limited
            
            
            PRC/Oct.17,
                2006
            
            
            1,000,000
                RMB
              ($126,406)
            
            
            100.00
            %Luoyang
                Zhongpin Food Company Limited
            
            
            PRC/April
                26, 2007
            
            
            5,000,000
                RMB
              ($647,677)
            
            
            100.00
            %Yongcheng
                Zhongpin Food Company Limited
            
            
            PRC/June
                1, 2007
            
            
            1,000,000
                RMB
              ($130,724)
            
            
            100.00
            %Tianjin
                Zhongpin Food Company Limited
            
            
            PRC/Sept.
                14, 2007
            
            
            5,000,000
                RMB
              (
                $664,699)
            
            
            100.00
            %





2.  SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES





**BASIS
      OF PRESENTATION**





The
      consolidated financial statements include the accounts of Zhongpin Inc.
      (formerly Strong Technical, Inc.), Falcon Link Investment Limited, Henan
      Zhongpin Food Co., Ltd., Henan Zhongpin Food Share Company Limited, Henan
      Zhongpin Industrial Company Limited, Henan Zhongpin Import and Export Trading
      Company, Zhumadian Zhongpin Food Company Limited, Anyang Zhongpin Food Company
      Limited, Henan Zhongpin Business Development Company Limited, Henan Zhongpin
      Fresh Food Logistics Company Limited, Deyang Zhongpin Food Company Limited
      ,Heilongjiang Zhongpin Food Company Limited, Luoyang Zhongpin Food Company
      Limited, Yongcheng Zhongpin Food Company
      Limited and Tianjin Zhongpin Food Company Limited. All material intercompany
      accounts and transactions have been eliminated in consolidation.




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


8





**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





2.  SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (continued)




The
      consolidated financial statements were prepared in accordance with accounting
      principles generally accepted in the United States of America (“U.S. GAAP”). The
      preparation of financial statements in conformity with U.S. GAAP requires
      management to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities, the disclosure of contingent assets and liabilities
      as
      of the date of the financial statements and the reported amounts of revenues
      and
      expenses during the reporting period. Actual results could differ from those
      estimates. U.S. GAAP differs from that used in the statutory financial
      statements of our PRC subsidiaries, which were prepared in accordance with
      the
      relevant accounting principles and financial reporting regulations as
      established by the Ministry of Finance of the PRC.





The
      Renminbi of the People’s Republic of China (RMB) has been determined to be our
      functional currency. The balance sheets of our company and our subsidiaries
      were
      translated at period end exchange rates. Expenses were translated at moving
      average exchange rates in effect during the quarter. The effects of rate changes
      on assets and liabilities are recorded as accumulated other comprehensive
      income.





**FISCAL
      YEAR**





Our
      financial statements have been prepared using December 31 as the fiscal year
      end.





**RESTRICTIONS
      ON TRANSFER OF ASSETS OUT OF THE PRC**





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





**START-UP
      COSTS**





In
      accordance with the provisions of the American Institute of Certified Public
      Accountants’ Statement of Position (SOP) 98-5, “Reporting on the Costs of
      Start-up Activities,” we expense all start-up and organizational costs as they
      are incurred.




**USE
      OF ESTIMATES**




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and reported amounts of revenues and expenses during
      the reporting period. Actual results could differ from those estimates.





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


9


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





2.  SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (continued)





**SIGNIFICANT
      ESTIMATES**





Several
      areas require significant management estimates relating to uncertainties for
      which it is reasonably possible there will be a material change in the near
      term. The more significant areas requiring the use of management estimates
      relate to the valuation of receivables, equipment and accrued liabilities,
      and
      the useful lives for amortization and depreciation.





**CASH
      EQUIVALENTS**





We
      consider all highly-liquid debt instruments purchased with a maturity of three
      months or less to be cash equivalents.





**ACCOUNTS
      RECEIVABLE**





Accounts
      receivable are stated at cost, net of allowance for doubtful accounts. Based
      on
      our periodic review of our collection experience, the ability of our customers
      to pay and current practice and general economic conditions in the PRC,
      management provides for an allowance for doubtful accounts in an amount equal
      to
      the aggregate amount of those accounts that are not collected within one year
      plus an amount equal to 10% of the aggregate amount of accounts receivable
      less
      than one year old for Food Share and an amount equal to 5% of the aggregate
      amount of accounts receivable less than one year old for our other subsidiaries.





**INVENTORIES**





Inventories
      are stated at the lower of cost, determined on a weighted average basis, and
      net
      realizable value. Work-in-progress and finished goods are composed of direct
      material, direct labor and an attributable portion of manufacturing overhead.
      Net realizable value is the estimated selling price, in the ordinary course
      of
      business, less estimated costs to complete and dispose.




**LAND
      USE RIGHTS**





We
      adopted the provisions of Statement of Financial Accounting Standard (“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. We have performed the requisite annual impairment tests on intangible assets and determined that
      no
      impairment adjustments were necessary.





**REVENUE
      RECOGNITION**





We
      recognize revenue on the sales of our products as earned when the customer takes
      delivery of the product according to previously agreed upon pricing and delivery
      arrangements, and when we believe collectibility is reasonably assured. We
      sell
      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.





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




10


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




2.  SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (continued)





**EARNINGS
      PER SHARE**





Basic
      earnings per common share (“EPS”) are calculated by dividing net income
      available to common stockholders by the weighted average number of common shares
      outstanding during the period. Our Series A 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 March 31,2008
            
            2007(Restated)NUMERATOR
                FOR BASIC AND DILUTED EPSNet
                income (numerator for Diluted EPS)
            
            $
            7,287,760
            
            $
            4,009,759Net
                income allocated to preferred stock
            
            
            (803,111
            )
            
            (1,349,284
            )Net
                income to common stockholders (Basic)
            
            $
            6,484,649
            
            $
            2,660,475DENOMINATORS
                FOR BASIC AND DILUTED EPSCommon
                stock outstanding
            
            
            26,208,383
            
            
            12,627,854DENOMINATOR
                FOR BASIC EPS
            
            
            26,208,383
            
            
            12,627,854Add:
                Weighted average preferred as if converted
            
            
            3,125,000
            
            
            6,404,457Add:
                Weighted average stock warrants outstanding
            
            
            1,415,578
            
            
            1,949,993DENOMINATOR
                FOR DILUTED EPS
            
            
            30,748,961
            
            
            20,982,304EPS –
                Basic
            
            $
            0.25
            
            $
            0.21EPS –
                Diluted
            
            $
            0.24
            
            $
            0.19





**SHIPPING
      AND HANDLING COSTS**





Shipping
      and handling amounts billed to customers in related sales transactions are
      included in sales revenues. Direct shipping costs, which are included in
      operating expenses, were approximately $1,218,000 and $575,000 for the three
      months ended March 31, 2008 and 2007, respectively. Handling costs, which are
      included in costs of sales, were approximately $790,000 and $261,000 for the
      three months ended March 31, 2008 and 2007, respectively.





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




11


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





2.  SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (continued)





**ADVERTISING
      COSTS**





Advertising
      costs are expensed as incurred and included in general and administrative
      expenses. Advertising expenses were approximately $819,000 and $207,000 for
      the
      three months ended March 31, 2008 and 2007, respectively.





**RESEARCH
      AND DEVELOPMENT COSTS**





The
      PRC
      government has made a cash grant to our company specifically to fund research
      and development. We have recorded this grant as a liability titled “Research
& development grants payable” on our balance sheet. Qualifying research and
      development costs reduce the liability while non-qualifying research and
      development costs are expensed as incurred. Research and development costs
      were
      approximately $445,000 and $385,000 for the three months ended March 31, 2008
      and 2007, respectively.





**PROPERTY
      AND EQUIPMENT**





Impairment
      of long-lived assets is recognized when events or changes in circumstances
      indicate the carrying amount of an asset, or related groups of assets, may
      not
      be recoverable. Under the provisions of SFAS No. 144, “Accounting for the
      Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” we
      recognize an “impairment charge” when the expected net undiscounted future cash
      flows from an asset’s use and eventual disposition are less than the asset’s
      carrying value and the asset’s carrying value exceeds its fair value.
      Measurement of fair value for an asset, or related group of
      assets, may be based on appraisals, market values of similar assets or estimated
      discounted future cash flows resulting from the use and ultimate disposition
      of
      the asset or assets.





Expenditures
      for maintenance, repairs and betterments, which do not materially extend the
      normal useful life of an asset, are charged to operations as incurred. Upon
      sale
      or other disposition of assets, the cost and related accumulated depreciation
      are removed from the accounts and any resulting gain or loss is reflected in
      income.





Depreciation
      and amortization are provided for financial reporting purposes primarily on
      the
      straight-line method over the estimated useful lives, ranging from five to
      50
      years.





**OPERATING
      LEASES**





Operating
      leases represent those leases under which substantially all the risks and
      rewards of ownership of the leased assets remain with the lessors. Rental
      payments under operating leases are charged to expense on the straight-line
      basis over the period of the relevant leases.





**INCOME
      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 SFAS No. 109, “Accounting
      for Income Taxes,” these deferred taxes are measured by applying currently-
      enacted tax laws. We recorded income tax expenses of $526,081 and $217,353
      for
      the three months ended March 31, 2008 and 2007, respectively.




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


12


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




2.  SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (continued)




We
      withhold and pay income taxes on our employees’ wages, which fund the Chinese
      government’s sponsored health and retirement programs for all of our employees.
      For our employees, we were obligated to make contributions to the social
      insurance bureau under the laws of the PRC for pension and retirement benefits.




3.  ACCOUNTS
      RECEIVABLE AND OTHER RECEIVABLES




We
      accrue
      an allowance for bad debts related to our receivables. The receivable and
      allowance balances at March 31, 2008 and December 31, 2007 were as follows:




March 31, 2008
            
            December 31, 2007Accounts
                receivable
            
            $
            16,056,324
            
            $
            19,856,766Other
                receivables
            
            
            7,827,513
            
            
            5,293,697Allowance
                for bad debts
            
            
            (1,396,472
            )
            
            (1,341,872
            )$
            22,487,365
            
            $
            23,808,591Current
            
            $
            15,146,289
            
            $
            18,982,312Non-current
            
            
            7,341,076
            
            
            4,826,279$
            22,487,365
            
            $
            23,808,591




Other
      receivables consist primarily of cash advances to suppliers to ensure
      preferential pricing and delivery. These advances bear no interest and are
      expected to be repaid in cash. Repayment is typically required to be made in
      less than one year. Advances that are not expected to be repaid within one
      year
      are classified as non-current.




