UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-Q





(Mark
One)





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


For the
quarterly period ended: December 31, 2010




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


Commission
File Number: 000-53146




MAN SHING AGRICULTURAL
HOLDINGS, INC.


(Exact
name of the registrant as specified in its charter)





Nevada
            
            98-0660577(State
      or other jurisdiction of incorporation or
              organization)
            
            (I.R.S.
      Employer Identification No.)




Unit
1005, 10/F, Tower B


Hunghom
Commercial Centre


37
Ma Tau Wai Road, Hunghom


Kowloon, Hong
Kong


(Address
of principal executive offices)




(86)
536-4644888


(Registrant’s
telephone number, including area code)




N/A


(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 Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.  Yes x No  ̈




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every, Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).  Yes  ̈ No  ̈




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





Large
      accelerated filer  ̈
            Accelerated
      filer  ̈Non-accelerated
      filer  ̈
            Smaller
      Reporting Company x


(Do
not check if a smaller reporting company)




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




Number of
shares of common stock outstanding as of January 30, 2011:
48,026,958








Contents
                            
                            Page(s)PART
      I: FINANCIAL INFORMATION
                            
                            4Item
      1      Financial Statements
                            
                            4Item
      2      Management’s Discussion and Analysis
      of Financial Condition and Results of Operations
                            
                            16Item
      3      Quantitative and Qualitative
      Disclosure about Market Risk
                            
                            21Item
      4      Controls and
    Procedures
                            
                            21PART
      II: OTHER INFORMATION
                            
                            22Item
      1      Legal Proceedings
                            
                            22Item
      1A   Risk Factors
                            
                            22Item
      2      Unregistered Sales of Equity
      Securities and Use of Proceeds
                            
                            22Item
      3      Defaults Upon Senior
      Securities
                            
                            22Item
      4      Removed and Reserved
                            
                            22Item
      5      Other Information
                            
                            22Item
      6      Exhibits
                            
                            22SIGNATURES
                            
                            23


2


UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-Q




CAUTIONARY
STATEMENT REGARDING FORWARD LOOKING INFORMATION




The
discussion contained in this 10-Q under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), contains “forward-looking statements” within the
meaning of Section 21E of the Exchange Act that involve risks and uncertainties.
The actual results of Man Shing Agricultural Holdings, Inc. (including our
subsidiaries and predecessors unless the context indicates otherwise, “we,”
“us,” “our,” “MSAH,” or the “Company”) could differ significantly from those
discussed herein. These include statements about our expectations, beliefs,
intentions or strategies for the future, which we indicate by words or phrases
such as "anticipate," "expect," "intend," "plan," "will," "we believe," "the
Company believes," "management believes" and similar language, including those
set forth in the discussions under "Notes to Financial Statements" and
"Management's Discussion and Analysis or Plan of Operation" as well as those
discussed elsewhere in this Form 10-Q. These forward-looking statements include
statements of management's plans and objectives for our future operations and
statements of future economic performance, information regarding our expansion
and possible results from expansion, our expected growth, our capital budget and
future capital requirements, the availability of funds and our ability to meet
future capital needs, the realization of our deferred tax assets, and the
assumptions described in this report underlying such forward-looking statements.
Actual results and developments could differ materially from those expressed in
or implied by such statements due to a number of factors, including, without
limitation, those described in the context of such forward-looking statements,
our expansion and acquisition strategy, our ability to raise additional capital
to finance our activities; the effectiveness, profitability, and the
marketability of our products; the future trading of our common stock; our
ability to operate as a public company; our ability to protect our proprietary
information; general economic and business conditions; the volatility of our
operating results and financial condition; our ability to attract or retain
qualified senior management personnel and research and development staff; and
other risks detailed from time to time in its filings with the SEC, or
otherwise. We base our forward-looking statements on information currently
available to us, and we assume no obligation to update them. Readers are
cautioned not to place undue reliance on these forward-looking statements.
Statements contained in this Form 10-Q that are not historical facts are
forward-looking statements that are subject to the "safe harbor" created by the
Private Securities Litigation Reform Act of 1995.




3




PART
I:




ITEM
1  FINANCIAL STATEMENTS


Man
Shing Agricultural Holdings, Inc. and Subsidiaries
 Condensed
Consolidated Balance Sheets
 As of December 31, 2010
      (unaudited) and June 30,
2010
  12/31/2010
                                                        
                                                        
                                                        6/30/2010(Audited)ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                                                        
                                                        $
                                                        3,623,246
                                                        
                                                        
                                                        $
                                                        378,929Accounts
      receivable, trade
                                                        
                                                        
                                                        3,428,972
                                                        
                                                        
                                                        
                                                        2,249,998Inventory
                                                        
                                                        
                                                        13,692,627
                                                        
                                                        
                                                        
                                                        4,938,043Deferred
      inventory cost
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        5,118,558Prepayments
                                                        
                                                        
                                                        424,697
                                                        
                                                        
                                                        
                                                        350,668Other
      receivables
                                                        
                                                        
                                                        769
                                                        
                                                        
                                                        
                                                        747TOTAL
      CURRENT ASSETS
                                                        
                                                        $
                                                        21,170,311
                                                        
                                                        
                                                        $
                                                        13,036,943FIXED
      ASSETSProperty,
      plant, and equipment
                                                        
                                                        $
                                                        1,542,625
                                                        
                                                        
                                                        $
                                                        908,105Accumulated
      depreciation
                                                        
                                                        
                                                        (228,224
                                                        )
                                                        
                                                        
                                                        (182,665
                                                        )Construction
      in progress
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        124,697NET
      FIXED ASSETS
                                                        
                                                        $
                                                        1,314,401
                                                        
                                                        
                                                        $
                                                        850,137TOTAL
      ASSETS
                                                        
                                                        $
                                                        22,484,712
                                                        
                                                        
                                                        $
                                                        13,887,080LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIESShort-term
      borrowings
                                                        
                                                        $
                                                        362,390
                                                        
                                                        
                                                        $
                                                        352,087Note
      payable
                                                        
                                                        
                                                        318,375
                                                        
                                                        
                                                        
                                                        318,375Accounts
      payable
                                                        
                                                        
                                                        2,541,254
                                                        
                                                        
                                                        
                                                        597,791Other
      payables and accrued liabilities
                                                        
                                                        
                                                        1,013,017
                                                        
                                                        
                                                        
                                                        1,047,529Received
      in advance
                                                        
                                                        
                                                        1,977,190
                                                        
                                                        
                                                        
                                                        314,916Tax
      payable
                                                        
                                                        
                                                        240,459
                                                        
                                                        
                                                        
                                                        128,338TOTAL
      CURRENT LIABILITIES
                                                        
                                                        $
                                                        6,452,685
                                                        
                                                        
                                                        $
                                                        2,759,036LONG-TERM
      LIABILITIESConvertible
      Note
                                                        
                                                        $
                                                        1,500,000
                                                        
                                                        
                                                        $
                                                        1,500,000TOTAL
      LIABILITIES
                                                        
                                                        $
                                                        7,952,686
                                                        
                                                        
                                                        $
                                                        4,259,036STOCKHOLDERS'
      EQUITYPreferred
      stock, $.001 par, 25,000,000 shares authorized,176,750
      and 3,535,000 shares issued and outstanding at December 31,
      2010and
      June 30, 2010, respectively
                                                        
