**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**









**FORM
      10-Q**


**(Mark
      One)**





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


**For
      the quarterly period ended June 30, 2008**




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


**For
      the transition period from ______________ to
      _______________**





Commission
      File Number 0-28806




**ENERGROUP
      HOLDINGS CORPORATION**


(Exact
      name of registrant as specified in its charter)




**Nevada**
            
            **87-0420774**(State
                of Incorporation)
            
            (I.R.S.
                Employer Identification No.)





**No.
                9, Xin Yi Street, Ganjingzi District**
              **Dalian
                City, Liaoning Province, PRC 116039**
            
            **N/A**(Address
                of principal executive offices)
            
            (Zip
                Code)




**+86
      411 867 166 96**


(Registrant’s
      telephone number, including area code)




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
      during the preceding 12 months (or for such shorter period that the registrant
      was required to file such reports), and (2) has been subject to such filing
      requirements for the past 90 days.


Yes x No o




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





Large
      Accelerated filer o Accelerated Filer o Non-Accelerated Filer o Smaller
      Reporting Company x





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





As
      of
      June 30, 2008, the Registrant had 21,136,391 shares of Common Stock
      outstanding.







**ENERGROUP
      HOLDINGS CORPORATION**





**INDEX**





Page NumberPART
                I. Financial StatementsItem
                1.
            Financial
                InformationConsolidated
                Balance Sheets as of June 30, 2008 and December 31, 2007
            1Consolidated
                Statements of Income for the Three and Six Months Ended June 30,
                2008 and
                2007.
            3Consolidated
                Statements of Shareholders' Equity for the Six Months Ended June
                30, 2008
                and the Year Ended December 31, 2007
            4Consolidated
                Statements of Cash Flows for the Three months and Six Months Ended
                June
                30, 2008 and June 30, 2007
            5Notes
                to Consolidated Financial Statements - June 30, 2008
            6-26Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            27Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            43Item
                4.
            Controls
                and Procedures
            43**PART
                II. Other Information**Item
                1.
            Legal
                Proceedings
            45Item
                1A.
            Risk
                Factors
            45Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            60Item
                3.
            Defaults
                Upon Senior Securities
            60Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            60Item
                5.
            Other
                Information
            61Item
                6.
            Exhibits
            61Signatures
            
            64







**PART
      I. FINANCIAL INFORMATION**


**ITEM
      1.**  **FINANCIAL
      STATEMENTS**




**Energroup
      Holdings Corporation**


**Consolidated
      Balance Sheets**


**As
      of June 30, 2008 and December 31, 2007**


**(Stated
      in US Dollars)**





Note**June 30, 2008**
            
            **December 31, 2007****ASSETS**Cash
            
            
            
            
            $
            11,270,730
            
            $
            14,031,851Restricted
                Cash
            
            
            3
            
            
            2,230,667
            
            
            4,250,000Accounts
                Receivable
            
            
            4
            
            
            19,120,753
            
            
            622,433Other
                Receivable
            
            
            
            
            
            3,953,573
            
            
            1,068,939Related
                Party Receivable
            
            
            
            
            
            -
            
            
            3,964,357Inventory
            
            
            5
            
            
            5,110,172
            
            
            2,916,016Purchase
                Deposit
            
            
            
            
            
            795,418
            
            
            267,807Prepaid
                Expenses
            
            
            
            
            
            141,767
            
            
            46,401Prepaid
                Taxes
            
            
            
            
            
            199,893
            
            
            -Deferred
                Tax Asset
            
            
            
            
            
            653,354
            
            
            613,844**Total
                current assets**
            
            
            
            
            
            43,476,326
            
            
            27,781,648Property,
                Plant & Equipment, net
            
            
            6
            
            
            25,934,159
            
            
            24,836,496Land
                Use Rights, net
            
            
            7
            
            
            13,539,743
            
            
            12,855,980Construction
                in Progress
            
            
            
            
            
            1,016,693
            
            
            927,866Other
                Assets
            
            
            
            
            
            92,928
            
            
            32,619**TOTAL
                ASSETS**
            
            
            
            
            **$**
            84,059,848
            
            $
            66,434,609**LIABILITIES**Bank
                Loans & Notes
            
            
            8
            
            
            6,402,980
            
            
            7,383,095Accounts
                Payable
            
            
            
            
            
            5,142,723
            
            
            3,779,274Related
                Party Payable
            
            
            9
            
            
            1,835,881
            
            
            -Accrued
                Liabilities
            
            
            
            
            
            3,500,487
            
            
            3,347,013Taxes
                Payable
            
            
            
            
            
            2,018,967
            
            
            1,491,876Other
                Payable
            
            
            
            
            
            3,208,336
            
            
            1,471,381Customer
                Deposits
            
            
            
            
            
            1,694,300
            
            
            24,161**Total
                current liabilities**
            
            
            
            
            
            23,803,675
            
            
            17,496,800**TOTAL
                LIABILITIES**
            
            
            
            
            $
            23,803,675
            
            $
            17,496,800





**See
      Accompanying Notes to the Financial Statements**





1




**Energroup
        Holdings Corporation**
 **Consolidated
        Balance Sheets**
 **As
        of June 30, 2008 and December 31, 2007**
 **(Stated
        in US Dollars)**


Note
            
            **June 30, 2008**
            
            **December 31, 2007****STOCKHOLDERS'
                EQUITY**Preferred
                Stock - $0.001 par value 10,000,000 shares authorized; 0 shares issued
                & outstanding at June 30, 2008 and December 31, 2007,
                respectively.
            
            
            
            
            
            -
            
            
            -Common
                Stock $0.001 par value 21,739,130 shares authorized; 21,136,392 shares
                issued & outstanding at June 30, 2008 and December 31, 2007,
                respectively.
            
            
            
            
            $
            21,136
            
            $
            21,136Additional
                Paid in Capital
            
            
            10
            
            
            15,440,043
            
            
            15,440,043Statutory
                Reserve
            
            
            11
            
            
            1,729,863
            
            
            751,444Retained
                Earnings
            
            
            
            
            
            38,642,002
            
            
            29,764,236Accumulated
                Other Comprehensive Income
            
            
            
            
            
            4,423,129
            
            
            2,960,951**TOTAL
                STOCKHOLDERS' EQUITY**
            
            60,256,173
            
            
            48,937,810**TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY**
            
            
            
            
            $
            84,059,848
            
            $
            66,434,610





**See
      Accompanying Notes to the Financial Statements**





2





**Energroup
      Holdings Corporation**


**Consolidated
      Statements of Income**


**for
      the three and six months ended June 30, 2008 and 2007**


**(Stated
      in US Dollars)**





Note
            
            **3 months**
            
            **3 months**
            
            **6 months**
            
            **6 months****ended**
            
            **ended**
            
            **ended**
            
            **ended****June 30, 2008**
            
            **June 30, 2007**
            
            **June 30, 2008**
            
            **June 30, 2007**Sales
            
            
            
            
            $
            43,076,524
            
            $
            31,370,321
            
            $
            86,583,622
            
            $
            54,558,315Cost
                of Sales
            
            
            
            
            
            36,600,428
            
            
            26,510,666
            
            
            73,074,852
            
            
            45,536,298Gross
                Profit
            
            
            
            
            
            6,476,097
            
            
            4,859,655
            
            
            13,508,771
            
            
            9,022,017Selling
                Expenses
            
            
            12
            
            
            759,778
            
            
            1,570,001
            
            
            2,585,055
            
            
            1,799,420General
                & Administrative Expenses
            
            
            
            
            
            653,187
            
            
            382,377
            
            
            1,146,161
            
            
            687,513Operating
                Income
            
            
            
            
            
            5,063,132
            
            
            2,907,277
            
            
            9,777,555
            
            
            6,535,084Other
                Income
            
            
            
            
            
            358,850
            
            
            4,276
            
            
            383,119
            
            
            7,004Interest
                Income
            
            
            
            
            
            631,707
            
            
            -
            
            
            635,692
            
            
            -Other
                Expenses
            
            
            
            
            
            (72,085
            )
            
            (9,657
            )
            
            (100,735
            )
            
            (37,830
            )Interest
                Expense
            
            
            
            
            
            (300,613
            )
            
            (117,663
            )
            
            (607,078
            )
            
            (710,641
            )Earnings
                before Tax
            
            
            
            
            
            5,680,991
            
            
            2,784,233
            
            
            10,088,553
            
            
            5,793,617Income
                Tax
            
            
            13
            
            
            66,023
            
            
            -
            
            
            232,368
            
            
            -Net
                Income
            
            
            
            
            **$**
            5,614,968
            
            $
            2,784,233
            
            $
            9,856,185
            
            $
            5,793,617Earnings
                Per Share
            
            
            16Basic
            
            
            
            
            $
            0.33
            
            $
            0.21
            
            $
            0.57
            
            $
            0.43Diluted
            
            
            
            
            $
            0.27
            
            $
            0.16
            
            $
            0.47
            
            $
            0.34Weighted
                Average Shares OutstandingBasic
            
            
            
            
            
            17,272,756
            
            
            13,409,120
            
            
            17,272,756
            
            
            13,409,120Diluted
            
            
            
            
            
            21,182,756
            
            
            17,272,756
            
            
            21,182,756
            
            
            17,272,756





Note
            
            **3 months**
            
            **3 months**
            
            **6 months**
            
            **6 months****ended**
            
            **ended**
            
            **ended**
            
            **ended****June 30, 2008**
            
            **June 30, 2007**
            
            **June 30, 2008**
            
            **June 30, 2007**Comprehensive
                IncomeNet
                Income
            
            
            
            
            $
            5,614,968
            
            $
            2,784,233
            
            $
            9,856,185
            
            $
            5,793,617Other
                Comprehensive IncomeForeign
                Currency Translation Adjustment
            
            (2,220,130
            )
            
            16,252
            
            
            1,462,155
            
            
            247,509Total
                Comprehensive Income
            
            
            
            
            $
            3,394,838
            
            $
            2,800,485
            
            $
            11,318,340
            
            $
            6,041,126





**See
      Accompanying Notes to the Financial Statements**





3




**Energroup
      Holdings Corporation**


**Consolidated
      Statements of Changes in Stockholders’ Equity**


**for
      the six months ended June 30, 2008 and the year ended December 31,
      2007**


**(Stated
      in US Dollars)**





**Common****Stock**
            
            
            
            
            
            **Accumulated****Common Stock**
            
            **Additional**
            
            
            
            
            
            **Other****Shares**
            
            
            
            **Paid in**
            
            **Statutory**
            
            **Retained**
            
            **Comprehensive****Outstanding**
            
            **Amount**
            
            **Capital**
            
            **Reserve**
            
            **Earnings**
            
            **Income**
            
            **Total**Balance,
                January 1, 2007
            
            
            17,272,756
            
            
            17,273
            
            
            2,396,079
            
            
            751,444
            
            
            18,112,089
            
            
            896,679
            
            
            22,173,563Issuance
                of Common Stock & Warrants
            
            
            3,863,636
            
            
            3,863
            
            
            13,043,964
            
            
            -
            
            
            -
            
            
            -
            
            
            13,047,828Net
                Income
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            11,652,147
            
            
            -
            
            
            11,652,147Appropriations
                of Retained Earnings
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Foreign
                Currency Translation Adjustment
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            2,064,272
            
            
            2,064,272Balance,
                December 31, 2007
            
            
            21,136,392
            
            
            21,136
            
            
            15,440,043
            
            
            751,444
            
            
            29,764,236
            
            
            2,960,951
            
            
            48,937,810Balance,
                January 1, 2008
            
            
            21,136,392
            
            
            21,136
            
            
            15,440,043
            
            
            751,444
            
            
            29,764,236
            
            
            2,960,951
            
            
            48,937,810Issuance
                of Common Stock & Warrants
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                Income
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            9,856,185
            
            
            -
            
            
            9,856,185Appropriations
                of Retained Earnings
            
            
            -
            
            
            -
            
            
            -
            
            
            978,419
            
            
            (978,419
            )
            
            -
            
            
            -Foreign
                Currency Translation Adjustment
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,462,178
            
            
            1,462,178Balance,
                June 30, 2008
            
            
            21,136,392
            
            
            21,136
            
            
            15,440,043
            
            
            1,729,863
            
            
            38,642,002
            
            
            4,423,129
            
            
            60,256,173





**See
      Accompanying Notes to the Financial Statements**





4







**Energroup
      Holdings Corporation**


**Consolidated
      Statements of Cash Flows**


**for
      the three and six months ended June 30, 2008 and 2007**


**(Stated
      in US Dollars)**





**3 months**
            
            **3 months**
            
            **6 months**
            
            **6 months****ended**
            
            **ended**
            
            **ended**
            
            **ended****June 30, 2008**
            
            **June 30, 2007**
            
            **June 30, 2008**
            
            **June 30, 2007****Cash Flow from
                Operating Activities**Net
                Income
            
            $
            5,614,968
            
            $
            2,784,233
            
            $
            9,856,185
            
            $
            5,793,617Amortization
            
            
            92,630
            
            
            21,101
            
            
            185,260
            
            
            64,530Depreciation
            
            
            739,953
            
            
            485,594
            
            
            1,407,774
            
            
            920,223(Increase)
                in Accounts & Other Receivables
            
            
            (2,925,264
            )
            
            (14,469,947
            )
            
            (17,418,597
            )
            
            (13,121,242
            )(Increase)
                in Inventory & Purchase Deposits
            
            
            6,384,900
            
            
            (564,783
            )
            
            (2,721,767
            )
            
            941,313(Increase)
                in Prepaid Taxes & Expenses
            
            
            (64,415
            )
            
            (27,236
            )
            
            (149,450
            )
            
            (79,079
            )Increase
                Accounts, Taxes & Other Payables
            
            
            4,989,385
            
            
            9,649,369
            
            
            5,278,059
            
            
            9,848,676Increase
                in Accrued Liabilities
            
            
            (105,365
            )
            
            1,351,665
            
            
            153,474
            
            
            313,361Increase
                in Customer Deposits
            
            
            1,612,260
            
            
            (20,187
            )
            
            1,670,140
            
            
            (20,187
            )Cash
                Sourced/(Used) in Operating Activities
            
            
            16,339,051
            
            
            (790,191
            )
            
            (1,738,923
            )
            
            4,661,212**Cash
                Flows from Investing Activities**Funds
                deposited/released from Escrow Account
            
            
            (72,836
            )
            
            -
            
            
            2,019,333
            
            
            -Purchases
                of Plant & Equipment
            
            
            (291,927
            )
            
            (572,469
            )
            
            (646,814
            )
            
            (698,710
            )Purchase
                of Land Use Rights
            
            
            -
            
            
            (3,976,894
            )
            
            -
            
            
            (3,333,506
            )Payments
                for Deposits
            
            
            (58,952
            )
            
            -
            
            
            (60,308
            )
            
            -Cash
                Sourced/(Used) in Investing Activities
            
            
            (423,715
            )
            
            (4,549,363
            )
            
            1,312,211
            
            
            (4,032,216
            )**Cash
                Flows from Financing Activities**Proceeds
                from Bank Borrowings
            
            
            -
            
            
            -
            
            
            7,605,795
            
            
            -Repayment
                of Bank Loans
            
            
            (8,585,910
            )
            
            -
            
            
            (8,585,910
            )
            
            (1,293,663
            )Cash
                Sourced/(Used) in Financing Activities
            
            
            (8,585,910
            )
            
            -
            
            
            (980,115
            )
            
            (1,293,663
            )**Net
                Increase/(Decrease) in Cash & Cash
                Equivalents**
            
            
            7,329,427
            
            
            (5,339,554
            )
            
            (1,406,826
            )
            
            (664,667
            )Effect
                of Currency Translation
            
            
            (3,097,786
            )
            
            1,307,671
            
            
            (1,354,295
            )
            
            119,065Cash
                & Cash Equivalents at Beginning of Period
            
            
            7,039,089
            
            
            6,511,568
            
            
            14,031,851
            
            
            3,025,287**Cash
                & Cash Equivalents at End of Period**
            
            **$**
            11,270,730
            
            $
            2,479,685
            
            $
            11,270,730
            
            $
            2,479,685**Supplementary
                information:**Interest
                Received
            
            
            631,707
            
            
            317
            
            
            635,692
            
            
            655Interest
                Paid
            
            
            86,435
            
            
            76,419
            
            
            557,582
            
            
            76,419Income
                Tax Paid
            
            
            **-**
            
            
            **-**
            
            
            -
            
            
            **-**




**See
      Accompanying Notes to the Financial Statements**





5





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**




1.
            The
                Company and Principal Business
                Activities





Energroup
      Holdings Corporation (the “Company”) (OTCBB: ENHD) is a holding company
      incorporated in the state of Nevada in the United States of America whose
      primary business operations are conducted through its three operating
      subsidiaries: (1) Dalian Chuming Processed Foods Company Ltd., (the “Foods
      Company”) (2) Dalian Chuming Slaughter and Packaging Pork Company Ltd. (the
“Meat Company”), and (3) Dalian Chuming Sales Company Ltd. (the “Sales
      Company”), which are incorporated in the People’s Republic of China (the “PRC”).
      The Company is
      headquartered in the City of Dalian, Liaoning Province of China.





The
      three
      operating subsidiaries were spun-off constituents of former parent company,
      Dalian Chuming Group Co. Ltd. The Company indirectly holds the three operating
      subsidiary companies through its wholly owned intermediary subsidiaries: (A)
      Precious Sheen Investments Limited (“PSI”), a British Virgin Islands
      corporation, and (B) Dalian Chuming Precious Sheen Investments Consulting Co.,
      Ltd., (“Chuming”), a wholly foreign owned enterprise incorporated in the
      PRC.





Dalian
      Precious Sheen Investments Consulting Co., Ltd. (“Chuming”) is an intermediary
      holding company established in the People’s Republic of China (the “PRC” or
“China”) formed for the purpose of providing a group structure to enhance the
      viable capacity of its three PRC operating subsidiaries.





The
      Company’s primary business activities are the production and packing of fresh
      pork and also production of processed meat products for distribution and sale
      to
      clients throughout the PRC and Russia.





*Corporate
      Reorganization*





PRC
      law
      currently has limits on foreign ownership of certain companies. To enable
      Chuming to raise equity capital from investors outside of China, it established
      an offshore holding company by incorporating Precious Sheen Investments Limited
      in the British Virgin Islands (“PSI”) in May 2007. On September 26, 2007,
      Chuming entered into share transfer agreements with Dalian Chuming Group Co.,
      Ltd., under which Dalian Chuming Group Co., Ltd. agreed to transfer ownership
      of
      three operating subsidiaries (collectively known as “Chuming Operating
      Subsidiaries”) to Chuming. On October 23, 2007, Chuming completed all required
      registrations to complete the share transfer, and became the 100% owner of
      the
      Chuming Operating Subsidiaries. On November 14, 2007 the Dalian Commerce Bureau
      approved the transfer of Dalian Chuming Group Co., Ltd.’s 68% interest in
      Chuming to PSI, and upon this transfer, Chuming became a wholly foreign owned
      enterprise, with PSI as the 100% owner of Chuming (including its subsidiaries).
      On December 13, 2007, the PRC government authorities issued Chuming a business
      license formally recognizing it as a wholly foreign owned enterprise, of which
      PSI is the sole shareholder.




6





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





The
      following is a description of the Chuming Operating Subsidiaries: -




A.
      Dalian
      Chuming Slaughter and Packaging Pork Company Ltd., whose primary business
      activity is acquiring, slaughtering, and packaging of pork and
      cattle;





B.
      Dalian
      Chuming Processed Foods Company Ltd., whose primary business activity is the
      processing of raw and cooked meat products; and





C.
      Dalian
      Chuming Sales Company Ltd., which is responsible for Chuming’s sales, marketing,
      and distribution operations.





*Share
      Exchange Transaction*





On
      December 31, 2007, the Company acquired all of the outstanding shares of PSI
      in
      exchange for the issuance of 16,850,000 restricted shares of our common stock
      to
      the shareholders of PSI, which represented approximately 97.55% of the
      then-issued and outstanding common stock of the Company (excluding the shares
      issued in the Financing). As a result of that transaction, PSI became our wholly
      owned subsidiary and we acquired the business and operations of the three
      operation subsidiaries.





The
      share
      exchange transaction has been accounted for as a recapitalization of PSI where
      the Company (the legal acquirer) is considered the accounting acquiree and
      PSI
      (the legal acquiree) is considered the accounting acquirer. As a result of
      this
      transaction, the Company is deemed to be a continuation of the business of
      PSI.





Accordingly,
      the financial data included in the accompanying consolidated financial
      statements for all periods prior to December 31, 2007 is that of the accounting
      acquirer (PSI). The historical stockholders’ equity of the accounting acquirer
      prior to the share exchange has been retroactively restated as if the share
      exchange transaction occurred as of the beginning of the first period
      presented.





2.
            Summary
                of Significant Accounting
                Policies





*(A)*
            *Method
                of Accounting*





The
      Company maintains its general ledger and journals with the accrual method
      accounting for financial reporting purposes. The financial statements and notes
      are representations of management. Accounting policies adopted by the Company
      conform to generally accepted accounting principles in the United States of
      America and have been consistently applied in the presentation of financial
      statements, which are compiled on the accrual basis of accounting.





7





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





*(B)*
            *Principles
                of Consolidation*





The
      consolidated financial statements, which include the Company and its
      subsidiaries, are compiled in accordance with generally accepted accounting
      principles in the United States of America. All significant inter-company
      accounts and transactions have been eliminated. The consolidated financial
      statements include 100% of assets, liabilities, and net income or loss of those
      wholly-owned subsidiaries.





The
      Company owned the three operating subsidiaries since its inception. The Company
      also owns two intermediary holdings companies. As of June 30, 2008, the detailed
      identities of the consolidating subsidiaries are as follows: -





**Name of Company**
            
            **Place of**
              **Incorporation**
            
            **Attributable**
              **Equity**
              **Interest**
            
            **Registered**
              **Capital**Precious Sheen Investments Limited
            
            
            BVI
            
            
            100
            %
            
            USD 10,000Dalian
                Chuming Precious Sheen Investment Consulting Co., Ltd.
            
            
            PRC
            
            
            100
            %
            
            RMB29,400,682Dalian
                Chuming Slaughtering & Pork Packaging Co. Ltd.
            
            
            PRC
            
            
            100
            %
            
            RMB 10,000,000Dalian
                Chuming Processed Foods Co. Ltd.
            
            
            PRC
            
            
            100
            %
            
            RMB 5,000,000Dalian
                Chuming Sales Co. Ltd.
            