4. INVENTORIES




Inventories
      at March 31, 2008 and December 31, 2007 consisted of:





March 31, 2008
            
            December 31, 2007Raw
                materials
            
            $
            1,116,265
            
            $
            1,242,717Low
                value consumables & packaging
            
            
            1,151,096
            
            
            1,027,223Work-in-progress
            
            
            3,665,320
            
            
            4,899,169Finished
                goods
            
            
            18,316,552
            
            
            18,753,016Net
                inventories
            
            $
            24,249,233
            
            $
            25,922,125




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




13


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




5. PROPERTY,
          PLANT AND EQUIPMENT




Property,
      plant and equipment at cost at March 31, 2008 and December 31, 2007 consisted
      of:




March 31, 2008
              
              December 31, 2007Machinery
                  and equipment
              
              $
              33,348,104
              
              $
              26,964,304Furniture
                  and office equipment
              
              
              900,561
              
              
              818,528Motor
                  vehicles
              
              
              1,693,978
              
              
              1,491,544Buildings
              
              
              50,426,554
              
              
              42,711,397Subtotal
              
              
              86,369,197
              
              $
              71,985,773Less:
                  accumulated depreciation
              
              
              (6,663,888
              )
              
              (5,556,119
              )Net
                  property and equipment
              
              $
              79,705,309
              
              $
              66,429,654Depreciation
                  expense
              
              $
              883,113
              
              $
              2,087,551




6.  INTANGIBLE
      ASSETS




Intangible
      assets consist of prepaid land use 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, we paid in advance for certain land use rights.
      Prepaid land use rights are being amortized and recorded as lease expense using
      the straight-line method over the use terms of 20 to 50 years. Intangible assets
      at March 31, 2008 and December 31, 2007 consisted of the following:




March 31, 2008
              
              December 31, 2007Land
                  use rights
              
              $
              25,327,842
              
              $
              23,989,174Accumulated
                  amortization
              
              
              (825,199
              )
              
              (650,032
              )$
              24,502,643
              
              $
              23,339,142Amortization
                  expense
              
              $
              145,662
              
              $
              397,975




7.  CONSTRUCTION
      IN PROGRESS




Construction
      in progress at March 31, 2008 and December 31, 2007 consisted of:





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




14


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




7.  CONSTRUCTION
      IN PROGRESS (continued)




Project
              
              Date
                  or
                Estimated
                  Date
                Put
                  in Service(1)
              
              March
                  31, 2008
              
              December
                  31, 2007Production facility
                  for chilled pork in Zhumadian
              
              
              July
                  2008
              
              $
              356,883
              
              $
              523,359Production facility
                  for chilled pork in Anyang
              
              
              July
                  2008
              
              
              4,913,239
              
              
              2,069,446Production
                  line for prepared pork in Changge industrial plant
              
              
              Dec.
                  2008
              
              
              5,250,087
              
              
              -Production facility for
                  chilled pork in Luoyang
              
              
              Dec.
                  2008
              
              
              17,012,206
              
              
              6,481,730Production facility
                  for chilled pork in Yongcheng
              
              
              Dec.
                  2008
              
              
              2,226,347
              
              
              55,347Waste
                  water solution system
              
              
              Dec.
                  2008
              
              
              564,757
              
              
              8,214Cooling
                  storage and logistic hub
              
              
              May
                  2008
              
              
              -
              
              
              7,673,644Supplies
                  storage
              
              
              Oct.
                  2008
              
              
              294,143
              
              
              -Production
                  line for fruits and vegetables
              
              
              Feb.
                  2009
              
              
              27,723
              
              
              -The
                  first phase of residential dormitory construction in Zhongpin Industrial
                  Park
              
              
              Dec.
                  2008
              
              
              473,327
              
              
              -$
              31,118,712
              
              $
              16,811,740




___________________


(1)
            Represents
                date all regulatory permits and approvals are received and project
                is
                placed in service. In certain cases, construction of a project may
                be
                substantially completed and the project may be operational during
                a
                testing period prior to such date.




8.  LOANS
      PAYABLE




**SHORT-TERM
      LOANS**




Short-term
      loans are due within one year. Of the $50.89 million aggregate principal amount
      of short-term loans at March 31, 2008, loans in the principal amount of $29.49
      million were secured by our land and plants located in the PRC and loans in
      the
      aggregate principal amount of $21.37 million were guaranteed by some of our
      subsidiaries. These loans bear interest at prevailing lending rates in the
      PRC
      ranging from 6.84% to 7.84% per annum. At March 31, 2008, there was
      approximately $141.47 million in available unused lines of credit.




**LONG-TERM
      LOANS**




Our
      long-term loan bears interest at the rate of 6.02% per annum.





The
      balances of loans payable at March 31, 2008 and December 31, 2007 were as
      follows:




March 31, 2008
              
              December 31, 2007Short-Term
                  Loans Payable
              
              $
              50,890,440
              
              $
              47,668,592Long-Term
                  Loans Payable
              
              
              1,780,440
              
              
              1,780,440$
              52,670,880
              
              $
              49,449,032





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


15


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




8.  LOANS
      PAYABLE (continued)




Long-Term
      Repayment Schedule




Payments
                  due in 2008 – current portion
              
              $
              145,671Payments
                  due in 2009
              
              
              145,671Payments
                  due in 2010
              
              
              145,671Payments
                  due in 2011
              
              
              145,671Payments
                  due in 2012
              
              
              145,671Payments
                  due thereafter
              
              
              1,052,085$
              1,780,440




9.  COMMITMENTS
      AND CONTINGENCIES




**LEGAL
      PROCEEDINGS**




From
      time
      to time, we have disputes that arise in the ordinary course of our business.
      As
      of March 31, 2008, there was no material legal proceedings to which we were
      a
      party or to which any of our property was subject that will have a material
      adverse effect on our financial condition.




10.  ALLOWANCES
      INCOME





“Allowances
      income” consists of grants from the government of the PRC for our participation
      in specific programs, such as import and export, branding, and city maintenance
      and construction. We received allowances income for the three months ended
      March
      31, 2008 and 2007 as follows:




Three Months Ended March 31,2008
              
              2007Allowances
                  income
              
              $
              139,544
              
              
              -




In
      addition to paying our company for our participation in ongoing programs, the
      PRC government has made a cash grant to our company specifically to fund
      research and development. We recorded this grant as a liability titled “Research
& development grants payable” on our balance sheet rather than as revenue.
      As qualifying research and development costs are incurred, we reduce the
      liability rather than recording an expense.




11.  FAIR
      VALUE OF FINANCIAL INSTRUMENTS




SFAS
      No.
      107, “Disclosures about Fair Value of Financial Instruments” (“SFAS 107”)
      requires entities to disclose the fair values of financial instruments except
      when it is not practicable to do so. Under SFAS No. 107, it is not practicable
      to make this disclosure when the costs of formulating the estimated values
      exceed the benefit when considering how meaningful the information would be
      to
      financial statement users.




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


16




**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




11.  FAIR
      VALUE OF FINANCIAL INSTRUMENTS (continued)




As
      a
      result of the difficulties presented in the valuation of the loans payable
      to
      related entities/parties because of their related party nature, estimating
      the
      fair value of these financial instruments is not considered practical. The
      fair
      values of all other assets and liabilities do not differ materially from their
      carrying amounts. None of the financial instruments held are derivative
      financial instruments
      and none were acquired or held for trading purposes during the three months
      ended March 31, 2008 and 2007.




12.  NEW
      ACCOUNTING PRONOUNCEMENTS




In
      December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141R, “Business
      Combinations” (“SFAS No. 141R”). SFAS No. 141R amends SFAS 141 and provides
      revised guidance for recognizing and measuring identifiable assets and goodwill
      acquired, liabilities assumed, and any noncontrolling interest in the acquiree.
      It also provides disclosure requirements to enable users of the financial
      statements to evaluate the nature and financial effects of the business
      combination. It is effective for fiscal years beginning on or after December
      15,
      2008 and will be applied prospectively. We are currently evaluating the impact
      of adopting SFAS No. 141R on our consolidated financial statements.




In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements - an amendment of ARB No. 51” (“SFAS No.
      160”). SFAS No. 160 requires that ownership interests in subsidiaries held by
      parties other than the parent, and the amount of consolidated net income, be
      clearly identified, labeled, and presented in the consolidated financial
      statements. It also requires once a subsidiary is deconsolidated, any retained
      noncontrolling equity investment in the former subsidiary be initially measured
      at fair value. Sufficient disclosures are required to clearly identify and
      distinguish between the interests of the parent and the interests of the
      noncontrolling owners. It is effective for fiscal years beginning on or after
      December 15, 2008 and requires retroactive adoption of the presentation and
      disclosure requirements for existing minority interests. All other requirements
      shall be applied prospectively. We are currently evaluating the impact of
      adopting SFAS No. 160 on our consolidated financial statements.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities - an amendment of FASB Statement
      No.
      115.” This statement permits entities to choose to measure many financial
      instruments and certain other items at fair value. T he objective is to improve
      financial reporting by providing entities with the opportunity to mitigate
      volatility in reported earnings caused by measuring related assets and
      liabilities differently without having to apply complex hedge
      accounting provisions. This Statement is expected to expand the use of fair
      value measurement, which is consistent with the Board’s long-term measurement
      objectives for accounting for financial instruments. We expect the Statement
      will have no material impact on our consolidated financial statements.




13.  PREFERRED
      STOCK




The
      principal terms of our Series A convertible preferred stock are as follows.




*Dividends* .
      The
      holders of our Series A convertible preferred stock are entitled to receive,
      when and as declared by our board of directors, dividends in such amounts as
      may
      be determined by our board of directors from time to time out of funds legally
      available therefor. No dividends (other than those payable solely in common
      stock) will be paid to the holders of common stock until there shall have been
      paid or declared and set apart during that fiscal year for the holders of our
      Series A convertible preferred stock a dividend in an amount per share that
      the
      holders would have received for the shares of common stock issuable upon
      conversion of their shares of Series A convertible preferred stock.




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


17


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




13.  PREFERRED
      STOCK (continued)




*Preference
      on Liquidation* .
      In the
      event of our merger or consolidation or the sale of all or substantially all
      of
      our assets or other liquidation of our company, holders of our Series A
      convertible preferred stock shall get a priority in payment over all other
      classes of stock. In such event, the Series A convertible preferred stock would
      be entitled to receive the greater of (i) the original purchase price of the
      Series A convertible preferred stock or (ii) the amount the holder would get
      if
      such holder converted all of such holder’s Series A convertible preferred stock
      into common stock.





*Voting* .
      The
      holder of each share of Series A convertible preferred stock (i) shall be
      entitled to the number of votes with respect to such share equal to the number
      of shares of common stock into which such share of Series A convertible
      preferred stock could be converted on the record date for the subject vote
      or
      written consent (or, if there is no such record date, then on the date that
      such
      vote is taken or consent is effective) and (ii) shall be entitled to notice
      of
      any stockholders’ meeting in accordance with our by-laws.




*Appoint
      and Elect a Director* .
      So long
      as the number of shares of common stock issuable upon conversion of the
      outstanding shares of Series A convertible preferred stock is greater than
      10%
      of the number of outstanding shares of common stock (on a fully diluted basis),
      the holders of record of the shares of Series A convertible preferred stock,
      exclusively and as a separate class, shall be entitled to elect one of our
      directors.





