**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 September 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
      September 30, 2008, the Registrant had 21,136,391 shares of Common Stock
      outstanding.














**ENERGROUP
      HOLDINGS CORPORATION**


**FORM
      10-Q**





**INDEX**





Page NumberPART
                I. Financial StatementsItem
                1.
            Financial
                Information
            3Consolidated
                Balance Sheets as of September 30, 2008 and December 31,
                2007
            3Consolidated
                Statements of Income for the Three and Nine Months Ended September
                30,
                2008 and 2007.
            5Consolidated
                Statements of Shareholders' Equity for the Nine Months Ended September
                30,
                2008 and the Year Ended December 31, 2007
            6Consolidated
                Statements of Cash Flows for the Three months and Nine Months Ended
                September 30, 2008 and September 30, 2007
            7Notes
                to Consolidated Financial Statements - September 30, 2008
            8-30Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            31Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            49Item
                4.
            Controls
                and Procedures
            50**PART
                II. Other Information**Item
                1.
            Legal
                Proceedings
            50Item
                1A.
            Risk
                Factors
            50Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            65Item
                3.
            Defaults
                Upon Senior Securities
            65Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            65Item
                5.
            Other
                Information
            65Item
                6.
            Exhibits
            65Signatures
            
            67





2





**PART
      I. FINANCIAL INFORMATION**





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




**Energroup
      Holdings Corporation**


**Consolidated
      Balance Sheets**


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


**(Stated
      in US Dollars)**





**At**
            
            **At****Note**
            
            **September 30,**
            
            **December 31,****2008**
            
            **2007****ASSETS**Cash
            
            
            
            
            $
            11,672,377
            
            $
            14,031,851Restricted
                Cash
            
            
            3
            
            
            2,234,387
            
            
            4,250,000Accounts
                Receivable
            
            
            4
            
            
            25,429,400
            
            
            622,433Other
                Receivable
            
            
            
            
            
            1,888,165
            
            
            1,068,939Related
                Party Receivable
            
            
            5
            
            
            6,244,256
            
            
            3,964,357Inventory
            
            
            6
            
            
            6,483,137
            
            
            2,916,016Purchase
                Deposit
            
            
            
            
            
            1,410,121
            
            
            267,807Prepaid
                Expenses
            
            
            
            
            
            50,328
            
            
            46,401Prepaid
                Taxes
            
            
            
            
            
            1,224,020
            
            
            185,419Deferred
                Tax Asset
            
            
            
            
            
            654,946
            
            
            613,844**Total
                current assets**
            
            
            
            
            
            57,291,137
            
            
            27,966,967Property,
                Plant & Equipment, net
            
            
            7
            
            
            25,450,634
            
            
            24,836,496Land
                Use Rights, net
            
            
            8
            
            
            13,500,699
            
            
            12,855,980Construction
                in Progress
            
            
            
            
            
            1,019,169
            
            
            927,866Other
                Assets
            
            
            
            
            
            93,154
            
            
            32,619**TOTAL
                ASSETS**
            
            
            
            
            **$**
            **97,354,793**
            
            **$**
            **66,619,928****LIABILITIES**Bank
                Loans & Notes
            
            
            9
            
            $
            6,418,579
            
            $
            7,383,095Accounts
                Payable
            
            
            
            
            
            14,276,813
            
            
            3,779,274Taxes
                Payable
            
            
            
            
            
            2,749,160
            
            
            1,677,194Other
                Payable
            
            
            
            
            
            3,477,954
            
            
            1,471,381Accrued
                Liabilities
            
            
            
            
            
            3,894,780
            
            
            3,347,013Customer
                Deposits
            
            
            
            
            
            2,872,226
            
            
            24,161**Total
                current liabilities**
            
            
            
            
            
            33,689,511
            
            
            17,682,118**TOTAL
                LIABILITIES**
            
            
            
            
            **$**
            **33,689,511**
            
            **$**
            **17,682,118**





**See
      Accompanying Notes to the Financial Statements and Accountant’s
      Report**





3





**Energroup
      Holdings Corporation**


**Consolidated
      Balance Sheets**


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


**(Stated
      in US Dollars)**


**At**
              
              **At****September 30,**
              
              **December 31,**Note
              
              **2008**
              
              **2007****STOCKHOLDERS'
                  EQUITY**Preferred
                  Stock - $0.001 par value 10,000,000 shares authorized; 0 shares
                  issued
                  & outstanding at September 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 September 30, 2008 and December 31, 2007,
                  respectively.
              
              
              10
              
              $
              21,136
              
              $
              21,136Additional
                  Paid in Capital
              
              
              
              
              
              15,440,043
              
              
              15,440,043Statutory
                  Reserve
              
              
              11
              
              
              1,729,863
              
              
              751,444Retained
                  Earnings
              
              
              
              
              
              42,962,290
              
              
              29,764,236Accumulated
                  Other Comprehensive Income
              
              
              
              
              
              3,511,950
              
              
              2,960,951**TOTAL
                  STOCKHOLDERS' EQUITY**
              
              
              
              
              
              **62,665,282**
              
              
              **48,937,810****TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY**
              
              
              
              
              **$**
              **97,354,793**
              
              **$**
              **66,619,928**





**See
      Accompanying Notes to the Financial Statements and Accountant’s
      Report**





4





**Energroup
      Holdings Corporation**


**Consolidated
      Statements of Income**


**for
      the three and nine months ended September 30, 2008 and
      2007**


**(Stated
      in US Dollars)**


Note
              
              **3 months**
              
              **3 months**
              
              **9 months**
              
              **9 months****ended**
              
              **ended**
              
              **ended**
              
              **ended****September 30,**
              
              **September 30,**
              
              **September 30,**
              
              **September 30,****2008**
              
              **2007**
              
              **2008**
              
              **2007**Sales
              
              
              
