U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB

                                   (Mark One)
     [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934

                      FOR THE YEAR ENDED DECEMBER 31, 2007
                                       OR

   [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

                  For the transition period from _____ to _____

                        COMMISSION FILE NUMBER 000-30115

                          HANKERSEN INTERNATIONAL CORP.
       (Exact name of Small Business Issuer as specified in its charter.)

         DELAWARE                                            13-3912047
-------------------------------                         -------------------
(State of other jurisdiction of                          (IRS Employer
incorporation or organization)                         Identification No.)

                        3RD FLOOR, A TOWER OF CHUANG XIN
                              INFORMATION BUILDING
                      NO. 72 SECOND KEJI ROAD, HI TECH ZONE
                                   XI'AN CHINA

          (Address of principal executive offices, including zip code.)

                              (0086) 29 - 8845 3409
                (Issuer's Telephone Number, Including Area Code)

         Securities registered under Section 12(b) of the Exchange Act:

                              NAME OF EACH EXCHANGE

         Title of Each Class                    on Which Registered
         -------------------                   ---------------------
                 None                                   None

         SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:

                         COMMON STOCK, PAR VALUE $.0001
                                (Title of Class)

Check whether the issuer: (1) Filed all reports required to be filed by Section
13 or 14(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Company was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES [X] NO [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Company's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
form 10-K. [X]

State issuer's revenues for its most recent fiscal year:  $16,050,938

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.) $991,221 as of March 28, 2008


The number of shares outstanding of the issuer's common stock as of March 28,
2008 was 35,413,850.

Transitional Small Business Disclosure Format (check one):  YES [ ] NO [X]


<PAGE>


                                TABLE OF CONTENTS

PART I                                                                      PAGE

ITEM 1.     DESCRIPTION OF BUSINESS                                            1
ITEM 1A.    RISK FACTORS                                                       5
ITEM 1B.    UNRESOLVED COMMENTS                                               10
ITEM 2.     DESCRIPTION OF PROPERTIES                                         10
ITEM 3.     LEGAL PROCEEDINGS                                                 10
ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS               11

PART II

ITEM 5.     MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS      11
            MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION         11
ITEM 7.     FINANCIAL STATEMENTS                                              20
ITEM 8.     FINANCIAL DISCLOSURE                                              20
ITEM 8A.    CONTROLS AND PROCEDURES                                           20
ITEM 8B.    OTHER INFORMATION                                                 21
            DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS      21

PART III

ITEM 10:    EXECUTIVE COMPENSATION.                                           27
ITEM 11:    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT    28
ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS.             31

PART IV

ITEM 13.    EXHIBITS LIST AND REPORTS ON FORM 8-K                             32

ITEM 14:    PRINCIPAL ACCOUNTANT FEES AND SERVICES                            33

EX-31.1

EX-31.2

EX-32.1

EX-32.2

<PAGE>


                           FORWARD LOOKING STATEMENTS

THIS FORM 10-KSB AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY
HANKERSEN INTERNATIONAL CORP. ("WE") AND OUR SUBSIDIARES, XIAN HANXIN TECHNOLOGY
CO., LTD. ("HANXIN") AND XI'AN CORK INVESTMENTS CONSULTATIVE MANAGEMENT CO.
("XI'AN") OR THEIR REPRESENTATIVES CONTAIN STATEMENTS WHICH MAY CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE SECURITIES ACT OF 1933
AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED BY THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. FIFTEEN U.S.C.A. SECTIONS 77Z-2 AND 78U-5 (SUPP.
1996). THOSE STATEMENTS INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF OR
CURRENT EXPECTATIONS OF HANKERSEN AND MEMBERS OF ITS MANAGEMENT TEAM AS WELL AS
THE ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE BASED. PROSPECTIVE INVESTORS ARE
CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY
DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS.
IMPORTANT FACTORS CURRENTLY KNOWN TO MANAGEMENT THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THOSE IN FORWARD-LOOKING STATEMENTS ARE SET FORTH IN
THE SAFE HARBOR COMPLIANCE STATEMENT FOR FORWARD-LOOKING STATEMENTS INCLUDED AS
EXHIBIT 99.1 TO OUR FORM 10-SB12G, AND ARE HEREBY INCORPORATED HEREIN BY
REFERENCE. WE UNDERTAKE NO OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING
STATEMENTS TO REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED
EVENTS OR CHANGES TO FUTURE OPERATING RESULTS OVER TIME.





<PAGE>



                                     PART I

ITEM I. DESCRIPTION OF BUSINESS.

HISTORY

Hankersen International Corp. (f/k/a Kushi Natural Foods Corp.), was
incorporated under the laws of the State of Delaware on August 1, 1996. We were
formed in connection with the merger acquisition of Kushi Macrobiotics Corp.
("KMC") with American Phoenix Group, Inc. ("APGI") in 1996. Prior to such
acquisition, KMC had operated a business of marketing a line of natural foods
(the "Kushi Cuisine"). This business was not successful and management
determined that it would be in the shareholder's interest for KMC to operate a
different business.

In August 2005, we, through Kushi Sub, Inc., a newly formed Delaware corporation
and wholly-owned subsidiary of us ("Acquisition Sub") acquired all the ownership
interest in Hanxin (Cork) International Holding Co., Ltd. ("Hanxin
International"), a British Virgin Islands limited liability corporation,
organized in September 2004. We acquired Hanxin International in exchange for
24,000,000 shares of common stock and 1,000 shares of the Series A Preferred
Stock, which such shares converted into 29,530,937 shares of common stock.
Subsequent to the merger and upon the conversion of the Series A Preferred
Stock, the former shareholders of Hanxin International own 95% of the
outstanding shares of our common stock.

During the year ended December 31, 2005, through Hanxin, we acquired a 75%
equity interest of Cork Import and Export Co. Ltd. ("Cork I&E"), a PRC
corporation that engages in cork trading businesses.

Hanxin International has no other business activities other than owning 100% of
Xi'An Cork Investments Consultative Management Co., Ltd. ("Xi'An"), which owns
92% of Xian Hanxin Technology Co., Ltd. ("Hanxin"), incorporated in July 2002,
both Xi'An and Hanxin are People's Republic of China (PRC) corporations. Most of
our operating and business activities are conducted through Hanxin.


BUSINESS OVERVIEW

Hanxin is engaged in developing, manufacturing and marketing of cork wood floor,
wall and decorating materials. Its products are sold to customers in China by an
internal sales network and to oversea customers in India, the United States of
America, Germany and Japan through unrelated distributors and agents. Mr.
Fangshe Zhang, our Chairman and a principal shareholder currently owns four cork
processing technology related patents in China, and has licensed three of them
to Hanxin.

Our objective is to utilize the cost advantages of being based in China in order
to become a leading cork flooring producer. In order to achieve our objectives,
we intend to, among other things, increase our sales and marketing efforts,
enhance production capacity, ensure our raw material incoming source, acquire
other cork manufacturing factories and other cork exporting companies in China,
export our cork products to oversea countries by our own sales network, and
establish our own cork plantation in the world. There is no assurance that we
will be able to achieve these objectives.

                                      -1-
<PAGE>


PRODUCTS

CORK FLOORING PLANKS

Hanxin produces seven series of cork flooring planks with over 50 different
patterns, colors and granules. Cork floor accounted for 69% of our revenue in
2007, and is the main product line for Hanxin. Hanxin intends to develop
additional series of product lines modeled its existing products. The special
features of cork material have enabled it to be an ideal flooring material. With
its elasticity, cork is a natural floor cushion, is sound proofed, comfortable
to walk on and, unlike other materials, it does not get the appearance of being
"worn out". Cork flooring can also be crafted into many different designs and
patterns, many of which are difficult to achieve using other raw materials.

CORK WALLBOARD AND ART CRAFTS

Hanxin produces 16 types of cork wallboard and three types of cork art crafts
with different patterns. All these products utilize Hanxin's special staining
technology to create different colors. Hanxin's cork art crafts includes
ornaments and decorations. Wallboard can also be used as decorative material.

CORK GRANULE AND SHEET ROLL

Hanxin also sells semi-finished cork products to other manufacturers which use
cork granule and sheet roll as raw materials. Cork Granule comes in various
sizes and is the early stage of cork material processing. Cork Sheet/Roll is a
type of thin cork material, which needs advanced processing techniques and vital
manufacturing requirements. It costs more than other basic materials and the
customers use it as raw material of cork art crafts.

MARKETING AND GROWTH STRATEGIES

As previously discussed, we sell our products in China through our own sales
persons, local distributors and retail sellers. The markets overseas primarily
are approached through unrelated overseas distributors and agents.

o    Domestic market:

Our domestic marketing strategies are based on our existing market channels,
whereby we work with our own sales persons, domestic distributors and domestic
retail sellers to create a China sales network. We currently use our Xian office
as the headquarters of our sales network, and have many sales representatives
throughout Beijing, Shanghai and Guangzhou. We intend to hire more sales
representatives in the two major cities: Jinan and Shenyang, within the central
and northeast regions of China to attempt to increase our market reach and

                                      -2-
<PAGE>

facilitate our day-to-day operations in 2008. Commencing from the third quarter
of 2007, we began to retain the SHUTA cork company, which had an existing sales
network in China, to assist us with the promotion and sales of cork flooring
tile and wall title. We expect to promote our market share in China through the
cooperation with the SHUTA cork company.

o    International market:

Previously, our products were sold internationally though unrelated national
distributors and agents (those are our independent clients). Our products are
currently being exported to India, the United States, Japan, and Germany by
those unrelated national distributors and agents. Commencing in May 2007, we
began selling our products to oversea clients directly through our own export
sales network instead of through those unrelated national distributors or
agents. In the near future, we expect to extend our own oversea export sales
network to other Asian and North American markets.

MARKET OPPORTUNITIES AND COMPETITION

MARKET OPPORTUNITIES

According to a media report called "Real Estate Market Analysis & Report of
China in 2007", construction and sales of residential real estate in PRC
increased 5% during 2007, and 24.7% respectively as compared to 2006, and it is
expected that this increase will continue in 2008. The growth for demand of
flooring products is directly attributed to the growth in real estate markets.
The increase of the real estate industry will hopefully continue to increase the
demand of wood flooring including cork flooring. We believe that cork tile, the
soft wood flooring which is different from other hard wood flooring, will enjoy
similar or even a higher growth rate because of its distinct characteristics and
multi purposes.

COMPETITION

The increasing real estate market has resulted in an increase of various types
of flooring. Based on various studies, sales of flooring have been increasing
and will continue to increase during th next five years. We believe we are
currently a leading manufacturer and producer of cork flooring in China,
including technology, in production volume of production and in total sales. We
produced about 650,000 square meters of cork flooring planks and boards in 2007.

In term of domestic competition, we believe we have several competitive
advantages over its competitors:

o    Proximity to raw material resources

According to a report from the website "Introduction of Cork", the world
reserves of cork resources are mainly concentrated in Mount Qinba of Shaanxi
PRC, which is where our factory is located, and a minority of provinces at the
same latitude which accounts for more than 65% of total bark production in PRC.

                                      -3-
<PAGE>



ADVANTAGES IN PRODUCTS

Hanxin produces high end cork product for decoration. The products have high
quality and a variety of patterns. Production requires proprietary processing
and manufacturing technology that creates barriers to other domestic
competitors.

Hanxin believes that it will be able to compete on an international basis based
on the cost advantages of doing business in China. Hanxin's cost advantages
arise primarily from two sources: low labor costs and competitive raw material
costs. In addition, with the support of local government, Hanxin enjoys the
advantages of favorable tax and other beneficial policies.

PRODUCTION PROCESS

Hanxin has designed certain production processes in order to ensure the quality
of its products. As discussed previously, our Chairman and a principal
shareholder of currently owns four cork processing technology related patents in
China, and has licensed three of them to Hanxin.


QUALITY CONTROL

We place great emphasis on the quality of its products and quality control
system. In particular:

     o    In March, 2005, Hanxin cork floor was approved by State plywood
          Quality Supervision and Test Center for formaldehyde emission, TS
          water immersion testing. (Certification No. Floor 2005-65/66/6768)

     o    In March, 2005,Hanxin cork wallboard was approved by State plywood
          Quality Supervision and Test Center for formaldehyde emission testing.
          (Certification No. Floor 2005-64)

     o    In February 2005, Hanxin cork floor passed material sound absorption
          testing by Acoustics Research Center from Tong Ji University

     o    In October. 2003, Hanxin cork floor was approved by Xi'an Institute of
          Supervision & Testing on Product Quality in standard testing of
          GB18580, GB/T18102-2000, GB/T18103-2000 with Certification
          NO.G0300708.

     o    In Nov. 2003, Hanxin cork wallboard was approved by Xi'an Institute of
          Supervision & Testing on Product Quality in standard testing of
          Q/HX01-2001 with Certification NO.G0300742.

     o    In October 2001, Hanxin's products and standards were certified by the
          Xi'an Quality Technology Supervision Bureau, the governmental agency
          responsible for the inspection of commodities being imported and
          exported to and from China

                                      -4-
<PAGE>


     o    Currently, Hanxin is working on ISO9000: 2000 and ISO14001
          certifications.

EMPLOYEES

We have approximately 260 employees, and believe our relationship with our
employees is good.

ITEM IA. RISK FACTORS

In a market environment that is difficult to predict and that involves
significant risks and uncertainties, many of which will be beyond the control of
us. Additional risks and uncertainties not presently known to us, or that are
not currently believed to be important to you, if they materialize, also may
adversely affect us.

         HANXIN MAY NOT BE ENTITLED TO CERTAIN BENEFITS THAT IT RECEIVES FROM
THE CHINESE GOVERNMENT, WHICH MAY HAVE AN ADVERSE AFFECT ON ITS BUSINESS.