*Conversion
      Right* .
      The
      holders of Series A convertible preferred stock may convert each share of Series
      A convertible preferred stock into common stock at an initial conversion price
      of $4.00. The conversion price will be adjusted for stock dividends, stock
      splits and similar events.





*Automatic
      Conversion* .
      Each
      share of Series A convertible preferred stock will automatically be converted
      into shares of common stock at the conversion price at the time in effect if
      (i)
      we consummate an underwritten public offering of our common stock giving us
      at
      least $30 million in net proceeds, (ii)(A) the closing price of our common
      stock
      equals or exceeds $10.00 (as adjusted) for the twenty (20)
      consecutive-trading-day period ending within two (2) days of the date on which
      we provide notice of such conversion as hereinafter provided and (B) either
      a
      registration statement registering for resale the shares of common stock
      issuable upon conversion of the Series A convertible preferred stock has been
      declared effective
      and remains effective and available for resale for the twenty (20)-day period,
      or Rule 144(k) under the Securities Act of 1933, as amended, is available for
      the resale of such shares, or (iii) by consent of at least 67% of the
      then-outstanding shares of Series A convertible preferred stock.





*Protective
      Provisions* .
      So long
      as at least 1,750,000 shares of Series A convertible preferred stock are
      outstanding (subject to adjustment for stock splits, combinations and the like),
      the holders of a majority of the outstanding shares of Series A convertible
      preferred stock shall be required (in addition to any consent or approval
      otherwise required by law) for us to take certain actions, including (1) the
      liquidation, dissolution or wind up of our company, (2) the amendment,
      alteration or repeal of any provision of our certificate of incorporation so
      as
      to affect the rights, preferences or privileges of the Series A convertible
      preferred stock, (3) the creation of a new class of preferred stock or any
      increase in the
      number of shares of Series A convertible preferred stock that can be issued,
      or
      (4) the purchase or redemption, or the payment or declaration of any dividend
      or
      the making of any distribution on, any securities junior in priority to the
      Series A convertible preferred stock; or (5) making any change in the size
      of
      our board of directors.





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


18


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




14.  SHARE-BASED
      PAYMENT ARRANGEMENTS





In
      conjunction with the issuance of preferred stock discussed in Note 14, we issued
      warrants for the purchase of 3,450,000 shares of our common stock.





Also
      in
      conjunction with the issuance of such preferred stock, we issued warrants to
      purchase 345,000 units at an initial exercise price of $8.00 per unit. The
      units
      that may be acquired upon exercise of such warrants consist of two shares of
      Series A convertible preferred stock and one warrant to purchase one share
      of
      common stock at an initial exercise price per share of $5.00. These warrants,
      if
      fully exercised and converted, would require the issuance of 1,035,000 shares
      of
      common stock.





On
      January 31, 2006, we completed a private placement in which we sold for an
      aggregate purchase price of $27.6 million, 3.45 million units, each unit
      consisting of two shares of our Series A convertible preferred stock and a
      warrant to purchase one share of our common stock. In connection with this
      financing, nine individuals, including six of our employees, including Mr.
      Xianfu Zhu, our Chairman of the Board, Chief Executive Officer and President,
      and Mr. Baoke Ben, our Executive Vice President and a director of our company,
      deposited into escrow an aggregate of 1,125,056 shares of our common stock.
      Under the terms of such escrow arrangement, 50% of such shares were to be
      released to the investors in the private placement if our audited net income
      for
      the fiscal year ended December 31, 2006, subject to certain adjustments, was
      less than $7.927 million, and the remaining 50% were to be released to such
      investors if our audited net income for the fiscal year ended December 31,
      2007,
      subject to certain adjustments, was less than $15 million. Under U.S. generally
      accepted accounting principles, the release of any of such escrow shares to
      any
      of our employees based on our fulfillment of stated performance thresholds
      constitutes a compensatory plan to such employees, which requires us to record
      a
      corresponding compensation expense in our financial statements. The key
      provisions of SFAS-123R require that share-based compensation awards to
      employees be measured at the grant-date fair value and the cost recognized
      over
      the period during which the employee is required to provide service in exchange
      for the award. As we have satisfied the performance threshold for fiscal 2006
      and fiscal 2007 for the release of the escrowed shares, 50% of such shares
      were
      released to employee stockholders in April 2007, and the remaining 50% of such
      shares were released to employee stockholders in April 2008. A non-cash expense
      in the amount of $562,528 was recorded in the three months ended March 31,
      2007.
      There was no related expense recorded in the three months ended March 31,
      2008.





On
      June
      15, 2006, in conjunction with a one-year consulting agreement, we issued
      three-year warrants to purchase 100,000 shares of common stock at a price of
      $6.50 per share. The warrants vest monthly
      over a one-year period. These warrants were accounted for using the fair value
      method, with the expense being recognized ratably over the requisite service
      period of one year. Consulting expense related to the warrants amounted to
      $9,570 for the three months ended March 31, 2007. There was no further related
      expense recorded during the three months ended March 31, 2008.





On
      December 22, 2006, in conjunction with an amendment to a registration rights
      agreement, we issued to investors warrants to purchase 884,796 shares of common
      stock at a price of $5.50 per share. The warrants were accounted for using
      the
      fair value method. Penalty expense related to the warrants amounted to
      $4,461,775 for the year ended December 31, 2006. There was no penalty expense
      accrued for the fiscal year of 2007 and thereafter.





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


19


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





14.  SHARE-BASED
      PAYMENT ARRANGEMENTS (continued)





On
      August
      23, 2007, we issued stock purchase options to an executive officer to purchase
      100,000 shares of common stock and to a director to purchase 30,000 shares
      of
      common stock, in each case at an initial exercise price of $9.20 per share.
      These options were accounted for using the fair value method, with the expense
      being recognized ratably over the requisite service period (three years for
      the executive
      officer and one year for the director). The compensation expense for these
      options amounted to $66,058  for
      the
      three months ended March 31, 2008.





On
      September 30, 2007, in conjunction with a one-year consulting agreement, we
      issued three-year warrants to purchase 50,000 shares of common stock at an
      initial exercise price per share of $10.00. The warrants vest monthly over
      a
      one-year period. These warrants were accounted for using the fair value
      method, with the expense being recognized ratably over the requisite service
      period of one year. The compensation expense for these the warrants amounted
      to
      $48,597 for the three months ended March 31, 2008.





On
      December 14, 2007, we issued stock purchase options to certain executive
      officers to purchase an aggregate of 580,000 shares of common stock at an
      initial exercise price of $11.76 per share. These options were accounted for
      using the fair value method, with the expense being recognized ratably over
      the
      requisite service period (three years). The compensation expense for these
      options amounted to $289,918  for
      the
      three months ended March 31, 2008.





The
      following table provides the information with respect to the above-referenced
      share-based non-cash compensation at March 31, 2008:





Nonvested Shares
            
            Shares
            
            Weighted Average
              Grant-Date
              Fair ValueNonvested
                at January 1, 2006
            
            
            -
            
            
            -Granted
                at January 31, 2006
            
            
            1,125,056
            
            $
            4.00Vested
                -50%
            
            
            (562,528
            )
            $
            4.00Nonvested
                at December 31, 2006
            
            
            562,528
            
            $
            4.00Vested
                – 50%
            
            
            (562,528
            )
            $
            4.00Nonvested
                at December 31, 2007
            
            
            -
            
            
            -





The
      following table provides certain information with respect to the
      above-referenced warrants and options outstanding at March 31,
      2008:





Exercise Price
            
            Number
              Outstanding
            
            Weighted Average
              Life - YearsWarrants
            
            $
            4.00
            
            
            690,000
            
            
            2.83Warrants
            
            $
            5.00
            
            
            758,189
            
            
            2.83Warrants
            
            $
            5.50
            
            
            86,811
            
            
            3.72Warrants
            
            $
            6.50
            
            
            100,000
            
            
            1.21Warrants
            
            $
            10.00
            
            
            50,000
            
            
            2.50Warrants
            
            $
            8.00
            
            
            437,500
            
            
            4.50Options
            
            $
            9.20
            
            
            130,000
            
            
            4.40Options
            
            $
            11.76
            
            
            580,000
            
            
            4.71





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


20


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





14.  SHARE-BASED
      PAYMENT ARRANGEMENTS (continued)





The
      weighted average fair value at date of grant for warrants and options granted
      during 2007 and 2006 was $6.00 and $0.38, respectively, and was estimated using
      the Black-Scholes option valuation model with the following assumptions:





2006
            
            2007Expected
                life in years
            
            
            3
                - 5
            
            
            3
                - 5Interest
                rate
            
            
            4.00%
                - 4.52%
            
            
            3.63%
                - 4.19%Volatility
            
            
            6.1%
                - 68.5%
            
            
            46%
                - 55%Dividend
                yield
            
            
            0%
            
            
            0%




15.  SEGMENT
      REPORTING




We
      operate in two business segments: pork and pork products, and vegetables and
      fruits.





Our
      pork
      and pork products segment is involved primarily in the processing of live market
      hogs into fresh, frozen and processed pork products. Our pork and pork products
      segment markets its products domestically to our branded stores and to food
      retailers, foodservice distributors, restaurant operators and noncommercial
      foodservice establishments, such as schools, hotel chains, healthcare
      facilities, the military and other food processors, as well as to international
      markets.





Our
      vegetables and fruits segment is involved primarily in the processing of fresh
      vegetables and fruits. We contract with more than 100 farms in Henan Province
      and nearby areas to produce high-quality vegetable varieties and fruits suitable
      for export purposes. The proximity of the contracted farms to our operations
      ensures freshness from harvest to processing. We contract to grow more than
      20 categories
      of vegetables and fruits, including asparagus, sweet corn, broccoli, mushrooms,
      lima beans and strawberries.