              
              $
              53,725,596
              
              $
              35,160,526
              
              $
              140,309,218
              
              $
              89,718,841Cost
                  of Sales
              
              
              
              
              
              47,254,631
              
              
              29,430,153
              
              
              120,329,483
              
              
              74,966,451Gross
                  Profit
              
              
              
              
              
              6,470,965
              
              
              5,730,373
              
              
              19,979,735
              
              
              14,752,390Selling
                  Expenses
              
              
              12
              
              
              878,893
              
              
              1,597,626
              
              
              3,463,947
              
              
              3,397,046General
                  & Administrative Expenses
              
              
              
              
              
              734,976
              
              
              459,975
              
              
              1,881,138
              
              
              1,147,488Operating
                  Income
              
              
              
              
              
              4,857,096
              
              
              3,672,772
              
              
              14,634,650
              
              
              10,207,856Other
                  Income
              
              
              
              
              
              1,036,941
              
              
              806
              
              
              1,420,060
              
              
              7,810Interest
                  Income
              
              
              
              
              
              (356,596
              )
              
              -
              
              
              279,097
              
              
              -Other
                  Expenses
              
              
              
              
              
              (413,264
              )
              
              (40,524
              )
              
              (514,000
              )
              
              (78,354
              )Interest
                  Expense
              
              
              
              
              
              (587,118
              )
              
              (378,580
              )
              
              (1,194,197
              )
              
              (1,089,221
              )Earnings
                  before Tax
              
              
              
              
              
              4,537,058
              
              
              3,254,474
              
              
              14,625,611
              
              
              9,048,091Income
                  Tax
              
              
              13
              
              
              (216,770
              )
              
              (749,504
              )
              
              (449,138
              )
              
              (749,504
              )Net
                  Income
              
              
              
              
              **$**
              **4,320,288**
              
              $
              **2,504,970**
              
              **$**
              **14,176,473**
              
              **$**
              **8,298,587**Earnings
                  Per Share
              
              
              16Basic
              
              
              
              
              $
              0.25
              
              $
              0.19
              
              $
              0.82
              
              $
              0.62Diluted
              
              
              
              
              $
              0.20
              
              $
              0.15
              
              $
              0.67
              
              $
              0.48Weighted
                  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




**3 months**
                
                **3 months**
                
                **9 months**
                
                **9 months****ended**
                
                **ended**
                
                **ended**
                
                **ended****September 30,**
                
                **September 30,**
                
                **September 30,**
                
                **September 30,****2008**
                
                **2007**
                
                **2008**
                
                **2007**Comprehensive
                    IncomeNet
                    Income
                
                
                
                
                $
                4,320,288
                
                $
                2,504,970
                
                $
                14,176,473
                
                $
                8,298,587Other
                    Comprehensive IncomeForeign
                    Currency Translation Adjustment
                
                
                
                
                
                (911,156
                )
                
                927,231
                
                
                550,999
                
                
                1,174,740Total
                    Comprehensive Income
                
                
                
                
                $
                3,409,132
                
                $
                3,432,201
                
                $
                14,727,472
                
                $
                9,473,327




**See
      Accompanying Notes to the Financial Statements and Accountant’s
      Report**





5





**Energroup
      Holdings Corporation**


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


**for
      the nine months ended September 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
            
            $
            5,440,043
            
            $
            751,444
            
            $
            29,764,236
            
            $
            2,960,951
            
            $
            48,937,810Issuance
                of Common Stock & WarrantsNet
                Income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            14,176,473
            
            
            
            
            
            14,176,473Appropriations
                of Retained Earnings
            
            
            
            
            
            
            
            
            
            
            
            978,419
            
            
            (978,419
            )
            
            
            
            
            -Foreign
                Currency Translation Adjustment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            550,999
            
            
            550,999Balance,
                September 30, 2008
            
            
            21,136,392
            
            $
            21,136
            
            $
            15,440,043
            
            $
            1,729,863
            
            $
            42,962,289
            
            $
            3,511,950
            
            $
            63,665,282





**See
      Accompanying Notes to the Financial Statements and Accountant’s
      Report**





6




**Energroup
      Holdings Corporation**


**Consolidated
      Statements of Cash Flows**


**for
      the three and nine months ended September 30, 2008 and
      2007**


**(Stated
      in US Dollars)**





**3 months**
            
            **3 months**
            
            **9 months**
            
            **9 months****ended**
            
            **ended**
            
            **ended**
            
            **ended****September 30,**
            
            **September 30,**
            
            **September 30,**
            
            **September 30,****2008**
            
            **2007**
            
            **2008**
            
            **2007****Cash
                Flow from Operating Activities**Net
                Income
            
            $
            4,320,288
            
            $
            2,504,970
            
            $
            14,176,473
            
            $
            8,298,587Amortization
            
            
            74,052
            
            
            32949
            
            
            259,312
            
            
            97,479Depreciation
            
            
            576,203
            
            
            450,002
            
            
            1,983,977
            
            
            1,370,225(Increase)/Decrease
                in Accounts & Other Receivables
            
            
            (10,487,495
            )
            
            1,636,735
            
            
            (27,906,092
            )
            