                                                        
                                                        177
                                                        
                                                        
                                                        
                                                        3,535Common
      stock, $.001 par, 175,000,000 shares authorized,38,026,958  shares
      issued and outstanding at December 31, 2010 and June 30,
      2010
                                                        
                                                        
                                                        38,027
                                                        
                                                        
                                                        
                                                        38,027Additional
      paid-in capital
                                                        
                                                        
                                                        180,545
                                                        
                                                        
                                                        
                                                        177,187Accumulated
      other comprehensive income
                                                        
                                                        
                                                        634,350
                                                        
                                                        
                                                        
                                                        189,186Statutory
      reserves
                                                        
                                                        
                                                        5,823,139
                                                        
                                                        
                                                        
                                                        2,134,501Accumulated
      earnings
                                                        
                                                        
                                                        7,855,789
                                                        
                                                        
                                                        
                                                        7,085,608TOTAL
      STOCKHOLDERS' EQUITY
                                                        
                                                        $
                                                        14,532,027
                                                        
                                                        
                                                        $
                                                        9,628,044TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                                                        
                                                        $
                                                        22,484,712
                                                        
                                                        
                                                        $
                                                        13,887,080
  4
 
 Man
Shing Agricultural Holdings, Inc. and Subsidiaries
 Unaudited
Condensed Consolidated Statements of Operations and Comprehensive
Income
 For the Three and Six Months
      Ended December 31, 2010 and
2009
  FortheThreeMonthsEnded
                  
                  
                  FortheSixMonthsEnded12/31/2010
                  
                  
                  12/31/2009
                  
                  
                  12/31/2010
                  
                  
                  12/31/2009RevenuesSales
                  
                  
                  8,147,275
                  
                  
                  
                  5,168,941
                  
                  
                  
                  15,474,502
                  
                  
                  
                  9,790,467Cost
      of sales
                  
                  
                  4,816,635
                  
                  
                  
                  3,425,589
                  
                  
                  
                  8,974,943
                  
                  
                  
                  6,755,171Gross
      profit
                  
                  
                  3,330,640
                  
                  
                  
                  1,743,352
                  
                  
                  
                  6,499,558
                  
                  
                  
                  3,035,296Operating
      expensesSelling
      and marketing
                  
                  
                  715,642
                  
                  
                  
                  383,180
                  
                  
                  
                  1,498,401
                  
                  
                  
                  463,303General
      and administrative
                  
                  
                  306,183
                  
                  
                  
                  190,091
                  
                  
                  
                  455,581
                  
                  
                  
                  239,990Total
      Operating Expenses
                  
                  
                  1,021,825
                  
                  
                  
                  573,271
                  
                  
                  
                  1,953,982
                  
                  
                  
                  703,2932,308,815
                  
                  
                  
                  1,170,081
                  
                  
                  
                  4,545,576
                  
                  
                  
                  2,332,003Other
      income (expenses), netFinancial
      income (expenses), net
                  
                  
                  (59,295
                  )
                  
                  
                  (10,109
                  )
                  
                  
                  (87,910
                  )
                  
                  
                  (16,341
                  )Non-operating
      income (expense), net
                  
                  
                  1,403
                  
                  
                  
                  2,047
                  
                  
                  
                  1,153
                  
                  
                  
                  4,237Total
      other income (loss), net
                  
                  
                  (57,892
                  )
                  
                  
                  (8,062
                  )
                  
                  
                  (86,757
                  )
                  
                  
                  (12,104
                  )Income
      from Operations
                  
                  
                  2,250,923
                  
                  
                  
                  1,162,019
                  
                  
                  
                  4,458,819
                  
                  
                  
                  2,319,899Income
      taxes
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0Net
      Income
                  
                  
                  2,250,923
                  
                  
                  
                  1,162,019
                  
                  
                  
                  4,458,819
                  
                  
                  
                  2,319,899Other
      comprehensive income (loss), netForeign
      currency translation gain (loss), net
                  
                  
                  195,327
                  
                  
                  
                  (43,319
                  )
                  
                  
                  445,164
                  
                  
                  
                  (41,360
                  )Total
      comprehensive income
                  
                  
                  2,446,249
                  
                  
                  
                  1,118,700
                  
                  
                  
                  4,903,983
                  
                  
                  
                  2,278,539Weighted
      average number of shares outstandingBasic
                  
                  
                  38,026,958
                  
                  
                  
                  34,124,185
                  
                  
                  
                  38,026,958
                  
                  
                  
                  20,150,852Diluted
                  
                  
                  67,901,550
                  
                  
                  
                  70,124,185
                  
                  
                  
                  70,624,294
                  
                  
                  
                  56,578,630Earning
      per shareBasic
                  
                  
                  0.06
                  
                  
                  
                  0.03
                  
                  
                  
                  0.12
                  
                  
                  
                  0.11Diluted
                  
                  
                  0.03
                  
                  
                  
                  0.02
                  
                  
                  
                  0.06
                  
                  
                  
                  0.04
  5
 
 Man
Shing Agricultural Holdings, Inc. and Subsidiaries
 Unaudited
Condensed Consolidated Statements of Cash Flows
 For the Six Months Ended
      December 31, 2010 and
2009
 For the Six Months Ended at12/31/2010
                                                      
                                                      
                                                      12/31/2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
                                                      
                                                      
                                                      4,458,819
                                                      
                                                      
                                                      
                                                      2,319,899Adjustments
      to reconcile net income tonet
      cash provided by (used in) operating activities:Depreciation
                                                      
                                                      
                                                      39,657
                                                      
                                                      
                                                      
                                                      31,585Stock-based
      compensation to service providers
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      125,000Increase
      (decrease) in cash from changes in:Accounts
      receivable, trade
                                                      
                                                      
                                                      (1,097,716
                                                      )
                                                      
                                                      
                                                      1,301,771Prepayments
                                                      
                                                      
                                                      (71,050
                                                      )
                                                      
                                                      
                                                      1,178,981Deferred
      inventory costs
                                                      
                                                      
                                                      5,195,372
                                                      
                                                      
                                                      
                                                      -Inventory
                                                      
                                                      
                                                      (8,490,828
                                                      )
                                                      
                                                      
                                                      (5,962,972
                                                      )Other
      receivables
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (79,968
                                                      )Accounts
      payable
                                                      
                                                      
                                                      1,899,295
                                                      
                                                      
                                                      
                                                      1,048,373Tax
      payable
                                                      
                                                      
                                                      106,864
                                                      
                                                      
                                                      
                                                      (4,545
                                                      )Other
      payables and accrued liabilities
                                                      
                                                      
                                                      36,181
                                                      
                                                      
                                                      
                                                      70,539Received
      in advance
                                                      
                                                      
                                                      150,812
                                                      
                                                      
                                                      
                                                      (67,537
                                                      )NET
      CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
                                                      
                                                      
                                                      2,227,406
                                                      
                                                      
                                                      
                                                      (38,875
                                                      )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of property, plant, and equipment
                                                      
                                                      
                                                      (472,957
                                                      )
                                                      