            
            PRC
            
            
            100
            %
            
            RMB 5,000,000





The
      consolidation of these operating subsidiaries into a newly formed holding
      company i.e. “the Company” is permitted by United States GAAP: ARB51 paragraph
      22 and 23.





*(C)*
            *Use
                of Estimates*




The
      preparation of financial statements in conformity with generally accepted
      accounting principles in the United States 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 reported amounts of revenues and expenses during the
      reporting period. Management makes these estimates using the best information
      available at the time the estimates are made; however, actual results could
      differ materially from these estimates.





*(D)*
            *Cash
                Equivalents*





For
      purposes of the statement of cash flows, the Company considers all highly liquid
      equity or debt instruments purchased with a maturity of three months or less
      to
      be cash equivalents.





8





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





*(E)*
            *Accounts
                Receivable*





The
      Company extends unsecured, non-interest bearing credit to its customers;
      accordingly, the Company carries an allowance for doubtful accounts, which
      is an
      estimate, made by management. Management makes its estimate based on prior
      experience rates and assessment of specific outstanding customer balances.
      Management may extend credit to new customers who have met the criteria of
      the
      Company’s credit policy.





*(F)*
            *Inventory
                Carrying Value*





Inventory,
      consisting of raw materials in the form of livestock, work in progress, and
      finished products, is stated at the lower of cost or market value. Finished
      products are comprised of direct materials, direct labor and an appropriate
      proportion of overhead. Periodic
      evaluation is made by management to identify if inventory needs to be written
      down because of damage, or spoilage. Cost is computed using the weighted average
      method.





*(G)*
            *Purchase
                Deposit*





Purchase
      deposit represents the cash paid in advance for purchasing raw materials. The
      purchase deposit is interest free and unsecured.





*(H)*
            *Property,
                Plant, and Equipment*





Property,
      Plant, and Equipment are stated at cost. Repairs and maintenance to these assets
      are charged to expense as incurred; major improvements enhancing the function
      and/or useful life are capitalized. When items are sold or retired, the related
      cost and accumulated depreciation are removed from the accounts and any gains
      or
      losses arising from such transactions are recognized.





Construction
      in progress represents the direct costs of design, acquisition, and construction
      of buildings, building improvements and land improvements. Capitalization of
      these costs ceases when substantially all activities necessary to prepare the
      assets for their intended use are completed. At such point, construction in
      progress is transferred to its respective asset classification. No depreciation
      is provided until it is completed and ready for intended use.





9





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





Property
      and equipment are depreciated using the straight-line method over their
      estimated useful life with a 5% salvage value. Their useful lives are as
      follows: -





Fixed Asset Classification
            
            Useful LifeLand
                Improvements
            
            10
                yearsBuildings
            
            20
                yearsBuilding
                Improvements
            
            10
                yearsManufacturing
                Machinery & Equipment
            
            10
                yearsOffice
                Equipment
            
            5
                yearsFurniture
                & Fixtures
            
            5
                yearsVehicles
            
            5
                years





*(I)*
            *Land
                Use Rights*





Land
      Use
      Rights are stated at cost less accumulated amortization. Amortization is
      provided over its useful life, using the straight-line method. The useful life
      of the land use right is 50 years.





*(J)*
            *Construction
                in Progress*





Construction
      in progress represents the direct costs of design, acquisition, and construction
      of: buildings, building improvements, and land improvements. These costs are
      capitalized in the Construction-in-Progress account until substantially all
      activities necessary to prepare the assets for their intended use are completed.
      At such point, the Construction-in-Progress account is closed and the
      capitalized costs are transferred to their appropriate asset classification.
      No
      depreciation is provided until the assets are completed and ready for their
      intended use.





*(J)*
            *Accounting
                for Impairment of Assets*





The
                Company reviews the recoverability of its long-lived assets, such
                as
                property and equipment, when events or changes in circumstances occur
                that
                indicate the carrying value of the asset group may not be recoverable.
                The
                assessment of possible impairment is based on the Company’s ability to
                recover the carrying value of the asset from the expected future
                cash
                flows, undiscounted and without interest charges, of the related
                operations. If these cash flows are less than the carrying value
                of such
                assets, an impairment loss is recognized for the difference between
                estimated fair value and carrying value. The measurement of impairment
                requires management to estimate future cash flows and the fair value
                of
                long-lived assets.





*(K)*
            *Customer
                Deposits*





Customer
      Deposits represents money the Company has received in advance for purchases
      of
      pork and pork products. The Company considers customer deposits as a liability
      until products have been shipped and revenue is earned.





10





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





*(L)*
            *Statutory
                Reserve*





Statutory
      reserve refer to the amount appropriated from the net income in accordance
      with
      laws or regulations, which can be used to recover losses and increase capital,
      as approved, and, are to be used to expand production or operations. PRC laws
      prescribe that an enterprise operating at a profit, must appropriate, on an
      annual basis, from its earnings, an amount to the statutory reserve to be used
      for future company development. Such an appropriation is made until the reserve
      reaches a maximum equalling 50% of the enterprise’s capital.





*(M)*
            
            *Other
                Comprehensive Income*





Comprehensive
      income is defined to include all changes in equity except those resulting from
      investments by owners and distributions to owners. Among other disclosures,
      all
      items that are required to be recognized under current accounting standards
      as
      components of comprehensive income are required to be reported in a financial
      statement that is presented with the same prominence as other financial
      statements. The Company’s current component of other comprehensive income is the
      foreign currency translation adjustment.





*(N)*
            *Recognition
                of Revenue*





Revenue
      from the sale of pork products, etc., is recognized on the transfer of risks
      and
      rewards of ownership, which generally coincides with the time when the goods
      are
      delivered to customers and the title has passed.





*(O)*
            *Cost
                of Sales*





The
      Company’s cost of sales is comprised of raw materials, factory worker salaries
      and related benefits, machinery supplies, maintenance supplies, depreciation,
      utilities, inbound freight, purchasing and receiving costs, inspection and
      warehousing costs





*(P)*
            *Selling
                Expense*





Selling
      expenses are comprised of outbound freight, salary for the sales force, client
      entertainment, commissions, depreciation, advertising, and travel and lodging
      expenses.





*(Q)*
            *General
                & Administrative*





General
      and administrative costs include executive compensation, quality control, and
      general overhead such as the finance department, administrative staff, and
      depreciation and amortization expense.





11




**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





*(R)*
            *Shipping
                and handling*





All
      shipping and handling are expensed as incurred and are included as a component
      of cost of sales.




*(S)*
            *Advertising
                Expense*





Costs
      related to advertising and promotion expenditures are expensed as incurred
      during the year. Advertising costs are charged to selling expense





*(T)*
            *Retirement
                Benefits*





Retirement
      benefits in the form of contributions under defined contribution retirement
      plans to the relevant authorities are charged to the statement of operations
      as
      incurred.





*(U)*
            *Income
                Taxes*





The
      Company accounts for income tax using an asset and liability approach and allows
      for recognition of deferred tax benefits in future years. Under the asset and
      liability approach, deferred taxes are provided for the net tax effects of
      temporary differences between the carrying amounts of assets and liabilities
      for
      financial reporting purposes and the amounts used for income tax purposes.
      A
      valuation allowance is provided for deferred tax assets if it is more likely
      than not these items will either expire before the Company is able to realize
      their benefits, or that future realization is uncertain.





*(V)*
            *Economic
                and Political Risks*





The
      Company’s operations are conducted in the PRC. Accordingly, the Company’s
      business, financial condition and results of operations may be influenced by
      the
      political, economic and legal environment in the PRC, and by the general state
      of the PRC economy.





*(W)*
            *Foreign
                Currency Translation*





The
      Company maintains its financial statements in the functional currency. The
      functional currency of the Company is the Renminbi (RMB). Monetary assets and
      liabilities denominated in currencies other than the functional currency are
      translated into the functional currency at rates of exchange prevailing at
      the
      balance sheet dates. Transactions denominated in currencies other than the
      functional currency are translated into the functional currency at the exchanges
      rates prevailing at the dates of the transaction. Exchange gains or losses
      arising from foreign currency transactions are included in the determination
      of
      net income for the respective periods.





12





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





For
      financial reporting purposes, the financial statements of the Company which
      are
      prepared using the functional currency have been translated into United States
      dollars. Assets and liabilities are translated at the exchange rates at the
      balance sheet dates and revenue and expenses are translated at the average
      exchange rates and stockholders’ equity is translated at historical exchange
      rates. Any translation adjustments resulting are not included in determining
      net
      income but are included in foreign exchange adjustment to other comprehensive
      income, a component of stockholders’ equity.





***Exchange
                Rates***
            
            ***6/30/2008***
            
            ***12/31/2007***
            
            ***6/30/2007***Period
                end RMB : US$ exchange rate
            
            
            6.871800
            
            
            7.314100
            
            
            7.624800Average
                period RMB : US$ exchange rate
            
            
            7.072630
            
            
            7.617200
            
            
            7.729990





RMB
      is
      not freely convertible into foreign currency and all foreign exchange
      transactions must take place through authorized institutions. No representation
      is made that the RMB amounts could have been, or could be, converted into US$
      at
      the rates used in translation.





*(X)*
            *Earnings
                Per Share*





The
      Company computes earnings per share (“EPS”) in accordance with Statement of
      Financial Accounting Standards No. 128, “Earnings per share” (“SFAS No. 128”),
      and SEC Staff Accounting Bulletin No. 98 (“SAB 98”). SFAS No. 128 requires
      companies with complex capital structures to present basic and diluted EPS.
      Basic EPS is measured as the income or loss available to common shareholders
      divided by the weighted average common shares outstanding for the period.
      Diluted EPS is similar to basic EPS but presents the dilutive effect on a per
      share basis of potential common shares (e.g., contingent shares, convertible
      securities, options, and warrants) as if they had been converted at the
      beginning of the periods presented, or issuance date, if later. Potential common
      shares that have an anti-dilutive effect (i.e., those that increase income
      per
      share or decrease loss per share) are excluded from the calculation of diluted
      EPS.





*(Y)*
            *Recent
                Accounting Pronouncements*





In
      March
      2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
      Instruments and Hedging Activities, an amendment of FASB Statement No. 133"
      ("SFAS 161"). SFAS 161 applies to all derivative instruments and
      related hedged items accounted for under SFAS No. 133, "Accounting for
      Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 161
      requires entities to provide greater transparency about (a) how and why an
      entity uses derivative instruments, (b) how derivative instruments and
      related hedged items are accounted for under SFAS 133 and its related
      interpretations, and (c) how derivative instruments and related hedged
      items affect an entity's financial position, results of operations and cash
      flows. SFAS 161 is effective for financial statements issued for fiscal
      years and interim periods beginning after November 15, 2008.





13





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





In
      May
      2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
      Accounting Principles" ("SFAS 162"). SFAS 162 identifies the sources
      of accounting principles and the framework for selecting the principles used
      in
      the preparation of financial statements of nongovernmental entities that are
      presented in conformity with generally accepted accounting principles (the
      GAAP hierarchy). Statement 162 will become effective 60 days
      following the SEC's approval of the Public Company Accounting Oversight Board
      amendments to AU Section 411, "The Meaning of Present Fairly in
      Conformity With Generally Accepted Accounting Principles."





In
      May
      2008, the FASB issued FSP Accounting Principles Board ("APB") 14-1 "Accounting
      for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
      (Including Partial Cash Settlement)" ("FSP APB 14-1"). FSP APB 14-1
      requires the issuer of certain convertible debt instruments that may be settled
      in cash (or other assets) on conversion to separately account for the liability
      (debt) and equity (conversion option) components of the instrument in a manner
      that reflects the issuer's non-convertible debt borrowing rate. FSP
      APB 14-1 is effective for fiscal years beginning after December 15,
      2008 on a retroactive basis.





The
      Company is currently evaluating the potential impact, if any, of the adoption
      of
      the above recent accounting pronouncements on its consolidated results of
      operations and financial condition.





14





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





3. Restricted
      Cash





The
      restricted cash reflects funds received from the financing transaction described
      in Note 16 that is held in an escrow with US Bank in the United States. These
      funds are restricted until the Company has fulfilled the following criteria:
      (1)
      the hiring of a Chief Financial Officer (“CFO”) that meets the approval of the
      investors, at such point the Company will release $1.5 million from restriction,
      the Company must satisfy this requirement within 90 days of the closing of
      the
      financing transaction, (2) the Company appoints a Board of Directors that has
      majority of independent members, at such point $2.0 million will be released
      from restriction, and (3) appoint a successor auditor, at which point $500,000
      will be released from restriction. There is $250,000 in the escrow account
      that
      has already been earmarked for investor relations purposes.





At
      June
      30, 2008, the Company has yet to fulfill requirement (1) and (3). The Company
      is
      still in the process of recruitment of a CFO in order to meet requirement (1).
      The Company has also requested bids for consideration from auditing firms that
      were on an approved list submitted by, Pinnacle Fund, whom was the lead investor
      in the Company’s financing transaction in December 2007, detailed in Note
      18.





4. Accounts
      Receivable





Accounts
      Receivable at June 30, 2008 and December 31, 2007 consisted of the following:





**June 30, 2008**
            
            **December 31, 2007**Accounts
                Receivable – Trade
            
            $
            19,210,929
            
            $
            707,156Less:
                Allowance for Doubtful Accounts
            
            
            (90,176
            )
            
            (84,723
            )Net
                Accounts Receivable
            
            $
            19,120,753
            
            $
            622,433





*Allowance
                for Bad Debts*
            
            **June 30, 2008**
            
            **December 31, 2007**Beginning
                Balance
            
            $
            84,723
            
            $
            79,267Allowance
                Provided
            
            
            5,453
            
            
            5,456Charged
                Against Allowance
            
            
            
            
            
            -Ending
                Balance
            
            $
            90,176
            
            $
            84,723


During
        the second quarter, management revised the Company’s credit policy. Based on
        management’s review, the Company began extending more favorable credit terms to
        its top tier customers.  Those customers that qualified as top tier
        were extended approximately one month of credit. The Company previously extended
        one to two days of credit.




5. Inventory


**June 30, 2008**
            
            **December 31, 2007**Raw
                Materials
            
            $
            1,090,498
            
            $
            1,039,440Work
                in Progress
            
            
            515,763
            
            
            547,889Finished
                Goods
            
            
            3,503,911
            
            
            1,328,688$
            5,110,172
            
            $
            2,916,016





15





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





6. Property,
      Plant & Equipment





**At
                June 30, 2008**
            
            
            
            **Accumulated****Cost**
            
            **Depreciation**
            
            **Net**Buildings
            
            $
            20,699,601
            
            $
            3,100,214
            
            $
            17,599,386Manufacturing
                Equipment
            
            
            9,981,336
            
            
            2,634,788
            
            
            7,346,548Office
                Equipment
            
            
            191,241
            
            
            116,939
            
            
            74,302Vehicles
            
            
            911,476
            
            
            408,094
            
            
            503,382Furniture
                & Fixture
            
            
            522,678
            
            
            112,138
            
            
            410,540$
            32,306,332
            
            $
            6,372,173
            
            $
            25,934,159





**At
                December 31, 2007**
            
            
            
            **Accumulated****Cost**
            
            **Depreciation**
            
            **Net**Buildings
            
            $
            19,910,391
            
            $
            2,522,257
            
            $
            17,388,134Manufacturing
                Equipment
            
            
            9,066,948
            
            
            2,041,694
            
            
            7,025,254Office
                Equipment
            
            
            122,124
            
            
            60,298
            
            
            61,826Vehicles
            
            
            652,231
            
            
            321,138
            
            
            331,093Furniture
                & Fixture
            
            
            49,204
            
            
            19,015
            
            
            30,189$
            29,800,898
            
            $
            4,964,402
            
            $
            24,836,496





7. Land
      Use Right





The
      Company had the following intangible assets outstanding at June 30, 2008 and
      December 31, 2007:





**June 30, 2008**
            
            **December 31, 2007**Land
                Use Rights, at Cost
            
            $
            14,370,602
            
            $
            13,501,580*less:*Accumulated Amortization
            
            
            (830,859
            )
            
            (645,600
            )$
            13,539,743
            
            $
            12,855,980





16





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





8. Bank
      Loans





*(A)*
            *Short
                Term Bank Loans*





At
      June
      30, 2008, the Company had the following short term loans
      outstanding:





**Borrower: Operating**
              **Subsidiary**
            
            **Bank**
            
            **Interest**
              **Rate**
            
            **Due Date**
            
            **Amount**Meat Company
            
            Bank
              of China
            
            
            8.217
            %
            
            12/18/2008
            
            $
            4,365,668Food Company
            
            Bank
              of China
            
            
            8.217
            %
            
            11/17/2008
            
            
            2,037,312$
            6,402,980




The
      loans
      provided by the Bank of have been secured by the Company’s land use rights and
      guaranteed by the Dalian Chuming Group Co., Ltd.





9. Related
      Party Payable





In
      the
      normal course of business which includes the purchases of hogs and other raw
      materials, sale of pork and pork products, the Company conducts transactions
      with the following related parties: Dalian Chuming Group Co., Ltd (“Group”) and
      the Group subsidiaries, that are not consolidated into Energroup Holdings or
      Energroup’s subsidiary, Dalian Chuming Precious Sheen Investments Consulting Co.
      Ltd. (Chuming): (1) Dalian Chuming Industrial Development Co., Ltd., (2) Dalian
      Chuming Trading Co., Ltd, (3) Dalian Mingxing Livestock Product Co. Ltd., (4)
      Dalian Chuming Stockbreeding Combo Development Co., Ltd., (5) Dalian Chuming
      Fodder Co., Ltd., and (6) Dalian Chuming Biological Technology Co., Ltd., and
      (7) Dalian Huayu Seafood Food Co., Ltd. The Company and the aforementioned
      related parties share common beneficial ownership. All
      related party transactions are conducted between Chuming, the WOFE, and the
      Group. All transactions with related parties are generally performed at arm’s
      length, and in 2008, all such transactions were conducted at arm’s
      length.





In
      the
      event that the Company has both receivables from, and payables to the Group
      it
      will, in accordance with FIN 39, setoff the balances in order to arrive at
      a
      single balance that is either due from, or due to the Group. The following
      table
      shows how the Company arrived at a setoff balance that can be found on the
      Company’s Balance Sheet at June 30, 2008.





**Operating**
              **Subsidiary**
            
            **Type
                of**
              **Balance**
            
            **Description**
            
            **Amount**Meat
                Company
            
            Receivable
            
            Meet
                paid for feed on behalf of Group
            
            5,434,331Food
                Company
            
            Receivable
            
            Food
                sold products to Huayu
            
            13,780Food
                Company
            
            Receivable
            
            Food
                Sold products to Group upon receipt of Bank Drafts
            
            8,440,29213,888,403





17





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





**Operating**
              **Subsidiary**
            
            **Type
                of**
              **Balance**
            
            **Description**
            
            **Amount**Meat
                Company
            
            Payable
            
            Industrial
                paid for Equipment on behalf of Meat Company
            
            6,461Meat
                Company
            
            Payable
            
            Combo
                paid for Equipment on behalf of Meat Company
            
            116,326Food
                Company
            
            Payable
            
            Mingxing
                paid for Equipment on behalf of Food Company
            
            4,366Food
                Company
            
            Payable
            
            Packaging
                paid on Behalf of Food Company by Group
            
            106,955Food
                Company
            
            Payable
            
            Advance
                from Huayu for the purchases of products from Food Company
            
            3,634,962WOFE
            
            Payable
            
            Group
                loaned funds to Chuming WOFE
            
            11,855,21315,724,283Net
                Related Party Payable
            
            1,835,880





The
      related party payable balance detailed above, and the related transactions
      that
      comprise that balance are integral and material to the Company’s operations. The
      Company is reliant on transactions with the above related parties in order
      to
      conduct its business normally. The Company acknowledges that it has the
      responsibility to comply with paragraph c of SFAS 57 which calls for the dollar
      amounts of transactions for each of the periods for which income statements
      are
      presented and the effects of any change in the method of establishing the terms
      from that used in the preceding period. The Company’s accounting system in the
      past was manual and accordingly is not able to, from a cost benefit perspective,
      summarize and provide further detail on the related party transactions. Also,
      the Company’s current accounting department does not have enough staff in order
      to perform an exercise to further detail the Related Party Receivable beyond
      what has been provided above; however the Company is taking remedial action
      to
      rectify this deficiency for future financial reports. The Company does represent
      that the balances disclosed above are both accurate and reliable within
      acceptable thresholds of materiality.





The
      Company believes that related party transactions have a significant bearing
      on
      the Company’s financial statements. The procurement of hogs is almost entirely
      transacted through related parties. The Company’s cost of sales is significantly
      correlated with the transactions with related parties. The
      hogs
      that were purchased from the Group comprised 51.56%
      and 41.89% of the Company’s total cost of sales for the years 2007, and 2006,
      respectively. The remaining portions of hogs were purchased directly from
      breeders whom the Group has trained and indirectly oversees to insure quality.
      The current related party receivable from the Group represents the fact that
      Group significantly needed the aid of the Company in the form of working capital
      in order to meet the hog requirement by the Company for future sales and growth.
      The Company and the Group acknowledge the recoverability of the receivable
      and
      points out that this balance plays a role in the Company’s plans; however, the
      Company and the Group have stated that the receivable will be
      repaid.





18





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





10. Capitalization





As
      a
      result of the reverse-takeover on December 31, 2007 including an exchange of
      shares and issuance of common stock to private investors pursuant to the equity
      financing plan, the total capitalization as of June 30, 2008 is showed in
      the following table.





**Name of Shareholder**
            
            **Number of**
              **Shares**
            
            **Common**
              **Stock**
              **Capital**
            
            **Additional**
              **Paid in**
              **Capital**
            
            **Equity %**Operating
                Companies Founders
            
            
            14,688,948
            
            $
            14,689
            
            $
            2,396,079
            
            
            69.50
            %Shareholders
                Prior to reverse takeover
            
            
            422,756
            
            
            423
            
            
            -
            
            
            2.00
            %Advisors
                & Consultants
            
            
            2,161,052
            
            
            2,161
            
            
            -
            
            
            10.22
            %Private
                Investors
            
            
            3,863,636
            
            
            3,863
            
            
            13,043,964
            
            
            18.28
            %21,136,392
            
            $
            21,136
            
            $
            15,440,043
            
            
            100.00
            %





11 Commitments
      of Statutory Reserve





In
      compliance with PRC laws, the Company is required to appropriate a portion
      of
      its net income to its statutory reserve up to a maximum of 50% of an
      enterprise’s registered capital in the PRC. The Company had future unfunded
      commitments, as provided below.