            (11,484,507
            )(Increase)/Decrease
                in Inventory & Purchase Deposits
            
            
            (1,987,668
            )
            
            195,202
            
            
            (4,709,434
            )
            
            1,136,515(Increase)
                in Prepaid Taxes & Expenses
            
            
            (934,281
            )
            
            28,544
            
            
            (1,083,731
            )
            
            (50,535
            )Increase/(Decrease)
                in Accounts, Taxes & Other Payables
            
            
            8,298,021
            
            
            (8,424,131
            )
            
            13,576,079
            
            
            1,424,545Increase/(Decrease)
                in Accrued Liabilities
            
            
            394,292
            
            
            232,734
            
            
            547,767
            
            
            546,095Increase
                in Customer Deposits
            
            
            1,177,925
            
            
            2,216,740
            
            
            2,848,064
            
            
            2,196,553Cash
                Sourced/(Used) in Operating Activities
            
            
            1,431,337
            
            
            (1,126,255
            )
            
            (307,586
            )
            
            3,534,957**Cash
                Flows from Investing Activities**Funds
                released from/(interest earned in) Escrow Account
            
            
            (3,720
            )
            
            -
            
            
            2,015,613
            
            
            -Purchases
                of Plant & Equipment
            
            
            (2,042,604
            )
            
            (148,353
            )
            
            (2,689,418
            )
            
            (847,063
            )Purchase
                of Land Use Rights
            
            
            (904,031
            )
            
            2,705
            
            
            (904,031
            )
            
            (3,330,801
            )Payments
                for Deposits
            
            
            (227
            )
            
            -
            
            
            (60,535
            )
            
            -Cash
                Sourced/(Used) in Investing Activities
            
            
            (2,950,582
            )
            
            (145,648
            )
            
            (1,638,371
            )
            
            (4,177,864
            )**Cash
                Flows from Financing Activities**Proceeds
                from Bank Borrowings
            
            
            15,004,489
            
            
            1,219,923
            
            
            6,418,579
            
            
            1,219,923Repayment
                of Bank Loans
            
            
            (14,988,890
            )
            
            (9,140
            )
            
            (7,383,095
            )
            
            (1,302,803
            )Cash
                Sourced/(Used) in Financing Activities
            
            
            15,599
            
            
            1,210,783
            
            
            (964,516
            )
            
            (82,880
            )**Net
                Increase/(Decrease) in Cash & Cash Equivalents for the
                Year**
            
            
            (1,503,647
            )
            
            (61,120
            )
            
            (2,910,473
            )
            
            (725,787
            )Effect
                of Currency Translation
            
            
            1,905,294
            
            
            38,869
            
            
            550,999
            
            
            107,434Cash
                & Cash Equivalents at Beginning of Year
            
            
            11,270,730
            
            
            2,479,685
            
            
            14,031,851
            
            
            3,075,787**Cash
                & Cash Equivalents at End of Year**
            
            **$**
            **11,672,377**
            
            **$**
            **2,457,****434**
            
            **$**
            **11,672,377**
            
            **$**
            **2,457,434****Supplementary
                information:**Interest
                Received
            
            
            -
            
            
            -
            
            
            279,097
            
            
            -Interest
                Paid
            
            
            230,522
            
            
            378,580
            
            
            1,194,197
            
            
            1,089,221Income
                Tax Paid
            
            
            216,770
            
            
            749,504
            
            
            449,138
            
            
            749,504





**See
      Accompanying Notes to the Financial Statements and Accountant’s
      Report**





7





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**


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


**and
      for the three and nine months ended September 30, 2008, and
      2007**





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., (“Food Company”)
      (2) Dalian Chuming Slaughter and Packaging Pork Company Ltd. (“Meat Company”),
      and (3) Dalian Chuming Sales Company Ltd. (“Sales Company”), which are
      i ncorporated
      in the People’s Republic of China (“PRC”). The Company is headquartered in the City of Dalian, Liaoning Province of China.





The
      three
      operating subsidiaries were spun-off constituents of the former parent company,
      Dalian Chuming Group Co. Ltd (“Group”). 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.





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 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.





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.





8





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**


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


**and
      for the three and nine months ended September 30, 2008, and
      2007**





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.





*(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 September 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.





9





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**


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


**and
      for the three and nine months ended September 30, 2008, and
      2007**





*(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.





*(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.





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.





10





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**


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


**and
      for the three and nine months ended September 30, 2008, and
      2007**





*(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.





*(K)*
            *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.





*(L)*
            *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.




*(M)*
            *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.





*(N)*
            *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.





*(O)*
            *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.





11





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**


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


**and
      for the three and nine months ended September 30, 2008, and
      2007**





*(P)*
            *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





*(Q)*
            *Selling
                Expense*





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





*(R)*
            *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.





*(S)*
            *Shipping
                and handling*





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





*(T)*
            *Advertising
                Expense*





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





*(U)*
            *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.





*(V)*
            *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.





*(W)*
            *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.





12





**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**


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


**and
      for the three and nine months ended September 30, 2008, and
      2007**





*(X)*
            *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.





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***
            
            ***9/30/2008***
            
            ***12/31/2007***
            
            ***9/30/2007***Period
                end RMB : US$ exchange rate
            
            
            6.855100
            
            
            7.314100
            
            
            7.517600Average
                period RMB : US$ exchange rate
            
            
            6.998860
            
            
            7.617200
            
            
            7.675760





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.





*(Y)*
            *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.





*(Z)*
            *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**


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


**and
      for the three and nine months ended September 30, 2008, and
      2007**





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.