                                                      
                                                      (213,345
                                                      )NET
      CASH USED IN INVESTING ACTIVITIES
                                                      
                                                      
                                                      (472,957
                                                      )
                                                      
                                                      
                                                      (213,345
                                                      )CASH
      FLOWS FROM FINANCING ACTIVITIES:Increase
      of due to a director
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      2,755Proceeds
      from short-term loans
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      219,642Proceeds
      from potential investors
                                                      
                                                      
                                                      1,500,129
                                                      
                                                      
                                                      
                                                      -NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                                                      
                                                      
                                                      1,500,129
                                                      
                                                      
                                                      
                                                      222,397Foreign
      Currency Translation Adjustment
                                                      
                                                      
                                                      (10,262
                                                      )
                                                      
                                                      
                                                      1,328NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                                                      
                                                      
                                                      3,244,316
                                                      
                                                      
                                                      
                                                      (28,496
                                                      )CASH
      AND CASH EQUIVALENTS:Beginning
      of period
                                                      
                                                      
                                                      378,930
                                                      
                                                      
                                                      
                                                      86,408End
      of period
                                                      
                                                      
                                                      3,623,246
                                                      
                                                      
                                                      
                                                      57,912Supplemental
      disclosure of cash flow informationCash
      paid for:Interest
                                                      
                                                      
                                                      6,027
                                                      
                                                      
                                                      
                                                      5,813Income
      taxes
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
  6





MAN
SHING AGRICULTURAL HOLDINGS, INC. AND SUBSIDIARIES


NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2010 AND 2009


(STATED
IN US DOLLARS)





1.
            BASIS OF
      PRESENTATION





The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with both generally accepted accounting principles in the
United States of America for interim financial information, and the instructions
to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles in the United States of America for complete financial statements.
The accompanying unaudited condensed consolidated financial statements reflect
all adjustments (consisting of normal recurring accruals) that are, in the
opinion of management, considered necessary for a fair presentation of the
results for the interim periods presented. Interim results are not necessarily
indicative of results for a full year.





The
unaudited condensed consolidated financial statements and related disclosures
have been prepared with the presumption that users of the interim financial
information have read or have access to the Company’s annual audited
consolidated financial statements for the preceding fiscal year. Accordingly,
these unaudited condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and the related
notes for the year ended June 30, 2010.





2.
            ORGANIZATION
      BACKGROUND





Man Shing
Agricultural Holdings, Inc. (the “Company”) was incorporated on February 8, 2000
under the laws of the State of Nevada.  From the beginning of 2003
until December 31, 2007 the Company had no operations and no assets and was
considered a dormant company.  Subsequent to December 31, 2007, the
Company began operating in the real estate industry and engaged in the business
of buying, selling, renting, and improving real estate.





As of
August 20, 2009, the Company entered into a Plan of Exchange (the “Agreement”)
between and among the Company, Hero Capital Profits Limited, a company organized
and existing under the laws of the British Virgin Islands (including its
successors and assigns “HCP”), Weifang Xinsheng Food Co., Ltd., a company
organized and existing under the laws of the People’s Republic of China
(“Xinsheng”), and the shareholders of Xinsheng (the “Xinsheng Shareholders”).
Pursuant to the terms of the Agreement, the Company acquired one hundred percent
(100%) of the issued and outstanding share capital of HCP from the HCP
Shareholders in exchange for a new issuance 32,800,000 shares of common stock of
the Company and the simultaneous transfer of 3,535,000 shares of the Company’s
preferred stock to the HCP shareholders, held in the name of the Northeast
Nominee Trust (Duane Bennett, Former President of the Company as trustee), which
gave the HCP shareholders an interest in the Company representing 99.38% of the
issued and outstanding shares. Upon completion of the exchange, HCP and Xinsheng
became the Company’s wholly-owned subsidiaries. All of these conditions to
closing have been met, and the Company, HCP, Xinsheng, and the Xinsheng
Shareholders declared the exchange transaction consummated on August 20,
2009.





The
Exchange and the Transfer have been respectively accounted for as reverse
acquisition and recapitalization of the Company and HCP / Xinsheng whereby HCP /
Xinsheng is deemed to be the accounting acquirer (legal acquiree) and the
Company to be the accounting acquiree (legal acquirer) under the Exchange. The
unaudited condensed consolidated financial statements are in substance those of
Xinsheng, with the assets and liabilities, and revenues and expenses, of the
Company and HCP being included effective from the respective consummation dates
of the Exchange and the Transfer.




The
Company and its subsidiaries are hereinafter referred to as the
"Company".





On
September 2, 2009, the Company changed its name to Man Shing Agricultural
Holdings, Inc. to more accurately reflect the Company’s business after a stock
exchange transaction with HCP and Xinsheng.





7





MAN
SHING AGRICULTURAL HOLDINGS, INC. AND SUBSIDIARIES


NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2010 AND 2009


(STATED
IN US DOLLARS)





Additionally,
on June 25, 2009, the Company’s board of directors authorized and approved a
reverse stock split (the “Reverse Split”) of the Company’s common stock on the
basis of one share for one hundred shares currently issued and outstanding.
Accordingly, the number of issued and outstanding shares decreased from
20,196,200 shares to 201,962 shares. The Reverse Split was effective on
September 2, 2009.





3.
            DESCRIPTION
      OF BUSINESS





The
Company’s primary business operations are engaged in the production and
processing of fresh vegetables, mainly ginger but also including others such as
onion and garlic. The Company strives to provide high quality products to the
Company’s customers. The Company operates in 110,000 square meters of factory
space and leases 5.3 million square meters of farm land, which is one of the
largest ginger farm lands in the region. The Company has also met the
requirement of the British Retail Consortium Global Food Standard.





Our
Products





Fresh
Vegetables




Ginger




Frozen
Vegetables


Peeled
      Ginger
                            
                            Diced
      GarlicDiced
      Ginger
                            
                            Garlic
      PureeGinger
      Puree Cubes
                            
                            Garlic
      Puree CubesGinger
      Puree
                            
                            Peeled
      GarlicStrawberry
                            
                            Diced
      Onion





Our
customers





The
following table depicts our top five customers and their percentage of current
sales for the six months ended December 31, 2010.





Top 5
customers for the six months ended December 31, 2010


(Total
sales revenue for the six months ended December 31, 2010:
US$15,474,502)





Customer
                  
                  Revenues
                  
                  
                  %1.          
      Customer A
                  
                  US$
                  2,257,766
                  
                  
                  
                  15
                  %2.
                Customer
      B
                  
                  US$
                  1,577,811
                  
                  
                  
                  10
                  %3.
                Customer
      C
                  
                  US$
                  1,192,495
                  
                  
                  
                  8
                  %4.
                Customer
      D
                  
                  US$
                  1,064,603
                  
                  
                  
                  7
                  %5.
                Customer
      E
                  
                  US$
                  994,631
                  
                  
                  
                  6
                  %Total
                  
                  US$
                  7,087,306
                  
                  
                  
                  46
                  %





8





MAN
SHING AGRICULTURAL HOLDINGS, INC. AND SUBSIDIARIES


NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2010 AND 2009


(STATED
IN US DOLLARS)





Geographic
segmentation of our customer base by designation of delivery:





Market
                        
                        % of
                          revenue
                          contributionJapan
                        
                        
                        39
                        %UK
                        
                        
                        34
                        %Netherlands
                        
                        
                        18
                        %Others
                        
                        
                        9
                        %Total
                        
                        
                        100
                        %





4.
            RECENTLY
      ISSUED ACCOUNTING STANDARS





The
Company has reviewed all recently issued, but not yet effective, accounting
pronouncements and does not believe the future adoption of any such
pronouncements will cause a material impact on its financial condition or the
results of its operations.