         Hanxin takes advantage of favorable tax rates and other beneficial
governmental policies afforded to it as a result of the nature of its business.
In the event that the program offered to Hanxin is amended or rescinded or
Hanxin's business no longer meets the eligibility requirements of the program,
it may not be able to enjoy the benefits of these programs and as a result may
have to pay higher income taxes, which may have a material adverse affect on
Hanxin.

         The Chinese government might adjust the current industrial policies and
tax rates with the growth of political and economic environment in China, which
may negatively impact Hanxin's business.


         HANXIN MUST BE ABLE TO EFFECTIVELY IMPROVE ITS PRODUCT AND IF IT IS
UNABLE TO IMPROVE ITS PRODUCT, ITS BUSINESS MAY BE ADVERELY AFFECTED.

         Management believes that Hanxin's cork products enjoy technical
advantages over its competitors in China. If Hanxin is unable to improve and
develop its products, Hanxin may not be able to compete effectively.

                                      -5-
<PAGE>


         HANXIN IS DEPENDENT ON ITS RAW MATERIALS. ANY SHORTAGES OF THE
NECESSARY MATERIALS WILL HAVE A MATERIALLY ADVERSE EFFECT ON ITS BUSINESS

         The supply of cork raw material is the base of production. The
shortfall of raw material will impair the development and production of Hanxin's
products. The supply of these raw materials can also be adversely affected by
any material change in the climate or other environmental conditions, which may
have a material adverse impact on the costs of raw materials and the results of
operations and financial condition of Hanxin.

         HANXIN IS DEPENDENT ON KEY PERSONNEL, AND THE LOSS OF ANY
KEY EMPLOYEES, OFFICERS AND/OR DIRECTORS MAY HAVE A MATERIALLY ADVERSE EFFECT ON
HANXIN'S OPERATIONS.

         Hanxin's success will be substantially dependent on the continued
services of its executive officers and other key personnel, who generally have
extensive experience in the cork industry and have been employed by Hanxin for
substantial periods of time. The loss of the services of any key employees, or
Hanxin's failure to attract and retain other qualified and experienced personnel
on acceptable terms, could have a material adverse effect on its business and
results of operations.

WE DO NOT OWN THE CORK PROCESSING TECHNOLOGY RELATED PATENTS WE ARE USING AND
ARE SUBJECT TO THE TERMS AND CONDITIONS OF A LICENSING AGREEMENT.

         We are dependent on the patents licensed to use from our Chairman and
principal shareholder. He owns four cork processing technology related patents
in China, and has licensed three of them to Hanxin. As a result, our business
activities related to exploiting these patents are dependent on the license
granted to us from him. In the event that the license is terminated, such a
result would have a material adverse affect on the company as it would prevent
us from using them in our business and deriving revenue associated therewith.


         DUE TO VOLATILITY, ANY QUARTER-TO-QUARTER COMPARISONS IN OUR
CONSOLIDATED FINANCIAL STATEMENTS MAY NOT BE MEANINGFUL

         Hanxin's business is subject to fluctuations, which may cause its
operating results to fluctuate from quarter-to-quarter. This fluctuation may
result in volatility or have an adverse effect on the market price of our common
stock.

                                      -6-
<PAGE>

         CHANGES IN THE EXTENSIVE REGULATIONS TO WHICH HANXIN IS SUBJECT COULD
INCREASE ITS COST OF DOING BUSINESS OR AFFECT ITS ABILITY TO GROW.

         The governments of countries where Hanxin's exports products,
including, but not limited to India, the United States, Germany and Japan, may,
from time to time, consider regulatory proposals relating to raw materials,
market, and environmental regulation, which, if adopted, could lead to
disruptions in supply and/or increases in operational costs, and hence
indirectly affect Hanxin's profitability. To the extent that Hanxin increases
its product prices as a result of such changes, its sales volume and revenues
may be adversely affected. Furthermore, these governments may change certain
regulations or impose additional taxes or duties on certain Chinese imports from
time to time. Such regulations, if effected, may have a material adverse impact
on Hanxin's operations revenue and/or profitability.

         THERE IS NO ASSURANCE OF AN ESTABLISHED PUBLIC TRADING MARKET OF OUR
SECURITIES AND THERE CAN BE NO ASSURANCE THAT ONE WILL EVER BE ESTABLISHED.

         There can be no assurances that a market for our common stock will be
established. Our common stock will be influenced by a number of factors relating
to Hanxin, including:

     o    the issuance of new equity securities;

     o    competitive developments, including announcements by competitors of
          new products or services or significant contracts, acquisitions,
          strategic partnerships, joint ventures or capital commitments;

     o    variations in quarterly operating results;

     o    change in financial estimates by securities analysts;

     o    the depth and liquidity of the market for Company's common stock;

     o    our investor perceptions and the technologies industries generally;

     o    general economic and other national conditions; and

     O    regulation of the OTCBB

         CONTROL BY PRINCIPAL SHAREHOLDERS, OFFICERS AND DIRECTORS.

         Our principal shareholders, officers and directors beneficially own
approximately sixty percent (60%) of our Common Stock. As a result, such persons
may have the ability to control us and direct our affairs and business. Such
concentration of ownership may also have the effect of delaying, deferring or
preventing change in control of us. See "Security Ownership Of Certain
Beneficial Owners And Management."

         POSSIBLE NEED FOR ADDITIONAL FINANCING.

         We may need additional financing in the future. The ultimate success of
we may depend upon our ability to raise additional capital. We have not
investigated the availability, source, or terms that might govern the
acquisition of additional capital and will not do so until it determines a need
for additional financing. If additional capital is needed, there is no assurance
that funds will be available from any source or, if available, that they can be
obtained on terms acceptable to us. If not available, our operations will be
limited to those that can be financed with our modest capital.

                                      -7-
<PAGE>



         OUR COMMON STOCK IS DEEMED TO BE A "PENNY STOCK," WHICH MAY MAKE IT
MORE DIFFICULT FOR INVESTORS TO SELL THEIR SHARES DUE TO SUITABILITY
REQUIREMENTS.

         Our common stock could be considered to be a "penny stock" if it meets
one or more of the definitions in Rules 15g-2 through 15g-6 promulgated under
Section 15(g) of the Securities Exchange Act of 1934, as amended. These include
but are not limited to the following: (i) the stock trades at a price less than
$5.00 per share; (ii) it is not traded on a "recognized" national exchange;
(iii) it is not quoted on the NASDAQ Stock Market, or even if so, has a price
less than $5.00 per share; or (iv) is issued by a company with net tangible
assets less than $2.0 million, if in business more than a continuous three
years, or with average revenues of less than $6.0 million for the past three
years. The principal result or effect of being designated a "penny stock" is
that securities broker-dealers cannot recommend the stock but must trade in it
on an unsolicited basis.

         BROKER-DEALER REQUIREMENTS MAY AFFECT TRADING AND LIQUIDITY OF OUR
COMMMON STOCK WHICH MAY RESULT IN SHAREHOLDERS BEING UNABLE TO SELL THEIR
SHARES.

         Section 15(g) of the Securities Exchange Act of 1934, as amended, and
Rule 15g-2 promulgated thereunder by the SEC require broker-dealers dealing in
penny stocks to provide potential investors with a document disclosing the risks
of penny stocks and to obtain a manually signed and dated written receipt of the
document before effecting any transaction in a penny stock for the investor's
account.

         Potential investors in our common stock are urged to obtain and read
such disclosure carefully before purchasing any shares that are deemed to be
"penny stock." Moreover, Rule 15g-9 requires broker-dealers in penny stocks to
approve the account of any investor for transactions in such stocks before
selling any penny stock to that investor. This procedure requires the
broker-dealer to (i) obtain from the investor information concerning his or her
financial situation, investment experience and investment objectives; (ii)
reasonably determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably capable of evaluating the risks of
penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in
(ii) above; and (iv) receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the investor's financial
situation, investment experience and investment objectives. Compliance with
these requirements may make it more difficult for holders of our common stock to
resell their shares to third parties or to otherwise dispose of them in the
market or otherwise.

                                      -8-
<PAGE>


         NO ASSURANCE OF SUCCESS OR PROFITABILITY.

         There is no assurance that we will acquire a favorable business
opportunity. Even if we should become involved in a business opportunity, there
is no assurance that we will generate revenues or profits, or that the market
price of our Common Stock will be increased thereby.

         INDEMNIFICATION OF OFFICERS AND DIRECTORS.

         Our Articles of Incorporation and applicable Delaware Law provide for
the indemnification of our directors, officers, employees, and agents, under
certain circumstances, against attorney's fees and other expenses incurred by
them in any litigation to which they become a party arising from their
association with or activities on behalf of us. We will also bear the expenses
of such litigation for any of its directors, officers, employees, or agents,
upon such person's promise to repay us therefore if it is ultimately determined
that any such person shall not have been entitled to indemnification. This
indemnification policy could result in substantial expenditures by us which it
will be unable to recoup.

         DIRECTOR'S LIABILITY LIMITED.

         Our Articles of Incorporation exclude personal liability of our
directors to us and our stockholders for monetary damages for breach of
fiduciary duty except in certain specified circumstances. Accordingly, we will
have a much more limited right of action against our directors than otherwise
would be the case. This provision does not affect the liability of any director
under federal or applicable state securities laws.

         DEPENDENCE UPON OUTSIDE ADVISORS.

         To supplement the business experience of our officers and directors, we
may be required to employ accountants, technical experts, appraisers, attorneys,
or other consultants or advisors. The selection of any such advisors will be
made by our officers and directors without any input from stockholders.
Furthermore, it is anticipated that such persons may be engaged on an "as
needed" basis without a continuing fiduciary or other obligation to us. In the
event the Company considers it necessary to hire outside advisors, he may elect
to hire persons who are affiliates, if they are able to provide the required
services.

         NO FORESEEABLE DIVIDENDS.

         We have not paid dividends on its Common Stock and do not anticipate
paying such dividends in the foreseeable future.

         RULE 144 SALES.

         All of the outstanding shares of Common Stock held by present
stockholders are "restricted securities" within the meaning of Rule 144 under
the Securities Act of 1933, as amended.

                                      -9-
<PAGE>


         As restricted shares, these shares may be resold only pursuant to an
effective registration statement or under the requirements of Rule 144 or other
applicable exemptions from registration under the Act and as required under
applicable state securities laws. Rule 144 provides in essence that a person who
has held restricted securities for more than one year may, under certain
conditions, sell every three months, in brokerage transactions, a number of
shares that does not exceed the greater of 1.0% of a company's outstanding
common stock or the average weekly trading volume during the four calendar weeks
prior to the sale. As a result of revisions to Rule 144 which became effective
on or about April 29, 1997, there will be no limit on the amount of restricted
securities that may be sold by a non-affiliate after the restricted securities
have been held by the owner for a period of two years. A sale under Rule 144 or
under any other exemption from the Act, if available, or pursuant to subsequent
registrations of shares of Common Stock of present stockholders, may have a
depressive effect upon the price of the Common Stock in any market that may
develop.

ITEM 1B.   UNRESOLVED COMMENTS

         There were no unresolved comments from the Securities and Exchange
Commission during the year ended December 31, 2007.


ITEM 2.     DESCRIPTION OF PROPERTIES

Hanxin owns one property in Xi'an called "YuLeraYuan" which is for approximately
10,360.3 square meters. It was used for an entertainment space, and leased out
to an unrelated party. However, in 2007, we renovated the space and built an
additional student dormitory in YuLerYuan. Hanxin expects to complete the
internal decoration of this new student dormitory, and intends to lease these
facilities to the university located at the YuLerYuan. Hanxin also leases an
office space about 436 square meters in Xi'an for approximately $1,852
(equivalent to RMB14,083 included rent and maintenance fee) per month. The lease
for this office space expires on December 31, 2008. Hanxin also leases the right
to use a parcel of land which is approximately 53,120 square meters and is used
as our cork processing plant. The lease fee for this processing plant is about
$1,315 (equivalent to RMB10,000) per month, and the lease had been extended to
October 2047. Hanxin had built a fifth removable workshop on the leased land
during year 2007, and expects to complete the whole construction project in the
second quarter of year 2008. Hanxin intends to purchase more production
facilities to install in the fifth workshop and increase its production capacity
starting from the second quarter of 2008. If our funds and cash inflow
available, we may also complete the acquisition of a cork manufacturing
enterprise in Sichuan District of PRC in year 2008.

ITEM 3.     LEGAL PROCEEDINGS

         We are not currently a party to any material legal proceeding.

                                      -10-
<PAGE>


ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.
                                     PART II


ITEM 5.     MARKET FOR THE COMMON EQUITY AND RELATED
                  STOCKHOLDER MATTERS


        Our common stock is traded on Over-The-Counter Bulletin Board under the
symbol HKRS.OB. Our common stock became eligible for trading on April 6, 2006.
As of March 28, 2008, there were approximately 85 registered holders of record
of our common stock. The following table sets forth the range of high and low
bid information for the year ended December 31, 2007.

PERIOD                                               HIGH BID        LOW BID
--------------------------------------------------------------------------------

2007
First quarter                                          $0.185           $0.10
Second quarter                                          $0.14           $0.05
Third quarter                                           $0.16          $0.105
Fourth quarter                                          $0.25           $0.15

         The above quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.

         We have never declared dividends or paid any cash dividends on our
capital stock. We currently intend to retain all future earnings, if any, for
use in the operation and development of its business and, therefore, do not
expect to declare or pay any cash dividends on its Common Stock in the
foreseeable future.

ITEM 6.    MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL
               CONDITION

The following analysis of our consolidated financial condition and results of
operations for the years ended December 31, 2007 and 2006 should be read in
conjunction with the consolidated financial statements, including footnotes.