3.
            Restricted
                Cash





The
      restricted cash reflects funds received from the financing transaction described
      in *Note
      18 – Financing Transaction* 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 (less
      applicable penalties), the Company agreed to 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. A total of $250,000
      was placed in the escrow account earmarked for investor relations
      purposes.





At
      September 30, 2008, the Company has yet to fulfill requirement (3). The Company
      has 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 - Financing Transaction* .





4.
            Accounts
                Receivable





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





**September 30, 2008**
            
            **December 31, 2007**Accounts
                Receivable – Trade
            
            $
            25,686,263
            
            $
            707,156Less:
                Allowance for Doubtful Accounts
            
            
            (256,863
            )
            
            (84,723
            )Net
                Accounts Receivable
            
            $
            25,429,400
            
            $
            622,433





*Allowance
                for Bad Debts*
            
            **September 30, 2008**
            
            **December 31, 2007**Beginning
                Balance
            
            $
            90,176
            
            $
            79,267Allowance
                Provided
            
            
            166,687
            
            
            5,456Charged
                Against Allowance
            
            
            -
            
            
            -Ending
                Balance
            
            $
            256,863
            
            $
            84,723




14







**Energroup
      Holdings Corporation**


**Notes
      to Consolidated Financial Statements**


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


**and
      for the three and nine months ended September 30, 2008, and
      2007**





During
      the second quarter of the 2008 fiscal year, 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 45 to 60 days of credit. The Company
      previously extended one to two days of credit.





5.
            Related
                Party Receivable





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.,
      (“Industrial Development Co.”) (2) Dalian Chuming Trading Co., Ltd, (“Trading
      Co.”) (3) Dalian Mingxing Livestock Product Co. Ltd., (“Mingxing”) (4) Dalian
      Chuming Stockbreeding Combo Development Co., Ltd., (“Combo Development Co.”) (5)
      Dalian Chuming Fodder Co., Ltd. (“Fodder Co.”), and (6) Dalian Chuming
      Biological Technology Co., Ltd., (“Biological Co.”) and (7) Dalian Huayu Seafood
      Food Co., Ltd. (“Huayu”). The Company and the aforementioned related parties
      share common beneficial ownership. All
      transactions with related parties are generally performed 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 a receivable due from, or a payable due to the
      Group. The
      Company’s net receivable balance of $6,244,246 at
      September 30, 2008 is
      shown
      in the following table. The table is followed by a description of how the
      receivable balance changed during the three month period ended September 30,
      2008.


**Ref.**
              
              **Subsidiary**
                **Due to:**
              
              **Nature of Balance**
              
              **Related Party**
              
              **Balance**
              
              **Description of Transaction**A
              
              
              Food
                  Company
              
              
              Sale
                  of Products resulting in Trade Receivable from
              
              
              Dalian
                  Huayu Seafood Food Company, Ltd
              
              $
              88,178
              
              
              Food
                  Company sold cooked food to Huayu dating back to 1/2007.**Subtotal
                  of Related Party Sales**
              **$**
              **88,178**B
              
              
              Sales
                  Company
              
              
              Loan
                  Receivable from
              
              
              Dalian
                  Mingxing Livestock Product Co. Ltd.
              
              $
              75,856
              
              
              Sales
                  Company bought equipment on behalf of Mingxing dating back to
                  7/2008.C
              
              
              Meat
                  Company
              
              
              Loan
                  Receivable from
              
              
              Dalian
                  Chuming Group Co., Ltd.
              
              
              6,759,432
              
              
              Meat
                  Company paid bank loan principal for Group and made advancement
                  for
                  purchase of hogs dating back to 12/2004.D
              
              
              Meat
                  Company
              
              
              Loan
                  Receivable from
              
              
              Dalian
                  Chuming Fodder Co., Ltd.
              
              
              15,243
              
              
              Meat
                  Company paid utility fees for Fodder Co. dating back to
                  7/2008.E
              
              
              Meat
                  Company
              
              
              Loan
                  Receivable from
              
              
              Dalian
                  Chuming Stockbreeding Combo Development Co., Ltd.
              
              
              3,101,522
              
              
              Prepayment
                  to Group for Purchase of hogs dating back to 7/2008.F
              
              
              Meat
                  Company
              
              
              Loan
                  Receivable from
              
              
              Dalian
                  Chuming Group Co., Ltd.
              
              
              68,432
              
              
              Meat
                  Company purchased office supplies on behalf of the Group dating
                  back to
                  11/2005G
              
              
              Food
                  Company
              
              
              Loan
                  Receivable from
              
              
              Dalian
                  Chuming Group Co., Ltd.
              
              
              12,559,385
              
              
              Food
                  Company paid bank loan principal and interest on behalf of Industrial
                  Co.
                  dating back to 1/2008H
              
              
              Sales
                  Company
              
              
              Loan
                  Receivable from
              
              
              Dalian
                  Chuming Group Co., Ltd.
              
              
              1,362,236
              
              
              Sales
                  Company paid the Group to help it buy materials dating back to
                  7/2008.I
              
              
              Sales
                  Company
              
              
              Loan
                  Receivable from
              
              
              Dalian
                  Chuming Stockbreeding Combo Development Co., Ltd.
              
              
              7,279,252
              
              
              Sales
                  Company paid for Stockbreeding to buy hogs from farmer dating back
                  7/2008J
              
              
              Sales
                  Company
              
              
              Loan
                  Receivable from
              
              
              Dalian
                  Chuming Fodder Co., Ltd.
              