In April
2010, the Financial Accounting Standard Board (“FASB”) issued Accounting
Standards Update (“ASU”) 2010-13, Compensation – Stock Compensation (Topic 718):
Effect of Denominating the Exercise Price of a Share-Based Payment Award in the
Currency of the Market in Which the Underlying Equity Security Trades. ASU
2010-13 provides guidance on the classification of a share-based payment award
as either equity or a liability. A share-based payment that contains a condition
that is not a market, performance, or service condition is required to be
classified as a liability. ASU 2010-13 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2010 and is not expected to have a significant impact on the Company’s financial
statements.





In July
2010, the FASB issued new accounting guidance ASU 2010-20, Receivables (Topic
310), Disclosures about the Credit Quality of Financing Receivables and the
Allowance for Credit Losses, that will require additional disclosures about the
credit quality of loans, lease receivables and other long-term receivables and
the related allowance for credit losses. Certain additional disclosures in this
new accounting guidance will be effective for the Company on December 31, 2010
with certain other additional disclosures that will be effective on March 31,
2011. The Company does not expect the adoption of this new accounting guidance
to have a material impact on its consolidated financial statements since the
Company’s financing receivables are comprised of trade receivables with
maturities of one year or less that arose from sales of goods or services which
are excluded from the scope of the new disclosures.





5.
            Accounts
      receivable, net





The
majority of the Company’s sales are on open credit terms and in accordance with
terms specified in the contracts governing the relevant transactions. The
Company evaluates the need of an allowance for doubtful accounts based on
specifically identified amounts that management believes to be uncollectible. If
actual collections experience changes, revisions to the allowance may be
required. Based upon the aforementioned criteria, management has determined that
the allowances for doubtful accounts of $11,849 and $11,512 are appropriate as
of December 31, 2010 and June 30, 2010, respectively.





December 31, 2010
                  
                  
                  June 30, 2010Accounts
      receivable, gross
                  
                  $
                  3,440,821
                  
                  
                  $
                  2,261,510Less:
      allowance for doubtful accounts
                  
                  
                  (11,849
                  )
                  
                  
                  (11,512
                  )Accounts
      receivable, net
                  
                  $
                  3,428,972
                  
                  
                  $
                  2,249,998





9





MAN
SHING AGRICULTURAL HOLDINGS, INC. AND SUBSIDIARIES


NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2010 AND 2009


(STATED
IN US DOLLARS)





6.
            Inventory


December 31, 2010
                    
                    
                    June 30, 2010Raw
      materials
                    
                    
                    13,083,312
                    
                    
                    
                    4,551,760Finished
      goods
                    
                    
                    609,315
                    
                    
                    
                    386,283Inventories
                    
                    $
                    13,692,627
                    
                    
                    $
                    4,938,043





For the
six months ended December 31, 2010 and the year ended June 30, 2010, no
provision for obsolete inventories was recorded by the Company.





7.
            Deferred
      inventory costs





The
balances of $0 and $5,118,558 as of December 31, 2010 and June 30, 2010,
respectively, represent mainly rental of $0 and $469,449, cost of ginger seeds
of $0 and $3,127,384, fertilizers of $0 and $787,658 and supplies and other
items of $0 and $734,067 as of December 31, 2010 and June 30, 2010,
respectively. These items were used in planting of the ginger which will become
the major components of and transferred to inventories at time of
harvests.





8.
            Short-term
      borrowing (Line of Credit)





On March
14, 2010, the Company entered into a loan agreement with Bank of Weifang for a
facility of $352,314 (2,400,000 RMB). The loan has a monthly interest rate of
7.08% and matures in twelve months from date of drawdown. The loan was
guaranteed by an unrelated third party. As of December 31, 2010, the outstanding
amount of this loan is $362,390 (2,400,000 RMB).





9.
            Note
      payable and convertible redeemable
debentures





Effective
September 9, 2009, the Company issued a secured note in the amount of $450,000
(the “Secured Note”) to a non-affiliate, which was secured by 2,250,000 shares
of common stock of the Company. The Secured Note is interest-free and due on
March 8, 2011. As of December 31, 2010, the balance of the Secured Note was
$318,375.





On
January 4, 2010, the Company issued a secured convertible redeemable debenture
(“Debenture I”) in the amount of $1,000,000, along with 800,000 shares of the
Company’s common stock, to a non-affiliate investor, which was secured by
6,286,250 shares of the Company’s common stock and 839,562 shares of the
Company’s preferred stock (equivalent to 14,681,870 shares of common stock),
representing a pro rata portion of a majority position in the Company’s common
stock owned by Mr. Shili Liu, the President of the Company.





Debenture
I bears annual interest rate of 8% payable quarterly in cash, and a default
interest rate of 16% per annum. All or any part of the principal amount of
Debenture I, plus accrued interest, could be converted into shares of the
Company’s common stock at a price per share equal to two dollars ($2.00), at the
option of the holder.





10





MAN
SHING AGRICULTURAL HOLDINGS, INC. AND SUBSIDIARIES


NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2010 AND 2009


(STATED
IN US DOLLARS)





On
January 14, 2010, the Company issued a secured convertible redeemable debenture
(“Debenture II”) in the amount of $500,000, along with 400,000 shares of the
Company’s common stock, to a non-affiliate investor, which was secured by
3,143,125 shares of the Company’s common stock and 419,781 shares of the
Company’s preferred stock (equivalent to 7,340,935 shares of common stock),
representing a pro rata portion of a majority position in the Company’s common
stock owned by Mr. Shili Liu, the President of the Company.





Debenture
II bears annual interest rate of 8% payable quarterly in cash, and a default
interest rate of 16% per annum. All or any part of the principal amount of
Debenture II, plus accrued interest, could be converted into shares of the
Company’s common stock at a price per share equal to two dollars ($2.00), at the
option of the holder.




10.
              Received
      in advance
 The
balance represents mainly $1.5 million received in advance from potential
investors. Pursuant to the securities purchase agreements on September 13, 2010,
the Company received $2.6 million in advance from potential investors. Pursuant
to certain cancellation agreement and amendments to certain securities purchase
agreements dated November 14, 2010, Mr. Shili Liu agreed to cancel his 3,358,250
preferred shares of the Company. On December 9, 2010, the Company refunded $1.1
million to potential investor prior to the closing of the applicable
transaction. On January 18, 2011, the transactions contemplated by those certain
securities purchase agreements dated as of September 13, 2010, as amended on
November 14, 2010 were consummated.


11.
            Stockholders’
      equity




On August
20, 2009, the Company executed the Agreement among the Company, HCP, the
shareholders of HCP and Xinsheng, pursuant to which the Company issued
32,800,000 new shares of common stock of the Company to HCP shareholders and
simultaneously transferred 3,535,000 shares of the Company’s preferred stock to
the HCP shareholders, held in the name of the Northeast Nominee Trust, in
exchange for 100% of the capital stock of HCP and Xinsheng. On September 2,
2009, the Company effectuated a 1 for 100 reverse split of its common stock. All
common stock and per share data for all periods presented in these financial
statements have been restated to give effect to the reverse stock
split.