**Sales
                by Segment**
              **(U.S.
                dollars in millions)****Three
                Months Ended**
              **March
                31,**
            
            **Net
                Change**
            
            **Percentage**
              **Change****2008**
            
            **2007**
            
            **2008/2007**
            
            **2008/2007**Pork
                and Pork ProductsChilled
                Pork
            
            $
            55.09
            
            $
            28.48
            
            $
            26.61
            
            
            93.43
            %Frozen
                Pork
            
            
            40.16
            
            
            20.29
            
            
            19.87
            
            
            97.93
            %Prepared
                Pork Products
            
            
            11.96
            
            
            5.85
            
            
            6.11
            
            
            104.44
            %Vegetables
                and Fruits
            
            
            1.52
            
            
            1.17
            
            
            0.35
            
            
            29.91
            %Total
            
            $
            108.73
            
            $
            55.79
            
            $
            52.94
            
            
            94.89
            %




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


21


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




15.  SEGMENT
      REPORTING (continued)




**Operating
                Income by Segment**
              **(U.S.
                dollars in millions)****Three
                Months Ended**
              **March 31,**
            
            **Net
                Change**
            
            **Operating
                Margin**
              **Three
                Months Ended**
              **March
                31,****2008**
            
            **2007**
            
            **2008/2007**
            
            **2008**
            
            **2007**(Restated)
            
            
            
            
            
            (Restated)Pork
                and Pork ProductsChilled
                Pork
            
            $
            3.51
            
            $
            2.20
            
            $
            1.31
            
            
            6.37
            %
            
            7.72
            %Frozen
                Pork
            
            
            2.37
            
            
            1.54
            
            
            0.83
            
            
            5.90
            %
            
            7.59
            %Prepared
                Pork Product
            
            
            1.74
            
            
            0.79
            
            
            0.95
            
            
            14.55
            %
            
            13.50
            %Vegetables
                and Fruits
            
            
            0.18
            
            
            0.12
            
            
            0.06
            
            
            12.00
            %
            
            10.26
            %Total
            
            $
            7.80
            
            $
            4.65
            
            $
            3.15
            
            
            7.18
            %
            
            8.33
            %





16.  RESTATEMENT





On
      January 31, 2006, we completed a private placement in which we sold for an
      aggregate purchase price of $27.6 million, 3.45 million units, each unit
      consisting of two shares of our Series A convertible preferred stock and a
      warrant to purchase one share of our common stock. In connection with this
      financing, nine individuals, including six of our employees, including Mr.
      Xianfu Zhu, our Chairman of the Board, Chief Executive Officer and President,
      and Mr. Baoke Ben, our Executive Vice President and a director of our company,
      deposited into escrow an aggregate of 1,125,056 shares of our common stock.
      Under the terms of such escrow arrangement, 50% of such shares were to be
      released to the investors in the private placement if our audited net income
      for
      the fiscal year ended December 31, 2006, subject to certain adjustments, was
      less than $7.927 million, and the remaining 50% were to be released to such
      investors if our audited net income for the fiscal year ended December 31,
      2007,
      subject to
      certain adjustments,
      was less than $15 million. After satisfying the performance threshold for fiscal
      2006 and 2007, 50% of the escrowed shares were released in April 2007 and 2008,
      respectively.





Under
      U.S. generally accepted accounting principles, the release of any of such escrow
      shares to any of our employees based on our fulfillment of stated performance
      thresholds constituted a compensatory plan to such employees, which required
      us
      to record a corresponding compensation expense in our financial statements.
      We
      originally recorded a $4.1 million non-cash expense in connection with the
      initial release of escrowed shares in April 2007 based upon the fair value
      of
      the released shares on the date of release. However, the key provisions of
      SFAS-123R require that share-based compensation awards to employees be measured
      at the grant-date fair value and the cost recognized over the period during
      which the employee is required to provide service in exchange for the award.
      As
      a result, we have restated our financial statements for the three months ended
      March 31, 2007 to record a $562,529 non-cash expense for such shares during
      such
      period.





The
      following are the restated consolidated balance sheets as of March 31, 2007,
      consolidated statement of operations and comprehensive income for the three
      months ended March 31, 2007 and consolidated statement of cash flows for the
      three months ended March 31, 2007:





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


22


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





16. RESTATEMENT
      (continued)





**Zhongpin
      Inc.**


**Consolidated
      Balance Sheets**


*(U.S.
      dollars) (Unaudited)*





**March 31,**
              **2007**
            
            **March 31,**
              **2007**(Original)
            
            
            (Restated)**ASSETS**Current
                assetsCash
                and cash equivalents
            
            $
            25,917,698
            
            $
            25,917,698Accounts
                receivable
            
            
            17,047,013
            
            
            17,047,013Purchase
                deposits
            
            
            336,695
            
            
            336,695Prepaid
                expenses and deferred charges
            
            
            273,391
            
            
            273,391Inventories
            
            
            11,464,847
            
            
            11,464,847Tax
                refund receivables
            
            
            1,243,277
            
            
            1,243,277Total
                current assets
            
            
            56,282,921
            
            
            56,282,921Property,
                plant and equipment (net)
            
            
            32,679,396
            
            
            32,679,396Other
                receivables
            
            
            2,445,994
            
            
            2,445,994Construction
                contracts
            
            
            21,551,169
            
            
            21,551,169Intangible
                assets (net)
            
            
            9,070,043
            
            
            9,070,043Total
                assets
            
            $
            122,029,523
            
            $
            122,029,523**LIABILITIES
                AND EQUITY**Current
                liabilitiesAccounts
                and other payables
            
            $
            23,874,118
            
            $
            23,874,118Accrued
                liabilities
            
            
            1,942,162
            
            
            1,942,162Short
                term loans payable
            
            
            32,996,302
            
            
            32,996,302Taxes
                payable
            
            
            1,044,359
            
            
            1,044,359Deposits
                from clients
            
            
            2,039,645
            
            
            2,039,645Research
                and development grants payable
            
            
            249,034
            
            
            249,034Long-term
                   loans payable-current portion
            
            
            145,671
            
            
            145,671Total
                current liabilities
            
            
            62,291,291
            
            
            62,291,291Long
                term loans payable
            
            
            1,913,614
            
            
            1,913,614Total
                liabilities
            
            
            64,204,905
            
            
            64,204,905EquityPreferred
                stock: par value $0.001
            
            
            5,479
            
            
            5,479Common
                stock: par value $0.001
            
            
            13,554
            
            
            13,554Additional
                paid in capital
            
            
            32,548,105
            
            
            33,110,634Retained
                earnings
            
            
            23,029,172
            
            
            22,466,643Accumulated
                other comprehensive income
            
            
            2,228,308
            
            
            2,228,308Total
                equity
            
            
            57,824,618
            
            
            57,824,618Total
                liabilities and equity
            
            $
            122,029,523
            
            $
            122,029,523




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


23


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





16.  RESTATEMENT
      (continued)





**Zhongpin
      Inc.**


**Consolidated
      Statements Of Operations And Comprehensive Income**


*(U.S.
      dollars) (Unaudited)*





**Three Months Ended March 31,****2007**
            
            **2007**(Original)
            
            (Restated)**Revenues**Sales
                revenues
            
            $
            55,791,778
            
            $
            55,791,778Cost
                of sales
            
            
            48,049,622
            
            
            48,049,622Gross
                profit
            
            
            7,742,156
            
            
            7,742,156Operating
                expensesGeneral
                and administrative expenses
            
            
            1,404,719
            
            
            1,967,248Operating
                expenses
            
            
            1,125,945
            
            
            1,125,945Total
                operating expenses
            
            
            2,530,664
            
            
            3,093,193Income
                from operations
            
            
            5,211,492
            
            
            4,648,963Other
                income (expense)Interest
                income
            
            
            21,904
            
            
            21,904Other
                income (expenses)
            
            
            (4,428
            )
            
            (4,428
            )Exchange
                gain (loss)
            
            
            3,484
            
            
            3,484Interest
                expense
            
            
            (442,811
            )
            
            (442,811
            )Total
                other income (expense)
            
            
            (421,851
            )
            
            (421,851
            )Net
                income before taxes
            
            
            4,789,641
            
            
            4,227,112Provision
                for income taxes
            
            
            217,353
            
            
            217,353Net
                income
            
            $
            4,572,288
            
            $
            4,009,759Foreign
                currency translation adjustment
            
            $
            545,541
            
            $
            545,541Comprehensive
                income
            
            $
            5,117,829
            
            $
            4,555,300Basic
                earnings per common share
            
            $
            0.24
            
            $
            0.21Diluted
                earnings per common share
            
            $
            0.22
            
            $
            0.19Basic
                weighted average shares outstanding
            
            
            12,627,854
            
            
            12,627,854Diluted
                weighted average shares outstanding
            
            
            20,982,304
            
            
            20,982,304




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


24


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





16.  RESTATEMENT
      (continued)





**Zhongpin
      Inc.**


**Consolidated
      Statements of Cash Flow**


*(U.S.
      dollars) (Unaudited)*




**Three
                Months Ended March 31,****2007**
            
            **2007****(Original)**
            
            **(Restated)**Cash
                flows from operating activities:Net
                income
            
            $
            4,572,288
            
            $
            4,009,759Adjustments
                to reconcile net income to net case provided by (used in)
                operations:Depreciation
            
            
            415,186
            
            
            415,186Amortization
            
            
            47,177
            
            
            47,177Warrant
                expenses
            
            
            9,570
            
            
            9,570Non-cash
                compensation adjustment
            
            
            —
            
            
            562,529Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            (3,964,914
            )
            
            (3,575,562
            )Other
                receivable
            
            
            —
            
            
            (389,352
            )Purchase
                deposits
            
            
            (336,695
            )
            
            (336,695
            )Prepaid
                expense and deferred charges
            
            
            (72,955
            )
            
            (72,955
            )Inventories
            
            
            (1,387,368
            )
            
            (1,387,368
            )Tax
                refunds receivable
            
            
            (164,275
            )
            
            (164,275
            )Accounts
                payable
            
            
            3,161,786
            
            
            2,779,252Other
                payable
            
            
            —
            
            
            382,072Research
                and development grants payable
            
            
            —
            
            
            462Accrued
                liabilities
            
            
            344,605
            
            
            344,605Taxes
                payable
            
            
            665,654
            
            
            665,654Deposits
                from clients
            
            
            1,355,831
            
            
            1,355,831Net
                cash provided by (used in) operating activities:
            
            
            4,645,890
            
            
            4,645,890Cash
                flows from investing activities:Construction
                in progress
            
            
            (9,534,346
            )
            
            (9,534,346
            )Additions
                to property and equipment
            
            
            (497,433
            )
            
            (497,433
            )Additions
                to intangible assets
            
            
            (87,143
            )
            
            (87,143
            )Net
                cash used in investing activities
            
            
            (10,118,922
            )
            
            (10,118,922
            )Cash
                flows from financing activities:Proceeds
                from short-term loans
            
            
            11,724,610
            
            
            11,724,610Repayment
                of short-term loans
            
            
            (2,573,506
            )
            
            (2,573,506
            )Proceeds
                from long-term loans
            
            
            1,271
            
            
            1,271




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


25


**ZHONGPIN
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





16.  RESTATEMENT
      (continued)





**Zhongpin
      Inc.**


**Consolidated
      Statements of Cash Flow**


*(U.S.
      dollars) (Unaudited)*





**Three Months Ended March 31,****2007**
            
            **2007****(Original)**
            
            **(Restated)**Net
                cash provided by financing activities
            
            
            9,152,375
            
            
            9,152,375Effect
                of rate changes on cash
            
            
            545,541
            
            
            545,541Increase
                (decrease) in cash and cash equivalents
            
            
            4,224,884
            
            
            4,224,884Cash
                and cash equivalents, beginning of period
            
            
            21,692,814
            
            
            21,692,814Cash
                and cash equivalents, end of period
            
            $
            25,917,698
            
            $
            25,917,698Supplemental
                disclosures of cash flow information:Cash
                paid for interest
            