              
              2,198,363
              
              
              Sales
                  Company paid for feeding materials on behalf of Fodder dating back
                  to
                  9/2008.**Subtotal
                  of Loans to Related Parties**
              **$**
              **33,419,721****Gross
                  Related Party Receivable**
              **$**
              **33,507,899**





15




**Energroup
      Holdings Corporation**


**Notes
        to Consolidated Financial Statements**
 **As
        of September 30, 2008 and December 31, 2007**
 **and
        for the three and nine months ended September 30, 2008, and
        2007**


**Ref**
              
              **Subsidiary Due from:**
              
              **Nature of Balance**
              
              **Related Party**
              
              **Balance**
              
              **Description of Transaction**K
              
              
              Meat
                  Company
              
              
              Purchase
                  of Raw Materials resulting in Trade Payable to
              
              
              Dalian
                  Chuming Group Co., Ltd.
              
              $
              4,913,179
              
              
              Purchase
                  of hogs from Group dating back to 12/1/2004.L
              
              
              Meat
                  Company
              
              
              Purchase
                  of Raw Materials resulting in Trade Payable to
              
              
              Dalian
                  Chuming Group Co., Ltd.
              
              
              2,917,535
              
              
              Purchase
                  of hogs from Group dating back to 7/2008.M
              
              
              Food
                  Company
              
              
              Purchase
                  of Raw Materials resulting in Trade Payable to
              
              
              Dalian
                  Huayu Seafood Food Co., Ltd
              
              
              3,643,817
              
              
              Advance
                  from Huayu for the purchase of product dating back to
                  12/2007.**Subtotal
                  of Purchases from Related Parties**
              **$**
              **11,474,531**N
              
              
              Food
                  Company
              
              
              Loan
                  Payable to
              
              
              Dalian
                  Chuming Group Co., Ltd.
              
              $
              1,796,205
              
              
              Group
                  paid for salaries and other G&A expenses on behalf of Food Company
                  dating back to 1/2004.O
              
              
              Meat
                  Company
              
              
              Loan
                  Payable to
              
              
              Dalian
                  Chuming Stockbreeding Combo Development Co., Ltd.
              
              
              1,579,846
              
              
              Meat
                  Company collected bank loans for Stockbreeding Co. dating back
                  to
                  7/2008P
              
              
              Meat
                  Company
              
              
              Loan
                  Payable to
              
              
              Dalian
                  Chuming Industrial Development Co., Ltd.
              
              
              6,477
              
              
              Industrial
                  Development paid salaries on behalf of Meat Company dating back
                  to
                  1/2005.Q
              
              
              Meat
                  Company
              
              
              Loan
                  Payable to
              
              
              Dalian
                  Mingxing Livestock Product Co. Ltd.,
              
              
              393,868
              
              
              Meat
                  Company collected bank loans on behalf of Mingxing dating back
                  to
                  8/2008R
              
              
              Chuming
                  WFOE
              
              
              Loan
                  Payable to
              
              
              Dalian
                  Chuming Group Co.
              
              
              11,979,877
              
              
              Group
                  loaned funds to WFOE (incl. funds transferred from Meat Company
                  for US
                  RTO.S
              
              
              Sales
                  Company
              
              
              Loan
                  Payable to
              
              
              Dalian
                  Huayu Seafood Co., Ltd.
              
              
              32,850
              
              
              Sales
                  Company collected sales revenue on behalf of Huayu dating back
                  to
                  7/2008**Subtotal
                  of Loans from Related Parties**
              **$**
              **15,789,123****Gross
                  Related Party Payable**
              **$**
              **27,263,654****Setoff
                  Related Party Receivable**(Receivables have been setoff against payables)
              **$**
              **6,244,246**





16




**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of September 30, 2008 and December 31, 2007**
 **and
        for the three and nine months ended September 30, 2008, and
        2007**




A.
            The
                Food Company, sold approximately USD 88 thousand (RMB 6 thousand)
                cooked
                food to Huayu in credit in the third quarter of 2008. This transaction
                had
                impact on statement of income by applying 17% valued added tax, the
                Food
                Company, generated USD 54 thousand (RMB 0.4 million) in sales
                income.




B.
            Sales
                Company bought approximately USD 75 thousand (RMB 0.5 million) equipment
                on behalf of Mingxing Co. in 3rdquarter.




C.
            The
                balance of receivable owed by the Group of approximately USD 6.8
                million
                (RMB 46.3 million) to Meat Company, was increase by USD 5.5 million
                (RMB
                38.1 million) in the third quarter of 2008.
                The Meat Company, paid USD 2.7 million (RMB 18.1 million) bank loan
                principal for the Group in August and USD 2.8 million (RMB 20 million)
                in
                September to the Group for the purchase of hogs in advance.
                Simultaneously, the Group has delivered USD 2.9 million (RMB 19.5
                million)
                in hogs in August and USD 1.4 (RMB 9.7 million) in hogs in September
                to Meat Company, to net against the receivables. The prepayment has
                not
                impact on the statement of income.





D.
            The
                Meat Company paid approximately USD 15 thousand (RMB 0.1 million)
                utility
                fees for Fodder Co., in the third quarter of
                2008.





E.
            The
                prepayment of approximately USD 3.1 million (RMB 21.3 million) from
                Meat
                Company, to the Group was increased by USD 96 thousand (RMB 0.6 million),
                USD 0.15 million (RMB 1 million), and USD 4.1 million (RMB 28.3 million)
                in July, August, and September respectively. Simultaneously, the
                Group
                repaid USD 1.3 million (RMB 8.9 million) in hogs to Meat Company,
                to net
                against the prepayment in the third quarter of 2008.