On
September 17, 2009, 100,000 shares of preferred stock were converted into
1,000,000 shares of common stock, based on a rate of 10 shares for one, per the
request of the preferred stockholder.





Immediately
following completion of the share exchange transaction and the preferred stock
conversion, the Company had a total of 34,001,963 shares of its common stock
issued and outstanding.





Pursuant
to a binding term sheet, dated November 26, 2009, the Company issued 500,000
shares of common stock on December 8, 2009 to an investor.





Pursuant
to the two Securities Purchase Agreements, dated January 4, 2010 and January 14,
2010, respectively, the Company issued a total of 1,200,000 shares of common
stock to the non-affiliated investors.





During
the third quarter of 2010, the Company issued 549,995 shares of the Company’s
common stock to a consultant for the services rendered. The fair value of the
549,995 shares was determined using the bid price of the Company’s common stock
on the measurement date, at a price of $0.25 per share. Accordingly, the Company
calculated the stock-based compensation of $137,499 at its fair
value.





On May
27, 2010, the Company issued 125,000 shares of the Company’s common stock to a
consultant for the services rendered. The fair value of the 125,000 shares was
determined using the bid price of the Company’s common stock on the measurement
date, at a price of $0.25 per share. Accordingly, the Company calculated the
stock-based compensation of $31,250 at its fair value.





On May 5,
2010, 65,000 shares of preferred stock were converted into 650,000 shares of
common stock, based on a rate of 10 shares for one, per the request of the
preferred stockholder.





On
September 13, 2010, the Company entered into securities purchase agreements with
non-affiliate investors. Pursuant to the Agreements, the Investors will purchase
an aggregate of 10,000,000 shares of common stock of the Company for
consideration of $0.40 per share of Common Stock (an aggregate of $4,000,000).
On January 18, 2011, the transactions contemplated by those certain securities
purchase agreements dated as of September 13, 2010, as amended on November 14,
2010 were consummated.
 
 Pursuant
to that certain cancellation agreement and amendments to certain securities
purchase agreements dated November 14, 2010, Mr. Shili Liu agreed to cancel his
3,358,250 preferred shares of the Company. On December 16, 2010, 3,358,250
shares of preferred stock hold by Mr. Shili Liu were retired.




11





MAN
SHING AGRICULTURAL HOLDINGS, INC. AND SUBSIDIARIES


NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2010 AND 2009


(STATED
IN US DOLLARS)





12.
            Income
      taxes





The
Company’s wholly owned subsidiary is subject to the PRC Enterprise Income Tax
(“EIT”) at the statutory rate of 25% on the profits as reported in the Company’s
PRC statutory financial statements as adjusted by profit and loss items that are
not taxable or deductible.  During the fiscal year 2009 and 2010, the
Company is exempt from the EIT under the new law as detailed below. The company
expects its exemption to continue since it operates in the rural agricultural
business.





PRC’s
legislative body, the National People’s Congress, adopted the unified EIT Law on
March 16, 2007. This new tax law replaces the income tax laws for domestic
enterprises and foreign-invested enterprises and became effective on
January 1, 2008. Under the new tax law, a unified income tax rate is set at
25% for both domestic enterprises and foreign-invested enterprises. However,
there will be a transition period for enterprises, whether foreign-invested or
domestic, that are currently receiving preferential tax treatments granted by
relevant tax authorities. Enterprises that are subject to an enterprise income
tax rate lower than 25% may continue to enjoy the lower rate and will transit
into the new tax rate over a five year period beginning on the effective date of
the EIT Law. Enterprises that are currently entitled to exemptions for a fixed
term may continue to enjoy such treatment until the exemption term expires.
Preferential tax treatments may continue to be granted to industries and
projects that qualify for such preferential treatments under the new
law.





No income
taxes have been included in the statements of operations and comprehensive
income for the reporting periods for EIT for the Company’s continuing operations
in the PRC.





The
Company conducts all its operating business through its subsidiary in China. The
subsidiary is governed by the income tax laws of the PRC and do not have any
material deferred tax assets or deferred tax liabilities under the income tax
laws of the PRC because there are no material temporary differences between
financial statement carrying amounts and the tax bases of existing assets and
liabilities.





The
Company by itself does not have any business operating activities in the United
States and is therefore not subject to United States income tax.





The
Company has not provided deferred taxes of $372,408 and 888,112 as of
December 31, 2010 and 2009, respectively, on undistributed earnings attributable
to its PRC subsidiary as it intends to reinvest such earnings and the payment of
dividends is indefinitely postponed.





Value
added tax (“VAT”)





Enterprises
or individuals who sell commodities, engage in repair and maintenance or import
or export goods in the PRC are subject to a value added tax in accordance with
the PRC laws. The value added tax standard rate is 17% of the gross sales price.
A credit is available whereby VAT paid on the purchases of semi-finished
products or raw materials used in the production of the Company’s products can
be used to offset the VAT due on the sales of the products.





13.
            Earnings
      per share





Basic
earnings per share is computed using the weighted-average number of the ordinary
shares outstanding during the period. Diluted earning s per share is computed
using the weighted-average number of ordinary shares and ordinary share
equivalents outstanding during the period.





12





MAN
SHING AGRICULTURAL HOLDINGS, INC. AND SUBSIDIARIES


NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2010 AND 2009


(STATED
IN US DOLLARS)





Reconciliation
from basic earnings per share to diluted earnings per shares:





Three months endedDecember 31,2010
                  
                  
                  2009Net
      income for the period
                  
                  $
                  2,250,923
                  
                  
                  $
                  1,162,019Determination
      of shares:Weighted-average
      common shares outstanding
                  
                  
                  38,026,958
                  
                  
                  
                  34,124,185Assumed
      conversion of preferred stock
                  
                  
                  29,874,592
                  
                  
                  
                  36,000,000Diluted
      weighted-average common shares outstanding
                  
                  
                  67,901,550
                  
                  
                  
                  70,124,185Basic
      earnings per share
                  
                  $
                  0.06
                  
                  
                  $
                  0.03Diluted
      earnings per share
                  
                  $
                  0.03
                  
                  
                  $
                  0.02





Six months endedDecember 31,2010
                  
                  
                  2009Net
      income for the period
                  
                  $
                  4,458,819
                  
                  
                  $
                  2,319,899Determination
      of shares:Weighted-average
      common shares outstanding
                  
                  
                  38,026,958
                  
                  
                  
                  20,150,852Assumed
      conversion of preferred stock
                  
                  
                  32,597,336
                  
                  
                  
                  36,427,778Diluted
      weighted-average common shares outstanding
                  
                  
                  70,624,294
                  
                  
                  
                  56,578,630Basic
      earnings per share
                  
                  $
                  0.12
                  
                  
                  $
                  0.11Diluted
      earnings per share
                  
                  $
                  0.06
                  
                  
                  $
                  0.04





On
December 16, 2010, 3,358,250 shares of preferred stock hold by Mr. Shili Liu
were cancelled.