            $
            428,320
            
            $
            428,320Cash
                paid for income taxes
            
            $
            106,925
            
            $
            106,925





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


26




**Item
      2.**  **Management’s
      Discussion and Analysis of**  **Financial
      Condition and Results of Operations**





**Disclosure
      Regarding Forward-Looking Statements**





*The
      statements contained in this Report with respect to our financial condition,
      results of operations and business that are not historical facts are
“forward-looking statements” within the meaning of the Private Securities
      Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act
      of
      1934, as amended (the “Exchange Act”). We intend such forward-looking statements
      to be covered by the safe harbor provisions for forward-looking statements
      contained in Section 21E of the Exchange Act. Forward-looking statements can
      be
      identified by the use of forward-looking terminology, such as “estimates,”
“projects,” “plans,” “believes,” “expects,” “anticipates,” “intends,” or the
      negative thereof or other variations thereon, or by discussions of strategy
      that
      involve risks and uncertainties. Management wishes to caution the reader of
      the
      forward-looking statements that such statements, which are contained in this
      Report, reflect our current beliefs with respect to future events and involve
      known and unknown risks, uncertainties and other factors, including, but not
      limited to, economic, competitive, regulatory, technological, key employee,
      and
      general business factors affecting our operations, markets, growth, services,
      products, licenses and other factors discussed in our other filings with the
      Securities and Exchange Commission, and that these statements are only estimates
      or predictions. No assurances can be given regarding the achievement of future
      results, as actual results may differ materially as a result of risks facing
      our
      company, and actual events may differ from the assumptions underlying the
      statements that have been made regarding anticipated events.*





*These
      forward-looking statements are subject to numerous assumptions, risks and
      uncertainties that may cause our actual results to be materially different
      from
      any future results expressed or implied by us in those statements. Some of
      these
      risks are described in “Risk Factors” in Item 1A of our Annual Report on
      Form 10-K for the year ended December 31, 2007.*




*These
      risk factors should be considered in connection with any subsequent written
      or
      oral forward-looking statements that we or persons acting on our behalf may
      issue. All written and oral forward looking statements made in connection with
      this Report that are attributable to our company or persons acting on our behalf
      are expressly qualified in their entirety by these cautionary statements. Given
      these uncertainties, we caution investors not to unduly rely on our
      forward-looking statements. We do not undertake any obligation to review or
      confirm analysts’ expectations or estimates or to release publicly any revisions
      to any forward-looking statements to reflect events or circumstances after
      the
      date of this Report or to reflect the occurrence of unanticipated events.
      Further, the information about our intentions contained in this Report is a
      statement of our intention as of the date of this Report and is based upon,
      among other things, the existing regulatory environment, industry conditions,
      market conditions and prices, the economy in general and our assumptions as
      of
      such date. We may change our intentions, at any time and without notice, based
      upon any changes in such factors, in our assumptions or
      otherwise.*





**Overview**





We
      are
      principally engaged in the meat and food processing and distribution business
      in
      the PRC. Currently, we have nine processing plants located in Henan,
      Heilongjiang and Sichuan Provinces and in Tianjin City in the PRC, with a total
      of 15 production lines. Our current total production capacity for chilled pork
      and frozen pork is 997 metric tons per day, including the average
      production capacity of approximately 104 metric tons per day from OEM partners,
      based on an eight-hour working day, or approximately 359,000 metric tons on
      an
      annual basis. We also have production capacity for prepared meats of 70 metric
      tons per eight-hour day (or approximately 25,200 metric tons on an annual basis)
      and for fruits and vegetables of 73 metric tons per eight-hour day, including
      the average production capacity of approximately eight metric tons per day
      supplied by OEM partners, or approximately 26,280 metric tons on an annual
      basis. We utilize state-of-the-art equipment in all of our abattoirs and
      processing facilities.


27





On
      April
      26, 2007, Henan Zhongpin formed a new wholly-owned subsidiary, Luoyang Zhongpin
      Food Company Limited, for the purpose of constructing a production facility
      to
      be located in western Henan Province. We plan to invest approximately $14.5
      million to construct this facility, which is planned to have a production
      capacity of 195 metric tons per eight-hour working day, or approximately 70,000
      metric tons on an annual basis. Approximately 60% of the production capacity
      will be designed for the chilled pork and the remaining approximately 40% will
      be designed for the frozen pork. We plan to put the new facility into
      operation  by
      the
      end of the second quarter of fiscal 2008.





On
      June
      30, 2007, Henan Zhongpin formed a wholly-owned subsidiary, Yongcheng Zhongpin
      Food Company Limited, through which we plan to invest approximately $15 million
      to construct a new production facility in eastern Henan Province that will
      be
      designed with a production capacity for chilled or frozen pork of 222 metric
      tons per eight-hour working day, or approximately 80,000 metric tons on an
      annual basis. Approximately 75% of the production capacity will be designed
      for
      the production of chilled pork and approximately 25% will be designed for the
      production of frozen pork. We plan to put this new plant into production in
      the
      fourth quarter of fiscal 2008.





We
      also
      plan to invest approximately $13.2 million to expand the production line for
      prepared meat products at our production facilities in Changge City, Henan
      Province. The new production line will be designed with a production capacity
      of
      80 metric tons per eight-hour working day, or approximately 28,800 metric tons
      on an annual basis. We plan to put this new production line into operation
      in
      the third quarter of fiscal 2008.





In
      addition, we are investing a total of $11 million to expand and upgrade our
      production line for fruits and vegetables in our production facilities located
      in Changge City, Henan Province. The additional lines are expected to cost
      $6
      million and the remaining $5 million will be invested in a refrigerated storage
      warehouse for our fruit and vegetables as well as frozen pork and intermediate
      products for prepared meat. This new production line will be designed to expand
      our production capacity for fruits and vegetables by 83 metric tons per
      eight-hour day, or approximately 30,000 metric tons on an annual basis, and
      is
      expected to be put into operation in the fourth quarter of fiscal
      2008.





Our
      products are sold under the “Zhongpin” brand name. At March 31, 2008, our
      customers include d
      17
      international or domestic fast food companies in the PRC, 39 export-registered
      processing factories and 1,621 school cafeterias, factory canteens, army posts
      and national departments. At such date, we also sold directly to 2,946
      r etail
      outlets, including supermarkets, within the PRC.





Since
      2001, we have been one of the “leading agricultural industrial enterprises” in
      the PRC. Over the past five fiscal years, we achieved a compound annual growth
      rate of 77% in terms of revenues and 86% in terms of net profits. We have
      established distribution networks in 24 provinces, including four cities with
      special legal status, in the North, East, South and South Midland of the PRC,
      and also have formed strategic partnerships with leading supermarket chains
      and
      the catering industry in the PRC. In addition, we export products to the
      European Union, Southeast Asia, Russia and South Africa.





With
      the
      recent increases in pork prices in the PRC and the appreciation of the RMB
      against the U.S. dollar and other foreign currencies, we believe the dynamics
      of
      the international pork trade have changed over the past year, with exports
      of
      pork and pork products declining and imports of such products starting to
      increase. We believe we are well positioned to benefit from this change, both
      in
      the domestic market in the PRC and in the international market. In response
      to
      these changes in the marketplace, we are seeking to establish relationships
      with
      several multinational companies, including some of the leading pork processing
      companies in North America, as we believe there are now opportunities to import
      certain kinds of frozen pork and deep-processing pig by-products. We also have
      recently commenced selling raw pork products to the PRC-based subsidiaries
      of
      two U.S. meat processing companies.


28


**Critical
      Accounting Policies**





Our
      discussion and analysis of our financial condition and results of operations
      are
      based on our consolidated financial statements, which have been prepared in
      accordance with U.S. generally accepted accounting principles. The preparation
      of these financial statements requires us to make estimates and judgments that
      affect the reported amounts of assets, liabilities, revenues and expenses.
      We
      evaluate, on an on-going basis, our estimates for reasonableness as changes
      occur in our business environment. We base our estimates on experience, the
      use
      of independent third-party specialists, and various other assumptions that
      we
      believe to be reasonable under the circumstances, the results of which form
      the
      basis for making judgments about the carrying values of assets and liabilities
      that are not readily apparent from other sources. Actual results may differ
      from
      these estimates under different assumptions or conditions.





Critical
      accounting policies are defined as those that are reflective of significant
      judgments, estimates and uncertainties, and potentially result in materially
      different results under different assumptions and conditions. We believe the
      following are our critical accounting policies:





***Accounts
      Receivable.*** **** We
      state
      accounts receivable at cost, net of allowance for doubtful accounts. Based
      on
      our past experience and current practice in the PRC, management provides for
      an
      allowance for doubtful accounts in an amount equal to the aggregate amount
      of
      those accounts that have not been collected within one year plus
      an
      amount equal to the sum of 10% of the aggregate amount of the accounts
      receivable of our wholly-owned subsidiary, Henan Zhongpin Food Share Co., Ltd.,
      plus 5% of the aggregate amount of the accounts receivable less than one year
      old for all of our other subsidiaries. As of March 31, 2008, we were successful
      in collectin g
      $30,000, or approximately 38%, of our doubtful accounts that were outstanding
      at
      December 31, 2007 for longer than one year, and $13.76 million, or approximately
      73%, of our doubtful accounts that were outstanding at December 31, 2007 for
      one
      year or less. It is management’s belief that the current bad debt allowance adequately reflects an
      appropriate estimate based on management’s judgment.





***Inventory
      Valuation*** **.** We
      value
      our pork inventories at the lower of cost, determined on a weighted average
      basis, and net realizable value (the estimated market price). When the carcasses
      are disassembled and transferred from primary processing to various
      manufacturing departments, we adjust the net realizable value for product
      specifications and further processing, which becomes the basis for calculating
      inventory values. In addition, substantially all inventory expenses, packaging
      and supplies are valued by the weighted average method.





***Income
      Taxes*** **.** We
      account for income taxes in accordance with Statement of Financial Accounting
      Standard No. 109, “Accounting for Income Taxes.” We compute our provision for
      income taxes based on the statutory tax rates and tax planning opportunities
      available to us in the PRC. Significant judgment is required **** in
      evaluating our tax positions and determining our annual tax
      position.