F.
            The
                balance of approximately USD 68 thousand (RMB 0.4 million) office
                supplies
                payment made by Meat Company, for the Group was still outstanding
                as of
                September 30, 2008.





G.
            The
                balance of approximately USD 12.6 million (RMB 86.1 million) which
                Food
                Company, paid bank loan principal and interest on behalf of Industrial
                Co., was still outstanding as of September 30,
                2008.





17




**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of September 30, 2008 and December 31, 2007**
 **and
        for the three and nine months ended September 30, 2008, and
        2007**


H.
            The
                balance of approximately USD 1.3 million (RMB 9.3 million) receivable
                from
                Group to Sales Company, was increased by USD 5.8 million (RMB 39.6
                million) in the third quarter of 2008 asSales
                Company paid the Group to buy materials, and the Group has since
                repaid
                USD 4.5 million (RMB 20.3 million) of this
                obligation.





I.
            Sales
                Company helped the Group to pay approximately USD 7.3 million (RMB
                49.9
                million) to local farmers for the purchase of hogs in the third quarter
                of
                2008 .





18




**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of September 30, 2008 and December 31, 2007**
 **and
        for the three and nine months ended September 30, 2008, and
        2007**


J.
            The
                receivable of approximately USD 2.2 million (RMB15 million) due from
                Fodder Co. to Sales Company consisted of following transactions:
                USD 0.5
                million (RMB 3.3 million) was paid to buy feeding materials, USD
                1.1
                million (RMB 7.7 million) was paid for construction fees, and USD
                0.6
                million (RMB 4 million for
                utilities).




K.
            The
                balance of approximately USD 4.9 million (RMB 33.7 million) owed
                by the
                Company to the Group was increased by USD 3.9 million (RMB 27.4 million),
                USD 5.5 million (RMB 37.7 million), and USD 5.2 million (RMB 35.1
                million)
                in July, August, and September respectively. The Company paid USD
                9.8
                million (RMB 67.4 million) to settle this balance during September.
                The
                increase in the balance as a result of the purchase of hogs would
                impact the statements of income; however, the effect of the repayment
                is
                isolated to the Company’s balance
                sheet.




L.
            The
                Group sold hogs to Meat Company, and the Meat Company paid approximately
                USD 2.9 million (RMB 20,000,000 million) to the Group on August 12,
                2008.





M.
            The
                USD 3.6 million (RMB 24.9 million) deposit owed to Huayu was still
                outstanding at September 30, 2008.





N.
            The
                Group has paid USD 1.8 million (RMB 12.3 million) in salaries and
                general
                administrative expenses on behalf of Food
                Company.





O.
            The
                outstanding balance of USD 1.6 million (RMB 10.8 million) due from
                Meat
                Company to Stockbreeding Combo was due to the fact that Meat
                Company collected USD 52 thousand (RMB 0.4 million) in hog sales
                and a USD
                1.5 million (RMB 10.4 million) banks loan on behalf of Stockbreeding
                Co.,
                in August and September, 2008
                respectively.





P.
            The
                balance owed of USD 6 thousand (RMB 44 thousand) by Industrial Development
                Co. to Meat Company, was still outstanding at September 30,
                2008.





Q.
            The
                balance of USD 0.4 million (RMB 2.7 million) was due to the fact
                that Meat
                Company collected a bank loan of USD 0.43 million (RMB 2.9
                million) for Mingxing Co., in August, and Meat Company repaid USD
                30
                thousand (RMB 0.2 million) in
                September.





R.
            The
                outstanding payable balance of USD 12 million (RMB 82.1 million)
                due to
                the Group has been transferred to the books of the Company, which
                balance increased by approximately USD 95 thousand (RMB 0.7 million)
                in the 3rdquarter of 2008.





19




**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of September 30, 2008 and December 31, 2007**
 **and
        for the three and nine months ended September 30, 2008, and
        2007**


S.
            Sales
                Company helped Huayu collect USD 33 thousand (RMB 0.2 million) seafood
                sales from the customers.





The
      related party receivable balance detailed above, and the related transactions
      that comprise that balance were integral and material to the Company’s
      operations. The Company was 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 quarters was manually based and accordingly was not able to, from a
      functional and cost benefit perspective, effectively summarize and provide
      any
      greater detail on the related party transactions. Also, the Company’s current
      accounting department does not have sufficient staff in order to perform an
      exercise to further detail the related party payables and receivables beyond
      what has been provided above; however the Company has been taking steps to
      update its accounting systems and methods to provide fuller detail regarding
      these transactions for future periods. The Company does represent that the
      balances disclosed above are both accurate and reliable within acceptable
      thresholds of materiality.





The
      Company’s related party receivables and payables in the period presented were in
      the form of either short-term loans bearing no interest, or trade payables
      and
      receivables relating to the purchase of raw materials, supplies or products
      for
      which payment was due within a short period of time. Management believes that
      the net receivables from related parties are fully recoverable.