**June 30, 2008**
            
            **December 31, 2007**PRC
                Registered Capital
            
            $
            3,642,866
            
            $
            3,642,866-
                Statutory Reserve Ceilingbased
                on 50% ofRegistered
                Capital
            
            
            1,821,433
            
            
            1,821,433Less:
                - Retained Earningsappropriated
                toStatutory
                Reserve
            
            
            1,729,863
            
            
            751,444Reserve
                CommitmentOutstanding
            
            
            91,570
            
            $
            1,069,989





12. Advertising
      Costs





Advertising
      expenses were $1,413,901 and $50,313 for the six months ended June 30, 2008
      and
      2007 respectively.





19





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





13.
            Income
                Taxes





The
      Company’s different operating subsidiaries are subject to different income tax
      regulations under PRC law.





The
      operating subsidiary, Meat, has been given special tax-free status by the PRC
      government because of the Company standing as leader in its industry in Dalian;
      therefore, no provision for income tax in the PRC was made for the six months
      ended June 30, 2008 and 2007.





The
      Company’s operating subsidiary, Food, has provided provisions for income taxes
      for the six months ended June 30, 2008 and 2007 of $232,368 and $967,539 respectively.





The
      Company’s operating subsidiary, Sale, has not provided provisions for income
      taxes for the six months ended June 30, 2008 and 2007





After
      adjusting for special tax-free status and net operating loss, the consolidated
      taxable earnings were determined, and the results were as follows:
      -





i.
            
            June 30, 2008
            
            Tax expense
            
            $
            232,368ii.
            
            June 30, 2007
            
            Tax expense
            
            $
            0





Beginning
      December 31, 2007, the Company’s foreign subsidiaries became subject to U.S.
      income tax liability; however, the tax is deferred until foreign source income
      is repatriated to the Company. Accordingly, the company has not made any
      provisions for U.S. income tax liability.





On
      March
      16, 2007, the PRC government passed new tax legislation that repealed
      preferential tax treatment for foreign investment enterprises in the PRC and
      enacted new tax regulations. Under such regulations, with certain exceptions,
      both domestic and foreign enterprises will be taxed at a standard enterprise
      income tax rate of 25%. The Company’s two operating subsidiaries, Food, and
      Sales are subject to the 2 5%
      income
      tax rate beginning January 1, 2008. Based on current PRC legislation, Meat
      should be expected to continue benefiting from a tax holiday.





20





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





14.
            Commitments





*(A)*  *Hog
      Purchase Agreement*





It
      is
      company policy to develop plant facilities based on availability of cash
      resources without incurring capital commitments. Therefore, the Company did
      not
      have any capital commitments existing at June 30, 2008.





There
      were no severance packages to any key management personnel that have resigned
      their positions. The Company has the right to terminate employment for cause
      at
      any time.





On
      December 19, 2007, the Company entered into a hog purchase agreement whereby
      the
      Dalian Chuming Group Co., Ltd will provide at fair market price a minimum number
      of hogs to the Company. At June 30, 2008, the Company expects minimum quantities
      of hogs detailed in the following table:





**Year**
            
            **Hogs**
            
            **Price
                Per Hog**
            
            **Amount**2008
            
            
            270,000
            
            $
            211.01
            
            
            56,972,7002009
            
            
            800,000
            
            $
            232.21
            
            
            185,768,0002010
            
            
            800,000
            
            $
            255.44
            
            
            204,352,000**$**
            447,092,700





The
      Company believes that the fair market price of the hogs will increase by 10%
      each year. The assumption of 10% reflects that Company expectations in regards
      to inflation, and the rising costs of inputs in breeding livestock.





( *B)*  *Pledged
      Assets*





Prior
      to
      the financing transaction described in Note 18 undertaken by the Company at
      December 31, 2007, the Company owed Dalian Chuming Group Co. Ltd (“Group”)
      approximately $20,000,000 (RMB 160,000,000). The Group, in turn, borrowed these
      funds from the China National Development Bank. These funds were guaranteed
      by a
      bond issued by China Export and Credit Insurance Corporation (“Bond Issuer”).
      The Company pledged land use rights and real property to the Bond Issuer in
      order to secure the bond.





As
      per
      the terms of the agreement under the financing transaction detailed in Note
      18,
      the funds owed to the Group by the Company were set off against receivables
      owed
      by the Group to the Company. Although the Company no longer owes funds to the
      Group regarding this loan, the Group still has an outstanding balance with
      the
      China National Development Bank. Accordingly, the pledged collateral of land
      use
      rights and buildings made to the Bond Issuer still underlie the loan currently
      owed by the Group, and as such, the Company’s assets, namely the buildings and
      land use rights are at risk if the Group were to default on this
      loan.





21





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





15.
            Operating
                Segments





The
      Company individually tracks the performance of its three operating
      subsidiaries Meat Company, Food Company, Sales Company, and the
      ultimately holding parent company. Meat Company is primarily engaged in the
      slaughter and processing of pork livestock for wholesale and retail
      distribution. Food Company is primarily engaged in the production of
      pork-based food products, such as sausages and cured meats, for retail
      distribution. Sales Company is primarily engaged in the sale and
      distribution of products produced by Food Company and Meat Company.





Below
      is
      a presentation of the Company’s Statement of Income and Balance Sheet for its
      operating subsidiaries at, and for the six months ended June 30, 2008. The
      Company has also provided reconciling adjustments with the Company and its
      intermediate holding companies Dalian Chuming Precious Sheen Investments
      Consulting Ltd. (“Chuming”) and Precious Sheen Investments Ltd
      (PSI).





**Results of Operations**
              **for the six months**
              **ended June 30, 2008**
            
            **Meat**
              **Company**
            
            **Food**
              **Company**
            
            **Sales**
              **Company**
            
            **Chuming**
              **WOFE,**
              **PSI, &**
              **Eliminations**
            
            **Total**Sales
            
            $
            86,094,320
            
            $
            10,710,188
            
            $
            32,809,947
            
            $
            (43,030,832
            )
            $
            86,583,622Cost
                of Sales
            
            
            75,193,539
            
            
            8,612,897
            
            
            32,299,248
            
            
            (43,030,832
            )
            
            73,074,852Gross
                Profit
            
            
            10,900,781
            
            
            2,097,291
            
            
            510,699
            
            
            -
            
            
            13,508,771Operating
                expense
            
            
            1,561,818
            
            
            809,103
            
            
            1,243,301
            
            
            116,994
            
            
            3,731,216Operating
                (Loss)/Profit
            
            
            9,338,963
            
            
            1,288,188
            
            
            (732,602
            )
            
            (116,994
            )
            
            9,777,555Other
                Income (Expenses)
            
            
            601,323
            
            
            (494,618
            )
            
            124,143
            
            
            80,150
            
            
            310,998Earnings
                before Tax
            
            
            9,940,286
            
            
            793,570
            
            
            -608,460
            
            
            -36,843
            
            
            10,088,553Tax
            
            
            -
            
            
            232,368
            
            
            -
            
            
            -
            
            
            232,368Net
                Income
            
            **$**
            9,940,286
            
            $
            561,202
            
            $
            (608,460
            )
            $
            (36,843
            )
            $
            9,856,185





**Eliminated Intercompany Sales of Products Sold****Sold From:**
            
            **Sold To:**
            
            **Amount**Food
                Company
            
            Sales
              Company
            
            $
            7,133,567Meat
                Company
            
            Sales
              Company
            
            
            28,633,827Meat
                Company
            
            Food
              Company
            
            
            7,263,438$
            43,030,832





22





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





**Balance
                Sheet Data**
              **at June 30, 2008**
            
            **Meat**
              **Company**
            
            **Food**
              **Company**
            
            **Sales**
              **Company**
            
            **Chuming**
              **WOFE,**
              **PSI, &**
              **Eliminations**
            
            **Total**Current Assets
            
            $
            51,509,695
            
            $
            22,594,172
            
            $
            13,613,137
            
            $
            (44,240,677
            )
            $
            43,476,326Non
                Current Assets
            
            
            23,201,799
            
            
            16,949,116
            
            
            374,398
            
            
            58,209
            
            
            40,583,522Total
                Assets
            
            
            74,711,494
            
            
            39,543,288
            
            
            13,987,535
            
            
            (44,182,469
            )
            
            84,059,848Current
                Liabilities
            
            
            27,931,964
            
            
            34,533,349
            
            
            15,673,719
            
            
            (54,335,357
            )
            
            23,803,676Total
                Liabilities
            
            
            27,931,964
            
            
            34,533,349
            
            
            15,673,719
            
            
            (54,335,357
            )
            
            23,803,676Net
                Assets
            
            
            46,779,530
            
            
            5,009,939
            
            
            (1,686,185
            )
            
            10,152,888
            
            
            60,256,172Total
                Liabilities
              &
                Net Assets
            
            $
            74,711,494
            
            $
            39,543,288
            
            $
            13,987,535
            
            $
            (44,182,469
            )
            $
            84,059,848





23





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





16. Earnings
      Per Share





Components
      of basic and diluted earnings per share were as follows:





**3 months**
            
            **3 months**
            
            **6 months**
            
            **6 months****ended**
            
            **ended**
            
            **ended**
            
            **ended****June 30, 2008**
            
            **June 30, 2007**
            
            **June 30, 2008**
            
            **June 30, 2007**Net
                Income
            
            **$**
            5,614,968
            
            $
            2,784,233
            
            $
            9,856,185
            
            $
            5,793,617Original
                Shares
            
            
            13,409,120
            
            
            13,409,120
            
            
            13,409,120
            
            
            13,409,120Addition
                to Common Stock from Offering on December 31, 2007
            
            
            3,863,636
            
            
            -
            
            
            3,863,636
            
            
            -Basic
                Weighted Average Shares Outstanding
            
            
            17,272,756
            
            
            13,409,120
            
            
            17,272,756
            
            
            13,409,120Addition
                to Common Stock if Contingent Shares Held in Escrow Were
                Released
            
            
            3,863,636
            
            
            3,863,636
            
            
            3,863,636
            
            
            3,863,636Addition
                to Common Stock if Warrants Were Exercised
            
            
            46,364
            
            
            -
            
            
            46,364
            
            
            -Diluted
                Weighted Average Shares Outstanding
            
            
            21,182,756
            
            
            17,272,756
            
            
            21,182,756
            
            
            17,272,756Earnings
                Per ShareBasic
            
            $
            0.33
            
            $
            0.21
            
            $
            0.57
            
            $
            0.43Diluted
            
            $
            0.27
            
            $
            0.16
            
            $
            0.47
            
            $
            0.34Weighted
                Average Shares OutstandingBasic
            
            
            17,272,756
            
            
            13,409,120
            
            
            17,272,756
            
            
            13,409,120Diluted
            
            
            21,182,756
            
            
            17,272,756
            
            
            21,182,756
            
            
            17,272,756





17
            Concentration
                of Risk





*(A)* *Demand
      Risk*





The
      Company had concentrations of risk in demand for its products because its sales
      were made to a small number of customers.





*(B)* *Supply
      risk*





The
      Company is subject to concentration of supply shortage risk because it purchases
      its materials for resale from a few select vendors. The Company’s availability
      of supply is correlated with the few select vendors’ ability to meet the market
      demand. In 2007, the entire industry in the PRC faced a shortage in the supply
      of hogs.





24





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





18.
            Financing
                Transaction





On
      December 31, 2007, the Company, a Nevada corporation (“Energroup” or the
“Company”), acquired Precious Sheen Investments Ltd. (“PSI”) in a reverse
      take-over transaction, by executing a Share Exchange Agreement (“Exchange
      Agreement”) by and among Energroup, PSI, and all of the shareholders of PSI’s
      issued and outstanding share capital (the “PSI Shareholders”). PSI owned 100% of
      the equity in Dalian Precious Sheen Investments Consulting Co., Ltd., a wholly
      foreign owned enterprise in the People’s Republic of China (“Chuming”). Chuming
      is a holding company for the following three operating subsidiaries: (i) Dalian
      Chuming Slaughter and Packaging Pork Company Ltd., (ii) Dalian Chuming Processed
      Foods Company Ltd., and (iii) Dalian Chuming Sales Company Ltd., each of which
      is a limited liability company headquartered in, and organized under the laws
      of, China (collectively, the “Chuming Operating Subsidiaries”).





As
      a
      result of the reverse take-over transaction, PSI’s Shareholders became
      Energroup’s controlling shareholders and PSI became Energroup’s wholly-owned
      subsidiary. As a result of PSI becoming Energroup’s wholly-owned subsidiary,
      Energroup acquired the business and operations of Chuming and the Chuming
      Operating Subsidiaries.





Under
      the
      Exchange Agreement, Energroup completed the acquisition of all of the issued
      and
      outstanding shares of PSI through the issuance of 16,850,000 restricted shares
      of common stock of Energroup to PSI’s Shareholders. Immediately prior to the
      Exchange Agreement transaction, the Company had 422,756 shares of common stock
      issued and outstanding. Immediately after the issuance of the shares to PSI’s
      Shareholders, the Company had 17,272,756 shares of common stock issued and
      outstanding. The 422,756 shares of PSI were cancelled and 17,272,756 shares
      of
      Energroup were issued to reflect this reverse take-over
      transaction.





Concurrently
      with the Exchange Agreement, Energroup also entered into a Securities Purchase
      Agreement (the “Purchase Agreement”) pursuant to which Energroup agreed to issue
      and sell 3,863,635 shares of its common stock to ten accredited investors for
      an
      aggregate purchase price of $ 17,000,000 or
      $4.40
      per share (the “Financing”). The closing of the Financing coincided with the
      Closing of the reverse take-over transaction.





In
      connection with the sales of securities to accredited investors under the
      securities purchase agreement, Hunter Wise Financial Group, LLC (the “Placement
      Agent”), was compensated with a commission of $1,190,000 which is equal to 7.00%
      of the aggregate purchase price and a warrant to purchase the 386,364 shares
      of
      the Company’s common stock at an exercise price of $4.40 per share. At
      December 31, 2007, the Company had adequate authorized capital to issue common
      shares upon the exercise of the warrant.





At
      June
      30, 2007, the total number of shares outstanding, on a fully diluted basis,
      is
      shown in the following table:





25





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**





i.
            
            Common
              shares outstanding prior to offering of securities
            
            
            17,272,756ii.
            
            Common
              shares issued under securities purchase agreement
            
            
            3,863,635iii.
            
            Common
              shares issuable upon exercise of placement agent warrants
            
            
            386,36421,522,755





Concurrent
      with the Company’s financing transaction, the Company agreed to register for
      resale the common shares that were sold under the securities purchase agreement.
      Pursuant to filing a Form S-1 registration statement with the U.S. Securities
      and Exchange Commission, the Company entered into a Registration Rights
      Agreement with the Investors. The agreement calls for liquidated damages to
      be
      paid by the Company, if in the event the registration statement is not declared
      effective within 135 days of the closing of the financing transaction. The
      liquidated damages will be 1% of the total financing amount in cash per month
      for each month after the 135 period. The agreement states a maximum penalty
      of
      $1.70 million or 10% of the financing amount. At December 31, 2007, the Company
      accounted for the liability under the registration rights agreement in
      accordance with FASB Staff Position No. EITF 00-19-2 *Accounting
      for Registration Payment Arrangements* . Under
      such accounting treatment, the liquidated damages are accounted for as a
      reduction of the proceeds. In asserting the most conservative position, the
      Company has accrued the maximum liability of $1.7 million and is carrying that
      balance in the accrued liabilities account. In the event that the registration
      becomes effective in a timeframe that is earlier than February 15, 2009, the
      portion that is not legally owed, or in the event that investors waive any
      liquidating damages, the accrual will be reversed and the funds will be added
      to
      the Company’s additional paid in capital.





In
      connection with a make good agreement related to the financing transaction
      on
      December 31, 2007, the Company’s Chairman and CEO, Mr. Shi Huashan placed in
      escrow 3,863,636 shares ,
      which
      were beneficially
      owned by him,. These shares are to be released back to him if the Company meets
      the following earnings targets of $15.9 million, and $20.9 million in after-tax
      net income for the years ended December 31, 2008, and 2009 respectively. In
      the
      event that the Company does not meet the aforementioned financial targets,
      the
      escrowed shares will be released, on a pro-rata basis, to the investors in
      the
      financing transaction. In
      accordance with SFAS 128, *Earnings
      per Share* , for
      the
      sake of calculating the Company’s earnings per share, the
      Company has accounted for the 3,863,636
      escrowed shares as contingently issuable shares as such they are not included
      in
      the weighted average basic shares outstanding but are included in the weighted
      average diluted shares outstanding. Please refer to Note 16.





In
      accordance with Topic 5:T of the Staff Accounting Bulletins (SAB 79), the
      Company expects to record a compensatory expense for the shares upon their
      release from escrow. Whether the shares are released to the accredited investors
      or released to Mr. Shi the Company will record an expense with a corresponding
      credit to the Company’s contributed paid in capital.





26


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





**Note
      Regarding Forward-Looking Statements**





*This
      quarterly report on Form 10-Q and other reports filed by Registrant from time
      to
      time with the Securities and Exchange Commission (collectively the “Filings”)
      contain or may contain forward-looking statements and information that are
      based
      upon beliefs of, and information currently available to, Registrant’s management
      as well as estimates and assumptions made by Registrant’s management. Readers
      are cautioned not to place undue reliance on these forward-looking statements,
      which are only predictions and speak only as of the date hereof. When used
      in
      the filings, the words “anticipate”, “believe”, “estimate”, “expect”, “future”,
“intend”, “plan”, or the negative of these terms and similar expressions as they
      relate to Registrant or Registrant’s management identify forward-looking
      statements. Such statements reflect the current view of Registrant with respect
      to future events and are subject to risks, uncertainties, assumptions, and
      other
      factors (including the risks contained in the section of this report entitled
      “Risk Factors”) relating to Registrant’s industry, Registrant’s operations and
      results of operations, and any businesses that Registrant may acquire. Should
      one or more of these risks or uncertainties materialize, or should the
      underlying assumptions prove incorrect, actual results may differ significantly
      from those anticipated, believed, estimated, expected, intended, or
      planned.*





*Although
      Registrant believes that the expectations reflected in the forward-looking
      statements are reasonable, Registrant cannot guarantee future results, levels
      of
      activity, performance, or achievements. Except as required by applicable law,
      including the securities laws of the United States, the Registrant does not
      intend to update any of the forward-looking statements to conform these
      statements to actual results. Readers are urged to carefully review and consider
      the various disclosures made throughout the entirety of this quarterly report,
      which attempt to advise interested parties of the risks and factors that may
      affect our business, financial condition, results of operations, and
      prospects.*





*In
      this Form 10-Q, references to “we”, “our”, “us”, “our company”, “Energroup” or
      the “Registrant” refer to Energroup Holdings Corporation, a Nevada
      corporation.*




**OVERVIEW**





We
      are a
      meat processing company with a primary focus on pork and pork products. We
      have
      a unique wholesale and retail distribution model and sell directly to over
      7,600
      retail outlets, including supermarkets and hypermarkets, across Northeast
      China.




Dalian
      Precious Sheen Investments Consulting Co., Ltd., or Chuming WFOE, is our holding
      company established in the People’s Republic of China (the “PRC” or “China”) for
      our three PRC operating subsidiaries, collectively referred to elsewhere in
      this
      report as the “Chuming Operating Subsidiaries”:




1.
            Dalian
                Chuming Slaughter and Packaging Pork Company Ltd. ( “Meat Company”), whose
                primary business activity is acquiring, slaughtering and packaging
                of pork
                and cattle;2.
            Dalian
                Chuming Processed Foods Company Ltd. ( “Food Company”), whose primary
                business activity is the processing of raw and cooked meat products;
                and3.
            Dalian
                Chuming Sales Company Ltd. (“Sales Company”), which is responsible for our
                sales, marketing and distribution
                operations.




27


The
      Chuming Operating Subsidiaries are spin-off constituents of a former parent
      company, Dalian Chuming Group Co., Ltd., or the “Group.” Our primary business
      activities is the production and packing of fresh pork and production of
      processed meat products for distribution and sale to clients throughout the
      PRC.  Chuming WFOE was incorporated in China as wholly foreign owned
      enterprise on in December 2007. Chuming WFOE’s parent company is Precious Sheen
      Investments Limited (“PSI”), a holding company established in the British Virgin
      Islands in May 2007. We are headquartered in the City of Dalian, Liaoning
      Province of China.





**CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES**





Our
      management’s discussion and analysis of our financial condition and results of
      operations are based on our combined financial statements, which have been
      prepared in accordance with accounting principles generally accepted in the
      United States. The preparation of these financial statements requires us to
      make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and the disclosure of contingent assets and liabilities at the
      date
      of the financial statements as well as the reported net sales and expenses
      during the reporting periods. On an ongoing basis, we evaluate our estimates
      and
      assumptions. We base our estimates on historical experience and on various
      other
      factors that we believe are reasonable under the circumstances, the results
      of
      which form the basis for making judgments about the carrying value of assets
      and
      liabilities that are not readily apparent from other sources. Actual results
      may
      differ from these estimates under different assumptions or
      conditions.





While
      our
      significant accounting policies are more fully described in Note 2 to our
      combined financial statements included in this report, we believe that the
      following accounting policies are the most critical to aid you in fully
      understanding and evaluating this management discussion and
      analysis:





*Method
      of Accounting*





We
      maintain our general ledger and journals with the accrual method accounting
      for
      financial reporting purposes. The financial statements and notes are
      representations of management. Accounting policies adopted by us conform to
      generally accepted accounting principles in the United States of America and
      have been consistently applied in the presentation of financial statements,
      which are compiled on the accrual basis of accounting.




*Principles
      of Consolidation*





The
      consolidated financial statements, which include the Company and its
      subsidiaries, are compiled in accordance with generally accepted accounting
      principles in the United States of America. All significant inter-company
      accounts and transactions have been eliminated. The consolidated financial
      statements include 100% of assets, liabilities, and net income or loss of those
      wholly-owned subsidiaries.





Our
      founders have directly or indirectly owned the three operating subsidiaries
      since their inception. We also own two intermediary holding companies. As of
      June 30, 2008, the detailed identities of the consolidating subsidiaries are
      as
      follows:




**Name of Company**
            
            **Place of**
              **Incorporation**
            
            **Attributable**
              **Equity**
              **Interest**
            
            **Registered Capital**Precious
                Sheen Investments Limited
            
            
            BVI
            
            
            100
            %
            
            USD 10,000Dalian
                Chuming Precious Sheen Investment Consulting Co., Ltd.
            