14.
            Commitments
      and contingencies





In
addition to the lease commitment disclosed in annual report as of June 30, 2010,
t





15.
            Segment reportingandgeographical
      information





(a)
            Business
      information





The
Company’s chief operating decision maker has been identified as the chairman and
CEO, Mr. Shili Liu, who reviews consolidated results when making decisions about
allocating resources and assessing performance of the Company. Based on this
assessment, the Company has determined that it has one operating and reportable
segment. The
majority of the company's sale are ginger, with no other product constituting
more than 10% of the sales.





13





MAN
SHING AGRICULTURAL HOLDINGS, INC. AND SUBSIDIARIES


NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2010 AND 2009


(STATED
IN US DOLLARS)





(b)
            Geographical
      segment





The
following table sets forth the geographic segmentation of our customer base by
designation of delivery:





Market
                  
                  % of
                    reveune
                    contributionJapan
                  
                  
                  39
                  %UK
                  
                  
                  34
                  %Netherlands
                  
                  
                  18
                  %Others
                  
                  
                  9
                  %Total
                  
                  
                  100
                  %





The
Company’s operations are located in the PRC. For the six months ended December
31, 2010 and the year ended June 30, 2010, 100% of the Company’s assets were
located in the PRC.





16.
            Concentration
      and risk





The
Company's operations are carried out in the PRC. Accordingly, the Company's
business, financial condition and results of operations may be influenced by the
political, economic and legal environment in the PRC, and by the general state
of the PRC's economy. The Company's operations in the PRC are subject to
specific considerations and significant risks not typically associated with
companies in the North America and Western Europe. The Company's results may be
affected by changes in governmental policies with respect to laws and
regulations, anti-inflationary measures, currency conversion and remittance
abroad, and rates and methods of taxation, among other things.





(a)
            Major
      customers





The
Company had 7 and 4 customers that in aggregate comprised 58% and 39% of
net revenue for the six months ended December 31, 2010 and the year ended June
30, 2009, respectively.





For the
six months ended December 31, 2010


Customers
                                
                                Revenues
                                
                                
                                
                                
                                
                                Accounts
                                  ReceivableCustomer
      A
                                
                                $
                                2,257,766
                                
                                
                                
                                15
                                %
                                
                                $
                                821,155Customer
      B
                                
                                
                                1,577,811
                                
                                
                                
                                10
                                %
                                
                                
                                658,990Customer
      C
                                
                                
                                1,192,495
                                
                                
                                
                                8
                                %
                                
                                
                                39,722Customer
      D
                                
                                
                                1,064,603
                                
                                
                                
                                7
                                %
                                
                                
                                535,777Customer
      E
                                
                                
                                994,631
                                
                                
                                
                                6
                                %
                                
                                
                                224,078Customer
      F
                                
                                
                                939,880
                                
                                
                                
                                6
                                %
                                
                                
                                29,986Customer
      G
                                
                                
                                907,027
                                
                                
                                
                                6
                                %
                                
                                
                                376,059Total:
                                
                                $
                                8,934,213
                                
                                
                                
                                58
                                %
                                
                                $
                                2,685,767





For the
year ended June 30, 2010


Customers
                              
                              Revenues
                              
                              
                              
                              
                              
                              Accounts
                                ReceivableCustomer
      A
                              
                              $
                              3,771,035
                              
                              
                              
                              17
                              %
                              
                              $
                              602,020Customer
      B
                              
                              
                              1,851,691
                              
                              
                              
                              8
                              %
                              
                              
                              152,811Customer
      C
                              
                              
                              1,691,565
                              
                              
                              
                              8
                              %
                              
                              
                              370,555Customer
      D
                              
                              
                              1,436,536
                              
                              
                              
                              6
                              %
                              
                              
                              375,930Total:
                              
                              $
                              8,750,827
                              
                              
                              
                              39
                              %
                              
                              $
                              1,501,316





14





MAN
SHING AGRICULTURAL HOLDINGS, INC. AND SUBSIDIARIES


NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2010 AND 2009


(STATED
IN US DOLLARS)





(b)
            Credit
      risk





Financial
instruments that potentially subject the Company to significant concentrations
of credit risk consist principally of cash and trade accounts receivable. The
Company performs ongoing credit evaluations of its customers' financial
condition, but does not require collateral to support such
receivables.





15




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




Business
Overview




Our operations are conducted through
our wholly owned subsidiary, Xinsheng Food Co., Ltd. (“Xinsheng”), a company
incorporated under the laws of the People’s Republic of China (“China” or the
“PRC”). Xinsheng is principally engaged in the production and processing of
fresh vegetables: mainly ginger, but also others such as onion and garlic.
Xinsheng leases 5.3 million square meters of farm land in Anqiu within the
Shandong Province in China for the planting and growing of high quality ginger.
Our customers are primarily based in Japan and several countries within Europe.
We produce high quality ginger according to the strict food safety standards
within those countries. We are also currently certified by the British Retail
Consortium Global Food Standard. We maintain a monitoring and supervision
program that we believe results in our products being in compliance with food
safety standards from the countries into which we sell them.




Our
Products




Fresh
Vegetables




Ginger




Frozen
Vegetables




Peeled
      Ginger
                    Diced
      GarlicDiced
      Ginger
                    Garlic
      PureeGinger
      Puree Cubes
                    Garlic
      Puree CubesGinger
      Puree
                    Diced
      OnionStrawberry
                    Peeled
      Garlic




For the six months ended December 31,
2010 the Company produced 11 ginger and fresh vegetable products. Ginger was the
biggest revenue generator and accounted for approximately 81% of our sales
during the six month period ended December 31, 2010.




Our
customers




After years of building our reputation,
we have earned the trust of our customers. Our customers include suppliers to
one of the world’s largest supermarket chains in Europe and a major ingredient
producer in Japan. Our major customers are located in Japan and within Europe,
including the United Kingdom and the Netherlands.




The following table depicts our top
five customers and their percentage of current sales for the six months ended
December 31, 2010.




16




Top
5 Customers for the Six Months ended December 31, 2010


(Total
sales revenue for the six months ended December 31, 2010:
US$15,474,502)




Customer
                        
                        Revenues
                        
                        
                        %1.
      Customer A
                        
                        US$
                        2,257,766
                        
                        
                        
                        14.6
                        %2.
      Customer B
                        
                        US$
                        1,577,811
                        
                        
                        
                        10.2
                        %3.
      Customer C
                        
                        US$
                        1,192,495
                        
                        
                        
                        7.7
                        %4.
      Customer D
                        
                        US$
                        1,064,603
                        
                        
                        
                        6.9
                        %5.
      Customer E
                        
                        US$
                        994,631
                        
                        
                        
                        6.4
                        %Total:
                        
                        US$
                        7,087,306
                        
                        
                        
                        45.8
                        %




The following table sets forth our
sales distribution by location of delivery:




Market
                            
                            % of revenue contributionJapan
                            
                            
                            39
                            %UK
                            
                            
                            34
                            %Netherlands
                            
                            
                            18
                            %Others
                            
                            
                            9
                            %Total
                            
                            
                            100
                            %




Competitive
Advantages




Our
primary competitive advantage is that we lease over 5.3 million square meters of
farm land in Anqiu Weifang, a major farming region in Shangdong, China, the
lease for which does not expire until 2023, and which provides stable farm
land for planting. Other competitive advantages include:




▪
              We
      are able to meet strict export requirements that smaller local producers
      are unable to meet and  our customers are willing to pay a high
      premium for our products;




▪
            China
      has relatively low labor costs as compared to other developing countries;
      and




▪
            Local
      governments have tightened the export license renewal procedures and have
      toughened inspection, as a result of which certain exporters have
      terminated operations. As such, we believe that we will grow at a faster
      rate.