6.
            Inventory





**September 30, 2008**
            
            **December 31, 2007**Raw
                Materials
            
            $
            1,023,583
            
            $
            1,039,440Work
                in Progress
            
            
            555,754
            
            
            547,888Finished
                Goods
            
            
            4,903,800
            
            
            1,328,688$
            6,483,137
            
            $
            2,916,016





7.
            Property,
                Plant & Equipment





**At September 30, 2008**
            
            
            
            **Accumulated****Cost**
            
            **Depreciation**
            
            **Net**Buildings
            
            $
            20,750,029
            
            $
            3,360,259
            
            $
            17,389,769Manufacturing
                Equipment
            
            
            10,018,494
            
            
            2,876,366
            
            
            7,142,128Office
                Equipment
            
            
            192,840
            
            
            134,239
            
            
            58,601Vehicles
            
            
            913,696
            
            
            452,657
            
            
            461,039Furniture
                & Fixture
            
            
            523,951
            
            
            124,855
            
            
            399,097$
            32,399,010
            
            $
            6,948,376
            
            $
            25,450,634





20




**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of September 30, 2008 and December 31, 2007**
 **and
        for the three and nine months ended September 30, 2008, and
        2007**


**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





21




**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of September 30, 2008 and December 31, 2007**
 **and
        for the three and nine months ended September 30, 2008, and
        2007**


8.
            Land
                Use Right





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




**September 30, 2008**
            
            **December 31, 2007**Land
                Use Rights, at Cost
            
            $
            14,405,611
            
            $
            13,501,580*Less**:*
                Accumulated Amortization
            
            
            (904,912
            )
            
            (645,600
            )$
            13,500,699
            
            $
            12,855,980




9.
            Bank
                Loans





*(A)*
            *Short
                Term Bank Loans*





At
      September 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
            
            $
            4,376,304Food Company
            
            
            Bank of China
            
            
            8.019
            %
            
            11/17/2008
            
            
            2,042,275$
            6,418,579




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





10.
            Capitalization





As
      a
      result of the reverse take-over (RTO) transaction 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
      September 30, 2008 is depicted in the following table.





**Name of Shareholder**
            
            **Number of**
              **Shares**
            
            **Common StockCapital**
            
            **Additional**
              **Paid in**
              **Capital**
            
            **Equity %**Operating
                Companies Founders
            
            
            14,688,948
            
            $
            14,689
            
            $
            2,396,079
            
            
            69.50
            %Pre-RTO
                Shell Shareholders
            
            
            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
            %





22




**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of September 30, 2008 and December 31, 2007**
 **and
        for the three and nine months ended September 30, 2008, and
        2007**




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.





**September 30, 2008**
            
            **December 31, 2007**PRC
                Registered Capital
            
            $
            15,787,633
            
            $
            3,642,866-
                Statutory Reserve Ceilingbased
                on 50% ofRegistered
                Capital
            
            
            7,893,816
            
            
            1,821,433*Less**:*
                - Retained Earningsappropriated
                toStatutory
                Reserve
            
            
            1,729,863
            
            
            751,444Reserve
                CommitmentOutstanding
            
            $
            6,163,953
            
            $
            1,069,989





12.
            Advertising
                Costs





Advertising
      expenses were $1,546,948 and $50,313 for the nine months ended September 30,
      2008 and 2007, respectively.





23




**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of September 30, 2008 and December 31, 2007**
 **and
        for the three and nine months ended September 30, 2008, and
        2007**


13.
            Income
                Taxes





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





Meat
      Company 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 nine months ended September
      30, 2008 and 2007.





Food
      Company has provided provisions for income taxes for the nine months ended
      September 30, 2008 and 2007 of $232,368 and $967,539 respectively.





Sales
      Company has not provided provisions for income taxes for the nine months ended
      September 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.
              September 30, 2008
              
              
              Tax expense
              
              $
              449,138ii.
              September 30, 2007
              
              
              Tax expense
              
              $
              749,504





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. The Company has not repatriated foreign source
      income. 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 Company,
      and Sales Company 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.





24




**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of September 30, 2008 and December 31, 2007**
 **and
        for the three and nine months ended September 30, 2008, and
        2007**


14.
            Commitments
                & Contingencies





*(A)*
            *Capital
                Commitments*





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 September 30, 2008.





*(B)*
            *Executive
                Compensation*





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.





*(C)*
            *Hog
                Purchase Agreement*





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





**Year**
            
            **Hogs**
            
            **Price Per Hog**
            
            **Amount**2008
            
            
            130,000
            
            $
            211.01
            
            $
            27,431,3002009
            
            
            800,000
            
            $
            232.21
            
            
            185,768,0002010
            
            
            800,000
            
            $
            255.44
            
            
            204,352,000$
            417,551,300





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





(D)
            *Pledged
                Assets*





Prior
      to
      the financing transaction described in Note 18 undertaken by the Company at
      December 31, 2007, the Company owed the 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.





25




**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of September 30, 2008 and December 31, 2007**
 **and
        for the three and nine months ended September 30, 2008, and
        2007**





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 nine months ended September 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 WFOE”) and Precious Sheen Investments Ltd
      (PSI).