            
            PRC
            
            
            100
            %
            
            RMB 29,400,682Dalian
                Chuming Slaughtering & Pork Packaging Co. Ltd.
            
            
            PRC
            
            
            100
            %
            
            RMB 10,000,000Dalian
                Chuming Processed Foods Co. Ltd.
            
            
            PRC
            
            
            100
            %
            
            RMB 5,000,000Dalian
                Chuming Sales Co. Ltd.
            
            
            PRC
            
            
            100
            %
            
            RMB 5,000,000




28





The
      consolidation of these operating subsidiaries into a newly formed holding
      company i.e. “the Company” is permitted by United States GAAP: ARB51 paragraph
      22 and 23.





*Use
      of Estimates*




The
      preparation of financial statements in conformity with generally accepted
      accounting principles in the United States 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 reported amounts of revenues and expenses during the
      reporting period. Management makes these estimates using the best information
      available at the time the estimates are made; however, actual results could
      differ materially from these estimates.




*Accounts
      Receivable*




We
      extend
      unsecured, non-interest bearing credit to our customers; accordingly, we carry
      an allowance for doubtful accounts, which is an estimate, made by management.
      Management makes its estimate based on prior experience rates and assessment
      of
      specific outstanding customer balances. In
      the
      second quarter of 2008, we revised our customer credit policy and began offering
      extended payment terms to some of our quality long term customers. In accordance
      with this revised policy, qualified customers were offered up to a two-month
      grace period for payment, whereas previously payment was required within 1-2
      days of delivery of goods. See “Liquidity and Capital Resources – Cash
      Flows – Six Months Ended June 30, 2008”.Management may extend credit to new customers who have met the criteria
      of our revised credit policy.





*Inventory
      Carrying Value*




Inventory,
      consisting of raw materials in the form of livestock, work in progress, and
      finished products, is stated at the lower of cost or market value. Finished
      products are comprised of direct materials, direct labor and an appropriate
      proportion of overhead.Periodic
      evaluation is made by management to identify if inventory needs to be written
      down because of damage, or spoilage. Cost is computed using the weighted average
      method.




*Property,
      Plant, and Equipment*





Property,
      Plant, and Equipment are stated at cost. Repairs and maintenance to these assets
      are charged to expense as incurred; major improvements enhancing the function
      and/or useful life are capitalized. When items are sold or retired, the related
      cost and accumulated depreciation are removed from the accounts and any gains
      or
      losses arising from such transactions are recognized.





Construction
      in progress represents the direct costs of design, acquisition, and construction
      of buildings, building improvements and land improvements. Capitalization of
      these costs ceases when substantially all activities necessary to prepare the
      assets for their intended use are completed. At such point, construction in
      progress is transferred to its respective asset classification. No depreciation
      is provided until it is completed and ready for intended use.





Property
      and equipment are depreciated using the straight-line method over their
      estimated useful life with a 5% salvage value. Their useful lives are as
      follows:





**Fixed
                Asset Classification**
            
            **Useful Life**Land Improvements
            
            10
                yearsBuildings
            
            20
                yearsBuilding
                Improvements
            
            10
                yearsManufacturing
                Machinery & Equipment
            
            10
                yearsOffice
                Equipment
            
            5
                yearsFurniture
                & Fixtures
            
            5
                yearsVehicles
            
            5
                years




29





*Land
      Use Rights*




Land
      Use
      Rights are stated at cost less accumulated amortization. Amortization is
      provided over its useful life, using the straight-line method. The useful life
      of the land use right is 50 years.





*Customer
      Deposits*





Customer
      Deposits represents money we have received in advance for purchases of pork
      and
      pork products. We consider customer deposits as a liability until products
      have
      been shipped and revenue is earned.




*Statutory
      Reserve*





Statutory
      reserve refers to the amount appropriated from the net income in accordance
      with
      laws or regulations, which can be used to recover losses and increase capital,
      as approved, and, are to be used to expand production or operations. PRC laws
      prescribe that an enterprise operating at a profit, must appropriate, on an
      annual basis, from its earnings, an amount to the statutory reserve to be used
      for future company development. Such an appropriation is made until the reserve
      reaches a maximum equalling 50% of the enterprise’s capital.





*Earnings
      Per Share*





We
      compute earnings per share (“EPS”) in accordance with Statement of Financial
      Accounting Standards No. 128, “Earnings per share” (“SFAS No. 128”), and SEC
      Staff Accounting Bulletin No. 98 (“SAB 98”). SFAS No. 128 requires companies
      with complex capital structures to present basic and diluted EPS. Basic EPS
      is
      measured as the income or loss available to common shareholders divided by
      the
      weighted average common shares outstanding for the period. Diluted EPS is
      similar to basic EPS but presents the dilutive effect on a per share basis
      of
      potential common shares (e.g., contingent shares, convertible securities,
      options, and warrants) as if they had been converted at the beginning of the
      periods presented, or issuance date, if later. Potential common shares that
      have
      an anti-dilutive effect (i.e., those that increase income per share or decrease
      loss per share) are excluded from the calculation of diluted EPS.




*Recent
      Accounting Pronouncements*





In
      March
      2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
      Instruments and Hedging Activities, an amendment of FASB Statement No. 133"
      ("SFAS 161"). SFAS 161 applies to all derivative instruments and
      related hedged items accounted for under SFAS No. 133, "Accounting for
      Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 161
      requires entities to provide greater transparency about (a) how and why an
      entity uses derivative instruments, (b) how derivative instruments and
      related hedged items are accounted for under SFAS 133 and its related
      interpretations, and (c) how derivative instruments and related hedged
      items affect an entity's financial position, results of operations and cash
      flows. SFAS 161 is effective for financial statements issued for fiscal
      years and interim periods beginning after November 15, 2008.





In
      May
      2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
      Accounting Principles" ("SFAS 162"). SFAS 162 identifies the sources
      of accounting principles and the framework for selecting the principles used
      in
      the preparation of financial statements of nongovernmental entities that are
      presented in conformity with generally accepted accounting principles (the
      GAAP hierarchy). Statement 162 will become effective 60 days
      following the SEC's approval of the Public Company Accounting Oversight Board
      amendments to AU Section 411, "The Meaning of Present Fairly in
      Conformity With Generally Accepted Accounting Principles."


30




In
      May
      2008, the FASB issued FSP Accounting Principles Board ("APB") 14-1 "Accounting
      for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
      (Including Partial Cash Settlement)" ("FSP APB 14-1"). FSP APB 14-1
      requires the issuer of certain convertible debt instruments that may be settled
      in cash (or other assets) on conversion to separately account for the liability
      (debt) and equity (conversion option) components of the instrument in a manner
      that reflects the issuer's non-convertible debt borrowing rate. FSP
      APB 14-1 is effective for fiscal years beginning after December 15,
      2008 on a retroactive basis.





We
      are
      currently evaluating the potential impact, if any, of the adoption of the above
      recent accounting pronouncements on our consolidated results of operations
      and
      financial condition.




**RESULTS
      OF OPERATIONS**





**Comparison
      of Three Months Ended June 30, 2008 and June 30, 2007.**





The
      following table sets forth the results of our operations for the periods
      indicated as a percentage of net sales:





**Quarter Ended**
            
            
            
            **Quarter Ended****June 30,**
            
            **% of**
            
            **June 30,**
            
            **% of****2008**
            
            **Sales**
            
            **2007**
            
            **Sales**Sales
            
            $
            43,076,524
            
            
            100.00
            %
            $
            31,370,321
            
            
            100.00
            %Cost
                of Sales
            
            
            36,600,428
            
            
            84.97
            %
            
            26,510,666
            
            
            84.51
            %Gross
                Profit
            
            
            6,476,097
            
            
            15.03
            %
            
            4,859,655
            
            
            15.49
            %Selling
                Expenses
            
            
            759,778
            
            
            1.76
            %
            
            1,570,001
            
            
            5.00
            %General
                & Administrative Expenses
            
            
            653,187
            
            
            1.52
            %
            
            382,377
            
            
            1.22
            %Total
                Operating Expense
            
            
            1,412,965
            
            
            3.28
            %
            
            1,952,378
            
            
            6.22
            %Operating
                Income / (Loss)
            
            
            5,063,132
            
            
            11.75
            %
            
            2,907,277
            
            
            9.27
            %Other
                Income (Expense)
            
            
            617,859
            
            
            1.43
            %
            
            (123,044
            )
            
            0.39
            %Earnings
                Before Tax
            
            
            5,680,991
            
            
            13.19
            %
            
            2,784,233
            
            
            8.88
            %(Income
                Tax Expense) / Deferred Tax Benefit
            
            
            (66,023
            )
            
            0.15
            %
            
            -
            
            
            0.00
            %Net
                Income
            
            $
            5,614,968
            
            
            13.03
            %
            $
            2,784,233
            
            
            8.88
            %Earnings
                Per ShareBasic
            
            
            0.33
            
            
            
            
            
            0.21Diluted
            
            
            0.27
            
            
            
            
            
            0.16Weighted
                Average Shares OutstandingBasic
            
            
            17,272,756
            
            
            
            
            
            13,409,120Diluted
            
            
            21,182,756
            
            
            
            
            
            17,272,756




*Sales.* Our
      sales include revenues from sales of our fresh pork, frozen pork, and processed
      food products. During the quarter ended June 30, 2008, we had sales of
      $43,076,524 as compared to sales of $31,370,321 for the quarter ended June
      30,
      2007, an increase of approximately 37%. Our sales for our various product
      categories in the second quarter of 2008 are summarized as
      follows:


31




**Sales
                by product category**
            
            **Second Quarter**
              **2008 (amount**
              **in dollars)**
            
            **% of**
              **Total**
              **Sales**
            
            **Second Quarter**
              **2007 (amount**
              **in dollars)**
            
            **% of**
              **Total**
              **Sales**
            
            **% of increase**
              **from**
              **2007 to 2008**Fresh Pork
            
            $
            35,361,296
            
            
            82.09
            %
            $
            24,139,141
            
            
            76.95
            %
            
            46.49
            %Frozen
                Pork
            
            
            2,334,238
            
            
            5.42
            %
            
            1,939,900
            
            
            6.18
            %
            
            20.33
            %Processed
                Food Products
            
            
            5,380,990
            
            
            12.49
            %
            
            5,291,280
            
            
            16.87
            %
            
            1.70
            %Total
                Sales
            
            $
            43,076,524
            
            
            100
            %
            $
            31,370,321
            
            
            100
            %
            
            37.32
            %





**Sales
                by product category, by**
              **weight
                of product**
            
            **Second Quarter**
              **2008**
              **(Weight in tons)**
            
            **% of**
              **Total**
              **Sales**
            
            **Second Quarter**
              **2007**
              **(Weight in tons)**
            
            **% of**
              **Total**
              **Sales**
            
            **% of change**
              **from**
              **2007 to 2008**Fresh Pork
            
            
            15,445
            
            
            81.10
            %
            
            12,368
            
            
            74.15
            %
            
            24.88
            %Frozen
                Pork
            
            
            1,173
            
            
            6.20
            %
            
            1,054
            
            
            6.32
            %
            
            11.29
            %Processed
                Food Products
            
            
            2,426
            
            
            12.70
            %
            
            3,257
            
            
            19.53
            %
            
            -25.51
            %Total
                Sales
            
            
            19,044
            
            
            100.00
            %
            $
            16,679
            
            
            100.00
            %
            
            14.18
            %





In
      the
      second quarter of 2008, we raised our average per-kilogram sale prices to our
      customers, as we did during 2007, which coincided with an increase in the cost
      of live pigs and other production costs. In addition, despite these consumer
      price increases, in the second quarter of 2008 our sales volume of fresh pork
      and frozen pork (by weight) increased by 24.9% and 11.29% respectively, with
      the
      fresh pork category experiencing the highest growth in sales volume both by
      weight and in terms of sales revenue. We also increased our sales of frozen
      pork, both by weight and by sales revenue, in the second quarter of 2008 as
      compared with the same period in the prior year. For processed food products,
      our sales by weight decreased by 25.51%, but because of higher per-kilogram
      prices, our sales revenue for this product category increased by 1.70%.
      Management attributes the increases in sales revenue in all our product
      categories to the continuing strength in consumer demand for our products in
      the
      periods presented.





The
      following table shows the change in the average price per kilogram for our
      product to consumers in the quarter ending June 30, 2008, as compared to the
      same quarter last year:





**Average Per-Kilogram Price to Customers (in $US)****Second**
              **Quarter of**
              **2008**
            
            **Second**
              **Quarter of**
              **2007**
            
            **% change**
            
            **Change in**
              **Price**Fresh
                Pork
            
            $
            2.29
            
            $
            1.95
            
            
            17.44
            %
            $
            0.34Frozen
                Pork
            
            $
            1.99
            
            $
            1.84
            
            
            8.15
            %
            $
            0.15Processed
                Food Products
            
            $
            2.22
            
            $
            1.62
            
            
            37.04
            %
            $
            0.60




In
      the
      second quarter of 2008, we raised our prices for fresh pork significantly,
      while
      we made more modest increases in the prices of our processed food products
      and
      frozen pork. We raised our prices for frozen pork by only 8.15% because we
      use
      grade-3 and grade-4 pigs for such products, which are lower in price than the
      grade-1 and grade-2 pigs, which we use to produce fresh pork products. We raised
      our prices for processed food products by 37.04% because the price of live
      pigs
      increased rapidly starting from the third quarter of 2007. The price increase
      for processed food products was also partially due to rapid price increases
      for
      packaging material and food additives during the second quarter of
      2008.




32




Although
      we also sell our products through sales agents, our principal sales channels
      consist of Chuming-branded franchise stores, supermarkets and restaurants and
      canteens. The following table summarizes the changes in the number of
      participants within these sales channels:




**Sales Channels****As of June 30,**
            
            **Franchise Stores**
            
            **Supermarkets**
            
            **Restaurants****and**
              **Canteens**2007
            
            
            501
            
            
            95
            
            
            2,6082008
            
            
            682
            
            
            140
            
            
            3,172





As
      shown
      in the table above, as of June 30, 2008, as compared to June 30, 2007, we
      significantly increased the number of participants in all three of these sales
      channels. The increase in the number of these participants has resulted in
      increased sales.




The
      following table shows the total increase in our sales, from the second quarter
      of 2008 as compared to the second quarter of 2007, by product category and
      by
      sales channel.





**Increase in Sales from Second Quarter of 2007 to Second Quarter of 2008****By Product Group and Sales Channel ($)****Product**
              **Category**
            
            **Franchise**
              **Operators**
            
            **Sales**
              **Agents**
            
            **Super**
              **Markets**
            
            **Restaurants and**
              **Canteens**
            
            **Total Increase ($)**Fresh Pork
            
            
            2,562,492
            
            
            1,213,684
            
            
            4,271,990
            
            
            N/A
            2
            
            8,048,166Frozen
                Pork
            
            
            N/A
            1
            
            61,707
            
            
            N/A
            1
            
            924,997
            
            
            986,704Processed
                Food Products
            
            
            1,426,844
            
            
            110,899
            
            
            1,042,511
            
            
            91,098
            
            
            2,671,352Total
                Increase in Sales
            
            
            3,989,336
            
            
            1,386,290
            
            
            5,314,501
            
            
            1,016,075
            
            
            11,706,203






1 In the
      periods presented, we did not sell frozen pork through franchise operators
      and
      supermarkets.




2 In
      the
      periods presented, we did not sell fresh pork through restaurants and
      canteens.





In
      the
      second quarter of 2008, as compared to the same quarter in 2007, we achieved
      significantly higher sales revenue from the sale of fresh pork, which was a
      result of higher sales volume of this product category by weight, combined
      with
      increases in our per-kilogram prices to our customers. Management believes
      this
      is due to continued strong consumer demand for fresh pork.





In
      the
      second quarter of 2008, as compared to the same quarter in 2007, the majority
      of
      our increase in sales came through supermarkets, sales agent and franchise
      operators, respectively. The $5.3 million sales increase through supermarkets
      is
      due to our efforts in expanding the supermarket sales channel, which
      provides us with the largest profit margins, combined with
      increases in our per-kilogram prices of fresh pork.





Overall,
      management believes that our increase in sales, despite higher consumer prices,
      resulted from increased consumer demand, the expansion of our sales channels
      and
      sales network, and increased consumer awareness of our brand and availability
      of
      our products.




*Cost
      of Sales.* Cost of
      sales for the second quarter of 2008 increased by $10,089,762 or approximately
      38%, from $26,510,666 for the three months ended June 30, 2007 to $36,600,428
      for the three months ended June 30, 2008. The increase was attributable to
      the
      increase in sales for the second quarter of 2008 as compared to the same period
      in the prior year. Our cost of sales for our various product categories in
      the
      second quarter of 2008 is summarized as follows:


33




**Cost of Sales**
                  ******by**
                  **Product
                    Category**
                
                **Second Quarter****2008
                    (in $ US)**
                
                **% of**
                  **Overall**
                  **Cost of**
                  **Sales**
                
                **Second Quarter**
                  **2007 (in $ US)**
                
                **% of**
                  **Overall**
                  **Cost of**
                  **Sales**
                
                **%  increase**
                  **from**
                  **2007 to 2008**Fresh Pork
                
                $
                30,442,496
                
                
                83.18
                %
                $
                21,078,486
                
                
                79.51
                %
                
                44.42
                %Frozen
                    Pork
                
                
                1,960,760
                
                
                5.36
                %
                
                1,648,915
                
                
                6.22
                %
                
                18.91
                %Processed
                    Food Products
                
                
                4,197,172
                
                
                11.47
                %
                
                3,783,265
                
                
                14.27
                %
                
                10.94
                %Total
                    Cost of Sales
                
                $
                36,600,428
                
                
                100.00
                %
                $
                26,510,666
                
                
                100.0
                %
                
                38.06
                %





The
      following table shows the estimated average per-kilogram price we paid for
      live
      pigs in 2007 and 2008:


**Average**
                **Unit Price Per**
                **Kilogram in**
                **2008**
                **(in $US)**
              
              **Average**
                **Unit Price Per**
                **Kilogram in**
                **2007**
                **(in $US)**
              
              **Price**
                **Increase**
                **(in $US)**
              
              **% Increase**
                **from 2007**
                **to
                  2008**First
                  Quarter
              
              
              2.2936
              
              
              1.0579
              
              
              1.1357
              
              
              107.35
              %Second
                  Quarter
              
              
              2.2578
              
              
              1.3535
              
              
              0.9043
              
              
              66.81
              %Third
                  Quarter
              
              
              N/A
              
              
              1.8104
              
              
              N/A
              
              
              N/A
              %Fourth
                  Quarter
              
              
              N/A
              
              
              1.8656
              
              
              N/A
              
              
              N/A
              %Average
                  for Year to Date
              
              
              2.2757
              
              
              1.5219
              
              
              0.7538
              
              
              49.53
              %





The
      most
      rapid increase in live pig prices occurred in the third and fourth quarters
      of
      2007, for the highest grades of live pigs. However, the live pig prices slightly
      dropped during the second quarter of 2008. Management believes that while higher
      live pig prices may persist, management does not expect further rapid escalation
      in live pig prices of the scale seen during 2007. Management currently projects
      a 10% per year increase in the average price per kilogram for live pigs during
      the next several years.





The
      following table shows our cost of sales in the second quarter of 2008 as
      compared with the same period in 2007, and also indicates cost of sales by
      product group, as a percentage of sales within each product group.




**Cost
                  of Sales by**
                **Product
                  Category**
              
              **Second**
                **Quarter**
                **of
                  2008**
              
              **% of**
                **Product**
                **Group**
                **Sales**
              
              **Second Quarter**
                **of 2007**
              
              **% of Product**
                **Group Sales**
                **in the Second**
                **Quarter 2008**Fresh
                  Pork
              
              $
              30,442,496
              
              
              86.09
              %
              $
              21,078,486
              
              
              87.32
              %Frozen
                  Pork
              
              
              1,960,760
              
              
              84.00
              %
              
              1,648,915
              
              
              85.00
              %Processed
                  Food Products
              
              
              4,197,172
              
              
              78.00
              %
              
              3,783,265
              
              
              71.50
              %Total
                  Cost of Sales
              
              $
              36,600,428
              
              
              84.97
              %
              $
              26,510,666
              
              
              84.51
              %




34





Our
      cost
      of sales as a percentage of sales of fresh pork decreased slightly in the second
      quarter of 2008, as compared to the same period in 2007, primarily because
      of a
      deceleration of the price increases for live pigs during the second quarter
      of
      2008. The cost of sales as a percentage of sales of frozen pork also fell
      slightly, which was due to the use of grade-3 and grade-4 pigs for such
      products, which are lower in price than the grade-1 and grade-2 pigs, which
      we
      use to produce fresh pork products. The cost increases in live pigs primarily
      affected the grade-1 and grade-2 categories. The cost of sales as a percentage
      of sales of processed food products, however, increased by approximately 6.50%
      due to a rapid price increase in packaging material and food additives during
      the second quarter of 2008.




*Gross
      Profit.* Gross
      profit was $6,476,097 for the three months ended June 30, 2008 as compared
      to
      $4,859,655 for the same period in 2007, representing an increase of $1,616,442,
      or approximately 33.26%. Management attributes the increase in gross profit
      to strong
      increases in sales, driven by strong demand for our products, especially our
      fresh pork products. Our gross profit as a percentage of sales was 15.03% in
      the
      second quarter of 2008 as compared to 15.49% for the same period in 2007. The
      slight decrease in gross profit as a percentage of sales was attributable to
      these commodity and input price increases, not all of which we passed on to
      our
      customers in the form of higher product prices.




The
      following table presents our gross profit for the three months ended June 30,
      2008 and 2007. The table below also shows the percentage of gross profit for
      each of our product groups, as a percentage of sales for that product group.







**Gross Profit by**
              **Product Category**
            
            **Second**
              **Quarter**
              **of 2008**
            
            **% of**
              **Product**
              **Group**
              **Sales**
            
            **Second**
              **Quarter**
              **of 2007**
            
            **% of**
              **Product**
              **Group**
              **Sales**
            
            **% of**
              **increase**
              **from**
              **Second**
              **Quarter of**
              **2007 to**
              **Second**
              **Quarter of**
              **2008**Fresh Pork
            
            $
            4,918,800
            
            
            16.15
            %
            $
            3,060,655
            
            
            14.52
            %
            
            60.71
            %Frozen
                Pork
            
            
            373,478
            
            
            19.04
            %
            
            290,985
            
            
            17.64
            %
            
            28.35
            %Processed
                Food Products
            
            
            1,183,818
            
            
            28.21
            %
            
            1,508,015
            
            
            39.86
            %
            
            -21.50
            %Total
                Gross Profit
            
            $
            6,476,097
            
            
            15.03
            %
            $
            4,859,655
            
            
            15.49
            %
            
            33.26
            %




As
      shown
      in the table above, the fresh pork as a product category delivered the highest
      increase in gross profit from the second quarter of 2008 as compared with the
      same period in 2007. This is due to the strong demand of our fresh pork
      products.