                                      -11-
<PAGE>


         OVERVIEW

We, through its subsidiaries, engage in developing, manufacturing and marketing
of cork wood floor, wall and decorating materials.

Hanxin is a manufacturing company based in China, which produces cork-building
material sold under the Hanxin brand name. Approximately 75% of Hanxin's
products sold in year 2007 were to customers in China by our own sales persons,
and domestic distributors and agents, with the remaining sales being made to
customers in India, the United States, Germany and Japan through unrelated
national distributors and agents. Our Chairman and a principal shareholder
currently owns four cork processing technology related patents in China, and has
licensed three of them to Hanxin.


         FOREIGN EXCHANGE CONSIDERATIONS

Even though we are a U.S. company, because all of our operations are located in
the PRC, we face certain risks associated with doing business in that country.
These risks include risks associated with the ongoing transition from state
business ownership to privatization, operating in a cash-based economy, dealing
with inconsistent government policies, unexpected changes in regulatory
requirements, export restrictions, tariffs and other trade barriers, challenges
in staffing and managing operations in a communist country, differences in
technology standards, employment laws and business practices, longer payment
cycles and problems in collecting accounts receivable, changes in currency
exchange rates and currency exchange controls. We are unable to control the vast
majority of these risks associated both with our operations and the country in
which they are located and these risks could result in significant declines in
our revenues.

Because revenues from our operations in the PRC accounted for 100% of our
consolidated net revenues, how we report net revenues from our PRC-based
operations is of particular importance to understanding our financial
statements. Transactions and balances originally denominated in U.S. dollars are
presented at their original amounts. Transactions and balances in other
currencies are converted into U.S. dollars in accordance with Statement of
Financial Accounting Standards (SFAS) No. 52, "Foreign Currency Translation,"
and are included in determining comprehensive net income or loss. For foreign
operations with the local currency as the functional currency, assets and
liabilities are translated from the local currencies into U.S. dollars.
Translation adjustments resulting from the process of translating the local
currency financial statements into U.S. dollars are included in determining
comprehensive income or loss.

The functional currency of our Chinese subsidiaries is the Chinese RMB, the
local currency. The financial statements of the subsidiaries are translated to
U.S. dollars using year-end rates of exchange for assets and liabilities, and
average rates of exchange for the period for revenues, costs, and expenses. Net
gains and losses resulting from foreign exchange transactions are included in
the consolidated statements of operations and were not material during the
periods presented. Until 1994, the RMB experienced a gradual but significant
devaluation against most major currencies, including U.S. dollars, and there was
a significant devaluation of the RMB on January 1, 1994 in connection with the
replacement of the dual exchange rate system with a unified managed floating
rate foreign exchange system. Since 1994, the value of the RMB relative to the
U.S. Dollar has remained stable and has appreciated slightly against the U.S.
dollar. Countries, including the United States, have argued that the RMB is
artificially undervalued due to China's current monetary policies and have
pressured China to allow the RMB to float freely in world markets.

                                      -12-
<PAGE>


On July 21, 2005, the PRC reported that it would have its currency pegged to a
basket of currencies rather than just tied to a fixed exchange rate to the
dollar. It also increased the value of its currency 2% higher against the
dollar, effective immediately. If any devaluation of the RMB were to occur in
the future, returns on our operations in China, which are expected to be in the
form of RMB, will be negatively affected upon conversion to U.S. dollars.
Although we attempt to have most future payments, mainly repayments of loans and
capital contributions, denominated in U.S. dollars, if any increase in the value
of the RMB were to occur in the future, our product sales in China and in other
countries may be negatively affected.

         CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United
States. The preparation of these consolidated financial statements requires us
to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an on-going basis, we evaluate our estimates based on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

A summary of significant accounting policies is included in Note 3 to the
consolidated financial statements. Management believes that the application of
these policies on a consistent basis enables us to provide useful and reliable
financial information about our operating results and financial condition.

We record property and equipment at cost. Depreciation is provided using the
straight-line method over the estimated economic lives of the assets, which are
from 2 to 35 years. Expenditures for major renewals and betterments that extend
the useful lives of property and equipment are capitalized. Expenditures for
maintenance and repairs are charged to expense as incurred. We review the
carrying value of long-lived assets for impairment at least annually or whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of long-lived assets is measured by
comparison of its carrying amount to the undiscounted cash flows that the asset
or asset group is expected to generate. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the property, if any, exceeds its fair market value.

Our revenues from the sale of products are recognized when the goods are
shipped, title passes, the sales price to the customer is fixed and
collectibility is reasonably assured. Persuasive evidence of an arrangement is
demonstrated via purchase order from customer, product delivery is evidenced by
warehouse shipping log as well as bill of lading from the trucking company and
no product return is allowed except defective or damaged products, the sales
price to the customer is fixed upon acceptance of purchase order, there is no
separate sales rebate, discounts, and volume incentives.

                                      -13-
<PAGE>


RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2007 AS COMPARED TO YEAR ENDED DECEMBER 31, 2006

         REVENUES

         For the year ended December 31, 2007, our revenues were $16,050,938 as
compared to $12,041,588 for the year ended December 31, 2006, an increase of
$4,009,350 or approximately 33.3%. The reason for the increase is primarily due
to our selling efforts, increased sales of our major finished goods (wood
materials, floors, and boards) increased as compared to the sales quantities in
year 2006. Also(pound) we increased our unit sales prices by 20% starting in
October 2007. For the year ended December 31, 2007, our revenues from wood
materials, boards, and floor sales were $832,318, $434,954, and $2,123,730
respectively more than the revenue from sales of those items during the year
ended December 31, 2006. Even though we had decreased sales on the wood paper
products, this was offset by the increase sales amount in tree skin raw material
for the year ended December 31, 2007.

         COST OF SALES AND GROSS PROFIT

For the year ended December 31, 2007, cost of sales amounted to $10,990,041 or
68.47% of net revenues as compared to cost of sales of $9,333,361 or 77.51% of
net revenues for the year ended December 31, 2006, a percentage decrease of
9.04%. The decrease was primarily due to reduction of waste of materials
resulting in more efficient work from repaired and improved machinery and
equipment used by us. Accordingly, gross profit for the year ended December 31,
2007 increased $2,352,670 to $5,060,897 from $2,708,227 in the year ended
December 31, 2006. We are currently working with a vendor of raw materials to
secure future price by proposing long term supplier contracts.


         OPERATING EXPENSES

For the year ended December 31, 2007, total operating expenses were $2,467,341
as compared to $1,926,056 for the year ended December 31, 2006, an increase of
$541,285 or 28.1%.

Included in this increase were:

* For the year ended December 31, 2007, selling expenses amounted to $1,954,225
as compared to $1,363,494 for the year ended December 31, 2006, an increase of
$590,731 or 43.32%. For the year ended December 31, 2007, we experienced a
significant increase in sales commission expenses of $282,751 and in freight
expenses of $22,843 with our increased revenue. Another reason for the increase
in selling expenses was the increase in advertising costs of $191,342 to improve
sales quantities.

                                      -14-
<PAGE>


* For the year ended December 31, 2007, general and administrative expenses were
$513,116 as compared to $562,562 for the year ended December 31, 2006, a
decrease of $49,446 or 8.79%. The decrease in general and administrative costs
were primarily attributable to a $94,294 decrease in directors conference fees,
technical fees and legal fee associated with decreased operations. The decrease
was offset by, an increase of $34,775 employees' salaries, bonus, employee
benefits, entertainment fees as well as accounting and professional fees during
2007 in connection with our SEC filings and continued compliance with the
provisions of the Sarbanes-Oxley Act of 2002, including new provisions which
will be effective in year 2008.


         OTHER INCOME (EXPENSE)

For the year ended December 31, 2007, other expense amounted to $324,409 as
compared to other income of $47,855 for the year ended December 31, 2006. Other
(expense) income, net for the years ended December 31, 2007 and 2006 were
primarily related to net rental income $78,226 and $68,618 respectively from our
leasing entertainment facility. These rental net incomes had been offset by the
franchise taxes $55,000 and $0 accrued in the year 2007 and 2006, respectively.

For the year ended December 31, 2007, net interest expense was $6,270 as
compared to net interest income of $50,952 for the year ended December 31, 2006,
a decrease of $57,222. This was attributable to (i) loans made to its related
party DeRong during first nine months of 2006 and (ii) loans made to us from
banks.


         INCOME TAXES

Income taxes increased by $215,291 to $348,871 for the year ended December 31,
2007 as opposed to $133,580 for the year ended December 31, 2006. This increase
was due to an increase in net income before income taxes.

         MINORITY INTEREST

For the year ended December 31, 2007, we reported a minority interest in income
of subsidiary of $158,235 as compared to $63,486 for the year ended December 31,
2006. The minority interests income of subsidiaries were attributable to Hanxin
and Cork I&E, which we allocated to the minority stockholders, and reduced our
net income.

                                      -15-
<PAGE>



LIQUIDITY AND CAPITAL RESOURCES

Operating working capital (cash plus accounts receivable plus inventory less
accounts payable and accrued expenses) increased by $123,587 from $2,637,202 as
of December 31, 2006 to $2,760,789 as of December 31, 2007. The increase was
primarily due to an increase in accounts receivable of $448,731 from $1,981,041
as of December 31, 2006 to $2,429,772 as of December 31, 2007, and an increase
in inventory of $221,966 from $698,174 as of December 31, 2006 to $920,140 as of
December 31, 2007. Those increases were somewhat offset by the cash and
equivalents which decreased by $197,337 from $564,733 as of December 31, 2006 to
$367,396 as of December 31, 2007, and an increase in accounts payable and
accrued expenses of $349,773 from $606,746 as of December 31, 2006 to $956,519
as of December 31, 2007. The increase in accounts receivable and inventory
during the year ended December 31, 2007 was due to increased credit sales, the
reserving of more raw materials, and the increased manufacturing of finished
goods during 2007 as compared to year 2006, which should assist in increasing
sales demands in 2008.

Cash provided by operating activities was $2,074,461 for the year ended December
31, 2007 as compared to $1,270,429 provided for the year ended December 31,
2006. The increase in cash provided by operating activities for the year ended
December 31, 2007 primarily due to the increase of net income in 2007.

Net cash used in investing activities decreased $1,323,454 to $2,053,708 for the
year ended December 31, 2007 from $3,397,162 for the year ended December 31,
2006. This change was primarily due to the repayment of unrelated party loans
and the return of a deposit for the purchase of fixed assets had been received
in year 2007

Financing activities for the year ended December 31, 2007 was $388,956 as
compared to $2,027,202 net cash provided for the year ended December 31, 2006.
This change was primarily attributable to reduced collections, and increased
cash advances to shareholders and officers, and short-term loans during the year
ended December 31, 2007 when compared to the year ended December 31, 2006.


OPERATING RISK

(a) Country risk

Our revenues are mainly derived from the sale of wood floors, boards, and basis
materials products in the Peoples Republic of China (PRC). We expect to expand
our sales to the countries outside the PRC by our own sales network, however,
such expansion just commences in May 2007, and there are no assurances that we
will be able to achieve such an expansion successfully in the future. Therefore,
a downturn or stagnation in the economic environment of the PRC and the
countries that our products are sold in could have a material adverse effect on
our financial condition.

(b) Product risk

In addition to competing with other Chinese companies, we may have to compete
with larger US and European companies who have greater funds available for
expansion, marketing, research and development and the ability to attract more
qualified personnel if access is allowed into the PRC market. If U.S. and
European companies do gain access to the PRC markets, they may be able to offer
products at a lower price. There can be no assurance that we will remain
competitive should this occur.

                                      -16-
<PAGE>


(c) Exchange risk

We can not guarantee that the current exchange rate will remain steady,
therefore there is a possibility that we could post the same amount of profit
for two comparable periods and because of a fluctuating exchange rate actually
post higher or lower profit depending on exchange rate of Chinese Renminbi
converted to US dollars on that date. The exchange rate could fluctuate
depending on changes in the political and economic environments without notice.

(d) Political risk

Currently, PRC is in a period of growth and is openly promoting business
development in order to bring more business into PRC. Additionally PRC allows a
Chinese corporation to be owned by a United States corporation. If the laws or
regulations are changed by the PRC government, our ability to operate the PRC
subsidiaries could be affected.

(e) Key personnel risk

Our future success depends on the continued services of executive management in
China. The loss of any of their services would be detrimental to us and could
have an adverse effect on business development. We do not currently maintain
key-man insurance on their lives. Future success is also dependent on the
ability to identify, hire, train and retain other qualified managerial and other
employees. Competition for these individuals is intense and increasing.

(f) Performance of subsidiaries risk

All of our revenues are derived via the operations of our Chinese subsidiaries.
Economic, governmental, political, industry and internal company factors outside
of our control affect each of the subsidiaries. If the subsidiaries do not
succeed, the value of the assets and the price of our common stock could
decline. Some of the material risks relating to the partner companies include
the fact that the subsidiaries are located in China and have specific risks
associated with that and the intensifying competition for our products and
services and those of the subsidiaries.

OFF BALANCE SHEET ARRANGEMENTS


Under SEC regulations, we are required to disclose our off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to investors. An off-balance sheet arrangement means
a transaction, agreement or contractual arrangement to which any entity that is
not consolidated with us is a party, under which we have:

o   Any obligation under certain guarantee contracts;

o Any retained or contingent interest in assets transferred to an unconsolidated
entity or similar arrangement that serves as credit, liquidity or market risk
support to that entity for such assets;

                                      -17-
<PAGE>


o Any obligation under a contract that would be accounted for as a derivative
instrument, except that it is both indexed to our stock and classified in
stockholder's equity in our statement of financial position; and

o Any obligation arising out of a material variable interest held by us in an
unconsolidated entity that provides financing, liquidity, market risk or credit
risk support to us, or engages in leasing, hedging or research and development
services with us.