29


**Results
      of Operations**





In
      fiscal
      2008, we intend to continue to focus on the implementation of our strategic
      plan
      to continue the growth we have experienced in the last five years. The
      construction of our new plant in western Henan Province will be completed as
      scheduled by the end of the second quarter of fiscal 2008 while the construction
      of our new plant in eastern Henan Province might be delayed because of issues
      related to the environmental control system in that facility. Management,
      however, still believes that the construction of this plant should be finished
      in the fourth quarter of 2008. The construction of our new prepared meat
      facility with 28,800 tons of capacity should be completed as schedule in the
      third quarter of 2008, and production at that facility should begin by the
      end
      of that quarter. The construction of our new fruit and vegetable facility with
      30,000 tons of capacity is also expected to be completed as scheduled, and
      production at that facility should begin by the end of the fourth quarter of
      2008. In fiscal 2008, we expect to continue to expand our distribution channel
      and develop new markets. Through our aggressive marketing campaign, we also
      expect to increase our brand awareness and customer loyalty. We also intend
      to
      further streamline our supply chain management to build a unified, safe and
      efficient cold-chain logistics system. In addition, we will continue the
      development of our information technology systems, increase our research and
      development capability and invest in training and human resources development
      so
      that we will be able to sustain a rapid and healthy growth while maintaining
      a
      satisfactory profit margin.





In
      the
      remaining three quarters of fiscal 2008, we expect the demand for our pork
      and
      pork products to remain strong. While the supply of live hogs in the PRC is
      currently relatively tight, we believe this condition is slowly recovering
      and
      expect to experience a noticeable improvement in the hog supply in the second
      half of fiscal 2008. Based on our results for the first quarter of fiscal 2008,
      we remain confident in our ability to reach our 2008 earnings guidance we
      disclosed earlier this year. We also expect to increase our market share in
      the
      meat and meat products segment in our target markets in fiscal
      2008.


30


The
      following table sets forth, for the periods indicated, certain statement of
      operations data:


**Three Months Ended**
                **March
                  31,****2008**
              
              **2007**(Unaudited)
              
              (Unaudited)(Restated)(U.S.
                  dollars in thousands)Revenues:Sales
                  revenues
              
              $
              108,728
              
              $
              55,792Cost
                  of sales
              
              
              94,536
              
              
              48,050Gross
                  profit
              
              
              14,192
              
              
              7,742Operating
                  expenses:General
                  and administrative expenses
              
              
              4,405
              
              
              1,967Operating
                  expenses
              
              
              1,984
              
              
              1,126Total
                  operating expenses
              
              
              6,389
              
              
              3,093Income
                  from operations
              
              
              7,803
              
              
              4,649Other
                  income (expense):Interest
                  income
              
              
              635
              
              
              22Other
                  income(expense)
              
              
              66
              
              
              (4
              )Allowance
                  income
              
              
              140
              
              
              —Exchange
                  gain (loss)
              
              
              (24
              )
              
              3Interest
                  expense
              
              
              (806
              )
              
              (443
              )Total
                  other income (expense)
              
              
              11
              
              
              (422
              )Net
                  income before taxes
              
              
              7,814
              
              
              4,227Provision
                  for income taxes
              
              
              526
              
              
              217Net
                  income
              
              
              7,288
              
              
              4,010Foreign
                  currency translation adjustment
              
              
              5,939
              
              
              546Comprehensive
                  income
              
              $
              13,227
              
              $
              4,556





***Comparison
      of Three Months Ended March 31, 2008 and March 31, 2007***





*Revenue.* Total
      revenue increased from $55.79 million for the three months ended March 31,
      2007
      to $108.73 million for the three months ended March 31, 2008, which represented
      an increase of $52.94 million, or approximately 95%. The increase in revenues
      was primarily due to i ncreased
      prices for pork and pork products, combined with increased sales in our pork
      and
      pork products segment resulting from the effects of the continuing increased
      sales to food service distributors and to restaurants and non-commercial
      customers in the PRC during the quarter.





During
      the three months ended March 31, 2008, we added one additional showcase
      store, two additional “branded” retail stores and four additional supermarket
      counters (for a total of 114, 929 and 1,903 showcase stores, “branded” retail
      stores and supermarket counters, respectively, at March 31, 2008), compared
      to
      nine, 29 and 54 additional showcase stores, “branded” retail stores and
      supermarket counters, respectively (for a total of 105, 885 and 1,823 showcase
      stores, “branded” retail stores and supermarket counters, respectively, at March
      31, 2007), during the three months ended March 31, 2007. In addition, during
      the
      three months ended March 31, 2008, we expanded our marketing and sales efforts
      to include two additional second-tier cities (for a total of 95 second-tier
      cities at March 31, 2008) and six additional third-tier cities (for a total
      of
      293 third-tier cities at March 31, 2008), compared to the six additional
      second-tier cities (for a total of 81 second-tier cities at March 31, 2007)
      and
      20 additional third-tier cities (for a total of 246 third-tier cities at
      March 31, 2007) during the three months ended March 31, 2007.


31





During
      the three months ended March 31, 2008, revenues from sales to branded stores
      increased to $44.80 million, which represented an increase of $18.70 million,
      or
      approximately 72%, as compared to the three months ended March 31, 2007. During
      the three months ended March 31, 2008, revenues from sales to food service
      distributors increased to $27.62 million, which represented an increase of
      $17.07 million, or approximately 162%, as compared to the three months ended
      March 31, 2007. During the three months ended March 31, 2008, revenues from
      sales to restaurants and non-commercial customers increased to $34.03 million,
      which represented an increase of $19.75 million, or approximately138%, as
      compared to the three months ended March 31, 2007. During the three months
      ended
      March 31, 2008, revenues from export sales decreased to $2.28 million, which
      represented a decline of $2.57 million, or approximately 53%, as compared to
      the
      three months ended March 31, 2007. The decrease in export sales was primarily
      due to the reduction of our export sales efforts during the 2008 period due
      to
      the higher gross profit margins we could achieve during that period by selling
      our pork products domestically in the PRC. Within these four distribution
      channels, the percentage of growth was highest for food service distributors.





*Cost
      of sales.* Cost of
      sales increased from
      $48.05 million for the three months ended March 31, 2007 to $94.54 million
      for
      the three months ended March 31, 2008, which represented an increase of $46.49
      million, or approximately 97%. The gross profit margin (total sales revenue
      divided by cost of sales) decreased from 13.88% for the three months ended
      March
      31, 2007 to 13.05% for the three months ended March 31, 2008. The decrease
      in
      gross profit margin was primarily due to an increase i n
      the
      cost of raw materials, which was offset, in part, by an increase in the market
      prices for pork products, during the three
      months ended March 31, 2008 .





*General
      and administrative expenses* .
      General
      and administrative expenses increased from $1.97 million for three months ended
      March 31, 2007 to $4.40 million for the three months ended March 31, 2008,
      which
      represented an increase of $2.43 million, or approximately 123%. As a percentage
      of revenues, general and administrative expenses increased from 3.53% for the
      three months ended March 31, 2007 to 4.05% for the three months ended March
      31, 2008.





During
      the three months ended March 31, 2007, we incurred a non-cash compensation
      expense in the amount of $0.56 million in connection with the release from
      escrow to certain of our employees of shares of common stock that had been
      deposited into escrow by such employees in connection with our January 2006
      private placement. Under U.S. generally accepted accounting principles, the
      release of any of such escrow shares to any of our employees based on our
      fulfillment of stated performance thresholds constituted a compensatory plan
      to
      such employees, which required us to record a corresponding compensation expense
      in our financing statements. As we satisfied the performance thresholds for
      fiscal 2007, a percentage of the escrowed shares were released to employee
      stockholders in April 2008. There was no such non-cash compensation expense
      incurred in fiscal 2008.




By
      deducting the $0.56 million non-cash compensation expense during the three
      months ended March 31, 2007 discussed above, the percentage of our general
      and
      administrative expenses to revenues would have been 2.52%, as compared to 4.05%
      during three months ended March 31, 2008. The increase of general and
      administrative expenses during the fiscal 2008 period was primarily the result
      of significant increases in compensation expenses, advertising expenses,
      training expenses and amortization and depreciation expenses. As compared to
      the
      three months ended March 31, 2007, during the three months ended March 31,
      2008,
      salary and compensation expenses increased approximately $0.82 million from
      $0.33 million to $1.12 million, or approximately 239%, advertising expenses
      increased approximately $0.61 million from $0.21 million to $0.82 million,
      or
      approximately 290%, training expenses increased approximately $0.29 million
      from
      zero to $0.29 million, and the depreciation and amortization expenses increased
      approximately $0.22 million from $0.09 million to $0.31 million, or
      approximately 244%.


32





*Operating
      expenses.* Operating
      expenses increased from $1.13 million for the three months ended March 31,
      2007
      to $1.98 million for the three months ended March 31, 2008, which represented
      an
      increase of $0.85 million, or approximately 75%. As a percentage of revenue,
      operating expenses decreased from 2.03% for the three months ended March 31,
      2007 to 1.82% for the three months ended March 31, 2008. The increase in
      operating expenses was primarily the result of the increased scale of our
      operations.





*Interest
      expense.* Interest
      expense increas ed
      from
      $0.44 million for the three months ended March 31, 2007 to $0.81 million for
      the
      three months ended March 31, 2008, which represented an increase of $0.37
      million, or approximately 84%. The increase in interest expense was primarily
      a
      result of increased short-term bank loans. Our
      average outstanding bank debt increased by approximately $20.77
      million from $30.13 million for the three months ended March 31, 2007 to $50.90
      million for the three months ended March 31, 2008 ,
      primarily due to our increased working capital requirements resulting from
      our
      increased sales and our increased production capacities. Our weighted average
      borrowing rate increased fro m
      5.88%
      for the three months ended March 31, 2007 to 6.34%  for
      the three
      months ended March 31, 2008 .





*Interest
      income, allowance income, other income and exchange gain.* Interest
      income, allowance income, other income and exchange gain increased from $0.02
      million for the three months ended March 31, 2007 to $0.82 million for the
      three months ended March 31, 2008. This increase was primarily the result of
      an
      increase of $0.61 million in interest income and an increase of $0.14 million
      in
      allowance income.





*Income
      Taxes.* The
      effective tax rate in the PRC on income generated from the sale of prepared
      products is 25% and there is no income tax on income generated from the sale
      of
      raw products, including raw meat products and raw fruits and vegetable products.
      The increase of $0.31 million in the provision for income taxes for the three
      months ended March 31, 2008 over the three months ended March 31, 2007 resulted
      from an increase of $1.24 million in our net income from the sale of prepared
      products during th e
      three
      months ended March 31, 2008.





***Segment
      Information***





We
      operate in two business segments: pork and pork products, and vegetables and
      fruits.




Our
      pork
      and pork products segment is involved primarily in the processing of live market
      hogs into fresh, frozen and processed pork products. Our pork and pork products
      segment markets its products domestically to our branded stores, food retailers,
      foodservice distributors, restaurant operators and noncommercial foodservice
      establishments, such as schools, hotel chains, healthcare facilities, the
      military and other food processors, as well as to international
      markets.


33





Our
      vegetables and fruits segment is involved primarily in the processing of fresh
      vegetables and fruits. We contract with more than 100 farms in Henan Province
      and nearby areas to produce high-quality vegetable varieties and fruits suitable
      for export purposes. The proximity of the contracted farms to our operations
      ensures freshness from harvest to processing. We contract to grow more than
      20
      categories of vegetables and fruits, including asparagus, sweet corn, broccoli,
      mushrooms, lima beans, strawberries and capsicum.