However,
      in both periods, our processed food product category yielded the highest gross
      profit as a percentage of sales within the product category. Management
      attributes this to the use of grade-3 and grade-4 pigs and unsold portions
      of
      grade-1 and grade-2 pigs in producing our processed food products. Grade-3
      and
      grade-4 pigs are generally lower in price than grade-1 and grade-2 pigs. Because
      of our superior processing and storage techniques and the strength of our
      brand-name, we were able to sell our processed food products at the highest
      going market price for this category of products. However, because the price
      of
      the packaging material and food additives increased substantially during the
      second quarter of 2008, the gross profit of our processed food products declined
      from 39.86% to 28.21%.


35




*Selling
      Expenses.* Selling
      expenses totaled $759,778 for the three months ended June 30, 2008, as compared
      to $1,570,001 for the same period in 2007, a decrease of $810,223 or 52%. This
      decrease is due to a decrease in advertising expense. During the three months
      ended June 30, 2007, we spent $800,000 in advertising in a special marketing
      campaign in an effort to promote our brand.





*General
      and Administrative Expenses.* General
      and administrative expenses totaled $653,187 for the three months ended June
      30,
      2008 as compared to $382,377 for the same period in 2007, an increase of
      $270,810 or 71%. This increase is primarily attributable to an increase in
      salary expense. We continued to hire new staff to meet the needs of our
      expanding operations. Also, consistent with the recent escalation in
      the rate of inflation in China, the salaries and the cost of benefits for
      our staff increased by approximately 40% in the second quarter of 2008 as
      compared to the same period in 2007. These increases in salaries were made
      in
      order to maintain compensation levels that were sufficient to attract and
      retain qualified employees.




*Other
      Income (Expense).* Our
      other income (expense) consisted of interest income, other expenses, and
      interest expense. We had total other income of $617,859 for the three months
      ended June 30, 2008 as compared to total expense of $123,044 for the same period
      in 2007, a decrease of $740,903 or 602%. The decrease in other expenses in
      the
      second quarter of 2008 is primarily attributable to several factors. First,
      the
      Dalian City government gave us a one time subsidy in the amount of $240,000.
      This subsidy is due to efforts by the local government to keep the price of
      pork
      stable in local markets. Second, this is also attributable to a decrease in
      interest expenses of approximately $220,000 as we reduced our bank loan
      principal amount during the three months ended June 30, 2008 as compared to
      the
      same period in 2007.





*Net
      Income* .
      Our net
      income for the three months ended June 30, 2008 was $5,614,968 as compared
      to
      $2,784,233 for the same period in 2007, an increase of $2,830,735 or 102%.
      This
      increase in net income is primarily attributable to the factors described above,
      but primarily from the increase in sales, and our efforts to manage our
      costs in order to achieve a gross profit margin of 15.03%, which is only
      slightly less than the gross profit margin achieved in the second quarter of
      2007 of 15.49%.





**Comparison
      of Six Months Ended June 30, 2008 and June 30, 2007.**





The
      following table sets forth the results of our operations for the periods
      indicated as a percentage of net sales:


36





**Six**
              **Months Ended**
            
            
            
            **Six**
              **Months Ended****June 30,**
            
            **% of**
            
            **June 30,**
            
            **% of****2008**
            
            **Sales**
            
            **2007**
            
            **Sales**Sales
            
            $
            86,583,622
            
            
            100.00
            %
            $
            54,558,315
            
            
            100.00
            %Cost
                of Sales
            
            
            73,074,852
            
            
            84.80
            %
            
            45,536,298
            
            
            83.46
            %Gross
                Profit
            
            
            13,508,771
            
            
            15.60
            %
            
            9,022,017
            
            
            16.54
            %Selling
                Expenses
            
            
            2,585,055
            
            
            2.99
            %
            
            1,799,420
            
            
            3.30
            %General
                & Administrative Expenses
            
            
            1,146,161
            
            
            1.32
            %
            
            687,513
            
            
            1.26
            %Total
                Operating Expense
            
            
            3,731,216
            
            
            4.31
            %
            
            2,486,933
            
            
            4.56
            %Operating
                Income / (Loss)
            
            
            9,777,555
            
            
            11.29
            %
            
            6,535,084
            
            
            11.98
            %Other
                Income (Expense)
            
            
            310,998
            
            
            0.36
            %
            
            741,467
            
            
            1.36
            %Earnings
                Before Tax
            
            
            10,088,553
            
            
            11.65
            %
            
            5,793,617
            
            
            10.62
            %(Income
                Tax Expense) / Deferred Tax Benefit
            
            
            (232,368
            )
            
            0.27
            %
            
            -
            
            
            0.00
            %Net
                Income
            
            $
            9,856,185
            
            
            11.38
            %
            $
            5,793,617
            
            
            10.62
            %Earnings
                Per ShareBasic
            
            
            0.57
            
            
            
            
            
            0.43Diluted
            
            
            0.47
            
            
            
            
            
            0.34Weighted
                Average Shares OutstandingBasic
            
            
            17,272,756
            
            
            
            
            
            13,409,120Diluted
            
            
            21,182,756
            
            
            
            
            
            17,272,756




*Sales.* Our
      sales include revenues from sales of our fresh pork, frozen pork, and processed
      food products. During the six months ended June 30, 2008, we had sales of
      $86,583,622 as compared to sales of $54,558,315 for the same period of 2007,
      an
      increase of approximately 59%. Our sales for our various product categories
      for
      the six month period ended June 30, 2008 are summarized as follows:





**Sales
                  by product**
                **category**
              
              **Six Months Ended**
                **June 30,**
                **2008 (amount in**
                **$US)**
              
              **% of**
                **Total Sales**
              
              **Six Months**
                **Ended June**
                **30,**
                **2007 (amount**
                **in $US)**
              
              **% of**
                **Total**
                **Sales**
              
              **% of increase**
                **from**
                **2007 to 2008**Fresh Pork
              
              $
              65,635,910
              
              
              75.81
              %
              $
              42,795,035
              
              
              78.44
              %
              
              53.37
              %Frozen
                  Pork
              
              
              6,425,032
              
              
              7.42
              %
              
              3,843,316
              
              
              7.04
              %
              
              67.17
              %Processed
                  Food Products
              
              
              14,522,680
              
              
              16.77
              %
              
              7,919,964
              
              
              14.52
              %
              
              83.36
              %Total
                  Sales
              
              $
              86,583,622
              
              
              100
              %
              $
              54,558,315
              
              
              100
              %
              
              58.70
              %





37




**Sales by product category,**
                **by weight of product**
                **(metric tons):**
              
              **Six Months**
                **Ended June 30,**
                **2008******
                **(Weight in tons)**
              
              **% of**
                **Total**
                **Sales**
              
              **Six Months**
                **Ended June 30,**
                **2007**
                **(Weight in tons)**
              
              **% of**
                **Total**
                **Sales**
              
              **% of change**
                **from**
                **2007 to 2008**Fresh Pork
              
              
              29,442
              
              
              80.54
              %
              
              22,674
              
              
              73.97
              %
              
              29.85
              %Frozen
                  Pork
              
              
              2,259
              
              
              6.18
              %
              
              1,932
              
              
              6.30
              %
              
              16.93
              %Processed
                  Food Products
              
              
              4,856
              
              
              13.28
              %
              
              6,048
              
              
              19.73
              %
              
              -19.71
              %Total
                  Sales
              
              
              36,557
              
              
              100
              %
              $
              30,654
              
              
              100
              %
              
              19.26
              %





In
      the
      six months ended June 30, 2008, we raised our average per-kilogram sale prices
      to our customers, as we did during 2007, which coincided with an increase in
      the
      cost of live pigs and other production costs. In addition, despite these
      consumer price increases, in the first six months of 2008 our sales volume
      of
      fresh pork and frozen pork (by weight) increased, with the fresh pork category
      experiencing the highest growth in sales volume both by weight and in terms
      of
      sales revenue. We also increased our sales of frozen pork, both by weight and
      by
      sales revenue, in the first six months of 2008 as compared with the same period
      in the prior year. For processed food products, our sales by weight decreased
      by
      19.17%, but because of higher per-kilogram prices, our sales revenue for this
      product category increased by 83.36%. Management attributes the increases in
      sales revenue in all our product categories to the continuing strength in
      consumer demand for our products in the periods presented.




The
      following table shows the change in the average price per kilogram for our
      product to consumers in the six months ended June 30, 2008, as compared to
      the
      same quarter last year:




**Average Per-Kilogram Price to Customers (in $US)****Six Months**
                **Ended June**
                **30, 2008**
              
              **Six Months**
                **Ended June**
                **30, 2007**
              
              **% change**
              
              **Change in**
                **Price**Fresh
                  Pork
              
              $
              2.23
              
              $
              1.89
              
              
              17.99
              %
              $
              0.34Frozen
                  Pork
              
              $
              2.84
              
              $
              1.99
              
              
              42.71
              %
              $
              0.85Processed
                  Food Products
              
              $
              2.99
              
              $
              1.31
              
              
              128.4
              %
              $
              1.68




In
        the
        six months ended June 30, 2008, we raised our prices for processed food products
        significantly, while we made relatively smaller increases in the prices of
        our
        fresh pork and frozen pork. We raised our prices for processed food products
        due
        to several factors. First, we experienced a surge in customer demand for
        our pig
        viscera products, which is a subcategory within the processed food category.
        In
        response to this surge in demand, and due to limited supply, we raised our
        prices to customers for that subcategory of the processed food products.
        Second,
        the cost to us for packaging material and food additives increased substantially
        during the first half of 2008, and we passed much of these cost increases
        on to
        customers in the form of higher product prices. These input cost increases
        affected processed food products more than other categories. We raised our
        prices for fresh pork by only 17.99% because we were not able to pass on
        the
        entire amount of the live pig price increases to our customers. In management’s
        view, more aggressive price increases in the fresh pork category would have
        discouraged customers from consuming fresh pork, and would have been out
        of line
        with our competitors.


Although
      we also sell our products through sales agents, our principal sales channels
      consist of Chuming-branded franchise stores, supermarkets and restaurants and
      canteens.





The
      following table shows the total increase in our sales, from the first six months
      ending on June 30, 2008 as compared to same period of 2007, by product category
      and by sales channel.


38




**Increase in Sales from First Six Months Ended on June 30, 2007 to the same period**
              **of 2008****By Product Group and Sales Channel ($)****Product**
              **Category**
            
            **Franchise**
              **Operators**
            
            **Sales**
              **Agents**
            
            **Super**
              **Markets**
            
            **Restaurants and**
              **Canteens**
            
            **Total Increase ($)**Fresh
                Pork
            
            
            5,805,463
            
            
            6,604,820
            
            
            10,430,592
            
            
            N/A2
            
            
            22,840,875Frozen
                Pork
            
            
            N/A1
            
            
            335,809
            
            
            N/A1
            
            
            2,245,907
            
            
            2,581,716Processed
                Food Products
            
            
            3,232,591
            
            
            603,509
            
            
            2,545,421
            
            
            221,193
            
            
            6,602,714Total
                Increase in Sales
            
            
            9,038,054
            
            
            7,544,138
            
            
            12,976,013
            
            
            2,467,100
            
            
            32,025,305






1 In the
      periods presented, we did not sell frozen pork through franchise operators
      and
      supermarkets.




2 In
      the
      periods presented, we did not sell fresh pork through restaurants and
      canteens.





In
      the
      first six months of 2008, as compared to the same period in 2007, we achieved
      significantly higher sales revenue from the sale of fresh pork, which was a
      result of higher sales volume of this product category by weight, combined
      with
      increases in our per-kilogram prices to our customers. Management believes
      this
      is due to continued strong consumer demand for fresh pork.





In
      the
      first six months of 2008, as compared to the same period in 2007, the majority
      of our increase in sales came through supermarkets, sales agent and franchise
      operators, respectively. The $12.98 million sales increase through supermarkets
      is due to our efforts to expand the supermarket sales channel, which
      provides us with the largest profit margins, combined with
      increases in our per-kilogram prices of fresh pork.




Overall,
      management believes that our increase in sales, despite higher consumer prices,
      resulted from increased consumer demand, the expansion of our sales channels
      and
      sales network, and increased consumer awareness of our brand and availability
      of
      our products.




*Cost
      of Sales.* Cost of
      sales for the first six months of 2008 increased by $27,538,554 or approximately
      60%, from $45,536,298 for the six months ended June 30, 2007 to $73,074,852
      for
      the six months ended June 30, 2008. The increase was attributable to increase
      in
      sales for the six months ended June 30, 2008 as compared to the same period
      in
      the prior year. Our cost of sales for our various product categories in the
      six
      months end 2008 is summarized as follows:




**Cost of Sales**
              ******by**
              **Production Category:**
            
            **Six Months**
              **Ended June 30,**
              **2008**
            
            **% of**
              **Overall**
              **Cost of**
              **Sales**
            
            **Six Months**
              **Ended June 30,**
              **2007**
            
            **% of**
              **Overall**
              **Cost of**
              **Sales**
            
            **% of increase**
              **from**
              **2007 to 2008**Fresh Pork
            
            $
            56,350,135
            
            
            77.1
            %
            $
            36,606,705
            
            
            80.4
            %
            
            53.93
            %Frozen
                Pork
            
            
            5,397,027
            
            
            7.4
            %
            
            3,266,819
            
            
            7.2
            %
            
            65.21
            %Processed
                Food Products
            
            
            11,327,690
            
            
            15.5
            %
            
            5,
                662,774
            
            
            12.4
            %
            
            100.04
            %Total
                Cost of Sales
            
            $
            73,074,852
            
            
            84.80
            %
            $
            45,536,298
            
            
            83.46
            %
            
            60.48
            %




The
      following table shows our cost of sales in the six months ended June 30, 2008
      as
      compared with the same period in 2007, and also indicates cost of sales by
      product group, as a percentage of sales within each product
      group.


39




**Cost of Sales**
              **by Product Category:**
            
            **Six Months**
              **Ended June**
              **30,**
              **2008**
            
            **% of**
              **Product**
              **Group**
              **Sales**
            
            **Six Months**
              **Ended June****30,**
              **2007**
            
            **% of Product**
              **Group Sales**Fresh Pork
            
            $
            56,350,135
            
            
            85.85
            %
            $
            36,606,705
            
            
            85.53
            %Frozen
                Pork
            
            
            5,397,027
            
            
            84.00
            %
            
            3,266,819
            
            
            85.00
            %Processed
                Food Products
            
            
            11,327,690
            
            
            78.00
            %
            
            5,662,774
            
            
            71.49
            %Total
                Cost of Sales
            
            $
            73,074,852
            
            
            84.80
            %
            $
            45,536,298
            
            
            83.46
            %





Our
      cost
      of sales as a percentage of sales of fresh pork increased slightly in the first
      half of 2008, as compared to the same period in 2007, primarily because of
      the
      increase in the cost of inputs (primarily live pigs), which were not completely
      offset by higher prices to our customers. The cost of sales as a percentage
      of
      sales of frozen pork fell slightly, however, which was due to the use of grade-3
      and grade-4 pigs for such products, which are lower in price than the grade-1
      and grade-2 pigs, which we use to produce fresh pork products. Most of the
      cost
      increase in live pigs occurred in the grade-1 and grade-2 categories. The cost
      of sales as a percentage of sales of processed food products increased around
      6%. This is primarily because of the price increase of live pigs and the price
      increase of packaging material and food additives.





*Gross
      Profit.* Gross
      profit was $13,508,771 for the six months ended June 30, 2008 as compared to
      $9,022,017 for the same period in 2007, representing an increase of $4,486,754,
      or approximately 50%. Management attributes the increase in gross profit to
      strong increases in sales, driven by strong demand for our products, especially
      our fresh pork products. Our gross profit as a percentage of sales was 15.60%
      in
      the six months ended June 30, 2008 as compared to 16.54% for the same period
      in
      2007. The slight decrease in gross profit as a percentage of sales was
      attributable to these commodity and input price increases, not all of which
      we
      passed on to our customers in the form of higher product prices.





The
      following table presents our gross profit for the six months ended June 30,
      2008
      and 2007. The table below also shows the percentage of gross profit for each
      of
      our product groups, as a percentage of sales for that product group.








**Gross Profit**
              **by****Production Category**
            
            **Six Months**
              **Ended June 30,**
              **2008**
            
            **% of**
              **Product**
              **Group**
              **Sales**
            
            **Six Months**
              **Ended June**
              **30,**
              **2007**
            
            **% of**
              **Product**
              **Group**
              **Sales**
            
            **% of**
              **increase**
              **from First**
              **Six Months**
              **of 2007 to**
              **First**
              **Six Months**
              **of 2008**Fresh
                Pork
            
            $
            9,285,775
            
            
            14.15
            %
            $
            6,188,330
            
            
            14.46
            %
            
            50.05
            %Frozen
                Pork
            
            
            1,028,005
            
            
            16.00
            %
            
            576,497
            
            
            15.00
            %
            
            78.32
            %Processed
                Food Products
            
            
            3,194,991
            
            
            22
            %
            
            2,257,190
            
            
            28.50
            %
            
            41.55
            %Total
                Gross Profit
            
            $
            13,508,771
            
            
            15.60
            %
            $
            9,022,017
            
            
            16.54
            %
            
            49.73
            %


40


As
      shown
      in the table above, the fresh pork as a product category delivered the highest
      increase in gross profit from the first half of 2008 as compared with the same
      period in 2007. This is due to the strong demand for our fresh pork
      products.





However,
      in both periods, our processed food product category yielded the highest gross
      profit as a percentage of sales within the product category. Management
      attributes this to the use of grade-3 and grade-4 pigs and unsold portions
      of
      grade-1 and grade-2 pigs in producing our processed food products. Grade-3
      and
      grade-4 pigs are generally lower in price than grade-1 and grade-2 pigs. Because
      of our superior processing and storage techniques and the strength of our
      brand-name, however, we are able to sell our processed food products at prices
      comparable to other processed products that use higher quality pork.
      However, because the price of live pigs, packaging material and food additives
      increased substantially during the second quarter of 2008, the gross profit
      of
      our processed food products decreased from 28.50% to 22.00%.





*Selling
      Expenses.* Selling
      expenses totaled $2,585,055 for the six months ended June 30, 2008, as compared
      to $1,799,420 for the same period in 2007, an increase of $785,635 or 44%.
      This
      increase is primarily due to marketing expenses of approximately $490,000
      related to our efforts to place our pork products in new supermarkets. In
      addition, the salary of sales employees increased by approximately $80,000
      in
      the first half of 2008 as compared to the same period in 2007.





*General
      and Administrative Expenses.* General
      and administrative expenses totaled $1,146,161 for the six months ended June
      30,
      2008 as compared to $687,513 for the same period in 2007, an increase of
      $458,648 or 67%. This increase is primarily attributable to increases in salary
      expense. We
      continued to hire new staff to meet the needs of our expanding operations.
      Also,
      consistent with the recent escalation in the rate of inflation in
      China, the salaries for our staff were increased overall by approximately 40%
      in
      the six months ended June 30, 2008 as compared to the same period in 2007.
      These
      increases in salaries were made in order to maintain compensation levels that
      were sufficient to attract and retain
      qualified employees.




*Other
      Income (Expense).* Our
      other income (expense) consisted of interest income, other expenses, and
      interest expense. We had a total other income of $310,998 for the six months
      ended June 30, 2008 as compared to other expense $741,467 for the same period
      in
      2007, an increase of $1,052,465 or 142%. The increase in other income in the
      first half of 2008 is primarily attributable to a price subsidy in the amount
      of
      $240,000 received from the Dalian metropolitan government and loan interest
      reimbursement in the amount of approximately $550,000 for building a new frozen
      pork processing facility, which has been classified by Dalian metropolitan
      government as a technology reformation project. This is a policy adopted by
      Dalian metropolitan government to accelerate the introduction of new technology
      into the city. The Company does not need to fulfill any obligations because
      of
      this status.





*Net
      Income* .
      Our net
      income for the six months ended June 30, 2008 was $9,856,185 as compared to
      $5,793,617 for the same period in 2007, an increase of $4,062,568 or 70%. This
      increase in net income is attributable to the factors described above, but
      primarily from the increase in sales for the six months ended June 30, 2008,
      as
      compared to the same period in 2007.




**LIQUIDITY
      AND CAPITAL RESOURCES**




**Cash
      Flows**





***Six
      Months Ended June 30, 2008***





As
      of
      June 30, 2008, we had cash and cash equivalents of $11,270,730, other current
      assets of $32,205,596 and current liabilities of $23,803,675. At
      June
      30, 2007, we had $2.5
      million in cash and cash equivalents. We presently finance our
      operations primarily with cash flows from our operations, and we anticipate
      that
      this will continue to be our primary source of funds to finance our short-term
      cash needs. If we require additional capital to expand or enhance our existing
      facilities, we will consider debt or equity offerings or institutional
      borrowings as potential means of financing.


41


Net
      cash
      used in operating activities was $1,738,923 for the six months ended on June
      30,
      2008, while net cash flow sourced from operating activities was $4,661,212
      in
      the same period in 2007. This is primarily attributable to the fact that, in
      order to expand our sales, we began offering payment terms to accommodate our
      best customers.  Beginning in the first quarter of 2008 and continuing into
      the second quarter of 2008, we revised our customer credit policy and began
      offering extended payment terms to some of our quality long term clients
      with good credit (up to two months), where previously we required payment within
      1-2 days of delivery of goods. This practice caused a decrease in, and some
      delay in collection of, our incoming cash.





Net
      cash
      sourced from investing activities was $1,312,211 for the six months ended June
      30, 2008, compared to cash used in investing activities of $4,032,216 in the
      same period in 2007. This is primarily due to the following two factors: first,
      we paid $3,333,506 to purchase land use rights in the six months ended June
      30,
      2007. Second, we received additional funds in the amount of $2,019,333 released
      from our escrow account in the six months ended June 30, 2008, related to
      the 2007 private placement.