As of the date of this report, we do not have any off-balance sheet arrangements
that we are required to disclose pursuant to these regulations. In the ordinary
course of business, we enter into operating lease commitments, purchase
commitments and other contractual obligations. These transactions are recognized
in our financial statements in accordance with generally accepted accounting
principles in the United States.

FEDERAL INCOME TAX ASPECTS OF INVESTMENT IN US

         The discussion contained herein has been prepared by us and is based on
existing law as contained in the Code, amended United States Treasury
Regulations ("Treasury Regulations"), administrative rulings and court decisions
as of the date of this Registration Statement. No assurance can be given that
future legislative enactments, administrative rulings or court decisions will
not modify the legal basis for statements contained in this discussion. Any such
development may be applied retroactively to transactions completed prior to the
date thereof, and could contain provisions having an adverse affect upon us and
the holders of the Common Stock. In addition, several of the issues dealt with
in this summary are the subject of proposed and temporary Treasury Regulations.
No assurance can be given that these regulations will be finally adopted in
their present form.

BASIS IN COMMON STOCK

         The tax basis that a Shareholder will have in his Common Stock will
equal his cost in acquiring his Common Stock. If a Shareholder acquires Common
Stock at different times or at different prices, he must maintain records of
those transactions so that he can accurately report gain or loss realized upon
disposition of the Common Stock.

DIVIDENDS ON COMMON STOCK

         Distributions made by us with respect to the Common Stock will be
characterized as dividends that are taxable as ordinary income to the extent of
our current or accumulated earnings and profits ("earnings and profits"), if
any, as determined for U.S. federal income tax purposes. To the extent that a
distribution on the Common Stock exceeds the holder's allocable share of our
earnings and profits, such distribution will be treated first as a return of
capital that will reduce the holder's adjusted tax basis in such Common Stock,
and then as taxable gain to the extent the distribution exceeds the holder's
adjusted tax basis in such Common Stock. The gain will generally be taxed as a
long-term capital gain if the holder's holding period for the Common Stock is
more than one year.

                                      -18-
<PAGE>


         The availability of earnings and profits in future years will depend on
future profits and losses which cannot be accurately predicted. Thus, there can
be no assurance that all or any portion of a distribution on the Common Stock
will be characterized as a dividend for general income tax purposes. Corporate
shareholders will not be entitled to claim the dividends received deduction with
respect to distributions that do not qualify as dividends. See the discussion
regarding the dividends received deduction below.

REDEMPTION OF COMMON STOCK

         We do not have the right to redeem any Common Stock. However, any
redemption of Common Stock, with the consent of the holder, will be a taxable
event to the redeemed holder.

         We do not believe that the Common Stock will be treated as debt for
federal income tax purposes. However, in the event that the Common Stock is
treated as debt for federal tax purposes, a holder generally will recognize gain
or loss upon the redemption of the Common Stock measured by the difference
between the amount of cash or the fair market value of property received and the
holder's tax basis in the redeemed Common Stock. To the extent the cash or
property received are attributable to accrued interest, the holder may recognize
ordinary income rather than capital gain. Characterization of the Common Stock
as debt would also cause a variety of other tax implications, some of which may
be detrimental to either the holders, us, or both (including, for example,
original issue discount treatment to the Investors). Potential Investors should
consult their tax advisors as to the various ramifications of debt
characterization for federal income tax purposes.

OTHER DISPOSITION OF THE COMMON STOCK

         Upon the sale or exchange of shares of Common Stock, to or with a
person other than us, a holder will recognize capital gain or loss equal to the
difference between the amount realized on such sale or exchange and the holder's
adjusted basis in such stock. Any capital gain or loss recognized will generally
be treated as a long-term capital gain or loss if the holder held such stock for
more than one year. For this purpose, the period for which the Common Stock was
held would be included in the holding period of the Common Stock received upon a
conversion.

STATE, LOCAL AND FOREIGN TAXES

         In addition to the federal income tax consequences described above,
prospective investors should consider potential state, local and foreign tax
consequences of an investment in the Common Stock.

ERISA CONSIDERATIONS FOR TAX-EXEMPT INVESTORS/SHAREHOLDERS

                                      -19-
<PAGE>


GENERAL FIDUCIARY REQUIREMENTS

         Title I of ERISA includes provisions governing the responsibility of
fiduciaries to their Qualified Plans. Qualified Plans must be administered
according to these rules. Keogh plans that cover only partners of a partnership
or self-employed owners of a business are not subject to the fiduciary duty
rules of ERISA, but are subject to the prohibited transaction rules of the Code.

         Under ERISA, any person who exercises any authority or control
respecting the management or disposition of the assets of a Qualified Plan is
considered to be a fiduciary of such Qualified Plan (subject to certain
exceptions not here relevant).

         ERISA Section 404(a)(1) requires a fiduciary of a Qualified Plan to
"discharge his duties with respect to a plan solely in the interest of the
participants and beneficiaries and (A) for the exclusive purpose of: (i)
providing benefits to participants and their beneficiaries, and (ii) defraying
reasonable expenses of administering the plan; (B) with the care, skill,
prudence, and diligence under the circumstances then prevailing that a prudent
man acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims; (C) by
diversifying the investments of a plan so as to minimize the risk of large
losses, unless under the circumstances it is clearly prudent not to do so; and
(D) in accordance with the documents and instruments governing the plan."
Fiduciaries who breach the duties that ERISA imposes may suffer a wide variety
of legal and equitable remedies, including (i) the requirement to restore
qualified plan losses and to pay over any fiduciary's profits to the qualified
plan; (ii) removal as fiduciary of the qualified plan; and (iii) liability for
excise taxes that Section 4975 of the Code imposes

ITEM 7.     FINANCIAL STATEMENTS

SEE "FINANCIAL STATEMENTS" BEGINNING ON PAGE F-1.

ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
            FINANCIAL DISCLOSURE

         None.


ITEM 8A.    CONTROLS AND PROCEDURES

             We are responsible for establishing and maintaining adequate
internal control over financial reporting in accordance with Exchange Act Rule
13a-15. With the participation of our Chief Executive Officer and Chief
Financial Officer, our management conducted an evaluation of the effectiveness
of our internal control over financial reporting as of December 31, 2007 based
on the criteria established in INTERNAL CONTROL-INTEGRATED FRAMEWORK issued by
the Committee of Sponsoring Organizations of the Treadway Commission. Based on
this evaluation, management concluded that our internal control over financial
reporting was effective as of December 31, 2007, based on those criteria. A
control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the Company have been detected.

                                      -20-
<PAGE>


         This annual report does not include an attestation report of the
Company's registered accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission


ITEM 8B. OTHER INFORMATION

None.

ITEM 9:     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
            COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

         The directors and executive officers currently serving us are as
follows:


NAME                          AGE                 POSITIONS HELD

Fangshe Zhang                 50                Chairman
Pengcheng Chen                32                CEO/Director
Yi Tong                       36                Chief Financial Officer/Director
Yi Zhang                      36                Chief Operating Officer
Pingjun Zhang                 59                Chief Technical Officer
Genshe Bai                    48                Director
Shengli Liu                   40                Director

         The directors named above will serve until the annual meeting of our
stockholders. Thereafter, directors will be elected for one-year terms at the
annual stockholders' meeting. Officers will hold their positions at the pleasure
of the Board of Directors, absent any employment agreement, of which none
currently exists or is contemplated. There is no arrangement or understanding
between our sole directors and officers and any other person pursuant to which
any director or officer was or is to be selected as a director or officer.

BIOGRAPHICAL INFORMATION

MR. FANGSHE ZHANG, CHAIRMAN

Mr. Zhang founded Hanxin in 2001 and has acted as its Chairman of the Board of
Directors since its inception. Prior to forming Hanxin, Mr. Zhang was the
general manager of Xi'an Dong Da Terrestrial Heat Heating Co., Ltd., a company
whose primary business was the development of terrestrial heat. Mr. Zhang is a
technical expert in cork processing technology, holding more than six patents in
China.

                                      -21-
<PAGE>


MR. PENGCHENG CHEN, CEO/DIRECTOR

Mr. Chen is our Chief Executive Officer and a director and has worked at Hanxin
since 2002. From 1997 to 1998 he worked for Xi'an Tangcheng Hotel as an
assistant general manager. From 1998 to 2000 he served as general manager of
Xi'an Qingye Virescence Co. Ltd, a gardening engineering company.

MR. YI ZHANG, CHIEF OPERATING OFFICER

Mr. Zhang is our Chief Operating Officer and has worked at Hanxin since April
2004. From April 2002 to August 2004 he was general manager of Shanxi Litian
Science & Technology Co., Ltd, a wine trading company From November 1993 to
March 2002 he worked at Xi'an Xianyang International Airport where from 1996 to
2002 he served as operating manager.

MR. YI TONG, CHIEF FINANCIAL OFFICER

Mr. Tong is our Chief Financial Officer and has worked for Hanxin since February
2004. Mr. Tong has previously worked for several financial institutions. From
May 2003 to February 2004 he served as chief representative of Federal
International Finance Inc., Canada. From August 2001 to May 2003 he worked as a
senior manager for China Dragon Securities Co., Ltd. and from April 2001 to
August 2001 he worked as project manager of China Eagle Securities Co., Ltd.

MR. PINGJUN ZHANG, CHIEF TECHNICAL OFFICER

Mr. Zhang is our Chief Technical Officer and has worked for Hanxin since 1999.
From 1985 through 1999 he was the design manager of Xi'an Chemical Co., Ltd., a
chloralkali chemical company.

MR. GENSHE BAI, DIRECTOR

Mr. Bai is a director of us and has been affiliated with Hanxin since 2002. From
1996 to 2002 he worked as the general manager of Xi'an Commodity Development
Co., Ltd., a company engaged in the purchase and sale of commodities. From
1980-1996 Mr. Bai worked as a manager of the auditing department for Xi'an
Commodity Bureau, a governmental agency responsible for the regulation of
commodities.

MR. SHENGLI LIU, DIRECTOR

Mr. Liu is a director of us and has worked for Hanxin since 2002. From 1997 to
2002 he was the director for the 12th section of Xikang railway project of China
Railway 18th Bureau Group Co., Ltd. From 1989 to 1997 he worked as a manger in
the metals division of the Xi'an Commodity Bureau.

                                      -22-
<PAGE>


EMPLOYMENT AGREEMENTS

         Each major employee and consultant of Hanxin is required to sign an
employment agreement. The employment agreements run for a period of one (1)
year, however, an employee may be fired for cause.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

         Article Ninth of our Certificate of Incorporation provides for
indemnification of our officers and directors to the fullest extent permitted
under the General Corporation Law of the State of Delaware ("DGCL").

                  SECTION 145 of the DGCL, as amended, applies to us and the
relevant portion of the DGCL provides as follows:

                  145. Indemnification of Officers, Directors, Employees and
Agents; Insurance.

                          (a) A corporation may indemnify any person who was or
                  is a party or is threatened to be made a party to any
                  threatened, pending or completed action, suit or proceeding,
                  whether civil, criminal, administrative or investigative
                  (other than an action by or in the right of the corporation)
                  by reason of the fact that he is or was a director, officer,
                  employee or agent of the corporation, or is or was serving at
                  the request of the corporation as a director, officer,
                  employee or agent of another corporation, partnership, joint
                  venture, trust or other enterprise, against expenses
                  (including attorneys' fees), judgments, fines and amounts paid
                  in settlement actually and reasonably incurred by him in
                  connection with such action, suit or proceeding if he acted in
                  good faith and in a manner he reasonably believed to be in or
                  not opposed to the best interests of the corporation, and,
                  with respect to any criminal action or proceeding, had no
                  reasonable cause to believe his conduct was unlawful. The
                  termination of any action, suit or proceeding by judgment,
                  order, settlement, conviction, or upon a plea of nolo
                  contendere or its equivalent, shall not, of itself, create a
                  presumption that the person did not act in good faith and in a
                  manner which he reasonably believed to be in or not opposed to
                  the best interests of the corporation, and, with respect to
                  any criminal action or proceeding, had reasonable cause to
                  believe that his conduct was unlawful.

                                      -23-
<PAGE>


                                  (b) A corporation may indemnify any person who
                  was or is a party or is threatened to be made a party to any
                  threatened, pending or completed action or suit by or in the
                  right of the corporation to procure a judgment in its favor by
                  reason of the fact that he is or was a director, officer,
                  employee or agent of the corporation, or is or was serving at
                  the request of the corporation as a director, officer,
                  employee or agent of another corporation, partnership, joint
                  venture, trust or other enterprise against expenses (including
                  attorneys' fees) actually and reasonably incurred by him in
                  connection with the defense or settlement of such action or
                  suit if he acted in good faith and in a manner he reasonably
                  believed to be in or not opposed to the best interests of the
                  corporation and except that no indemnification shall be made
                  in respect of any claim, issue or matter as to which such
                  person shall have been adjudged to be liable to the
                  corporation unless and only to the extent that the Court of
                  Chancery or the court in which such action or suit was brought
                  shall determine upon application that, despite the
                  adjudication of liability but in view of all the circumstances
                  of the case, such person is fairly and reasonably entitled to
                  indemnity for such expenses which the Court of Chancery or
                  such other court shall deem proper.

                          (c) To the extent that a director, officer, employee
                  or agent of a corporation has been successful on the merits or
                  otherwise in defense of any action, suit or proceeding
                  referred to in subsections (a) and (b) of this section, or in
                  defense of any claim, issue or matter therein, he shall be
                  indemnified against expenses (including attorneys' fees)
                  actually and reasonably incurred by him in connection
                  therewith.