The
      following tables set forth our revenues, sales in metric tons, operating income
      and production processed in metric tons by segment for the three
      months ended March 31, 2008 and 2007 and the
      percentage increases for each segment between the two periods.





**Sales by Segment**
              **(U.S. dollars in millions)****Three Months Ended**
              **March
                31,**
            
            **Net Change**
            
            **Percentage**
              **Change****2008**
            
            **2007**
            
            **2008/2007**
            
            **2008/2007**Pork
                and Pork ProductsChilled
                Pork
            
            $
            55.09
            
            $
            28.48
            
            $
            26.61
            
            
            93.43
            %Frozen
                Pork
            
            
            40.16
            
            
            20.29
            
            
            19.87
            
            
            97.93
            %Prepared
                Pork Products
            
            
            11.96
            
            
            5.85
            
            
            6.11
            
            
            104.44
            %Vegetables
                and Fruits
            
            
            1.52
            
            
            1.17
            
            
            0.35
            
            
            29.91
            %Total
            
            $
            108.73
            
            $
            55.79
            
            $
            52.94
            
            
            94.89
            %


**Sales by Segment**
                **(in metric tons)****Three Months Ended March 31,**
              
              **Net Change**
              
              **Percentage**
                **Change****2008**
              
              **2007**
              
              **2008/2007**
              
              **2008/2007**Pork
                  and Pork ProductsChilled
                  Pork
              
              
              24,119
              
              
              23,348
              
              
              771
              
              
              3.30
              %Frozen
                  Pork
              
              
              18,487
              
              
              16,803
              
              
              1,684
              
              
              10.02
              %Prepared
                  Pork Products
              
              
              5,668
              
              
              3,338
              
              
              2,330
              
              
              69.80
              %Vegetables
                  and Fruits
              
              
              2,281
              
              
              2,183
              
              
              98
              
              
              4.49
              %Total
              
              
              50,555
              
              
              45,672
              
              
              4,883
              
              
              10.69
              %


34





**Operating
                Income by Segment**
              **(U.S.
                dollars in millions)****Three Months Ended March 31,**
            
            **Change**
            
            **Operating Margin**
              **Three Months Ended**
              **March
                31,****2008**
            
            **2007**
            
            **2008/2007**
            
            **2008**
            
            **2007**Pork
                and Pork Products
            
            
            
            (Restated)
            
            
            
            
            
            (Restated)Chilled
                Pork
            
            $
            3.51
            
            $
            2.20
            
            $
            1.31
            
            
            6.37
            %
            
            7.72
            %Frozen
                Pork
            
            
            2.37
            
            
            1.54
            
            
            0.83
            
            
            5.90
            %
            
            7.59
            %Prepared
                Pork Product
            
            
            1.74
            
            
            0.79
            
            
            0.95
            
            
            14.56
            %
            
            13.50
            %Vegetables
                and Fruits
            
            
            0.18
            
            
            0.12
            
            
            0.06
            
            
            11.84
            %
            
            10.26
            %Total
            
            $
            7.80
            
            $
            4.65
            
            $
            3.15
            
            
            7.17
            %
            
            8.33
            %




**Production
                by Segment**
              **(in
                metric tons)****Three Months Ended March 31,**
            
            **Net Change**
            
            **Percentage**
              **Change****2008**
            
            **2007**
            
            **2008/2007**
            
            **2008/2007**Pork
                and Pork ProductsChilled
                Pork
            
            
            24,217
            
            
            23,154
            
            
            1,063
            
            
            4.59
            %Frozen
                Pork
            
            
            18,385
            
            
            16,805
            
            
            1,580
            
            
            9.40
            %Prepared
                Pork Products
            
            
            5,687
            
            
            3,357
            
            
            2,330
            
            
            69.41
            %Vegetables
                and Fruits
            
            
            2,546
            
            
            3,117
            
            
            (571
            )
            
            (18.32
            )%Total
            
            
            50,835
            
            
            46,433
            
            
            4,402
            
            
            9.48
            %




**Additional
      Operating Data**





In
      assessing our existing operations and planning our future growth and the
      development of our business, management considers, among other factors, our
      revenue growth and growth in sales volume by market segment, as well as our
      sales by distribution channel and geographic market coverage.





The
      following table sets forth our revenues by sales channel for the three months
      ended March 31, 2008 and 2007.





**Sales
                by Distribution Channel**
              **(U.S.
                dollars in millions)****Three
                Months Ended March
                31,****Distribution
                Channel**
            
            **2008**
            
            **2007**Amount
            
            Percent
            
            Amount
            
            PercentBranded
                stores
            
            $
            44.80
            
            
            41.2
            %
            $
            26.11
            
            
            46.8
            %Food
                services distributors
            
            
            27.62
            
            
            25.4
            
            
            10.55
            
            
            18.9Restaurants
                and non-commercial
            
            
            34.03
            
            
            31.3
            
            
            14.28
            
            
            25.6Export
            
            
            2.28
            
            
            2.1
            
            
            4.85
            
            
            8.7Total
            
            $
            108.73
            
            
            100.0
            %
            $
            55.79
            
            
            100.0
            %


35





The
      following table sets forth information with respect to the number of products
      we
      offered, the number of stores in our retail network and the number of provinces
      and cities in the PRC in which we offered and sold our products at
      December 31, 2005, 2006, 2007 and March 31, 2008.





**Year
                Ended December 31,**
            
            **Three Months Ended****2005**
            
            **2006**
            
            **2007**
            
            **March 31, 2008**No.
                of products
            
            
            168
            
            
            229
            
            
            270
            
            
            276No.
                of retail stores
            
            
            2,100
            
            
            2,721
            
            
            2,939
            
            
            2,946Expansion
                of Market CoverageNo.
                of Provinces
            
            
            24
            
            
            24
            
            
            24
            
            
            24No.
                of first-tier cities
            
            
            29
            
            
            29
            
            
            29
            
            
            29No.
                of second-tier cities
            
            
            44
            
            
            75
            
            
            93
            
            
            95No.
                of third-tier cities
            
            
            142
            
            
            226
            
            
            287
            
            
            293





**Liquidity
      and Capital Resources**





We
      have
      financed our operations over the three years ended December 31, 2007 and three
      months ended March 31, 2008 primarily through cash from operating activities,
      borrowings under our lines of credit with various lending banks in the PRC,
      net
      proceeds from the sale of our equity securities and the proceeds from the
      exercise of certain of our outstanding stock purchase warrants. In January
      2006,
      we completed a private placement of our Series A convertible preferred stock
      and
      common stock purchase warrants and received net proceeds of approximately $23.11
      million. In October 2007, we completed a private placement of our common stock
      and received net proceeds of approximately $46.40 million. At December 31,
      2005,
      2006, 2007 and March 31, 2008, we had cash and cash equivalents of $10.14
      million, $21.69 million, $48.70 million and $50.02, respectively.




Net
      cash
      provided by operating activities was $23.39 million for three months ended
      March
      31, 2008. Cash
      provided by operating activities in three months ended March 31, 2008 consisted
      primarily of net profit of $7.29 million due to increased revenue, an increase
      of $4.58 million in deposits from clients primarily due to the increased deposit
      amounts we required for customized orders from our customers, an increase of
      $1.41 million other payables due to increased payables relating to the
      construction of our new production facilities and an increase of $1.07 million
      in accrued liabilities relating primarily to liabilities for employee salaries
      and benefits, a decrease of $4.51 million in accounts receivable due to our
      ability to better manage our accounts receivable collection practices, a
      decrease of $2.67 million in inventory as we intentionally reduced inventories
      to normal levels following the Chinese New Year holiday season, a decrease
      of
      $1.93 million in tax refund receivable and a decrease of $1.27 million in
      purchase deposits resulting from the recovery during the quarter of the live
      hog
      supply which reduced the need for us to furnish purchase deposits. Cash used
      in
      operating activities in three months ended March 31, 2008 was primarily
      attributable to an increase of $2.27 million in other receivables due to
      increased deposits for construction fees and prepayments of design fees relating
      to the construction of our new production facilities. Over the three months
      ended March 31, 2008, management focused on reducing the average age of our
      accounts receivable. Our average accounts receivable turnover days decreased
      from approximately 25 days during the three months ended March 31, 2007 to
      approximately 15 days during the three months ended March 31, 2008. At the
      same time, our average inventory turnover days increased from approximately
      20
      days during the three months ended March 31, 2007 to approximately 24 days
      during the
      three months ended March 31, 2008 due to the relatively higher inventory levels
      at December 31, 2007.


36





Net
      cash
      used in investing activities was $24.94 million in three months ended March
      31,
      2008. At
      March
      31, 2008, our investment in facilities construction in progress increased by
      approximately $23.04 million as compared to the amount of such investment at
      December 31, 2007 due to our new production capacity expansion program. During
      the three months ended March 31, 2008, a total of $1.56 million was invested
      in
      the purchase of fixed assets. In addition, we expended an additional $0.36
      million for an investment in land use rights during the three months ended
      March
      31, 2008.





Net
      cash
      provided by financing activities was $1.09 million during three months ended
      March 31, 2008. During
      the three months ended March 31, 2008, cash provided by financing activities
      included net proceeds from short-term loans of $15.77 million and the net
      proceeds of $1.24 from the exercise of certain of our outstanding stock purchase
      warrants. The net cash used in financing activities included the repayment
      of
      short-term bank loans in the aggregate amount of $14.52 million and the
      repayment of bank notes in amount of $1.40 million.





At
      March
      31, 2008, Henan Zhongpin had short-term bank and governmental loans in the
      aggregate amount of $50.89 million with a weighted average interest rate per
      annum of 6.34%, and lines of credit with aggregate credit availability of
      $141.47 million, as follows:





**Bank**
            
            **Maximum
                Credit****Availability**
            
            **Amount**
              **Borrowed******
            
            **Interest Rate**
            
            **Maturity Date**Agriculture
                Bank of China
            
            $
            21,370,566
            
            $
            2,706,938
            
            
            7.29
            %
            
            12/14/20082,849,409
            
            
            7.47
            
            
            12/28/2008997,293
            
            
            7.47
            
            
            01/21/2009Industrial
                and Commercial Bank of China
            
            
            21,370,566
            
            
            2,137,057
            
            
            6.84
            %
            
            07/22/2008China
                Construction Bank
            
            
            7,123,522
            
            
            -
            
            
            -CITIC
                Industrial Bank
            
            
            5,698,817
            
            
            -
            
            
            -Agriculture
                Development Bank of China
            
            
            99,729,306
            
            
            5,698,817
            
            
            7.29
            %
            
            06/26/200814,247,044
            
            
            7.29
            
            
            06/28/2008Shanghai
                Pudong Development Bank of China
            
            
            9,972,931
            
            
            2,991,879
            
            
            7.47
            %
            
            03/28/2009Bank
                of China
            
            
            9,972,931
            
            
            7,835,874
            
            
            7.10
            %
            
            01/03/2009China
                Merchants Bank
            
            
            8,548,226
            
            
            2,849,409
            
            
            7.47
            %
            
            06/19/2008Guangdong
                Development Bank
            
            
            4,274,113
            
            
            4,274,113
            
            
            7.29
            %
            
            12/11/2008China
                Communication Bank
            
            
            4,274,113
            
            
            4,274,113
            
            
            7.84
            %
            
            01/03/2009City
                Finance – short-term
            
            
            
            
            
            28,494
            
            
            0.00
            %
            
            ExtendableTotal
            
            $
            192,335,090
            
            $
            50,890,440Canadian
                Government Transfer Loan
            
            
            
            
            $
            1,634,769
            
            
            *****
            
            
            05/15/2043Canadian
                Government Transfer Loan – Current portion
            
            
            
            
            $
            145,671
            
            
            6.02
            %
            
            05/15/2008




37







*
            58%
                of the principal amount of this loan bears interest at the rate of
                6.02%
                per annum and the remaining principal amount of this loan is interest
                free. All repayments are applied first to the interest-bearing portion
                of
                this loan.