Net
      cash
      used in financing activities was $980,115 for the six months ended on June
      30,
      2008, as compared to net cash used in financing activities of $1,293,663 in
      the
      same period in 2007. The cash was used as payment of bank loan interest in
      both periods. The decrease of $313,548 was mainly interest savings due to the
      repayment of principal to Shanghai Pudong Development Bank.


**Capital
        Commitments**
 
 In
        the
        first quarter of 2008, as discussed above, we relaxed our credit policy for
        certain of our major customers, permitting them up to a two-month grace
        period for payment for goods, where previously no such grace period was
        provided. Management expects that in the short term, this revised credit
        policy
        will result in an increase in accounts receivable, and a corresponding reduction
        in our cash position. Management does not anticipate that this change in
        our
        credit policy will result in any deficiency of working capital.
 
 **Uses
        of Liquidity**
 
 Our
        cash
        requirements through the end of fiscal 2008 will be primarily to fund daily
        operations for the growth of our business. Management will consider acquiring
        additional manufacturing capacity for processed foods in the future to
        strengthen and stabilize our manufacturing base.
 
 **Sources
        of Liquidity**
 
 Our
        primary sources of liquidity for our short-term cash needs are expected to
        be
        from cash flows generated from operations and cash and cash equivalents
        currently on hand. We believe that we will be able to borrow additional funds
        if
        needed.
 
 We
        believe our cash flow from operations together with our cash and cash
        equivalents currently on hand will be sufficient to meet our needs for working
        capital, capital expenditure and other commitments through the end of 2008.
        For
        our long-term cash needs, we may consider a number of alternative financing
        opportunities, which may include debt and equity financing. No assurance
        can be
        made that such financing will be available to us, and adequate funds may
        not be
        available on terms acceptable to us. If additional funds are raised through
        the
        issuance of equity securities, dilution to existing shareholders may result.
        If
        funding is insufficient at any time in the future, we will develop or enhance
        our products or services and expand our business through our own cash flows
        from
        operations.
 
 As
        of
        June 30, 2008, we had outstanding borrowings under a loan from Bank of China
        $6,402,908, on which we pay interest at a rate of 8.24% per annum. As of
        June
        30, 2008, we did not have any standby letters of credit or standby repurchase
        obligations.
 
 **Foreign
        Currency Translation Risk**
 
 Our
        operations are, for the most part, located in the PRC, and we earn our revenue
        in Chinese RMB. However, we report our financial results in U.S. Dollars
        using
        the closing rate method. As a result, fluctuations in the exchange rates
        between
        Chinese RMB and the U.S. Dollar will affect our reported financial results.
        The
        balance sheet items are translated into U.S. dollars using the exchange rates
        at
        the respective balance sheet dates. The capital and various reserves are
        translated at historical exchange rates prevailing at the time of the
        transactions while income and expenses items are translated at the average
        exchange rate for the period. All exchange differences are recorded within
        equity. The foreign currency translation adjustment for the six months ended
        June 30, 2008 and 2007, which was in each instance a gain, was $1,462,155
        and
        $247,509, respectively.
 
 During
        2003 and 2004 the exchange rate of RMB to the dollar remained constant at
        8.26
        RMB to the dollar. On July 21, 2005, the Chinese government adjusted the
        exchange rate from 8.26 to 8.09 RMB to the dollar. In 2008, the RMB continued
        to
        appreciate against the U.S. dollar. As of June 30, 2008, the market foreign
        exchanges rate was increased to 6.85 RMB to one U.S. dollar. As a result,
        the
        ongoing appreciation of RMB to U.S. dollar negatively impacted our gross
        margins
        for the six months and three months ended June 30, 2008.




**Contractual
      Obligations and Off-Balance Sheet Arrangements**




***Contractual
      Obligations***




We
      have
      certain fixed contractual obligations and commitments that include future
      estimated payments. Changes in our business needs, cancellation provisions,
      changing interest rates, and other factors may result in actual payments
      differing from the estimates. We cannot provide certainty regarding the timing
      and amounts of payments. We have presented below a summary of the most
      significant assumptions used in our determination of amounts presented in the
      tables in order to assist in the review of this information within the context
      of our consolidated financial position, results of operations, and cash
      flows.





The
      following tables summarize our contractual obligations as of June 30, 2008,
      and
      the effect these obligations are expected to have on our liquidity and cash
      flows in future periods.





**Payments Due by Period****Total**
              
              **Less than 1**
                **year**
              
              **1-3 Years**
              
              **3-5 Years**
              
              **5 Years +**Contractual
                  Obligations :Bank
                  Indebtedness
              
              $
              6,402,908
              
              $
              6,402,908
              
              $
              —
              
              $
              —
              
              $
              —Other
                  Indebtedness
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —Capital
                  Lease Obligations
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —Operating
                  Leases
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —Purchase
                  Obligations
              
              $
              447,092,700
              
              $
              56,972,700
              
              $
              390,120,000
              
              $
              —
              
              $
              —Total
                  Contractual Obligations:
              
              $
              453,495,608
              
              $
              63,375,608
              
              $
              390,120,000
              
              $
              —
              
              
              —




As
        indicated in the table, as of June 30, 2008 we had $447,092,700 in purchase
        obligations, which relates to our agreement for the purchase and sale of
        hogs.
        On December 19, 2007, we entered into a hog purchase agreement whereby the
        Group
        will provide, at fair market prices, a minimum number of hogs to us.
 
 At
        June
        30, 2008, management projected minimum quantities of hogs as detailed in
        the
        following table:
 
 **Year**
              
              **Hogs**
              
              **Price
                  Per Hog**
              
              **Amount**2008
              
              
              270,000
              
              $
              211.01
              
              $
              56,972,7002009
              
              
              800,000
              
              $
              232.21
              
              $
              185,768,0002010
              
              
              800,000
              
              $
              255.44
              
              $
              204,352,000$
              447,092,700
 
 For
        purposes of estimating future payments, we project that the fair market price
        of
        the hogs will increase by 10% each year. The assumption of 10% reflects our
        expectations with regard to inflation and the rising costs of inputs in breeding
        livestock.




***Off-balance
      Sheet Arrangements***




We
      have
      not entered into any other financial guarantees or other commitments to
      guarantee the payment obligations of any third parties. We have not entered
      into
      any derivative contracts that are indexed to our shares and classified as
      shareholder’s equity or that are not reflected in our consolidated financial
      statements. Furthermore, we do not have any retained or contingent interest
      in
      assets transferred to an unconsolidated entity that serves as credit, liquidity
      or market risk support to such entity. We do not have any variable interest
      in
      any unconsolidated entity that provides financing, liquidity, market risk or
      credit support to us or engages in leasing, hedging or research and development
      services with us.


42


**ITEM
      3.**  **QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**





We
      do not
      use derivative financial instruments in our investment portfolio and have no
      foreign exchange contracts. Our financial instruments consist of cash and cash
      equivalents, trade accounts receivable, accounts payable and long-term
      obligations. We consider investments in highly liquid instruments purchased
      with
      a remaining maturity of 90 days or less at the date of purchase to be cash
      equivalents. However, in order to manage the foreign exchange risks, we may
      engage in hedging activities to manage our financial exposure related to
      currency exchange fluctuation. In these hedging activities, we might use
      fixed-price, forward, futures, financial swaps and option contracts traded
      in
      the over-the-counter markets or on exchanges, as well as long-term structured
      transactions when feasible.





*Interest
      Rates* .
      Our
      exposure to market risk for changes in interest rates relates primarily to
      our
      short-term investments and short-term obligations; thus, fluctuations in
      interest rates would not have a material impact on the fair value of these
      securities. At June 30, 2008, we had approximately $11,270,730 in cash and
      cash
      equivalents. A hypothetical 10% increase or decrease in interest rates would
      not
      have a material impact on our earnings or loss, or the fair market value or
      cash
      flows of these instruments.




*Foreign
      Exchange Rates* .
      All of
      our sales and inputs are transacted in Renminbi (“RMB”). As a result, changes in
      the relative values of U.S. dollars and RMB affect our reported levels of
      revenues and profitability as the results are translated into U.S. dollars
      for
      reporting purposes. However, since we conduct our sales and purchase inputs
      in
      RMB, fluctuations in exchange rates are not expected to significantly affect
      our
      financial stability or gross and net profit margins. We do not currently expect
      to incur significant foreign exchange gains or losses, or gains or losses
      associated with any foreign operations.





Our
      exposure to foreign exchange risk primarily relates to currency gains or losses
      resulting from timing differences between the signing of sales contracts and
      the
      settling of these contracts. Furthermore, we translate monetary assets and
      liabilities denominated in other currencies into RMB, the functional currency
      of
      our operating business. Our results of operations and cash flow are translated
      at average exchange rates during the period, and assets and liabilities are
      translated at the unified exchange rate as quoted by the People’s Bank of China
      at the end of the period. Translation adjustments resulting from this process
      are included in accumulated other comprehensive income in our statement of
      shareholders’ equity. We recorded net foreign currency gains of $1,307,671 and
      $3,097,786 in the second quarter of 2007 and 2008, respectively. We have not
      used any forward contracts, currency options or borrowings to hedge our exposure
      to foreign currency exchange risk. We cannot predict the impact of future
      exchange rate fluctuations on our results of operations and may incur net
      foreign currency losses in the future. As our sales denominated in foreign
      currencies, such as RMB, continue to grow, we may consider using arrangements
      to
      hedge our exposure to foreign currency exchange risk.





Our
      financial statements are expressed in U.S. dollars, but the functional
      currency of our operating subsidiaries is RMB. The value of your investment
      in
      our stock will be affected by the foreign exchange rate between
      U.S. dollars and RMB. A decline in the value of RMB against the
      U.S. dollar could reduce the U.S. dollar equivalent amounts of our
      financial results, the value of your investment in our company and the dividends
      we may pay in the future, if any, all of which may have a material adverse
      effect on the price of our stock.





**ITEM
      4.****CONTROLS
      AND PROCEDURES**





We
      maintain disclosure controls and procedures that are designed to ensure that
      information required to be disclosed in our Exchange Act reports is recorded,
      processed, summarized and reported within the time periods specified in the
      SEC’s rules and forms, and that such information is accumulated and communicated
      to our management, including its chief executive officer and chief financial
      officer, as appropriate, to allow timely decisions regarding required
      disclosure. In designing and evaluating the disclosure controls and procedures,
      management recognizes that any controls and procedures, no matter how well
      designed and operated, can provide only reasonable assurance of achieving the
      desired control objectives, and management necessarily is required to apply
      its
      judgment in evaluating the cost-benefit relationship of possible controls and
      procedures.


43





As
      of
      June 30, 2008, we carried out an evaluation, under the supervision and with
      the
      participation of our management, including our chief executive officer and
      our
      chief financial officer, of the effectiveness of the design and operation of
      our
      disclosure controls and procedures. Based on the foregoing, our chief executive
      officer and chief financial officer concluded that our disclosure controls
      and
      procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
      Exchange Act of 1934) were effective at the reasonable assurance
      level.





There
      were no changes in our internal control over financial reporting (as defined
      in
      Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as
      amended) during the quarter ended June 30, 2008 that have materially affected,
      or are reasonably likely to materially affect, our internal control over
      financial reporting.


44


**PART
      II. OTHER INFORMATION**




**ITEM 1.****LEGAL
      PROCEEDINGS******





We
      are
      not aware of any material existing or pending legal proceedings against us,
      nor
      are we involved as a plaintiff in any material proceeding or pending litigation.
      There are no proceedings in which any of our current directors, officers or
      affiliates, or any registered or beneficial shareholder, is an adverse party
      or
      has a material interest adverse to us.




**ITEM 1A.****RISK
      FACTORS**





*You
      should carefully consider the risks described below together with all of the
      other information included in this prospectus before making an investment
      decision with regard to our securities. The statements contained in or
      incorporated into this report that are not historic facts are forward-looking
      statements that are subject to risks and uncertainties that could cause actual
      results to differ materially from those set forth in or implied by
      forward-looking statements. If any of the following risks actually occurs,
      our
      business, financial condition or results of operations could be harmed. In
      that
      case, the trading price of our common stock could decline, and you may lose
      all
      or part of your investment.*





***Risks
      Relating to Our Business***




**Our
      limited operating history makes it difficult to evaluate our future prospects
      and results of operations.**




We
      have a
      limited operating history. Our holding company in China, Chuming WFOE, and
      the
      companies that form its present subsidiaries were incorporated in 2004.
      Accordingly, you should consider our future prospects in light of the risks
      and
      uncertainties experienced by early stage companies in evolving industries such
      as the meat industry in China. Some of these risks and uncertainties relate
      to
      our ability to:




·
            maintain
                our market position in the meat business in
                China;




·
            offer
                new and innovative products to attract and retain a larger customer
                base;




·
            attract
                additional customers and increase spending per
                customer;




·
            increase
                awareness of our brand and continue to develop user and customer
                loyalty;




·
            respond
                to competitive market conditions;




·
            respond
                to changes in our regulatory
                environment;




·
            manage
                risks associated with intellectual property
                rights;




·
            maintain
                effective control of our costs and
                expenses;




·
            raise
                sufficient capital to sustain and expand our
                business;




·
            attract,
                retain and motivate qualified personnel;
                and


45





·
            upgrade
                our technology to support additional research and
                development.




If
      we are
      unsuccessful in addressing any of these risks and uncertainties, our business
      may be materially and adversely affected.




**If
      there are any interruptions to or decline in the amount or quality of our live
      pigs, raw pork or other major raw material supply, our business could be
      materially and adversely affected.**




Live
      pigs
      and raw pork are the principal raw materials used in our production. We procure
      approximately 60% of our live pigs from Group, and the remainder from various
      third party suppliers who are independent farmers. Our third party suppliers
      may
      not continue to be able to supply an adequate number of live pigs to satisfy
      our
      present and future production needs. The supply of pigs is dependent on the
      output of pig farms, which may be affected by outbreaks of diseases or
      epidemics. Our current suppliers may not be able to provide live pigs of
      sufficient quality to meet our stringent quality control requirements. Any
      interruptions to or decline in the amount or quality of our live pig supply
      could materially disrupt our production and adversely affect our business.
      In
      addition to live pigs, we also use additives and packaging in our production,
      which we source from third party suppliers. Any interruptions to or decline
      in
      the amount or quality of our additives or packaging supply, could also disrupt
      our production or sales and adversely affect our business.




**We
      are vulnerable to increases in the price of live pigs and other operating costs,
      and we may not be able to entirely offset these increasing costs by increasing
      the prices of our products, particularly our processed meat
      products.**




We
      purchase agricultural products, such as live pigs, for use in our production
      process and for resale. The price of such commodities is subject to fluctuations
      that are attributable to a number of factors, such as the price of animal feed,
      diseases and infections, and weather conditions. If for example, worldwide
      and
      local grain prices should increase, this would affect the price of animal feed,
      which may increase the price of live pigs. Higher pig prices may force us to
      raise the prices we charge our customers for our products, however we may not
      always be able to pass on the entire amount of price increases to our customers,
      and/or consumers might cut back on consumption of meat products.





**We
      may be unable to anticipate changes in consumer preferences for processed meat
      products, which may result in decreased demand for our
      products.**




Our
      continued success in the processed meat products market is in large part
      dependent on our ability to anticipate and develop products that appeal to
      the
      changing tastes, dietary habits and preferences of customers. If we are not
      able
      to anticipate and identify new consumer trends and develop new products
      accordingly, demand for our products may decline and our operating results
      may
      be adversely affected. In addition, we may incur significant costs relating
      to
      developing and marketing new products or expanding our existing product
      offerings in reaction to what we perceive to be a consumer preference or demand.
      Such development or marketing may not result in the level of market acceptance,
      volume of sales or profitability anticipated.





**If
      the chilled and frozen pork market in China does not grow as we expect, our
      results of operations and financial conditions may be adversely
      affected.**




If
      the
      chilled and frozen pork market in China does not grow as we expect, our business
      may be harmed, we may need to adjust our growth strategy and our results of
      operation may be adversely affected.


46


**We
      require various licenses and permits to operate our business, and the loss
      of or
      failure to renew any or all of these licenses and permits could materially
      adversely affect our business.**




In
      accordance with PRC laws and regulations, we are required to maintain various
      licenses and permits in order to operate our business, including, without
      limitation, a slaughtering permit in respect of each of our chilled and frozen
      pork production facilities and a permit for production of industrial products
      in
      respect of each of our processed meat production facilities. We are required
      to
      comply with applicable hygiene and food safety standards in relation to our
      production processes. Our premises and transportation vehicles are subject
      to
      regular inspections by the regulatory authorities for compliance with applicable
      regulations. Failure to pass these inspections, or the loss of or failure to
      renew our licenses and permits, could require us to temporarily or permanently
      suspend some or all of our production or distribution operations, which could
      disrupt our operations and adversely affect our business.




**We
      are highly dependent on senior management and key research and development
      personnel.**




We
      are
      highly dependent on our senior management to manage our business and operations
      and our key research and development personnel for the development of new
      processing methods and technologies, food products and the enhancement of our
      existing products. In particular, we rely substantially on our chairman and
      chief executive officer, Mr. Shi Huashan, to manage our operations. We also
      depend on our key research personnel. In addition, we also rely on information
      technology and logistics personnel for the production, storage and shipment
      of
      our products and on marketing and sales personnel, engineers and other personnel
      with technical and industry knowledge to transport, market and sell our
      products. We do not maintain key man life insurance on any of our senior
      management or key personnel. The departure of any one of them, in particular
      Mr.
      Shi, would have a material adverse effect on our business and operations.
      Competition for senior management and research and development personnel is
      intense and the pool of suitable candidates is limited. We may be unable to
      locate a suitable replacement for any senior management or key research and
      development personnel that we lose. In addition, if any member of our senior
      management or key research and development personnel joins a competitor or
      forms
      a competing company, they may compete with us for customers, business partners
      and other key professionals and staff members of our company.




We
      note
      that Mr. Shi Huashan, who is our Chief Executive Officer, is also the Chief
      Executive Officer of Dalian Chuming Group Co., Ltd., our former parent company.
      See also, “Certain Relationships and Related Party Transactions” elsewhere in
      this report. Due to the non-exclusive roles of Mr. Shi as our CEO and the
      principal executive officer of Dalian Chuming Group Co., Ltd., with whom we
      conduct business from time to time, potential conflicts of interest may arise.
      In particular, situations might arise in which we transact business with Dalian
      Chuming Group Co., Ltd., and certain terms of agreements might be favorable
      to
      us, but conversely unfavorable to Dalian Chuming Group Co., Ltd., and vice
      versa. In order to effectively handle such conflict of interest scenarios,
      our
      management intends to submit all related party transactions to our independent
      board of directors, or appropriate committee of the board, for review and
      approval. If through these mechanisms we are not able to effectively handle
      such
      conflicts of interest to serve the Company’s best interest, our business could
      be harmed or adversely affected.




We
      compete for qualified personnel with other food processing companies, food
      retailers, logistics companies and research institutions. Intense competition
      for these personnel could cause our compensation costs to increase
      significantly, which could have a material adverse effect on our results of
      operations. Our future success and ability to grow our business will depend
      in
      part on the continued service of these individuals and our ability to identify,
      hire and retain additional qualified personnel. If we are unable to attract
      and
      retain qualified employees, we may be unable to meet our business and financial
      goals.





**Our
      growth strategy may prove to be disruptive and divert management
      resources.**




Our
      growth strategy may involve large transactions and present financial, managerial
      and operational challenges, including diversion of management attention from
      existing businesses, difficulty with integrating personnel and financial and
      other systems, increased expenses, including compensation expenses resulting
      from newly hired employees, assumption of unknown liabilities and potential
      disputes. We could also experience financial or other setbacks if any of our
      growth strategies incur problems of which we are not presently aware. We may
      require additional financing in the future.


47




We
      may
      need to obtain additional debt or equity to fund future capital expenditures.
      Additional equity may result in dilution to the holders of our outstanding
      shares of capital stock. Additional debt financing may include conditions that
      would restrict our freedom to operate our business, such as conditions
      that:




·
            limit
                our ability to pay dividends or require us to seek consent for the
                payment
                of dividends;·
            increase
                our vulnerability to general adverse economic and industry
                conditions;·
            require
                us to dedicate a portion of our cash flow from operations to payments
                on
                our debt, thereby reducing the availability of our cash flow to fund
                capital expenditures, working capital and other general corporate
                purposes; and·
            limit
                our flexibility in planning for, or reacting to, changes in our business
                and our industry.




We
      cannot
      guarantee that we will be able to obtain any additional financing on terms
      that
      are acceptable to us, or at all.




**Our
      operations are cash intensive and our business could be adversely affected
      if we
      fail to maintain sufficient levels of working capital.**




We
      expend
      a significant amount of cash in our operations, principally to fund our raw
      material procurement. Our suppliers, in particular, third party suppliers of
      pigs, typically require payment in full within seven days after delivery,
      although some of our suppliers provide us with credit. In turn, we typically
      require our customers of chilled and frozen pork to make payment in full on
      delivery, although we offer some of our long-standing customers credit terms.
      We
      generally fund most of our working capital requirements out of cash flow
      generated from operations. If we fail to generate sufficient revenues from
      our
      sales, or if we experience difficulties collecting our accounts receivables,
      we
      may not have sufficient cash flow to fund our operating costs and our business
      could be adversely affected.




**We
      may be unable to maintain our profitability in the face of a consolidating
      retail environment in China.**




We
      sell
      substantial amounts of our products to supermarkets and large retailers. The
      supermarket and food retail industry in China has been, and is expected to
      continue, undergoing a trend of development and consolidation. As the food
      retail trade continues to consolidate and our retail customers grow larger
      and
      become more sophisticated, they may demand lower pricing and increased
      promotional programs. Furthermore, larger customers may be better able to
      operate on reduced inventories and potentially develop or increase their focus
      on private label products. If we fail to maintain a good relationship with
      our
      large retail customers, or fail to maintain a wide offering of quality products,
      or if we lower our prices or increase promotional support of our products in
      response to pressure from our customers and are unable to increase the volume
      of
      our products sold, our profitability could decline.





**Our
      operating results may fluctuate from period to period and if we fail to meet
      market expectations for a particular period, our share price may
      decline.**




Our
      operating results have fluctuated from period to period and are likely to
      continue to fluctuate as a result of a wide range of factors, including seasonal
      variations in live pig supply and processed meat products consumption. Our
      production and sales of chilled and frozen pork are generally lower in the
      summer, due to lower supply of live pigs. Interim reports may not be indicative
      of our performance for the year or our future performance, and period-to-period
      comparisons may not be meaningful due to a number of reasons beyond our control.
      We cannot assure you that our operating results will meet the expectations
      of
      market analysts or our investors. If we fail to meet their expectations, there
      may be a decline in our share price.