                          (d) Any indemnification under subsections (a) and (b)
                  of this section (unless ordered by a court) shall be made by
                  the corporation only as authorized in the specific case upon a
                  determination that indemnification of the director, officer,
                  employee or agent is proper in the circumstances because he
                  has met the applicable standard of conduct set forth in
                  subsections (a) and (b) of this section. Such determination
                  shall be made (1) by the Board of Directors by a majority vote
                  of a quorum consisting of directors who were not parties to
                  such action, suit or proceeding, or (2) if such a quorum is
                  not obtainable, or, even if obtainable a quorum of
                  disinterested directors so directs, by independent legal
                  counsel in a written opinion, or (3) by the stockholders.

                                      -24-
<PAGE>


                          (e) Expenses (including attorneys' fees) incurred by
                  an officer or director in defending any civil, criminal,
                  administrative or investigative action, suit or proceeding may
                  be paid by the corporation in advance of the final disposition
                  of such action, suit or proceeding upon receipt of an
                  undertaking by or on behalf of such director or officer to
                  repay such amount if it shall ultimately be determined that he
                  is not entitled to be indemnified by the corporation as
                  authorized in this section. Such expenses (including
                  attorneys' fees) incurred by other employees and agents may be
                  so paid upon such terms and conditions, if any, as the board
                  of directors deems appropriate.

                          (f) The indemnification and advancement of expenses
                  provided by, or granted pursuant to, the other subsections of
                  this section shall not be deemed exclusive of any other rights
                  to which those seeking indemnification or advancement of
                  expenses may be entitled under any by-law, agreement, vote of
                  stockholders or disinterested directors or otherwise, both as
                  to action in his official capacity and as to action in another
                  capacity while holding such office.

                          (g) A corporation shall have power to purchase and
                  maintain insurance on behalf of any person who is or was a
                  director, officer, employee or agent of the corporation, or is
                  or was serving at the request of the corporation as a
                  director, officer, employee or agent of another corporation,
                  partnership, joint venture, trust or other enterprise against
                  any liability asserted against him and incurred by him in any
                  such capacity, or arising out of his status as such, whether
                  or not the corporation would have the power to indemnify him
                  against such liability under this section.

                          (h) For purposes of this section, references to "the
                  corporation" shall include, in addition to the resulting
                  corporation, any constituent corporation (including any
                  constituent of a constituent) absorbed in a consolidation or
                  merger which, if its separate existence had continued, would
                  have had power and authority to indemnify its directors,
                  officer and employees or agents, so that any person who is or
                  was a director, officer, employee or agent of such constituent
                  corporation, or is or was serving at the request of such
                  constituent corporation as a director, officer, employee or
                  agent of another corporation, partnership, joint venture,
                  trust or other enterprise, shall stand in the same position
                  under this section with respect to the resulting or surviving
                  corporation as he would have with respect to such constituent
                  corporation if its separate existence had continued.

                                      -25-
<PAGE>


                          (i) For purpose of this section, references to "other
                  enterprises" shall include employee benefit plans; references
                  to "fines" shall include any excise taxes assessed on a person
                  with respect to any employee benefit plan; and references to
                  "serving at the request of the corporation" shall include any
                  service as a director, officer, employee or agent of the
                  corporation which imposes duties on, or involves services by,
                  such director, officer, employee, or agent with respect to an
                  employee benefit plan, its participants, or beneficiaries; and
                  a person who acted in good faith and in a manner he reasonably
                  believed to be in the interest of the participants and
                  beneficiaries of an employee benefit plan shall be deemed to
                  have acted in a manner "not opposed to the best interests of
                  the corporation" as referred to in this section.

                          (j) The indemnification and advancement of expenses
                  provided by, or granted pursuant to, this section shall,
                  unless otherwise provided when authorized or ratified,
                  continue as to a person who has ceased to be a director,
                  officer, employee or agent and shall inure to the benefit of
                  the heirs, executors and administrators of such a person.

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933, may be permitted to directors, officers or persons controlling our
Company pursuant to the foregoing provisions, we have been informed that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933 and is
therefore unenforceable.

CONFLICTS OF INTEREST

         There is no procedure in place which would allow our management to
resolve potential conflicts in an arms-length fashion. Accordingly, they will be
required to use their discretion to resolve them in a manner which they consider
appropriate.

                                      -26-
<PAGE>


                                    PART III


ITEM 10:     EXECUTIVE COMPENSATION.

The following table discloses executive compensation received for the fiscal
year ended December 31, 2007 as well as the preceding two years.

<TABLE>
<CAPTION>


                                      SUMMARY COMPENSATION TABLE

                                                              LONG-TERM
                             ANNUAL COMPENSATION         COMPENSATION AWARDS

                                                      RESTRICTED SECURITIES
NAME AND                                               STOCK     UNDERLYING       TOTAL
PRINCIPAL POSITION        YEAR    SALARY    BONUS      AWARD      OPTIONS     COMPENSATION
------------------------------------------------------------------------------------------
<S>                    <C>        <C>      <C>       <C>        <C>          <C>
Fangshe Zhang,
Chairman                  2007   $ 3,971   $ 3,945   $     0   $     0         $ 7,916

                          2006   $ 3,972   $ 3,844   $     0   $     0         $ 7,816

Pengcheng Chen,
Chief Executive Officer   2007   $ 6,143   $ 3,945   $     0   $     0         $10,088

                          2006   $ 5,766   $ 3,844   $     0   $     0         $ 9,610

Yin Tong,
Chief Financial Officer   2007   $ 3,656   $13,151   $     0   $     0         $16,807

                          2006   $ 3,588   $ 3,588   $     0   $     0         $ 7,176

Yi Zhang,
Chief Operating Officer   2007   $ 3,656   $ 6,575   $     0   $     0         $10,231

                          2006   $ 3,588   $ 3,203   $     0   $     0         $ 6,791

Pingjun Zhang ,
Chief Technical Officer   2007   $ 3,656   $ 6,575   $     0   $     0         $10,231

                          2006   $ 3,306   $ 3,203   $     0   $     0         $ 6,509

------------------------------------------------------------------------------------------
</TABLE>



                                      -27-
<PAGE>


ITEM 11:     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth as of March 28, 2008, information with
respect to the beneficial ownership of our outstanding Common Stock by (i) each
director and executive officer of us, (ii) all directors and executive officers
of us as a group, and (iii) each shareholder who was known by us to be the
beneficial owner of more than 5% of our outstanding Common Stock. Except as
otherwise indicated, the persons or entities listed below have sole voting and
investment power with respect to all shares of Common Stock beneficially owned
by them. The table is based on 35,413,850 shares outstanding.

Title      Name and Address                            Number of         Percent
of         of Beneficial                               shares held by    of
Class      Owner of Shares         Position            Owner             Class
--------------------------------------------------------------------------------
Common    Pengcheng Chen (1)      CEO/Director        11,361,457 (1)      32.08%

Common    Fangshe Zhang (2)       Chairman             9,892,096 (2)      27.93%

Common    Yi Tong                 CFO/Director              --              --

Common    Yi Zhang                Chief Operating Officer   --              --

Common    Pingjun Zhang           Chief Technical Officer   --              --

Common    Genshe Bai              Director                  --              --

Common    Shengli Liu             Director                  --              --

Common    Executive Officers &                        21,253,553          60.01%
          Directors as a Group
--------------------------------------------------------------------------------

(1) Having an address at No. 23, Tiyu Street, Chang'an District, Xi'an, China.
Includes (i) 1,380,000 shares of common stock and (ii) 9,981,457 shares of
common stock issued from the conversion of 338 shares of Series A Preferred
Stock

(2) Having an address at No. 5, Beisan Street, Beida Village, Dongda Town,
Chang'an County, Xi'an, China. Includes (i) 1,200,000 shares of common stock and
(ii) 8,692,096 shares of common stock issued from the conversion of 294 shares
of Series A Preferred Stock


         Management has no plans to issue any additional securities to
management, promoters or their affiliates or associates and will do so only if
such issuance is in the best interests of shareholders of us and complies with
all applicable federal and state securities rules and regulations.

                                      -28-
<PAGE>


LONG TERM EQUITY COMPENSATION PLAN

         On September 30, 2005, shareholders owning a majority of our Common
Stock approved, adopted and ratified our Long Term Equity Compensation Plan (the
"Plan") in order to optimize our profitability and growth through incentives
which are consistent with our goals and which link the interests of select
employees, directors and consultants with those of our shareholders. We believe
that the Plan also promotes teamwork and provides employees, directors and
consultants with an incentive to strive for excellence. The Plan is described as
follows:

         The Plan provides for the granting of non-qualified stock options,
incentive stock options (within the meaning of Section 422 of the Code), stock
appreciation rights ("SARs"), restricted stock and restricted stock unit awards,
performance shares and other cash or share-based awards. The maximum number of
shares of common stock that may be issued in connection with awards under the
Plan is 3,500,000. In the event of any merger, reorganization, recapitalization,
stock split, stock dividend, or other change in corporate structure that affects
our common stock, an adjustment may be made to the (a) maximum number of shares
available for grants under the Plan and/or kind of shares that may be delivered
under the Plan, (b) the individual award limits under the Plan and (c) number,
kind and/or price of shares subject to outstanding awards granted under the
Plan, by our Board of Directors of, to prevent dilution or enlargement of
rights. Shares of stock covered by an award under the Plan that is cancelled,
expired, forfeited or settled in cash will again be available for issuance in
connection with future grants of awards under the Plan. As of the date of this
prospectus, no awards have been made under the Plan.

         Our Board of Directors has broad authority to administer the Plan,
including the authority to determine when and to whom awards will be made,
determine the type and size of awards, determine the terms and conditions of
awards, construe and interpret the Plan and award agreements, establish rates
and resolutions for the Plan's administration, and amend outstanding awards.
Generally, the Plan is open to directors, employees and consultants who are
selected by the Board of Directors.

         STOCK OPTIONS. Options granted under the Plan may be "incentive stock
options," as defined in Section 422 of the Code, or "nonqualified stock options"
which are stock options that do not qualify as incentive stock options. An
incentive stock option must expire within ten years from the date it is granted
(five years in the case of options granted to holders of more than 10% of the
total combined voting power of all classes of our stock and the stock of our
subsidiaries). The exercise price of an incentive stock option must be at least
equal to the fair market value on the date such incentive stock option is
granted (110% of fair market value in the case of options granted to holders of
more than 10% of the total combined voting power of all classes of our stock).
The exercise price of a non-qualified stock option must be at least equal to the
fair market value of the shares on the date such option is granted. Subject to
such restrictions as the Compensation Committee may impose, the exercise price
of options granted under the Plan may be paid (i) in cash or its equivalent,
(ii) by delivery, or attesting to the ownership, of previously-acquired shares
of our common stock, (iii) pursuant to a cashless exercise program, (iv) by such
other methods as the compensation committee may permit or (v) by any combination
of (i), (ii), (iii) and (iv). As of the date of this prospectus, no
non-qualified stock options had been granted under the Plan.

                                      -29-
<PAGE>


         SARS. The Board of Directors may grant a SAR in connection with all or
any portion of an option grant as well as independent of any option grant. A SAR
entitles the participant to receive the amount by which the fair market value of
a specified number of shares on the exercise dates exceeds an exercise price
established by the committee. The excess amount will be payable in common stock,
in cash, or in a combination of shares and cash.

         RESTRICTED STOCK. Restricted Stock Units and Performance Shares. These
awards may be granted in such amounts and subject to such terms and conditions
as determined by the Board of Directors. Holders of restricted stock may
generally exercise full voting rights and may be credited with regular dividends
paid with respect to the underlying shares while they are so held; however,
stock dividends or other non-cash distributions made with respect to restricted
stock awards generally will be subject to the same restrictions as the
restricted stock award. Generally, after the last day of the applicable period
of restriction, the shares become freely transferable.

         Restricted stock units and performance shares are conditional grants of
a right to receive a specified number of shares of common stock or an equivalent
amount of cash (or a combination of shares and cash) if certain conditions are
met. Each restricted stock unit and performance share must have an initial value
equal to the fair market value of a share on the date of grant. Restricted stock
units may have conditions relating to continued service or employment only or
continued employment or service and attainment of performance goals, as
determined by the Compensation Committee. Performance shares may be granted
based on a performance period of one or more years or other periods, as
determined by the Compensation Committee.

                  The Board of Directors must determine the performance
objectives for grants of performance shares and the range of the number of
shares to be paid to an employee if the relevant measure of performance is met
within the performance period. Recipients of restricted stock units and
performance shares may receive dividend equivalents with respect to their
awards.

         OTHER AWARDS. Subject to the terms of the Plan, the Board of Directors
may grant other awards such as deferred share, share or cash awards based on
attainment of performance or other goals or shares in lieu of cash under other
incentive or bonus programs. Payment under such awards may be made in such
manner and at such times as the Board of Directors may determine.

         Except as otherwise provided in a participant's award agreement, upon
the occurrence of a change in control of our company, all outstanding stock
options and SARs become immediately exercisable, any restriction imposed on
restricted stock, restricted stock units, performance shares or other awards
will lapse, and any performance shares or other awards with performance-related
vesting conditions will be deemed earned at the target level (or if no target
level is specified, the maximum level). Unless a participant's award agreement
provides otherwise, if a participant's employment or service terminates
following a change in control, any of the participant's stock options or SARs
that were outstanding on the date of the change in control and that were vested
as of the date of termination of employment or service will remain exercisable
for a period ending not before the earlier of the first anniversary of the
termination of the participant's employment or service or the expiration of the
stated term of the award.