Of
      our
      outstanding short-term indebtedness at March 31, 2008, $29.49 million aggregate
      principal amount of loans was secured by our land and plants located in the
      PRC
      and $21.37 million aggregate principle amount of loans was guaranteed by some
      of
      our wholly-owned subsidiaries.





We
      believe our existing cash and cash equivalents, together with our available
      lines of credit, will be sufficient to finance our investment in new facilities,
      operating requirements and anticipated capital expenditures of approximately
      $48.83 million over the next 12 months. We intend to use such funds over the
      next 12 months to fund our capacity expansion and the construction of supporting
      facilities and to supplement our working capital requirements to enable us
      to
      strengthen our market position and accelerate our growth.





**Contractual
      Commitments**





The
      following table summarizes our contractual obligations at March 31, 2008 and
      the
      effect those obligations are expected to have on our liquidity and cash flow
      in
      future periods.





**Payments
                Due by Period**
              **(in
                thousands)****Contractual
                Obligations**
            
            **Total**
            
            **Less Than**
              **1
                Year**
            
            **1-3 Years**
            
            **3-5 Years**
            
            **More Than**
              **5 Years**Long-term
                debt obligations
            
            $
            1,780
            
            $
            146
            
            $
            291
            
            $
            291
            
            $
            1,052Capital
                lease obligations
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Operating
                lease obligations
            
            
            2,398
            
            
            1,055
            
            
            1,343
            
            
            -
            
            
            -Purchase
                obligations
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Other
                obligations
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Total
            
            $
            4,178
            
            $
            1,201
            
            $
            1,634
            
            $
            291
            
            $
            1,052





**Inflation
      and Seasonality**





While
      demand for our products in general is relatively high before the Chinese New
      Year in January or February each year and lower thereafter, we do not believe
      our operations have been materially affected by inflation or
      seasonality.





**New
      Accounting Standards**





In
      February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
      159, “The Fair Value Option for Financial Assets and Financial
      Liabilities – an amendment of FASB Statement No. 115.” This statement
      permits entities to choose to measure many financial instruments and certain
      other items at fair value. The objective is to improve financial reporting
      by
      providing entities with the opportunity to mitigate volatility in reported
      earnings caused by measuring related assets and liabilities differently without
      having to apply complex hedge accounting provisions. This Statement is expected
      to expand the use of fair value measurement, which is consistent with the
      Board’s long-term measurement objectives for accounting for financial
      instruments. We expect the Statement will have no material impact on our
      consolidated financial statements.


38





In
      September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
      Benefit Pension and Other Postretirement Plans – an amendment of FASB
      Statements No. 87, 88, 106 and 132(R).” This Statement improves financial
      reporting by requiring an employer to recognize the overfunded or underfunded
      status of a defined benefit postretirement plan (other than a multiemployer
      plan) as an asset or liability in its statement of financial position and to
      recognize changes in that funded status in the year in which the changes occur
      through comprehensive income of a business entity or changes in unrestricted
      net
      assets of a not-for-profit organization. This Statement also improves financial
      reporting by requiring an employer to measure the funded status of a plan as
      of
      the date of its year-end statement of financial position, with limited
      exceptions. We expect the Statement will have no material impact on our
      consolidated financial statements.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This
      Statement defines fair value, establishes a framework for measuring fair value
      in generally accepted accounting principles (GAAP), and expands disclosures
      about fair value measurements. This Statement applies under other accounting
      pronouncements that require or permit fair value measurements, the Board having
      previously concluded in those accounting pronouncements that fair value is
      the
      relevant measurement attribute. Accordingly, this Statement does not require
      any
      new fair value measurements. However, for some entities, the application of
      this
      Statement will change current practice. We expect the Statement will have no
      material impact on our consolidated financial statements.




**Item
          3.** **Quantitative
          and Qualitative Disclosures About Market Risk**





*Disclosures
      About Market Risk.* We
      may be
      exposed to changes in financial market conditions in the normal course of
      business. Market risk generally represents the risk that losses may occur as
      a
      result of movements in interest rates and equity prices. We currently do not
      use
      financial instruments in the normal course of business that are subject to
      changes in financial market conditions.





*Currency
      Fluctuations and Foreign Currency Risk.* Substantially all of our operations are conducted in the PRC, with the exception
      of our export business and limited overseas purchases of raw materials. Most
      of
      our sales and purchases are conducted within the PRC in Renminbi, which is
      the
      official currency of the PRC. As a result, the effect of the fluctuations of
      exchange rates is considered minimal to our business operations.





Substantially
      all of our revenues and expenses are denominated in Renminbi. However, we use
      the United States dollar for financial reporting purposes. Conversion of
      Renminbi into foreign currencies is regulated by the People’s Bank of China
      through a unified floating exchange rate system. Although the PRC government
      has
      stated its intention to support the value of the Renminbi, there can be no
      assurance that such exchange rate will not again become volatile or that the
      Renminbi will not devalue significantly against the U.S. dollar. Exchange rate
      fluctuations may adversely affect the value, in U.S. dollar terms, of our net
      assets and income derived from our operations in the PRC.





*Interest
      Rate Risk.* We do
      not have significant interest rate risk, as our debt obligations are primarily
      short-term in nature, with fixed interest rates.


39




*Credit
      Risk.* We have
      not experienced significant credit risk, as most of our customers are long-term
      customers with superior payment records. Our receivables are monitored regularly
      by our credit managers.




**Item
      4.**  **Controls
      and Procedures**





Our
      management, with the participation our chief executive officer and chief
      financial officer, has evaluated the effectiveness of our disclosure controls
      and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
      the Exchange Act) as of the end of the period covered by this report. Based
      on
      such evaluation, our chief executive officer and chief financial officer were
      unable to conclude that, as of the end of such period, our disclosure controls
      and procedures were effective. As reported in our annual report on Form 10-K
      for
      the year ended December 31, 2007, we have not completed all of the
      evaluations necessary to issue guidance on the status of our internal controls,
      have identified certain control deficiencies and have not yet been able to
      complete our assessment of which, if any, control deficiencies constitute
“material weakness” as defined under Public Accounting Oversight Board Auditory
      Standard No. 5. See Item 9A. Controls and Procedures of our annual report on
      Form 10-K for the year ended December 31, 2007, which was filed on March 28,
      2008 and is incorporated by reference into this Item 4 for a more detailed
      explanation of these control deficiencies and remedial actions taken and planned
      that we expect will materially affect our disclosure controls and
      procedures.





In
      late
      April 2008, Child, VanWagoner & Bradshaw, PLLC, our independent registered
      accounting firm, advised our board of directors and the audit committee of
      our
      board that during its audit of our consolidated financial statements for the
      year ended December 31, 2007 the following matters were identified involving
      our
      internal control over financial reporting that it considered to be significant
      deficiencies under the standards established by the Public Company Accounting
      Oversight Board:





·
            the
                lack of a system of timely recording certain cash receipts and
                disbursements;





·
            the
                need to hire additional accounting personnel to prepare, supervise
                and
                review general ledger reconciliations at our subsidiaries;
                and





·
            our
                failure to have an effective method of accounting for certain non-routine
                transactions and estimates.





In response
      to the deficiencies identified, we have taken steps to strengthen our internal
      control over financial reporting. In particular, we have evaluated and continue
      to evaluate the roles and functions of the accounting personnel within our
      corporate accounting department and intend to add permanent personnel
      resources to support internal control over financing reporting. In addition, as reported in our annual report on Form 10-K for the year ended
      December 31, 2007, we have retained Horwath International, an independent third
      party consulting firm, to assist our management team in evaluating our internal
      controls and procedures. Management will continue to monitor the effectiveness
      of our internal controls and procedures on an ongoing basis and will take
      further action, as appropriate, to address the control deficiencies described
      herein.





The
      certifications of our chief executive officer and chief financial officer
      attached as Exhibits 31.1 and 31.2 to this report include, in paragraph 4 of
      such certifications, information concerning our disclosure controls and
      procedures and internal control over financial reporting. Such certifications
      should be read in conjunction with the information contained in this Item 4,
      including the information incorporated by reference to our annual report on
      Form
      10-K for the year ended December 31, 2007, for a more complete understanding
      of
      the matters covered by such certifications.




40





Except
      as
      otherwise described herein, t here
      have
      not been any changes in our internal control over financial reporting (as such
      term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during
      the fiscal quarter to which this report relates that have materially affected,
      or are reasonably likely to materially affect, our internal control over
      financial reporting.




41




**ZHONGPIN
      INC.**





**Part
      II – Other Information**





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





None.





**Item
      1A.**  **Risk
      Factors**





During
      the three months ended March 31, 2008, there were no material changes to the
      risk factors previously disclosed in our Annual Report on Form 10-K for the
      year
      ended December 31, 2007.





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





(a)  None.





(b)  Not
      Applicable.





(c)  None.





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





Not
      Applicable.





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





Not
      Applicable.





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





(a)  None.





(b)  None.




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





The
                exhibits required by this item are set forth on the Exhibit Index
                attached
                hereto.


42





**ZHONGPIN
      INC.**





**Signatures**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, we have duly caused
      this report to be signed on our behalf by the undersigned thereunto duly
      authorized.





Zhongpin
                Inc.(Company)Date:
                May 12, 2008By:
            /s/Xianfu
                ZhuXianfu
                ZhuChief
                Executive OfficerBy:
            /s/Yuanmei
                MaYuanmei
                MaChief
                Financial Officer




43


**Exhibit
      Index**




**Exhibit**
              **Number**
            
            **Exhibit Title**31.1*
            
            Certification
                of our Chief Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.31.2*
            
            Certification
                of our Chief Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.32.1*
            
            Certification
                of our Chief Executive Officer pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.32.2*
            
            Certification
                of our Chief Financial Officer pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.









*
            Filed
                herewith




44