**We
      derive all of our revenues from sales in China and any downturn in the Chinese
      economy could have a material adverse effect on our business and financial
      condition.**




All
      of
      our current revenues are generated from sales in China. We anticipate that
      revenues from sales of our products in China will continue to represent a
      substantial proportion of our total revenues in the near future. Any significant
      decline in the condition of the PRC economy could, among other things, adversely
      affect consumer buying power and discourage consumption of our products, which
      in turn would have a material adverse effect on our business and financial
      condition.


48





**We
      rely on our exclusive network of showcase stores, network stores and supermarket
      brand counters for the success of our sales and our brand image, and should
      they
      perform poorly, our business and brand image could be materially and adversely
      affected.**




In
      addition to our sales to wholesale customers, we sell our products through
      showcase stores, network stores and supermarket brand counters. All of these
      retail based stores exclusively sell our pork products and display the Chuming
      logo on our store facades. For the first half of 2008, these retail outlets
      accounted for approximately 43% of our total revenue. If the sales performance
      of our retail based stores deteriorates, this could adversely affect the
      financial results of the company. In addition, any sanitation, hygiene, or
      food
      quality problems that might arise from the retail based stores could adversely
      affect our brand image and lead to a loss of sales. Chuming does not own any
      of
      the retail based stores.




**We
      rely on the performance of our wholesaler, retailer and mass merchant customers
      for the success of our sales, and should they perform poorly or give priority
      to
      our competitors’ products, our business could be materially and adversely
      affected.**




In
      addition to our retail sales channel, we sell our products to supermarkets
      and
      large retailers, which in turn sell the products to end consumers. If the sales
      performance of our wholesale customers deteriorates, this could adversely affect
      our sales. Furthermore, our wholesale customers also carry products which
      directly compete with our products for retail space and consumer purchases.
      There is a risk that our wholesale customers may give higher priority to
      products of, or form alliances with, our competitors. If our wholesale customers
      do not continue to purchase our products, or provide our products with similar
      levels of promotional support, our sales performance and brand imaging could
      be
      adversely affected.




**The
      loss of any of our significant customers could have an adverse effect on our
      business.**




Our
      key
      customers are principally supermarkets and large retailers in the PRC. We have
      not entered into long-term supply contracts with any of these major customers.
      There can be no assurance that we will maintain or improve the relationships
      with these customers, or that we will be able to continue to supply these
      customers at current levels or at all. If we cannot maintain long-term
      relationships with our major customers, the loss of a significant portion of
      our
      sales to them could have an adverse effect on our business, financial condition
      and results of operations. Further, the loss of any one of our top five
      customers could cause us to suffer a temporary setback in our sales, which
      could
      have a short term negative effect on our financial results.





**Recent
      regulatory enforcement crackdowns on food processing companies in the PRC could
      adversely affect our businesses.**




Recently,
      the PRC government authorities have taken certain measures to maintain the
      PRC
      food market in good order and to improve the integrity of the PRC food industry,
      such as enforcing full compliance with industry standards and closing certain
      food processing companies in the PRC that did not meet regulatory standards.
      We
      cannot assure you that our businesses and operations will not be affected as
      a
      result of the deteriorating reputation of the food industry in the PRC due
      to
      recent scandals regarding food products.




**Environmental
      regulations and related litigation could have a material adverse effect on
      our
      business and results of operations.**




Our
      operations and properties are subject to extensive and increasingly stringent
      laws and regulations pertaining to, among other things, the discharge of
      materials into the environment and the handling and disposition of wastes
      (including solid and hazardous wastes) or otherwise relating to protection
      of
      the environment. Failure to comply with any laws and regulations and future
      changes to them may result in significant consequences to us, including civil
      and criminal penalties, liability for damages and negative
      publicity.


49


We
      have
      incurred, and will continue to incur, significant capital and operating
      expenditures to comply with these laws and regulations. W e cannot assure you
      that additional environmental issues will not require currently unanticipated
      investigations, assessments or expenditures, or that requirements applicable
      to
      us will not be altered in ways that will require us to incur significant
      additional costs.




**Deterioration
      of our perishable products may occur due to delivery delays, malfunctioning
      of
      freezer facilities or poor handling during transportation, which could adversely
      affect our business, results of operations and financial
      condition.**




The
      condition of our food products (being perishable goods) may deteriorate due
      to
      shipment or delivery delays, malfunctioning of freezer facilities or poor
      handling during delivery by shippers or intermediaries. We are not aware of
      any
      instances whereby we were made to compensate for delivery delays, malfunctioning
      of freezer facilities or poor handling during transportation. However, there
      is
      no assurance that such incidents will not occur in the future. In the event
      of
      any delivery delays, malfunctioning of freezer facilities or poor handling
      during transportation, we may have to make compensation payments and our
      reputation, business goodwill and revenue will be adversely
      affected.




**Unexpected
      business interruptions could adversely affect our
      business.**




Our
      operations are vulnerable to interruption by fire, power failure and power
      shortages, floods, computer viruses and other events beyond our control. In
      particular, China, especially eastern and southern China, is experiencing
      frequent electricity shortages. In addition, we do not carry business
      interruption insurance to compensate us for losses that may occur as a result
      of
      these kinds of events and any such losses or damages incurred by us could
      disrupt our production and other operations.





**If
      we fail to develop and maintain an effective system of internal controls, we
      may
      not be able to accurately report our financial results or prevent fraud; as
      a
      result, current and potential****shareholders
      could lose confidence in our financial reports, which could harm our business
      and the trading price of our common stock.**




Effective
      internal controls are necessary for us to provide reliable financial reports
      and
      effectively prevent fraud. Section 404 of the Sarbanes-Oxley Act of 2002
      requires us to evaluate and report on our internal controls over financial
      reporting and have our independent registered public accounting firm annually
      attest to our evaluation, as well as issue their own opinion on our internal
      controls over financial reporting, beginning with our Annual Report on Form
      10-K
      for the fiscal year ended December 31, 2007. We plan to prepare for compliance
      with Section 404 by strengthening, assessing and testing our system of internal
      controls to provide the basis for our report. The process of strengthening
      our
      internal controls and complying with Section 404 is expensive and time
      consuming, and requires significant management attention, especially given
      that
      we have not yet undertaken any efforts to comply with the requirements of
      Section 404. We cannot be certain that the measures we will undertake will
      ensure that we will maintain adequate controls over our financial processes
      and
      reporting in the future. Furthermore, if we are able to rapidly grow our
      business, the internal controls that we will need will become more complex,
      and
      significantly more resources will be required to ensure our internal controls
      remain effective. Failure to implement required controls, or difficulties
      encountered in their implementation, could harm our operating results or cause
      us to fail to meet our reporting obligations. If we or our auditors discover
      a
      material weakness in our internal controls, the disclosure of that fact, even
      if
      the weakness is quickly remedied, could diminish investors’ confidence in our
      financial statements and harm our stock price. In addition, non-compliance
      with
      Section 404 could subject us to a variety of administrative sanctions, including
      the suspension of trading, ineligibility for listing on one of the Nasdaq Stock
      Markets or national securities exchanges, and the inability of registered
      broker-dealers to make a market in our common stock, which would further reduce
      our stock price.


50




**We
      will incur increased costs as a public company which may affect our
      profitability.**




As
      a
      public company, Chuming will incur significant legal, accounting and other
      expenses that it did not incur as a private company. We are now subject to
      the
      SEC’s rules and regulations relating to public disclosure. SEC disclosures
      generally involve a substantial expenditure of financial resources. In addition,
      the Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented
      by
      the SEC, have required changes in corporate governance practices of public
      companies. We expect that full compliance with these new rules and regulations
      will significantly increase our legal and financial compliance costs and make
      some activities more time-consuming and costly. For example, we will be required
      to create additional board committees and adopt policies regarding internal
      controls and disclosure controls and procedures. In addition, on December 31,
      2007, we increased compensation to our senior executive officers, allocated
      $250,000 of the proceeds from our recent financing to our investor and public
      relations program (and shortly thereafter hired an investor relations firm)
      and
      expect to increase our financial and accounting staff in order to meet the
      demands and requirements of being a public reporting company. Such additional
      personnel, public relations, reporting and compliance costs may negatively
      impact our financial results.




**We
      have limited business insurance coverage.**




The
      insurance industry in China is still at an early stage of development. Insurance
      companies in China offer limited business insurance products. We do not have
      any
      business liability or disruption insurance coverage for our operations in China.
      Any business disruption, litigation or natural disaster may result in our
      incurring substantial costs and the diversion of our resources. In addition,
      since  our business operations are based outside of the U.S. (although we
      are a Nevada corporation quoted on the OTC Bulletin Board in the U.S.),
      directors and officers insurance may not be readily available to us at the
      prices and on terms acceptable to us. If we are not able to secure satisfactory
      D & O insurance coverage, we may not be able to attract the most qualified
      directors and officers, and our business could be indirectly adversely
      affected.





***Risks
      Relating To Our Industry***




**The
      pig slaughtering and processed meat industries in China are subject to extensive
      government regulation, which is in the process of change and
      development.**




The
      pig
      slaughtering and processed meat industries in China are heavily regulated by
      a
      number of governmental agencies, including primarily the Ministry of
      Agriculture, the Ministry of Commerce, the Ministry of Health, the General
      Administration of Quality Supervision, Inspection and Quarantine and the State
      Environmental Protection Administration. These regulatory bodies have broad
      discretion and authority to regulate many aspects of the pig slaughtering and
      processed meat industries in China, including, without limitation, setting
      hygiene standards for production and quality standards for processed meat
      products. In addition, the pig slaughtering and processed meat products
      regulatory framework in China is still in the process of being developed. If
      the
      relevant regulatory authorities set standards with which we are unable to comply
      or which increase our production costs and hence our prices so as to render
      our
      products non-competitive, our ability to sell products in China may be
      limited.





**The
      pig slaughtering and processed meat industries in China may face increasing
      competition from both domestic and foreign companies, as well as increasing
      industry consolidation, which may affect our market share and profit
      margin.**




The
      pig
      slaughtering and processed meat industries in China are highly competitive.
      Our
      processed meat products are targeted at mid- to high-end consumers, a market
      in
      which we face increasing competition, particularly from foreign suppliers.
      In
      addition, the evolving government regulations in relation to the pig
      slaughtering industry have driven a trend of consolidation through the industry,
      with smaller operators unable to meet the increasing costs of regulatory
      compliance and therefore are at a competitive disadvantage. We believe that
      our
      ability to maintain our market share and grow our operations within this
      landscape of changing and increasing competition is largely dependent upon
      our
      ability to distinguish our products and services.


51




In
      addition, prior to China’s entry into the World Trade Organization (“WTO”), high
      barriers to entry existed for many potential competitors in our business through
      the use of tariffs and restrictive import licensing and distribution practices.
      China’s admission to WTO has lowered some of the tariffs and other barriers to
      entry so we can expect that competition will increase.




We
      cannot
      assure you that our current or potential competitors will not develop products
      of a comparable or superior quality to ours, or adapt more quickly than we
      do to
      evolving consumer preferences or market trends. In addition, our competitors
      in
      the raw meat market may merge or form alliances to achieve a scale of operations
      or sales network which would make it difficult for us to compete. Increased
      competition may also lead to price wars, counterfeit products or negative brand
      advertising, all of which may adversely affect our market share and profit
      margin. We cannot assure you that we will be able to compete effectively with
      our current or potential competitors.




**The
      outbreak of animal diseases or other epidemics could adversely affect our
      operations.**




An
      occurrence of serious animal diseases, such as foot-and-mouth disease, or any
      outbreak of other epidemics in China affecting animals or humans might result
      in
      material disruptions to our operations, material disruptions to the operations
      of our customers or suppliers, a decline in the supermarket or food retail
      industry or slowdown in economic growth in China and surrounding regions, any
      of
      which could have a material adverse effect on our operations and turnover.
      There
      can be no assurance that our facilities or products will not be affected by
      an
      outbreak of any disease or outbreak in the future, or that the market for pork
      products in the PRC will not decline as a result of fear of disease. In either
      case, our business, results of operations and financial condition would be
      adversely and materially affected.





**Consumer
      concerns regarding the safety and quality of food products or health concerns
      could adversely affect sales of our products.**




Our
      sales
      performance could be adversely affected if consumers lose confidence in the
      safety and quality of our products. Consumers in the PRC are increasingly
      conscious of food safety and nutrition. Consumer concerns about, for example,
      the safety of pork products, or about the safety of food additives used in
      processed meat products, could discourage them from buying certain of our
      products and cause our results of operations to suffer.




**We
      may be subject to substantial liability should the consumption of any of our
      products cause personal injury or illness.**




The
      sale
      of food products for human consumption involves an inherent risk of injury
      to
      consumers. Such injuries may result from tampering by unauthorized third parties
      or product contamination or degeneration, including the presence of foreign
      contaminants, chemical substances or other agents or residues during the various
      stages of the procurement and production process. While we are subject to
      governmental inspections and regulations, we cannot assure you that consumption
      of our products will not cause a health-related illness in the future, or that
      we will not be subject to claims or lawsuits relating to such
      matters.




Even
      if a
      product liability claim is unsuccessful or is not fully pursued, the negative
      publicity surrounding any assertions that our products caused personal injury
      or
      illness could adversely affect our reputation with customers and our corporate
      and brand image. Consistent with industry practice in China, we do not maintain
      product liability insurance. Furthermore, our products could potentially suffer
      from product tampering, contamination or degeneration or be mislabeled or
      otherwise damaged. Under certain circumstances, we may be required to recall
      products. Even if a situation does not necessitate a product recall, we cannot
      assure you that government sanctions or product liability claims will not be
      asserted against us as a result. A product liability judgment against us or
      a
      product recall could have a material adverse effect on our business, financial
      condition or results of operations.


52


**Our
      product and company name may be subject to counterfeiting and/or imitation,
      which could impact upon our reputation and brand image as well as lead to higher
      administrative costs.**




We
      regard
      brand positioning as the core of our competitive strategy, and intend to
      position our brand, “ChumingTM” to create the perception and image of health,
      nutrition, freshness and quality in the minds of our customers. There have
      been
      frequent occurrences of counterfeiting and imitation of products in the PRC
      in
      the past. We cannot guarantee that counterfeiting or imitation of our products
      will not occur in the future or that we will be able to detect it and deal
      with
      it effectively. Any occurrence of counterfeiting or imitation could impact
      negatively upon our corporate and brand image, particularly if the counterfeit
      or imitation products cause sickness, injury or death to consumers. In addition,
      counterfeit or imitation products could result in a reduction in our market
      share, a loss of revenues or an increase in our administrative expenses in
      respect of detection or prosecution.





***Risks
      Relating To Conducting Business in the PRC***





Substantially
      all of our assets and projects are located in the PRC, and substantially all
      of
      our revenue is sourced from the PRC. Accordingly, our results of operations
      and
      financial position are subject to a significant degree to economic, political
      and legal developments in the PRC, including the following risks:




**Economic,
      political and social conditions and government policies in China could have
      a
      material adverse effect on our business, financial condition and results of
      operations.**





Economic,
      political and social conditions and government policies in China differ in
      many
      respects from other more fully industrialized nations, and below are examples
      of
      such differences.




·
            *Structure*.
                Agriculture still plays an important role in Chinese economy and
                employment. Agriculture still represents around 50% of the employment,
                which is substantially higher than most developed
                countries.




·
            *Capital
                re-investment*.
                Compared with more highly developed nations, there may be less
                availability to Chinese firms of all types of investment capital
                within
                China.




·
            *Government
                involvement*.
                China is still transitioning from a centrally planned economic model
                to
                that of a free market. As a result, the Chinese government has
                traditionally had a greater degree of regulatory involvement in the
                economic affairs and conduct of firms in China, as compared with
                firms in
                more advanced market-based
                economies.




·
            *Allocation
                of resources*.
                Related to the above point, the Chinese government may have greater
                ability to influence the allocation of capital, labor, materials,
                and
                other resources than governments of other advanced market-based
                economies.




·
            *Level
                of development*.
                Although China’s economy has been rapidly growing in recent years, certain
                aspects such as public infrastructure, poverty rate, and other
                measurements of development still lag behind highly developed nations,
                and
                this affects how companies must conduct business in
                China.




·
            *Control
                of foreign exchange*.
                China still maintains strict foreign exchange controls which has
                been in
                place since 1979, although steps have been taken to increase the
                exchangeability of the Chinese Renminbi with other
                currencies.




·
            *Growth
                rate*.
                For several years, China’s economy has achieved consistent double digit
                growth rates, and this may put strain on infrastructure, availability
                on
                raw materials, and ability of firms to manage
                growth.




·
            *Rate
                of inflation*.
                According to the Consumer Price Index (CPI) compiled by the National
                Statistics Bureau of China, the overall rate of inflation (CPI) in
                August
                2007 is 6.5% and the rate of inflation for food in August 2007 was
                18.2%,
                which are substantially higher than most of the developed countries,
                and
                these factors affect the local market environment in which Chinese
                firms
                must operate.


53


The
      economy of China has been transitioning from a centrally planned economy to
      a
      more market-oriented economy. Although in recent years the PRC government has
      implemented measures emphasizing the utilization of market forces for economic
      reform, a substantial portion of productive assets in China is still owned
      by
      the PRC government. In addition, the PRC government continues to play a
      significant role in regulating industries by imposing industrial policies.
      It
      also exercises significant control over China’s economic growth through
      allocation of resources, controlling payment of foreign currency-denominated
      obligations, setting monetary policy and providing preferential treatment to
      particular industries or companies.





Policies
      and other measures taken by the PRC government to regulate the economy could
      have a significant negative impact on economic conditions in China, with a
      resulting negative impact on our business. For example, our financial condition
      and results of operations may be materially and adversely affected
      by:




·
            new
                laws and regulations and the interpretation of those laws and
                regulations;·
            the
                introduction of measures to control inflation or stimulate
                growth;·
            changes
                in the rate or method of taxation;·
            the
                imposition of additional restrictions on currency conversion and
                remittances abroad; or·
            any
                actions which limit our ability to develop, produce, import or sell
                our
                products in China, or to finance and operate our business in
                China.




**Uncertainties
      with respect to the PRC legal system could adversely affect
      us.**




We
      conduct our business primarily through our Chuming Operating Subsidiaries which
      are located in China, which are governed by PRC laws and regulations. In
      addition, because the parent companies that hold these entities, namely PSI
      and
      Energroup Holdings Corporation, are outside of China, we are generally subject
      to laws and regulations applicable to foreign investments in China and, in
      particular, laws applicable to wholly foreign-owned enterprises. The PRC legal
      system is based on written statutes. Prior court decisions may be cited for
      reference but have limited precedential value.





Since
      1979, PRC legislation and regulations have significantly enhanced the
      protections afforded to various forms of foreign investments in China. However,
      China has not developed a fully integrated legal system and recently enacted
      laws and regulations may not sufficiently cover all aspects of economic
      activities in China. In particular, because these laws and regulations are
      relatively new, and because of the limited volume of published decisions and
      their nonbinding nature, the interpretation and enforcement of these laws and
      regulations involve uncertainties. In addition, the PRC legal system is based
      in
      part on government policies and internal rules (some of which are not published
      on a timely basis or at all) that may have a retroactive effect. As a result,
      we
      may not be aware of our violation of these policies and rules until some time
      after the violation. In addition, any litigation in China may be protracted
      and
      result in substantial costs and diversion of resources and management
      attention.




**You
      may experience difficulties in effecting service of legal process, enforcing
      foreign judgments or bringing original actions in China based on United States
      or other foreign laws against us, our management or the experts named in this
      prospectus.**




We
      conduct substantially all of our operations in China and substantially all
      of
      our assets are located in China. In addition, while we are incorporated in
      the
      State of Nevada, all of our senior executive officers reside within China.
      As a
      result, it may not be possible to effect service of process within the United
      States or elsewhere outside China upon our senior executive officers, including
      with respect to matters arising under U.S. federal securities laws or applicable
      state securities laws. Moreover, our PRC counsel has advised us that the PRC
      does not have treaties with the United States or many other countries providing
      for the reciprocal recognition and enforcement of judgment of
      courts.


54


**Governmental
      control of currency conversion may affect the value of your
      investment.**




The
      PRC
      government imposes controls on the convertibility of RMB into foreign currencies
      and, in certain cases, the remittance of currency out of China. We receive
      substantially all of our revenues in RMB. Under our current structure, our
      income is primarily derived from payments from Dalian Precious Sheen Investments
      Consulting Co., Ltd. Shortages in the availability of foreign currency may
      restrict the ability of our PRC subsidiaries and our affiliated entity to remit
      sufficient foreign currency to pay dividends or other payments to us, or
      otherwise satisfy their foreign currency denominated obligations. Under existing
      PRC foreign exchange regulations, payments of current account items, including
      profit distributions, interest payments and expenditures from trade-related
      transactions, can be made in foreign currencies without prior approval from
      the
      PRC State Administration of Foreign Exchange by complying with certain
      procedural requirements. However, approval from appropriate government
      authorities is required where RMB is to be converted into foreign currency
      and
      remitted out of China to pay capital expenses such as the repayment of bank
      loans denominated in foreign currencies. The PRC government may also at its
      discretion restrict access in the future to foreign currencies for current
      account transactions. If the foreign exchange control system prevents us from
      obtaining sufficient foreign currency to satisfy our currency demands, we may
      not be able to pay dividends in foreign currencies to our
      shareholders.




**Fluctuation
      in the value of RMB may have a material adverse effect on your
      investment.**




The
      value
      of RMB against the U.S. dollar and other currencies may fluctuate and is
      affected by, among other things, changes in political and economic conditions.
      Our revenues and costs are mostly denominated in RMB, while we report our
      financial results and position in U.S. dollars. Any significant fluctuation
      in
      value of RMB may materially and adversely affect our reported cash flows,
      revenues, earnings and financial position, and the value of, and any dividends
      payable on, our stock in U.S. dollars. For example, an appreciation of RMB
      against the U.S. dollar would make any new RMB denominated investments or
      expenditures more costly to us, to the extent that we need to convert U.S.
      dollars into RMB for such purposes. An appreciation of RMB against the U.S.
      dollar would also result in foreign currency translation losses for financial
      reporting purposes when we translate our U.S. dollar denominated financial
      assets into RMB, as RMB is our reporting currency.