                                      -30-
<PAGE>


         The Plan may be amended, suspended or terminated at any time by our
Board of Directors, provided that no amendment that requires shareholder
approval in order for the Plan to comply with any applicable stock exchange
listing standards or securities laws will be effective unless the requisite
shareholder approval is obtained, and no amendment or termination may be made
without approval of a participant to the extent the amendment or termination
materially adversely affects the participant's outstanding awards.

As of the date hereof, no options, SARS, restricted stock or other awards have
been issued under the Plan.

ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS.


         As of December 31, 2007, amounts due to stockholder/officer are
  unsecured, non-interest bearing and due on demand. The total net amount due to
  the stockholder/officer was $166,199 which represented the net amount lent by
  officers to us.

         Mr. Fangshe Zhang, our Chairman and a principal shareholder leases us
three cork processing technology related patents in China. During the years
ended December 31, 2007 and December 31, 2006 respectively, we paid him license
fees for these patents in the aggregate amount of $315,615 and $212,402.

                                      -31-
<PAGE>



                                     PART IV

ITEM 13.     EXHIBITS LIST AND REPORTS ON FORM 8-K.

(A) EXHIBITS:

3(a)      Articles of Incorporation*

3(b)      Bylaws*

4(b)      Specimen Stock Certificate*

2.1       Spin - Off Agreement, dated September 19, 1996, between us and Kushi
          Macrobiotics Corp.*

2.2.      Amended and Restated Agreement and Plan of Merger by and among Kushi
          Macrobiotics Corp. and American Phoenix Group, Inc. and us , dated
          August 12, 1996*

2.3       Agreement and Plan of Merger, dated as of July 11, 2005, by and among
          Kushi Natural Foods Corporation, Kushi Sub, Inc., Hanxin (Cork)
          International Holding Co., Ltd., Xi'An Cork Investments Consultative
          Management Co. and Xian Hanxin Science and Technology Co., Ltd. ***

2.4       Amendment to Agreement and Plan of Merger dated as of September 30,
          2005. ****

20.       Information Statement filed with the Securities and Exchange
          Commission on August 26, 2004 *****

21        Our subsidiaries: (i) Kushi Sub, Inc; (ii) Xi'An Cork Investments
          Consultative Management Co.; and (iii) Xian Hanxin Technology Co., Ltd
          (iv) Cork Import and Export Co., Ltd.

31.1      Certification of the Chief Executive Officer pursuant to Section 302
          of the Sarbanes- Oxley Act of 2002 **

31.2      Certification of the Chief Financial Officer pursuant to Section 302
          of the Sarbanes- Oxley Act of 2002 **

32.1      Certification of the Chief Executive Officer pursuant to 18 U.S.C.
          Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
          Act of 2002 **

32.2      Certification of the Chief Financial Officer pursuant to 18 U.S.C.
          Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
          Act of 2002 **

                                      -32-
<PAGE>


*         Incorporated by reference to the like numbered exhibit to our
          Registration Statement on Form 10-SB.

**        Filed herewith

***       Incorporated by reference to our report on Form 8-K filed on August 9,
          2005.

****      Incorporated by reference to our report on Form 8-K/A filed on January
          18, 2006.

*****     Incorporated by reference to our Information Statement on Schedule
          14-C filed on October 18, 2005 (Preliminary) and November 8, 2005
          (Definitive).

(B)      REPORTS ON FORM 8-K:

None.

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES


We accrued an aggregate of approximately $65,000 in fees for professional
services rendered by MS Group CPA LLC in connection with the review of our
Quarterly Reports and audit of our financial statements for the year ended
December 31, 2007.

                                      -33-
<PAGE>



CONTENTS                                                                    PAGE

Report of Independent Registered Public Accounting Firm                      F-2
Consolidated Financial Statements
   Consolidated Balance Sheet                                                F-3
   Consolidated Statements of Operations                                     F-4
   Consolidated Statements of Stockholders' Equity and Comprehensive Income  F-5
   Consolidated Statements of Cash Flows                                     F-6
   Notes to Consolidated Financial Statements                        F-7 to F-18



                                      F-1
<PAGE>



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



The Board of Directors and Stockholders of
Hankersen International Corp. (f/k/a Kushi Natural Foods Corp.)

We have audited the accompanying consolidated balance sheet of Hankersen
International Corp. (f/k/a Kushi Natural Foods Corp.) ("Hankersen" or the
"Company") as of December 31, 2007, and the related consolidated statements of
operations, stockholders' equity and comprehensive income, and cash flows for
each of the years in the two-year period ended December 31, 2007. The management
of Hankersen is responsible for these consolidated financial statements. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have nor were we engaged to perform, and audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing as opinion on the effectiveness of the company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements, assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation. We believe
that our audit provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Hankersen
International Corp. (f/k/a Kushi Natural Foods Corp.) as of December 31, 2007,
and the results of its operations and its cash flows for each of the years in
the two-years period ended December 31, 2007 in conformity with accounting
principles generally accepted in the United States of America.


MS Group CPA LLC
Edison New Jersey
February 14, 2008

                                      F-2
<PAGE>


<TABLE>
<CAPTION>

HANKERSEN INTERNATIONAL CORP. AND SUBSIDIARIES
(FORMERLY KUSHI NATURAL FOODS CORP. AND SUBSIDIARIES)
CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------------------
Assets                                                         DECEMBER 31, 2007
                                                               -----------------
Current Assets
<S>                                                                  <C>
  Cash and equivalents                                               $   367,396
  Accounts receivable, net of allowance for
    doubtful accounts of $12,210                                       2,429,772
  Inventories                                                            920,140
  Advance to suppliers                                                 2,375,174
  Prepayments and other current assets                                    16,111
                                                                     -----------
    Total Current Assets                                               6,108,593

Property and Equipment - Net                                           1,754,830
Deposit for Purchase of Fixed Assets                                   1,891,810
Deposit for Purchase of Intangible Assets                              1,370,877
Deposit for acquisition                                                1,370,877
Construction in Progress                                               2,821,817
Investment - At Cost                                                   1,919,228
Land Use Right - Net                                                     161,073
                                                                     -----------

    Total Assets                                                      17,399,105
                                                                     ===========

Liabilities and Stockholders' Equity
Current Liabilities
  Accounts payable and accrued expenses                                  956,519
  Loan payable                                                           534,642
  Taxes payable                                                          767,764
  Due to stockholders/officers                                           166,199
  Other current liabilities                                               15,039
                                                                     -----------
    Total Current Liabilities                                          2,440,163

Minority Interest                                                      1,522,318

Stockholders' Equity
  Series A preferred stock, $0.0001 par value,
    5,000,000 shares authorized,
    zero shares issued and outstanding,
    respectively                                                            --
  Common stock, $0.0001 par value,
    200,000,000 shares authorized,
    35,413,850 issued and outstanding,
    respectively                                                           3,541
  Additional paid-in capital                                           4,396,772
  Reserve funds                                                        1,741,715
  Retained earnings                                                    5,729,630
  Accumulated other comprehensives income                              1,564,966
                                                                     -----------

    Total Stockholders' Equity                                        13,436,624
                                                                     -----------

    Total Liabilities and Stockholders' Equity                       $17,399,105
                                                                     ===========

See notes to consolidated financial statements.
</TABLE>


                                      F-3
<PAGE>

<TABLE>
<CAPTION>
HANKERSEN INTERNATIONAL CORP. AND SUBSIDIARIES
(FORMERLY KUSHI NATURAL FOODS CORP. AND SUBSIDIARIES)
CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
                                                   FOR YEARS ENDED DECEMBER 31,
                                                  ------------------------------
                                                      2007             2006
                                                  ------------     ------------

<S>                                               <C>              <C>
Revenues                                          $ 16,050,938     $ 12,041,588

Cost of Goods Sold                                  10,990,041        9,333,361
                                                  ------------     ------------

Gross Profit                                         5,060,897        2,708,227

Operating Expenses
Selling expenses                                     1,954,225        1,363,494
General and administrative expense                     513,116          562,562
                                                  ------------     ------------

Total Operating Expenses                             2,467,341        1,926,056
                                                  ------------     ------------

Income From Operations                               2,593,556          782,171
                                                  ------------     ------------

Other Income (Expense)
  Interest (expense) income, net                        (6,270)          50,952
  Other income, net                                     23,988           68,618
  Loss on fix assets disposal                         (342,127)         (71,715)
                                                  ------------     ------------

Total Other (Expense) Income                          (324,409)          47,855
                                                  ------------     ------------

Income Before Taxes and Minority Interest            2,269,147          830,026

Income Tax Provision                                   348,871          133,580
                                                  ------------     ------------

Income Before Minority Interest                      1,920,276          696,446

Minority Interest                                      158,235           63,486
                                                  ------------     ------------

Net Income                                        $  1,762,041     $    632,960

Other Comprehensive Income:
Foreign Currency Translation Gain                      929,608          390,808
                                                  ------------     ------------

Comprehensive Income                              $  2,691,649     $  1,023,768
                                                  ============     ============

Net Income Per Common Share
  - Basic                                         $       0.05     $       0.04
                                                  ============     ============
  - Diluted:                                      $       0.05     $       0.02
                                                  ============     ============

Weighted Common Shares Outstanding*
  - Basic                                           35,413,850       15,660,645
                                                  ============     ============
  - Diluted:                                        35,413,850       35,413,850
                                                  ============     ============

* As restated to reflect recapitalization and the subsequent
  reverse stock split.

See notes to consolidated financial statements.
</TABLE>


                                      F-4
<PAGE>

<TABLE>
<CAPTION>

HANKERSEN INTERNATIONAL CORP. AND SUBSIDIARIES
(FORMERLY KUSHI NATURAL FOODS CORP. AND SUBSIDIARIES)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
----------------------------------------------------------------------------------------------------------------------------------
                                    Series A
                                 Preferred Stock                          Common Stock
                            No. of                                                                     Additional        Reserve
                            Shares             Amount          No. of Shares          Amount        Paid-in Capital       Fund
                          ----------        -----------        -------------       ------------     ---------------    -----------
<S>                         <C>           <C>                 <C>               <C>                <C>               <C>
Balance,
  December 31, 2005           1,000         $         1           5,764,786        $       577        $ 4,399,735      $ 1,330,756

Conversion of Series A
  Preferred Stock            (1,000)                 (1)         29,649,064              2,964             (2,963)            --

Net income

Appropriation of
  Reserve funds                                                                                                            102,236

Foreign currency               --                  --                  --                 --                 --               --
  translation
                        ----------------------------------------------------------------------------------------------------------
Balance,
  December 31, 2006            --           $      --            35,413,850        $     3,541        $ 4,396,772      $ 1,432,992

Net income

Appropriation of
  Reserve funds                                                                                                            308,723

Foreign currency               --                  --                  --                 --                 --               --
  translation

Balance,
  December 31, 2007            --           $      --            35,413,850        $     3,541        $ 4,396,772      $ 1,741,715
                        ==========================================================================================================






                                           Other         Total
                          Retained     Comprehensive  Shareholders'
                          Earnings        Income        Equity
                         -----------   ------------  -------------
Balance
  December 31, 2005      $ 3,745,588   $   244,550   $ 9,721,207

Conversion of Series A
  Preferred Stock

Net income                   632,960                     632,960

Appropriation of
  Reserve funds             (102,236)                        --

Foreign currency                --         390,808       390,808
  translation
                         ---------------------------------------
Balance,
  December 31, 2006      $ 4,276,312   $   635,358   $10,744,975

Net income                 1,762,041                   1,762,041

Appropriation of
  Reserve funds                                         (308,723)

Foreign currency                --         929,608       929,608
  translation
                         ---------------------------------------
Balance,
  December 31, 2007      $ 5,729,630   $ 1,564,966   $13,436,624
                         =======================================


See notes to consolidated financial statements.
</TABLE>


                                      F-5
<PAGE>

<TABLE>
<CAPTION>

HANKERSEN INTERNATIONAL CORP. AND SUBSIDIARIES
(FORMERLY KUSHI NATURAL FOODS CORP. AND SUBSIDIARIES)
CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------------------------------------------------------------------------
                                                                 FOR YEARS ENDED DECEMBER 31,
                                                                 -----------------------------
                                                                     2007           2006
                                                                 -----------    -----------
<S>                                                              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME                                                        $ 1,762,041    $   632,960
Adjustments to Reconcile Net Income to Net Cash
 Provided by Operating Activities
   Depreciation and amortization                                      248,581        238,184
   Bad debt adjustment                                                 (1,496)        (7,459)
   Loss on disposal of fixed assets                                   342,127         71,715
   Minority interest                                                  158,235         63,486
   Changes in operating assets and liabilities:
    Accounts receivable                                              (291,558)       376,593
    Inventories                                                      (161,894)       184,503
    Advance to suppliers                                             (732,019)      (476,344)
    Prepayments and other current assets                               25,905         25,598
    Accounts payable and accrued expenses                             287,326        188,666
    Taxes payable                                                     433,419        109,995
    Other current liabilities                                           3,794       (137,468)
                                                                  -----------    -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES                           2,074,461      1,270,429
                                                                  -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Payment for the deposit for purchase of fixed assets                   --         (991,301)
  Proceeds from return the deposit for purchase of fixed assets        25,628           --
  Payment for purchase of equipment                                    (5,945)        (8,339)
  Payment for deposit for acquisition                              (1,370,877)          --
  Payment for machinery improvement                                      --          (70,476)
  Payment for the deposit for purchase of intangible assets        (1,370,877)          --
  Payment for construction in progress                             (1,253,703)    (1,383,888)
  Proceeds from repayment of loan to related party                       --          978,910
  Advance to unrelated party                                             --       (1,922,067)
  Proceeds from repayment of unrelated party                        1,922,067           --
                                                                  -----------    -----------
NET CASH USED IN INVESTING ACTIVITIES                              (2,053,708)    (3,397,162)
                                                                  -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from short-term loan                                       534,642        896,964
  Payment of short-term loan                                         (959,614)      (371,738)
  Payments to stockholders/officers                                  (419,543)       (33,664)
  Receipts from stockholders/officers                                 455,559      1,535,640
                                                                  -----------    -----------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES                  (388,956)     2,027,202
                                                                  -----------    -----------

Net Decrease in Cash and Equivalents                                 (368,203)       (99,531)
Effect of Exchange Rate Changes on Cash                               170,866         89,490
Cash and Equivalents at Beginning of Period                           564,733        574,774
                                                                  -----------    -----------
Cash and Equivalents at End of Period                             $   367,396    $   564,733
                                                                  ===========    ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Interest paid                                                   $    70,923    $    22,821
                                                                  ===========    ===========
  Income taxes paid                                               $   153,007    $   167,158
                                                                  ===========    ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
  FINANCING ACTIVITIES
    Fixes assets transferred out for reward                       $      --      $     5,249
                                                                  ===========    ===========

See notes to consolidated financial statements.
</TABLE>


                                      F-6
<PAGE>




HANKERSEN INTERNATIONAL CORP. AND SUBSIDIARIES
(FORMERLY KUSHI NATURAL FOODS CORP. AND SUBSIDIARIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

1.       ORGANIZATION AND PRINCIPAL ACTIVITIES

Hankersen International Corp. (f/k/a Kushi Natural Foods Corp.) (the "Company")
was incorporated on August 1, 1996, under the laws of the State of Delaware.
Until August 2005, the Company had no operations and the sole purpose of the
Company was to locate and consummate a merger or acquisition with a private
entity.