Our social
responsibility




Viewing
ourselves as an agent for social change and economic development, we are aware
of the importance of sustainable village development. We hire and train local
workforce hoping to help raise the overall level of community
prosperity.




17




RESULTS
OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2010 AND 2009




For the three months ended
                        December 31,2010
                      
                      
                      2009Sales:
                      
                      $
                      8,147,275
                      
                      
                      $
                      5,168,941Cost
      of Goods Sold:
                      
                      $
                      4,816,635
                      
                      
                      $
                      3,425,589Operating
      Expenses:
                      
                      $
                      1,021,825
                      
                      
                      $
                      573,271Other
      (Loss):
                      
                      $
                      (57,892
                      )
                      
                      $
                      (8,062
                      )Income
      from Operations:
                      
                      $
                      2,250,923
                      
                      
                      $
                      1,162,019Income
      Taxes:
                      
                      $
                      0
                      
                      
                      $
                      0Net
      Income:
                      
                      $
                      2,250,923
                      
                      
                      $
                      1,162,019Other
      Comprehensive Income (Loss):
                      
                      $
                      195,327
                      
                      
                      $
                      (43,319
                      )Total
      Comprehensive Income:
                      
                      $
                      2,446,249
                      
                      
                      $
                      1,118,700




Revenues




We had
net revenues of $8,147,275 and $5,168,941 for the three months ended December
31, 2010 and 2009, respectively. The sales revenues were due primarily to the
sales of our frozen and fresh ginger and other agricultural products. The 58%
increase in revenues was due to the expansion of our business through our
marketing strategy and our customer loyalty, and increase in market price of
ginger to approximately $1,350 per ton as compared to $1,000 per ton for the
same period in last year.




We
recognize revenue when persuasive evidence of a sale exists, transfer of title
has occurred, the selling price is fixed or determinable and collectability is
reasonably assured. Sales revenue represents the invoiced value of goods, net of
a value-added tax (“VAT”). All of our products that are sold in the PRC are
subject to a Chinese value-added tax at a rate of 17% of the gross sales price
or at a rate approved by the Chinese local government. This VAT may be offset by
the VAT paid by us on raw materials and other materials included in the cost of
producing their finished product.




Our sales
arrangements are not subject to warranty. We did not record any product returns
for each of the three months ended December 31, 2010 and 2009.




Cost of
Sales




Cost of
sales primarily includes cost to plant, harvest and storing of ginger and other
agricultural products such as ginger seeds and fertilizers. During the three
months ended December 31, 2010, cost of sales were $4,816,635, or approximately
59% of revenues, versus $3,425,589, or approximately 66% of revenues for the
three months ended December 31, 2009. The cost of sales as a percentage of
revenues decreased mainly due to the increase in the market price of ginger to
approximately $1,350 per ton as compared to $1,000 per ton for the same period
in last year and high
utilization ginger raw material due to good storage facilities which stored
ginger raw material in good condition.




Gross
profit




Gross
profit margin improved by 7% from 34% for the three months ended December 31,
2009 to 41% for the three months ended December 31, 2010.




We had
gross profit of $3,330,640 for the three months ended December 31, 2010, which
increased by $1,587,288 or 91% when compared to the gross profit of $1,743,352
for three months ended December 31, 2009.


18




The
increase in gross profit margin for our ginger and agricultural products during
the period was due primarily to the increase in our selling prices and more
effective use of raw materials. Per unit overhead was much lower on higher
output volume.




Expenses




Operating
expenses for the three months ended December 31, 2010 and 2009 were $1,021,825
and $573,271, respectively. The increase in operating expenses was due primarily
to the increase in the selling and marketing expenses by $332,462 and the
increase in general and administrative expenses by $116,092.






Selling
and marketing expenses were 9% of revenues for the three months ended December
31, 2010 and 7% of revenues for the three months ended December 31, 2009. The
increase in the selling and marketing expenses was due primarily to the increase
in distribution cost and increase of sales and marketing activities in both
existing and new markets.
 
 General
and administrative expenses remained stable at 4% of revenues for the three
months ended December 31, 2010 and 4% of revenues for the three months ended
December 31, 2009. The increase in the general and administrative expenses was
mainly due to the increase in office rental expenses.





Income




We had net income of $2,250,923 and
$1,162,019 for the three months ended December 31, 2010 and 2009, respectively.
Net
income margin improved by 6% from 22% for the three months ended December 31,
2009 to 28% for the three months ended December 31, 2010.The net income
in these periods was due primarily to sales of our fresh and frozen ginger and
other agricultural products. Our net income is a function of revenues, cost of
sales and other expenses as described above. The increase in net income is
attributable to the expansion of our business through our marketing strategy and
our customer loyalty, and increase in market price of ginger.




RESULTS
OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 2010 AND 2009




For the six months ended
                          December 31,2010
                        
                        
                        2009Sales:
                        
                        $
                        15,474,502
                        
                        
                        $
                        9,790,467Cost
      of Goods Sold:
                        
                        $
                        8,974,943
                        
                        
                        $
                        6,755,171Operating
      Expenses:
                        
                        $
                        1,953,982
                        
                        
                        $
                        703,293Other
      Loss:
                        
                        $
                        (86,757
                        )
                        
                        $
                        (12,104
                        )Income
      from Operations:
                        
                        $
                        4,458,819
                        
                        
                        $
                        2,319,899Income
      Taxes:
                        
                        $
                        0
                        
                        
                        $
                        0Net
      Income:
                        
                        $
                        4,458,819
                        
                        
                        $
                        2,319,899Other
      Comprehensive Income (Loss):
                        
                        $
                        445,164
                        
                        
                        $
                        (41,360
                        )Total
      Comprehensive Income:
                        
                        $
                        4,903,983
                        
                        
                        $
                        2,278,539




Revenues




We had net revenues of $15,474,502 and
$9,790,467 for the six months ended December 31, 2010 and 2009, respectively.
The sales revenues were due primarily to the sales of our frozen and fresh
ginger and other agricultural products. The increase in revenue is attributable
to the expansion of our business through our marketing strategy and our customer
loyalty, and increase in market price of ginger to
approximately $1,290 per ton as compared to $960 per ton for the same period in
last year. We did not record any product returns for each of the six
months ended December 31, 2010 and 2009.


19




Cost of
Sales




During
the six months ended December 31, 2010, we had cost of sales of $8,974,943, or
approximately 58% of revenues, versus cost of sales of $6,755,171, or
approximately 69% of revenues for the six months ended December 31, 2009. The
cost of sales as a percentage of revenues decreased due to the large increase in
the market price to
approximately $1,290 per ton as compared to $960 per ton for the same period in
last yearand high
utilization ginger raw material due to good storage facilities which stored
ginger raw material in good condition.