**We
      face risks related to health epidemics and other
      outbreaks.**




Our
      business could be adversely affected by the effects of SARS or another epidemic
      or outbreak. China reported a number of cases of SARS in April 2004. Any
      prolonged recurrence of SARS or other adverse public health developments in
      China may have a material adverse effect on our business operations. For
      instance, health or other government regulations adopted in response may require
      temporary closure of our production facilities or of our offices. Such closures
      would severely disrupt our business operations and adversely affect our results
      of operations. We have not adopted any written preventive measures or
      contingency plans to combat any future outbreak of SARS or any other
      epidemic.





***Risks
      Related to Our Corporate Structure***




**In
      order to comply with PRC laws limiting foreign ownership of Chinese companies,
      we conduct our business in the PRC through Chuming by means of certain
      ownership arrangements. If the PRC government determines that these ownership
      arrangements do not comply with applicable regulations, our business could
      be
      adversely affected and we could be subject to sanctions.**




As
      a
      result of the share exchange transaction disclosed elsewhere in this report,
      we
      own 100% of the equity interest in Precious Sheen Investments Limited, a British
      Virgin Islands company (“PSI “). PSI owns 100% of the equity in Dalian Precious
      Sheen Investments Consulting Co., Ltd., a wholly foreign owned enterprise in
      the
      PRC (“Chuming”). Chuming is a holding company for the following three operating
      subsidiaries: (i) Dalian Chuming Slaughter and Packaging Pork Company Ltd.,
      (ii)
      Dalian Chuming Processed Foods Company Ltd., and (iii) Dalian Chuming Sales
      Company Ltd., each of which is a limited liability company headquartered in,
      and
      organized under the laws of, China (collectively, the “Chuming Operating
      Subsidiaries”).


55


The
      PRC
      government restricts foreign investment in businesses in China. Accordingly,
      we
      operate our business in China through Chuming and the Chuming Operating
      Subsidiaries, each of which holds the licenses and approvals necessary to
      operate our business in China.




Although
      we believe we comply with current PRC regulations, we cannot assure you that
      the
      PRC government would agree that these operating arrangements comply with PRC
      licensing, registration or other regulatory requirements, with existing policies
      or with requirements or policies that may be adopted in the future. If in the
      future the PRC government determines that we do not comply with applicable
      PRC
      law, it could impose fines on our PRC shareholders, and in extreme cases, the
      PRC government could take steps to revoke our business and operating licenses,
      require us to discontinue or restrict our operations, restrict our right to
      collect revenues, require us to restructure our operations, impose additional
      conditions or requirements with which we may not be able to comply, impose
      restrictions on our business operations or on our customers, or take other
      regulatory or enforcement actions against us that could be harmful to our
      business. Any of these or similar actions could significantly disrupt our
      business operations or restrict us from conducting a substantial portion of
      our
      business operations, which could materially and adversely affect our business,
      financial condition and results of operations.




**Recent
      PRC regulations relating to acquisitions of PRC companies by foreign entities
      may limit our ability to acquire PRC companies and adversely affect the
      implementation of our strategy as well as our business and
      prospects.**




The
      PRC
      State Administration of Foreign Exchange, or SAFE, issued a public notice in
      January 2005 concerning foreign exchange regulations on mergers and acquisitions
      in China. The public notice states that if an offshore company controlled by
      PRC
      residents intends to acquire a PRC company, such acquisition will be subject
      to
      strict examination by the relevant foreign exchange authorities. The public
      notice also states that the approval of the relevant foreign exchange
      authorities is required for any sale or transfer by the PRC residents of a
      PRC
      company’s assets or equity interests to foreign entities, such as us, for equity
      interests or assets of the foreign entities.




In
      April
      2005, SAFE issued another public notice further explaining the January notice.
      In accordance with the April notice, if an acquisition of a PRC company by
      an
      offshore company controlled by PRC residents has been confirmed by a Foreign
      Investment Enterprise Certificate prior to the promulgation of the January
      notice, the PRC residents must each submit a registration form to the local
      SAFE
      branch with respect to their respective ownership interests in the offshore
      company, and must also file an amendment to such registration if the offshore
      company experiences material events, such as changes in the share capital,
      share
      transfer, mergers and acquisitions, spin-off transactions or use of assets
      in
      China to guarantee offshore obligations.




On
      May
      31, 2007, SAFE issued another official notice known as “Circular 106,” which
      requires the owners of any Chinese company to obtain SAFE’s approval before
      establishing any offshore holding company structure for foreign financing as
      well as subsequent acquisition matters in China.




If
      we
      decide to acquire a PRC company, we cannot assure you that we or the owners
      of
      such company, as the case may be, will be able to complete the necessary
      approvals, filings and registrations for the acquisition. This may restrict
      our
      ability to implement our acquisition strategy and adversely affect our business
      and prospects. In addition, if such registration cannot be obtained, our company
      will not be able to receive dividends declared and paid by our subsidiaries
      in
      the PRC and may be forbidden from paying dividends for profit distribution
      or
      capital reduction purposes.





**Chuming
      is subject to restrictions on making payments to our parent
      company.**




We
      are a
      holding company incorporated in the State of Nevada and do not have any assets
      or conduct any business operations other than our investment in Chuming and
      their operating subsidiaries in China. As a result of our holding company
      structure, we rely entirely on payments or dividends from Chuming for our cash
      flow to fund our corporate overhead and regulatory obligations. The PRC
      government also imposes controls on the conversion of Renminbi into foreign
      currencies and the remittance of currencies out of China. We may experience
      difficulties in completing the administrative procedures necessary to obtain
      and
      remit foreign currency. Further, if our subsidiaries in China incur debt on
      their own in the future, the instruments governing the debt may restrict their
      ability to make payments. If we are unable to receive all of the revenues from
      our operations through these dividend arrangements, we may be unable to pay
      dividends on our shares of common stock.


56


***Risk
      Relating to an Investment in Our Securities***




**Generally,
      we have not paid any cash dividends to our shareholders and no cash dividends
      will be paid in the foreseeable future.**




We
      do not
      anticipate paying cash dividends on our common stock in the foreseeable future
      and we may not have sufficient funds legally available to pay dividends. Even
      if
      the funds are legally available for distribution, we may nevertheless decide
      or
      may be unable due to pay any dividends. We intend to retain all earnings for
      our
      company’s operations.




**The
      application of the “penny stock” rules could adversely affect the market price
      of our common stock and increase your transaction costs to sell those
      shares.**




As
      long
      as the trading price of our common shares is below $5 per share, the open-market
      trading of our common shares will be subject to the “penny stock” rules. The
“penny stock” rules impose additional sales practice requirements on
      broker-dealers who sell securities to persons other than established customers
      and accredited investors (generally those with assets in excess of US$1,000,000
      or annual income exceeding US$200,000 or US$300,000 together with their spouse).
      For transactions covered by these rules, the broker-dealer must make a special
      suitability determination for the purchase of securities and have received
      the
      purchaser’s written consent to the transaction before the purchase.
      Additionally, for any transaction involving a penny stock, unless exempt, the
      broker-dealer must deliver, before the transaction, a disclosure schedule
      prescribed by the Securities and Exchange Commission relating to the penny
      stock
      market. The broker-dealer also must disclose the commissions payable to both
      the
      broker-dealer and the registered representative and current quotations for
      the
      securities. Finally, monthly statements must be sent disclosing recent price
      information on the limited market in penny stocks. These additional burdens
      imposed on broker-dealers may restrict the ability or decrease the willingness
      of broker-dealers to sell our common stock, and may result in decreased
      liquidity for our common stock and increased transaction costs for sales and
      purchases of our common stock as compared to other securities.





**Our
      common stock is thinly traded and, you may be unable to sell at or near “ask”
prices or at all if you need to sell your shares to raise money or otherwise
      desire to liquidate your shares.**




We
      cannot
      predict the extent to which an active public market for our common stock will
      develop or be sustained. However, we do not rule out the possibility of applying
      for listing on the Nasdaq Global Select Market, Nasdaq Global Market, Nasdaq
      Capital Market (the “Nasdaq Markets”), or other exchanges. Our common stock has
      historically been sporadically or “thinly traded” on the “Over-the-Counter
      Bulletin Board,” meaning that the number of persons interested in purchasing our
      common stock at or near bid prices at any given time may be relatively small
      or
      nonexistent. This situation is attributable to a number of factors, including
      the fact that we are a small company which is relatively unknown to stock
      analysts, stock brokers, institutional investors and others in the investment
      community that generate or influence sales volume, and that even if we came
      to
      the attention of such persons, they tend to be risk-adverse and would be
      reluctant to follow an unproven company such as ours or purchase or recommend
      the purchase of our shares until such time as we become more seasoned and
      viable. As a consequence, there may be periods of several days or more when
      trading activity in our shares is minimal or non-existent, as compared to a
      seasoned issuer that has a large and steady volume of trading activity that
      will
      generally support continuous sales without an adverse effect on share price.
      We
      cannot give you any assurance that a broader or more active public trading
      market for our common stock will develop or be sustained, or that current
      trading levels will be sustained.





The
      market price of our common stock is particularly volatile given our status
      as a
      relatively small company with a small and thinly traded “float” that could lead
      to wide fluctuations in our share price. The price at which you purchase our
      common stock may not be indicative of the price that will prevail in the trading
      market. You may be unable to sell your common stock at or above your purchase
      price if at all, which may result in substantial losses to you.


57


The
      market for our common stock is characterized by significant price volatility
      when compared to seasoned issuers, and we expect that our share price will
      continue to be more volatile than a seasoned issuer for the indefinite future.
      The volatility in our share price is attributable to a number of factors. As
      noted above, our common stock is sporadically and/or thinly traded. As a
      consequence of this lack of liquidity, the trading of relatively small
      quantities of shares by our shareholders may disproportionately influence the
      price of those shares in either direction. The price for our shares could,
      for
      example, decline precipitously in the event a large number of our common shares
      are sold on the market without commensurate demand, as compared to a seasoned
      issuer which could better absorb those sales without adverse impact on its
      share
      price. The following factors also may add to the volatility in the price of
      our
      common stock: actual or anticipated variations in our quarterly or annual
      operating results; adverse outcomes; additions to or departures of our key
      personnel, as well as other items discussed under this “Risk Factors” section,
      as well as elsewhere in this Report. Many of these factors are beyond our
      control and may decrease the market price of our common stock, regardless of
      our
      operating performance. We cannot make any predictions or projections as to
      what
      the prevailing market price for our common stock will be at any time, including
      as to whether our common stock will sustain its current market prices, or as
      to
      what effect the sale of shares or the availability of common shares for sale
      at
      any time will have on the prevailing market price. However, we do not rule
      out
      the possibility of applying for listing on the Nasdaq Markets or another
      exchange.




Shareholders
      should be aware that, according to SEC Release No. 34-29093, the market for
      penny stocks has suffered in recent years from patterns of fraud and abuse.
      Such
      patterns include (1) control of the market for the security by one or a few
      broker-dealers that are often related to the promoter or issuer; (2)
      manipulation of prices through pre-arranged matching of purchases and sales
      and
      false and misleading press releases; (3) boiler room practices involving
      high-pressure sales tactics and unrealistic price projections by inexperienced
      sales persons; (4) excessive and undisclosed bid-ask differential and markups
      by
      selling broker-dealers; and (5) the wholesale dumping of the same securities
      by
      promoters and broker-dealers after prices have been manipulated to a desired
      level, along with the resulting inevitable collapse of those prices and with
      consequent investor losses. Our management is aware of the abuses that have
      occurred historically in the penny stock market. Although we do not expect
      to be
      in a position to dictate the behavior of the market or of broker-dealers who
      participate in the market, management will strive within the confines of
      practical limitations to prevent the described patterns from being established
      with respect to our securities. The occurrence of these patterns or practices
      could increase the volatility of our share price.





**Volatility
      in our common stock price may subject us to securities
      litigation.**




The
      market for our common stock may be characterized by significant price volatility
      when compared to seasoned issuers, and we expect our share price will be more
      volatile than a seasoned issuer for the indefinite future. In the past,
      plaintiffs have often initiated securities class action litigation against
      a
      company following periods of volatility in the market price of its securities.
      We may, in the future, be the target of similar litigation. Securities
      litigation could result in substantial costs and liabilities and could divert
      management’s attention and resources.




**Legislative
      actions, higher insurance costs and potential new accounting pronouncements
      may
      impact our future financial position and results of
      operations.**




There
      have been regulatory changes, including the Sarbanes-Oxley Act of 2002, and
      there may potentially be new accounting pronouncements or additional regulatory
      rulings that will have an impact on our future financial position and results
      of
      operations. The Sarbanes-Oxley Act of 2002 and other rule changes, as well
      as
      proposed legislative initiatives following the Enron bankruptcy, are likely
      to
      increase general and administrative costs and expenses. In addition, insurers
      are likely to increase premiums as a result of high claims rates over the past
      several years, which we expect will increase our premiums for insurance
      policies. Further, there could be changes in certain accounting rules. These
      and
      other potential changes could materially increase the expenses we report under
      generally accepted accounting principles, and adversely affect our operating
      results.


58





**Past
      activities of our company and its affiliates may lead to future liability for
      our company.**




Prior
      to
      our acquisition of Chuming in December 2007, we engaged in businesses unrelated
      to our current operations. Although certain previously controlling shareholders
      of our company are providing certain indemnifications against any loss,
      liability, claim, damage or expense arising out of or based on any breach of
      or
      inaccuracy in any of their representations and warranties made regarding such
      acquisition, any liabilities relating to such prior business against which
      we
      are not completely indemnified may have a material adverse effect on our
      company.




**Future
      sales of shares of our common stock may decrease the price for such
      shares.**




Actual
      sales, or the prospect of sales by our shareholders, may have a negative effect
      on the market price of the shares of our common stock. We may also register
      certain shares of our common stock that are subject to outstanding convertible
      securities, if any, or reserved for issuance under our stock option plans,
      if
      any. Once such shares are registered, they can be freely sold in the public
      market upon exercise of the options. If any of our shareholders either
      individually or in the aggregate cause a large number of securities to be sold
      in the public market, or if the market perceives that these holders intend
      to
      sell a large number of securities, such sales or anticipated sales could result
      in a substantial reduction in the trading price of shares of our common stock
      and could also impede our ability to raise future capital.





**Mergers
      of the type we just completed with Chuming are often heavily scrutinized by
      the
      SEC and we may encounter difficulties or delays in obtaining future regulatory
      approvals.**




Historically,
      the SEC and Nasdaq have not generally favored transactions in which a privately
      held company merges into a largely inactive company with publicly traded stock,
      and there is a significant risk that we may encounter difficulties in obtaining
      the regulatory approvals necessary to conduct future financing or acquisition
      transactions, or to eventually achieve a listing of shares on one of the Nasdaq
      stock markets or on a national securities exchange. On June 29, 2005, the SEC
      adopted rules dealing with private company mergers into dormant or inactive
      public companies. As a result, it is likely that we will be scrutinized
      carefully by the SEC and possibly by the Financial Industry Regulatory
      Authority, which could result in difficulties or delays in achieving SEC
      clearance of any future registration statements or other SEC filings that we
      may
      pursue, in attracting FINRA-member broker-dealers to serve as market-makers
      in
      our common stock, or in achieving admission to one of the Nasdaq stock markets
      or any other national securities market. As a consequence, our financial
      condition and the value and liquidity of your shares of our common stock may
      be
      negatively impacted.




**Our
      corporate actions are substantially controlled by our principal shareholders
      and
      affiliated entities.**




Our
      principal shareholders and their affiliated entities own approximately 69.5%
      of
      our outstanding ordinary shares, representing approximately 69.5% of our voting
      power. These shareholders, acting individually or as a group, could exert
      substantial influence over matters such as electing directors and approving
      mergers or other business combination transactions. In addition, because of
      the
      percentage of ownership and voting concentration in these principal shareholders
      and their affiliated entities, elections of our board of directors will
      generally be within the control of these shareholders and their affiliated
      entities. While all of our shareholders are entitled to vote on matters
      submitted to our shareholders for approval, the concentration of shares and
      voting control presently lies with these principal shareholders and their
      affiliated entities. As such, it would be difficult for shareholders to propose
      and have approved proposals not supported by management. There can be no
      assurances that matters voted upon by our officers and directors in their
      capacity as shareholders will be viewed favorably by all shareholders of our
      company.


59


**The
      elimination of monetary liability against our directors, officers and employees
      under Nevada law and the existence of indemnification rights to our directors,
      officers and employees may result in substantial expenditures by us and may
      discourage lawsuits against our directors, officers and
      employees.**




Our
      articles of incorporation contain specific provisions that eliminate the
      liability of our directors for monetary damages to our company and shareholders,
      and we are prepared to give such indemnification to our directors and officers
      to the extent provided by Nevada law. We may also have contractual
      indemnification obligations under our employment agreements with our officers.
      The foregoing indemnification obligations could result in our company incurring
      substantial expenditures to cover the cost of settlement or damage awards
      against directors and officers, which we may be unable to recoup. These
      provisions and resultant costs may also discourage our company from bringing
      a
      lawsuit against directors and officers for breaches of their fiduciary duties,
      and may similarly discourage the filing of derivative litigation by our
      shareholders against our directors and officers even though such actions, if
      successful, might otherwise benefit our company and shareholders.




**The
      market price for our stock may be volatile.**




The
      market price for our stock may be volatile and subject to wide fluctuations
      in
      response to factors including the following:




·
            actual
                or anticipated fluctuations in our quarterly operating
                results;·
            changes
                in financial estimates by securities research analysts;·
            conditions
                in agricultural markets;·
            changes
                in the economic performance or market valuations of other meat processing
                companies;·
            announcements
                by us or our competitors of new products, acquisitions, strategic
                partnerships, joint ventures or capital commitments;·
            addition
                or departure of key personnel;·
            fluctuations
                of exchange rates between RMB and the U.S. dollar;·
            intellectual
                property litigation; and·
            general
                economic or political conditions in
                China.





In
      addition, the securities market has from time to time experienced significant
      price and volume fluctuations that are not related to the operating performance
      of particular companies. These market fluctuations may also materially and
      adversely affect the market price of our stock.




**We
      may need additional capital, and the sale of additional shares or other equity
      securities could result in additional dilution to our
      shareholders.**




We
      believe that our current cash and cash equivalents, anticipated cash flow from
      operations and the net proceeds from a recent offering will be sufficient to
      meet our anticipated cash needs for the near future. We may, however, require
      additional cash resources due to changed business conditions or other future
      developments, including any investments or acquisitions we may decide to pursue.
      If our resources are insufficient to satisfy our cash requirements, we may
      seek
      to sell additional equity or debt securities or obtain a credit facility. The
      sale of additional equity securities could result in additional dilution to
      our
      shareholders. The incurrence of indebtedness would result in increased debt
      service obligations and could result in operating and financing covenants that
      would restrict our operations. We cannot assure you that financing will be
      available in amounts or on terms acceptable to us, if at all.




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





None.





**ITEM
      3.****DEFAULTS
      UPON SENIOR SECURITIES******





None.




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





None.


60


**ITEM
      5.**  **OTHER
      INFORMATION**





None.




**ITEM
      6.         
EXHIBITS**





The
      following exhibits are included in this report or incorporated by reference
      into
      this report:


61





**Exhibit**
              **Number**
            
            **Description**2.1
            
            Share Exchange
                Agreement by and among the Energroup Holdings Corporation, PSI and
                PSI and Energroup Shareholders dated December 31, 2007
                (1)2.2
            
            Articles
                and Plan of Merger (change in domicile from Utah to Nevada)
                (2)3.1
            
            Articles
                of Incorporation of Great Lakes Funding, Inc. (Utah)
                (1)3.2
            
            Bylaws
                of Great Lakes Funding, Inc. (1)3.3
            
            Articles
                of Amendment to Articles of Incorporation of Great Lakes Funding,
                Inc.
                (Name Change) (1)3.4
            
            Articles
                of Amendment to Articles of Incorporation of Energroup Technologies,
                Inc.
                (Reverse Split) (2)3.5
            
            Articles
                of Incorporation of Energroup Holdings Corporation (Nevada)
                (2)3.6
            
            Bylaws
                of Energroup Holdings Corporation (2)3.7
            
            Certificate
                of Amendment to Articles of Incorporation of Energroup Holdings
                Corporation (3)4.1
            
            Registration
                Rights Agreement dated December 2007 among Energroup and the investors
                signatory thereto (1)4.2
            
            Common
                Stock Purchase Warrant issued to Placement Agent (December 2007)
                (2)10.11
            
            Short-term
                Loan Agreement between Shanghai Pu Dong Development Bank Dalian Branch
                and
                Dalian Chuming Meat Co. (English summary translation)
                (4)10.12
            
            Short-term
                Loan Agreement between Bank of China Liao Ning Branch and Dalian
                Chuming
                Food Co. (English summary translation) (4)10.13
            
            Short-term
                Loan Agreement between Bank of China Liao Ning Branch and Dalian
                Chuming
                Meat Co. (English summary translation) (4)10.14
            
            Guarantee
                Agreement between Dalian Chuming Food Co. and Bank of China Liaoning
                Branch. (English summary translation) (4)31.1
            
            Rule 13a-14(a)
                / 15d-14(a)(4) Certification by the Company’s Chief Executive
                Officer.*31.2
            
            Rule
                13a-14(a) / 15d-14(a)(4) Certification by the Company’s Chief Financial
                Officer.*32.1
            
            Section
                1350 Certification by the Company’s Chief Executive
                Officer.*32.2
            
            Section
                1350 Certification by the Company’s Chief Financial
                Officer.*


62





*
            Filed
                herewith.(1)
            Previously
                filed with our Current Report on Form 8-K on January 7, 2008 and
                incorporated herein by reference.(2)
            Previously
                filed with our Current Report on Form 8-K on August 22, 2007 and
                incorporated herein by reference.(3)
            Previously
                filed with our Current Report on Form 8-K on December 14, 2007 and
                incorporated herein by reference.(4)
            Previously
                filed with our Quarter Report on Form 10-Q on May 20, 2008 and
                incorporated herein by
                reference.


63


**SIGNATURES**





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





**ENERGROUP
                HOLDINGS CORPORATION**Dated:  September 2, 2008
            By:
            /s/
                Shi HuashanShi
                HuashanPresident and Chief Executive Officer(Principal Executive Officer)Dated:  September 2, 2008
            By:
            /s/
                Wang ShuWang
                ShuChief Financial Officer(Principal Financial and Accounting Officer)


64