In August 2005, the Company, through Kushi Sub, Inc., a newly formed Delaware
corporation and wholly-owned subsidiary of the Company ("Acquisition Sub")
acquired all the ownership interest in Hanxin (Cork) International Holding Co.,
Ltd. ("Hanxin International"), a British Virgin Islands limited liability
corporation, organized in September 2004. The Company acquired Hanxin
International in exchange for shares of common stock and shares of the Series A
Preferred Stock of the Company. The capitalizations are described in further
detail in Note 13 to the accompanying consolidated financial statements.

Subsequent to the merger and upon the conversion of the Series A Preferred
Stock, the former shareholders of Hanxin International will own 95% of the
outstanding shares of the Company's common stock. As a result of the ownership
interests of the former shareholders of Hanxin International, for financial
statement reporting purposes, the merger was treated as a reverse acquisition,
with Hanxin International deemed the accounting acquirer and Kushi deemed the
accounting acquiree. Historical information of the surviving company is that of
Hanxin International.

During the year ended December 31, 2005, the Company, through Hanxin acquired
75% equity interest of Cork Import and Export Co. Ltd. ("Cork I&E"), a PRC
corporation engages in cork trading businesses.


Hanxin International has no other business activities but owns 100% of Xi'An
Cork Investments Consultative Management Co., Ltd. ("Xi'An"), which owns 92% of
Xian Hanxin Technology Co., Ltd. ("Hanxin"), incorporated in July 2002, both
Xi'An and Hanxin are People's Republic of China ("PRC") corporations. Most of
the Company's activities are conducted through Hanxin.

Hanxin is engaged in developing, manufacturing and marketing of cork wood floor,
wall and decorating materials. Its products are sold to customers in China and
oversea customers in India, the United States of America, Germany and Japan.

                                      F-7
<PAGE>


2.       BASIS OF PRESENTATION

PRINCIPLE OF CONSOLIDATION
The accompanying consolidated financial statements present the financial
position, results of operations and cash flows of the Company and all entities
in which the Company has a controlling voting interest. The consolidated
financial statements also include the accounts of any variable interest entities
in which the Company is considered to be the primary beneficiary and such
entities are required to be consolidated in accordance with accounting
principles generally accepted in the United States ("US GAAP"). These
consolidated financial statements include the financial statements of Hankersen
International Corp. and its subsidiaries. All significant intercompany
transactions and balances are eliminated in consolidation.

The accompanying consolidated financial statements are prepared in accordance
with US GAAP. This basis of accounting differs from that used in the statutory
accounts of some of the Company's subsidiaries, which were prepared in
accordance with the accounting principles and relevant financial regulations
applicable to enterprises with foreign investment in the PRC ("PRC GAAP").
Necessary adjustments were made to the Subsidiary's statutory accounts to
conform to US GAAP to be included in these consolidated financial statements.

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 REVENUE RECOGNITION
The Company's revenues from the sale of products are recognized when the goods
are shipped, title passes, the sales price to the customer is fixed and
collectibility is reasonably assured. Persuasive evidence of an arrangement is
demonstrated via purchase order from distributor, our customers, product
delivery is evidenced by warehouse shipping log as well as signed bill of lading
from the trucking company and no product return is allowed except defective or
damaged products, the sales price to the customer is fixed upon acceptance of
purchase order, there is no separate sales rebate, discounts, and volume
incentives.

ADVERTISING COSTS

Advertising costs are booked as expenses as incurred. The Company incurred
$237,369 and $43,902 for the years ended December 31, 2007 and 2006,
respectively.

SHIPPING AND HANDLING COSTS

Shipping and handling costs are classified as cost of sales and recognized when
the related sale is recognized. The Company incurred $471 and $658 for the years
ended December 31, 2007 and 2006, respectively.

CASH AND EQUIVALENTS

The Company considers all highly liquid temporary cash investments with an
original maturity date of three months or less from when purchased, to be cash
equivalents.

                                      F-8
<PAGE>


INVENTORIES

The Company values inventories, consisting of finished goods, work in progress,
raw materials, packaging material, and other, at the lower of cost or market.
Cost is determined on the weighted average cost method.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Expenditures for major additions
and betterments are capitalized. Maintenance and repairs are charged to
operations as incurred. Depreciation of property and equipment is computed by
the straight-line method over the assets estimated useful lives. Leasehold
improvements are amortized over the lesser of the lease term or the asset's
useful lives. Upon sale or retirement of plant and equipment, the related cost
and accumulated depreciation are removed from the accounts and any gain or loss
is reflected in the Company's Consolidated Statements of Operations.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company evaluates the recoverability of its other long-lived assets,
including amortizing intangible assets, if circumstances indicate impairment may
have occurred pursuant to SFAS No. 144. This analysis is performed by comparing
the respective carrying values of the assets to the current and expected future
cash flows, on an undiscounted basis, to be generated from such assets. If such
analysis indicates that the carrying value of these assets is not recoverable,
the carrying value of such assets is reduced to fair value through a charge to
the Company's Consolidated Statements of Operation.

INTANGIBLE ASSETS

Intangible assets include land use right. With the adoption of SFAS No. 142,
intangible assets with a definite life are amortized on a straight-line basis.
The land use right is being amortized over its estimated life of 40 years.
Intangible assets with a definite life are tested for impairment whenever events
or circumstances indicate that a carrying amount of an asset (asset group) may
not be recoverable. An impairment loss would be recognized when the carrying
amount of an asset exceeds the estimated undiscounted cash flows used in
determining the fair value of the asset. The amount of the impairment loss to be
recorded is calculated by the excess of the asset's carrying value over its fair
value. Fair value is generally determined using a discounted cash flow analysis.
Costs related to internally develop intangible assets are expensed as incurred.

COMPREHENSIVE INCOME (LOSS)

SFAS No. 130, "Reporting Comprehensive Income", established standards for the
reporting and display of comprehensive income, its components and accumulated
balances in a full set of general purpose financial statements. SFAS No. 130
defines comprehensive income to include all changes in equity except those
resulting from investments by owners and distributions to owners. Among other
disclosures, SFAS No. 130 requires that all items that are required to be
recognized under current accounting standards as components of comprehensive
income be reported in a financial statement that is presented with the same
prominence as other financial statements. The Company's only current component
of comprehensive income is the foreign currency translation adjustment.

                                      F-9
<PAGE>


CONCENTRATION OF CREDIT RISK

The Company's financial instruments consist primarily of cash, which is invested
in money market accounts, accounts receivable, and accounts payable. The Company
considers the book value of these instruments to be indicative of their
respective fair value. The Company places its temporary cash investments with
high credit quality institutions to limit its exposure. Almost all of the
Company's sales are credit sales which are primarily to customers whose ability
to pay is dependent upon the industry economics prevailing in their respective
areas; however, concentrations of credit risk with respect to trade accounts
receivable is limited due to generally short payment terms. The Company also
performs ongoing credit evaluations of its customers to help further reduce
credit risk.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts reported in the balance sheet for cash, accounts
receivable, inventories, advances to suppliers, prepayments and other current
assets, accounts payable, accrued expenses, loan payable, taxes payable, and
other current liabilities approximate fair value based on the short-term
maturity of these instruments. The Company's loans payable approximates the fair
value of such instruments based upon management's best estimate of interest
rates that would be available to the Company for similar financial arrangements
on December 31, 2007.

INCOME TAXES

The Company and its U. S. subsidiary will file consolidated federal and state
income tax returns. The Company's PRC subsidiaries file income tax returns under
the Income Tax Law of the People's Republic of China concerning Foreign
Investment Enterprises and Foreign Enterprises and local income tax laws. The
Company's BVI subsidiary is exempt from income taxes.

The Company follows Statement of Financial Accounting Standards No. 109 -
Accounting for Income Taxes, which requires recognition of deferred tax assets
and liabilities for the expected future tax consequences of events that have
been included in the financial statements or tax returns. Under this method,
deferred tax assets and liabilities are based on the differences between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse.

FOREIGN CURRENCY TRANSLATION

The reporting currency of the Company is the U.S. dollar. The functional
currencies of the Company's subsidiaries are local currencies, primarily the
Chinese Renminbi. The financial statements are translated into U.S. dollars
using period-end rates of exchange for assets and liabilities and average rates
of exchange for the period for revenues and expenses. Translation adjustments
resulting from the process of translating the local currency financial
statements into U.S. dollars are included in other comprehensive income or loss.

                                      F-10
<PAGE>


USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reporting amounts of revenues and expenses during the reported period.
Estimates, by their nature, are based on judgment and available information.
Accordingly, actual results could differ from those estimates.

SEGMENT REPORTING

The Company operates and manages its business as a single operating segment.

NEW ACCOUNTING PRONOUNCEMENTS

In December 2007, the Financial Accounting Standard Board ("FASB") issued SFAS
No. 160, "Noncontrolling Interests in Consolidated Financial Statements-an
amendment of ARB No.51" which clarifies that a noncontrolling interst in a
subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements. This statement also
changes the way the consolidated income statement is presented. It requires
consolidated net income to be reported at amounts that include the amounts
attributable to both the parent and the noncontrolling interest. In addition, it
requires disclosure, on the face of the consolidated statement of income, of the
amounts of consolidated net income attributable to the parent and to the
noncontrolling interest. SFAS No. 160 is effective for fiscal years, and interim
periods within those fiscal years beginning on or after December 15, 2008 (that
is, January 1, 2009, for entities with calendar year-ends). Earlier adoption is
prohibited. The Company is currently in the process of evaluating the effect, if
any, the adoption of SFAS No. 160 will have on its consolidated results of
operations, financial position, and financial disclosure.

In December 2007, the Financial Accounting Standard Board ("FASB") issued SFAS
No. 141R (revised 2007), "Business Combinations" which replaces FASB Statement
No. 141,"Business Combinations". The Statement 141R retains the fundamental
requirements in Statement 141 that the acquisition method of accounting (which
Statement 141 called the purchase method) be used for all business combinations
and for an acquirer to be identified for each business combination. The
Statement 141R defines the acquirer as the entity that obtains control of one or
more businesses in the business combination and establishes the acquisition date
as date that the acquirer achieves control. Statement 141 did not define the
acquirer, although it included guidance on identifying the acquirer, as does in
Statement 141R. The scope of Statement 141R is broader than that of Statement
141, which applied only to business combinations in which control was obtained
by transferring consideration. By applying the same method accounting - the
acquisition method- to all transactions and other events in which on entity
obtains control over one or more other businesses, the Statement 141R improves
the comparability of the information about business combinations provided in
financial reports. SFAS No.141R applies prospectively to business combinations
for which that acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. An entity may not
apply it before that date. The Company is currently in the process of evaluating
the effect, if any, for the future acquisition and combinations.

                                      F-11
<PAGE>

In February 2007, the Financial Accounting Standard Board ("FASB") issued SFAS
No. 159, "The Fair Value Option for Financial Assets and Financial
Liabilities-Including an amendment of FASB Statement No. 115" which permits all
entities to choose to measure eligible items at fair value at specified election
dates. A business entity shall report unrealized gains and losses on items for
which the fair value option has been elected in earnings (or another performance
indicator if the business entity does not report earnings) at each subsequent
reporting date. SFAS No. 159 is effective as of the beginning of an entity's
first fiscal year that begins after November 15, 2007. Early adoption is
permitted as of the beginning of a fiscal year that begins on or before November
15, 2007, provided the entity also elects to apply the provisions of FASB
Statement No. 157, "Fair Value Measurements". The Company is currently in the
process of evaluating the effect, if any, the adoption of SFAS No 159 and 157
will have on its consolidated results of operations, financial position, and
cash flows.