Gross
profit




We had
gross profit of $6,499,558 for the six months ended December 31, 2010, which
increased by $3,464,262 or 114% when compared to the gross profit of $3,035,296
for six months ended December 31, 2009. Gross profit margin improved by 11% from
31% for the six months ended December 31, 2009 to 42% for the six months ended
December 31, 2010.




The
increase in gross profit margin for our ginger and agricultural products during
the period under review was due primarily to the increase in our selling prices
and our control of material costs and overheads, resulting from better
utilization of our plantation and processing facilities due to economies of
scale from larger output volume.




Expenses




Operating
expenses for the six months ended December 31, 2010 and 2009 were $1,953,982 and
$703,293, respectively. The increase in operating expenses was due to the
increase in the selling and marketing expenses by $1,035,098 and the increase in
general and administrative expenses by $215,591.






Selling
and marketing expenses were 10% of revenues for the six months ended December
31, 2010 and 5% of revenues for the six months ended December 31, 2009. The
increase in the selling and marketing expenses was due primarily to the increase
in distribution cost and increase of sales and marketing activities in both
existing and new markets.
 
 General
and administrative expenses remained stable at 3% of revenues for the three
months ended December 31, 2010 and 2% of revenues for the three months ended
December 31, 2009. The increase in the general and administrative expenses was
mainly due to the increase in professional and office rental
expenses.




Income




We had
net income of $4,458,819 and $2,319,899 for the six months ended December 31,
2010 and 2009, respectively. Net
income margin improved by 5% from 24% for the three months ended December 31,
2009 to 29% for the three months ended December 31, 2010.The net income
in these periods was due primarily to sales of our fresh and frozen ginger and
other agricultural products. Our net income is a function of revenues, cost of
sales and other expenses as described above. The increase in net income is
attributable to the expansion of our business through our marketing strategy and
our customer loyalty, and increase in market price of ginger.




Impact of
Inflation




We
believe that inflation has had a negligible effect on operations. We believe
that we can offset inflationary increases in the cost of operations by
increasing sales and improving operating efficiencies.




Liquidity and Capital
Resources




As of
December 31, 2010 and 2009, cash and cash equivalents totaled $3,623,246 and
$57,912, respectively.




The
working capital for the six months ended December 31, 2010 and 2009 amounted to
$14,717,625 and $5,223,468, respectively. Cash flows provided by and used in
operating activities were $2,227,406 and $38,875 for the six months ended
December 31, 2010 and 2009, respectively. Positive cash flows from operations
for the six months ended December 31, 2010 were due primarily to the increase in
net income of $2,138,920, increase in accounts payable by $1,899,295 and
decrease in prepayment and deferred inventory costs of $5,124,322 which was in
connection with prepaid rent, supplies and other items used in the growing and
packaging of ginger, partially offset by an increase in inventory by
$8,490,828.




20




Cash
flows used in investing activities were $472,957 and $213,345 for the six months
ended December 31, 2010 and 2009, respectively.  Net cash used in
investing activities for the six months ended December 31, 2010 was due
primarily to the purchase of equipment.




Cash
flows provided by financing activities were $1,500,129 and $222,397 for the six
months ended December 31, 2010 and 2009, respectively. Positive cash flows from
financing for the six months ended December 31, 2010 were due to proceeds from
investor of $1,500,129.




Demand
for the products and services will be dependent on, among other things, market
acceptance of our products, fresh vegetables market in general, and general
economic conditions, which are cyclical in nature. Inasmuch as a major portion
of our activities is the receipt of revenues from the sales of our products, our
business operations may be adversely affected by our competitors and prolonged
recession periods.




Overall,
we have funded all of our cash needs and no significant amount of our trade
payables has been unpaid within the stated trade term. As of December 31, 2010,
we are not subject to any unsatisfied judgments, liens, or settlement
obligations.




Our
success will be dependent upon implementing our plan of operations and the risks
associated with our business plans. We engaged in the production and processing
of fresh vegetables, including mainly ginger and others such as onion and
garlic. We strive to provide high quality products to our customers. We plan to
strengthen our position in the existing and new markets. We also plan to expand
our operations through aggressively marketing our products and our
concept.




The Company has signed an agreement
with a farmland owner in Japan. The agreement was executed on December 17, 2010
and runs for a term of one year from February 1, 2011 to January 31, 2012. The
Company will lease a farmland which sits on 70,186 square meters of land in
Japan with annual rental of approximately $128,000. The Company expects to pay
the annual rental from its working capital.




Off-Balance Sheet
Arrangements




As of
December 31, 2010, we have no off-balance sheet arrangements.




ITEM
3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




Not
applicable to smaller reporting companies.




ITEM
4 CONTROLS AND PROCEDURES




Disclosure Controls and
Procedures




Under the
supervision and with the participation of our management, including our
principal executive officer (who is also our Chief Executive Officer) and
principal financial officer (who is also our Chief Financial Officer), we
conducted an evaluation of the effectiveness, as of December 31, 2010, of the
design and operation of our disclosure controls and procedures, as such term is
defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”). Based on this evaluation, our principal
executive officer and principal financial officer have concluded that, as of
such date, our disclosure controls and procedures are effective.




Disclosure
controls and procedures are designed to ensure that information required to be
disclosed by us in our Exchange Act reports is recorded, processed, summarized,
and reported within the time periods specified in the SEC’s rules and forms, and
that such information is accumulated and communicated to our management,
including our principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding required
disclosure.


21




Changes
in Internal Controls over Financial Reporting




There has
been no change in our internal control over financial reporting during our last
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.




PART
II   OTHER INFORMATION




ITEM
1.    LEGAL PROCEEDINGS




None.




ITEM
1A.   RISK FACTORS




Not
applicable to smaller reporting companies




ITEM
2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS




During
the three months ended December 31, 2010, we did not issue any unregistered
securities that were not otherwise reported in a Current Report on Form
8-K.




ITEM
3.    DEFAULT UPON SENIOR SECURITIES




None.




ITEM
4.    REMOVED AND RESERVED




ITEM
5.     OTHER INFORMATION




None.




ITEM
6.  EXHIBITS




Exhibit
                No.
              
              Description31.1
              
              Certification
      of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200231.2
              
              Certification
      of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200232.1
              
              Certification
      of the Chief Executive Officer and Chief Financial Officer pursuant to
      section 906 of the Sarbanes-Oxley Act of
2002




22


SIGNATURES





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




MAN
      SHING AGRICULTURAL HOLDINGS, INC.Date:
      February 10, 2011
                    By:
                    /s/ Shili LiuName:
      Shili LiuTitle:
      Chief Executive Officer(Principal
      Executive Officer)Date:
      February 10, 2011
                    By:
                    /s/ Kenny ChowName:
      Kenny ChowTitle:
      Chief Financial Officer(Principal
      Financial
Officer)


23


EXHIBIT
INDEX
 
 Exhibit
                  No.
                
                Description31.1
                
                Certification
      of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200231.2
                
                Certification
      of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200232.1
                
                Certification
      of the Chief Executive Officer and Chief Financial Officer pursuant to
      section 906 of the Sarbanes-Oxley Act of
2002
  24