Inventories on December 31, 2007 and 2006 consisted of the following:

                                         December 31,
                               ---------------------------
                                  2007              2006
                               ----------        ---------
Raw Materials                  $  536,319        $ 377,890
Working in progress               103,395          121,153
Finished goods                    249,932          185,697
Packaging and other                30,494           13,434
                               ----------        ---------
Total                          $  920,140        $ 698,174
                               ==========        =========



As of December 31, 2007 and 2006, property and equipment consisted of the
following:

                                                         December 31,
                                     Estimated    --------------------------
                                        Life        2007             2006
                                     ---------    ----------      ----------
Building and improvement               27-35      $1,507,241      $1,807,843
Manufacturing equipment                  1-8       1,128,887       1,115,102
Office furniture and equipment             5          28,575          25,765
Vehicle                                  2-8          11,716          10,951
Machinery improvement                      3          75,398          70,476
                                                  ----------      ----------
Subtotal                                           2,751,817       3,030,137
Less: Accumulated depreciation                       996,987         823,033
                                                  ----------      ----------
Total                                             $1,754,830      $2,207,104
                                                  ==========      ==========

                                      F-12
<PAGE>


For the years ended December 31, 2007 and 2006, depreciation expenses amounted
to $244,003 and $233,817, respectively. Loss on disposal of fixed assets for the
years ended December 31, 2007 and 2006 were $342,127 and $71,715, respectively.

6.       DEPOSIT FOR PURCHASE OF FIXED ASSETS

The Company intends to purchase a factory's fix assets from an unrelated company
without disclosing its own identity. The purchase was arranged through an agent
who is not affiliated with the Company. $1,793,929 (equivalent to RMB
14,000,000) deposit was paid to the agent as of December 31, 2006 and $1,891,810
(equivalent to RMB 13,800,000) was paid to the agent as of the year ended
December 31, 2007. The agency agreement has no firm commitment on the purchase
but it states a maximum price of RMB 50,000,000 that the Company is willing to
pay for the fixed assets. The deposit is fully refundable if the purchase does
not close.

7.       DEPOSIT FOR PURCHASE OF INTANGIBLE ASSETS

In order to grow its own raw material in the future, the Company intends to
purchase the right to use a parcel of land from an unrelated company in the
ShaanXi Baoji district of PRC. This "right to use" is based on the principal in
the PR that while one can own the buildings situated on the land except for the
government, one cannot own the land itself in perpetuity. Commercial land can be
used for a period of no more than fifty (50) years, unless extended (whereby a
fee is required to be paid to extend). The total purchase price is $5,181,915
(equivalent to RMB 37,800,000) of which a $1,370,877 (equivalent to RMB
10,000,000) deposit was paid to this company as of December 31, 2007. A closing
date for the transfer of the property has not been scheduled as of yet, however,
the Company is obligated to pay the remaining balance of $3,811,038 (equivalent
to RMB27,800,000) within seven days after the property transfer.

8.       DEPOSIT FOR ACQUISITION

As discussed in the preceding Note, the Company intends to acquire a private
company located in Sichuan China called Sichuan Hanxin Cork Merchandises Co,
Ltd. ("SHCM"). The purchase price of SHCM shall not exceed $2,741,754 (RMB20
million). As of December 31, 2007, the Company paid a $1,370,877 (equivalent to
RMB10 millions) deposit to SHCM. SHCM is a manufacturer for cork products and is
one of the Company's current cork raw material providers.

9.       CONSTRUCTION IN PROGRESS

In order to create a consistent supply of rental incomes, in June 2006, the
Company began a project to build a student dormitory building in its
entertainment facility area; YuLeYuan in ShaanXi District of China This property
is located near a university which is attractive to the Company's location. The
basic construction of the building was completed during the quarter ended
September 30 2007. Commencing in July 2007, the Company provided the internal
decorations for this student dormitory, and the Company expects to have it
completed in the second quarter of year 2008. As of December 31, 2007, the
Company had accrued costs of $2,204,922 (equivalent to RMB16,084,027) for the
basic construction and internal decoration.

                                      F-13
<PAGE>

In order to increase production capacity, the Company started to build a fifth
workshop on its leased land during the third quarter of 2007 As of December 31,
2007, the Company expended $616,895 (equivalent to RMB 4,500,000) on the fifth
workshop construction The Company expects to complete this construction project
in the second quarter of year 2008.

10.      INVESTMENT - AT COST

On June 28, 2005, the Company purchased a 12% equity interest of Shaanxi DeRong
Technology Information Development Co. Ltd. ("DeRong"), a PRC corporation, for
$1,919,228 (equivalent to RMB 14,000,000). DeRong owns a cork tree forest
plantation in China. The investment is stated at cost.

11.      LAND USE RIGHT

The Company purchased the right to use a parcel of land for 40 years on
September 27, 2001. The purchase price is being amortized over the term of the
right. On December 31, 2007 and 2006, land use right at cost, less accumulated
amortization consisted of the following:

                                                   December 31,
                                          ---------------------------
                                             2007             2006
                                          ---------         ---------
Land use right                            $ 190,901         $ 179,437
Less: Accumulated amortization               29,828            23,419
                                          ---------         ---------
  Total                                   $ 161,073         $ 156,018
                                          =========         =========


For the years ended December 31, 2007 and 2006, amortization expense amounted to
$4,578 and $4,367, respectively. The amortization expenses for the next five
years are as follows:

    2008                                            $4,578
    2009                                             4,578
    2010                                             4,578
    2011                                             4,578
    2012                                             4,578

                                      F-14
<PAGE>


12.      LOANS PAYABLE

Loans payable as of December 31, 2007 and 2006 consisted of the following:

<TABLE>
<CAPTION>

                                                                                         December 31,
                                                                                    -----------------------
                                                                                      2007          2006
                                                                                    ---------     ---------
<S>                                                                                  <C>          <C>
On October 26, 2006, the Company obtained a short-term loan $627,875 (equivalent
to RMB4,900,000) from Xian Lan Hu Valley Trust Bank by pledging the Company's
building in YuLerYuan with bank, The loan interest is 0.714% per month. On
November 16, 2006, the Company had paid principal $115,324 (equivalent to
RMB900,000) back to bank, and the rest of loan balance $512,551 (equivalent to
RMB4,000,000) was paid back to the bank on Novermber 30, 2007. On the same day,
the company borrowed $534,642 (equivalent to RMB3,900,000) from the same bank
again, but the new interest rate had been increased to 8.37/oo per month. The
expiration date for this new short-term loan is May 30, 2008.
                                                                                    $ 534,642     $ 512,551

On December 15, 2006, the Company obtained a short-term loan $384,413
(equivalent to RMB3,000,000) from Hua Xia Bank Xian Branch by pledging the
Company's land use right in YuLerYuan with bank. The loan accrues interest at an
original of rate 7.956% per year, however, was increased to 8.541% per year
commencing from April 1, 2007 and the whole principal of loan had been paid off
on September 4, 2007.                                                                 --            384,413
                                                                                    ---------     ---------
         Total Loan Payable                                                         $ 534,642     $ 896,964
                                                                                    =========     =========
</TABLE>


13.      TAX PAYABLE

The Company and its U. S. subsidiary will file consolidated Federal income tax
and state franchise tax returns. Its PRC subsidiaries file income tax returns
under the Income Tax Law of the PRC concerning Foreign Investment Enterprises
and Foreign Enterprises and local income tax laws. The Company's BVI subsidiary
is exempt from income taxes.
Per PRC Income Tax Law, any new foreign owned corporation is exempt from income
tax for the first two years of existence, and then receives a 50% exemption of
income tax for the next three years if it is a non high-tech corporation or 15%
tax rate for corporation qualified by State Science and Technology Commission as
"High Tech Manufacturing Enterprise" located in State "High Tech Zone" approved
by China State Council. Hanxin is qualified as a High Tech Manufacturing
Enterprise. Based on this regulation, Hanxin was exempt from income tax in year
2003 and 2004 and its income has been subject to a 15% tax starting from January
1, 2005. CIE is not "High Tech Manufacturing Enterprise" approved by China State
Council, thus its income is subject to 33% tax rate.



                                      F-15
<PAGE>

On December 31, 2007 and 2006, taxes payable consisted the following:


                                                              December 31,
                                                       -------------------------
                                                         2007             2006
                                                       --------         --------
Value-added tax                                        $393,969         $238,207
Corporate income tax provision                          235,465           29,246
Local taxes and surcharges                               83,330           16,768
Franchise tax                                            55,000             --
                                                       --------         --------
Total                                                  $767,764         $284,221
                                                       ========         ========


14.      DUE TO STOCKHOLDERS/OFFICERS

Amounts due to a stockholder/officer are unsecured, non-interest bearing and due
on demand. As of December 31, 2007 and 2006, the total net amounts due to the
stockholder/officer were $166,199 and $121,684, respectively, which represented
the net amounts lent by shareholders/officers to the Company.

15.      STOCKHOLDERS EQUITY

On August 9, 2005, the Company acquired Hanxin International in exchange for (i)
24,000,000 shares of the Company's common stock and (ii) 1,000 shares of the
Company's Series A Preferred Stock,. In November 2005, the Company filed and
circulated to its shareholders the Information Statement which permitted the
Company, among other things, to (i) amend its Articles of Incorporation to
increase its authorized shares of common stock to 200,000,000 shares; (ii)
approve one for six reverse split as to all outstanding shares of common stock
of the Company, effective as to holders of record of shares of common stock on
December 9, 2005, (iii) approve a stock option, SAR and stock bonus plan for the
directors, officers, employees and consultants of the Company. A certificate of
amendment officially increasing the authorized shares of common stock and
approving the reverse stock split was filed with the State of Delaware on
December 13, 2005.

On September 1, 2006, the 1,000 shares Series A preferred stock were converted
into 29,530,937 shares of the Company's common stock. Subsequently, the Company
issued additional 118,123 shares in October 2006 to reflect an under-issuance to
a stockholder of the shares of common stock issued upon conversion of the
preferred stock. As a result, the total issued and outstanding shares of the
Company's common stock were 35,413,850 as of December 31, 2007.

All net income per share amounts has been restated to reflect the reverse stock
split.

                                      F-16
<PAGE>


16.      LEASE COMMITMENTS

The Company leases its office space and production land under operating lease
agreements that are expiring on December 31, 2008 and October, 2047
respectively. The following is a schedule of future minimum rental land payments
required under these operating leases as of December 31, 2007.

For the Year Ending December 31,
2008                                                               $   38,004
2009                                                                   15,781
2010                                                                   15,781
2011                                                                   15,781
2012                                                                   15,781
Thereafter                                                            549,696
                                                                   ----------
TOTAL MINIMUN RENTAL PAYMENTS REQUIRED                             $  650,824
                                                                   ==========


Rent and properties maintenance expenses amounted to $38,004 and $36,370 for the
years ended December 31, 2007 and 2006, respectively.

The Company also leases three patent rights from its Chairman, Mr. Fang She
Zhang, under operating lease agreements that expire on April 16, 2011. The
following is a schedule of future minimum rental payments required under these
operating leases that have remaining lease terms in excesses of one year as of
December 31, 2007.

For the Year Ending December 31,
2008                                                              $  315,615
2009                                                                 315,615
2010                                                                  92,931
                                                                  ----------
TOTAL MINIMUN RENTAL PAYMENTS REQUIRED                            $  724,161
                                                                  ==========


Patent lease expenses amounted to $315,615 and $212,402 for the years ended
December 31, 2007 and 2006, respectively.

                                      F-17
<PAGE>



17.      FOREIGN SUBSIDIARIES

OPERATIONS

Substantially all of the Company's operations are carried out through its
subsidiary located in the PRC. Accordingly, the Company's business, financial
condition and results of operations may be influenced by the political, economic
and legal environments in the PRC. The Company's business may be influenced by
changes in governmental policies with respect to laws and regulations,
anti-inflationary measures, currency fluctuation and remittances and methods of
taxation, among other things.

DIVIDENDS AND RESERVES

Under laws of the PRC, net income after taxation can only be distributed as
dividends after appropriation has been made for the following: (i) cumulative
prior years' losses, if any; (ii) allocations to the "Statutory Surplus Reserve"
of at least 10% of net income after taxes, as determined under PRC accounting
rules and regulations, until the fund amounts to 50% of the Company's registered
capital; (iii) allocations of 5-10% of income after tax, as determined under PRC
accounting rules and regulations, to the Company's "Statutory Common Welfare
Fund", which is established for the purpose of providing employee facilities and
other collective benefits to employees in China; and (iv) allocations to any
discretionary surplus reserve, if approved by shareholders.

As of December 31, 2007, the Company's PRC subsidiaries established and
segregated in retained earnings an aggregate amount of $1,741,715 for the
Statutory Surplus Reserve and the Statutory Common Welfare Fund.

                                      F-18
<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Exchange
Act, we have caused this report to be signed on its behalf by the undersigned,
thereby duly authorized.

                                     HANKERSEN INTERNATIONAL CORP.

                                     BY: /S/ PENGCHENG CHEN
                                     ---------------------------------
                                     Pengcheng Chen, Chief Executive Officer

DATE:  March ___, 2008

         Pursuant to the requirements of the Exchange Act, this report has been
duly signed below by the following persons on behalf of us and in the capacities
and on the dates indicated.

NAME                        TITLE(S)                            DATE

/s/ Fangshe Zhang          Chairman                        March 28, 2008
------------------
Fangshe Zhang

/s/ Pengcheng Chen         Chief Executive Officer/        March 28, 2008
------------------         Director
Pengcheng Chen

/s/ Yi Tong                                                March 28, 2008
------------------         Chief Financial Officer/
Yi Tong                    Director

/s/ Yi Zhang                                               March 28, 2008
------------------         Chief Operating Officer
Yi Zhang

/s/ Pingjun Zhang
------------------         Chief Technical Officer         March 28, 2008
Pingjun Zhang

/s/ Genshe Bai
------------------         Director                        March 28, 2008
Genshe Bai

/s/ Shengli Liu
------------------         Director                        March 28, 2008
Shengli Liu


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