**Results of Operations for**
              **the nine months ended**
              **September 30, 2008**
            
            **Meat**
              **Company**
            
            **Food**
              **Company**
            
            **Sales**
              **Company**
            
            **Chuming**
              **WFOE,**
              **PSI, &**
              **Eliminations**
            
            **Total**Sales
            
            $
            128,208,596
            
            $
            16,185,747
            
            $
            62,110,427
            
            $
            (66,195,551
            )
            $
            140,309,218Cost of Sales
            
            
            111,689,686
            
            
            13,481,540
            
            
            61,353,808
            
            
            (66,195,551
            )
            
            120,329,483Gross
                Profit
            
            
            16,518,909
            
            
            2,704,207
            
            
            756,618
            
            
            -
            
            
            19,979,735Operating
                Expense
            
            
            1,943,752
            
            
            973,602
            
            
            2,124,161
            
            
            303,569
            
            
            5,345,085Operating
                (Loss)/Profit
            
            
            14,575,157
            
            
            1,730,605
            
            
            (1,367,543
            )
            
            (303,569
            )
            
            14,634,650Other
                Income (Expense)
            
            
            690,654
            
            
            (505,527
            )
            
            124,584
            
            
            (318,751
            )
            
            (9,040
            )Earnings
                before Tax
            
            
            15,265,811
            
            
            1,225,078
            
            
            (1,242,959
            )
            
            (622,320
            )
            
            14,625,611Tax
            
            
            214,321
            
            
            234,817
            
            
            -
            
            
            -
            
            
            449,138Net
                Income
            
            **$**
            **15,051,491**
            
            **$**
            **990,261**
            
            **$**
            **(1,242,959**
            **)**
            **$**
            **(622,320**
            **)**
            **$**
            **14,176,473**





**Eliminated Intercompany Sales of Products Sold****Sold From:**
            
            **Sold To:**
            
            **Amount**Food
                Company
            
            
            Sales
                Company
            
            $
            10,914,340Meat
                Company
            
            
            Sales
                Company
            
            
            44,347,880Meat
                Company
            
            
            Food
                Company
            
            
            10,933,331$
            66,195,551





26


**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of September 30, 2008 and December 31, 2007**
 **and
        for the three and nine months ended September 30, 2008, and
        2007**


**Financial Position at**
              **September 30, 2008**
            
            **Meat**
              **Company**
            
            **Food**
              **Company**
            
            **Sales**
              **Company**
            
            **Chuming**
              **WFOE,**
              **PSI, &**
              **Eliminations**
            
            **Total**Current Assets
            
            $
            74,843,828
            
            $
            28,297,353
            
            $
            33,956,051
            
            $
            (79,806,095
            )
            $
            57,291,137Non
                Current Assets
            
            
            22,912,019
            
            
            16,743,108
            
            
            350,179
            
            
            58,351
            
            
            40,063,657Total
                Assets
            
            
            97,755,847
            
            
            45,040,461
            
            
            34,306,230
            
            
            (79,747,745
            )
            
            97,354,793Current
                Liabilities
            
            
            46,801,246
            
            
            39,586,300
            
            
            36,637,780
            
            
            (89,335,814
            )
            
            33,689,511Total
                Liabilities
            
            
            46,801,246
            
            
            39,586,300
            
            
            36,637,780
            
            
            (89,335,814
            )
            
            33,689,511Net
                Assets
            
            
            50,954,601
            
            
            5,454,161
            
            
            (2,331,550
            )
            
            9,987,570
            
            
            63,665,282Total
                Liabilities
              &
                Net Assets
            
            $
            97,755,847
            
            $
            45,040,461
            
            $
            34,306,230
            
            $
            (79,747,745
            )
            $
            97,354,793





27




**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of September 30, 2008 and December 31, 2007**
 **and
        for the three and nine months ended September 30, 2008, and
        2007**


16.
            Earnings
                Per Share





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





**3 months**
            
            **3 months**
            
            **9 months**
            
            **9 months****ended**
            
            **ended**
            
            **ended**
            
            **ended****September 30,**
            
            **September 30,**
            
            **September 30,**
            
            **September 30,****2008**
            
            **2007**
            
            **2008**
            
            **2007**Net Income
            
            **$**
            **4,320,288**
            
            $
            **2,504,970**
            
            **$**
            **14,176,473**
            
            **$**
            **8,298,587**Original
                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
            
            
            2,504,970
            
            
            21,182,756
            
            
            17,272,756Earnings
                Per ShareBasic
            
            $
            0.25
            
            $
            0.19
            
            $
            0.82
            
            $
            0.62Diluted
            
            $
            0.20
            
            $
            0.15
            
            $
            0.67
            
            $
            0.48Weighted
                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.





28


**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of September 30, 2008 and December 31, 2007**
 **and
        for the three and nine months ended September 30, 2008, and
        2007**


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
      September 30, 2008, the total number of shares outstanding, on a fully diluted
      basis, is shown in the following table:





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





29


**Energroup
        Holdings Corporation**
 **Notes
        to Consolidated Financial Statements**
 **As
        of September 30, 2008 and December 31, 2007**
 **and
        for the three and nine months ended September 30, 2008, and
        2007**


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 its 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.





19.
            Appointment
                of Chief Financial Officer





Effective
      September 18, 2008, t he
      Company hired Mr.
      Yizhao Zhang to be the Chief Financial Officer. Mr. Zhang’s annual salary is
      $180,000. Mr. Zhang is eligible to participate in equity or non-equity bonus
      programs, to be determined by the Board. In connection with Mr. Zhang’s hiring,
      the Company had fulfilled the second criteria discussed in *Note
      3 – Restricted Cash* ,
      which
      relates to the financing transaction discussed in *Note
      18 – Financing Transaction* .
      Although the critera was fulfilled, the hiring of the new Chief Financial
      Officer was late, and therefore, the Company has accrued a liability of $399,500
      against its third quarter earnings for liquidated damages.





30




**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**





Headquartered
      in the City of Dalian, Liaoning Province of the People’s Republic of China (the
“PRC” or “China”), we are a meat processing company primarily involved in
      the slaughtering, processing, packaging and distribution of pork and pork
      products. We
      also
      process and sell seafood, such as minced fillet products, which accounted
      for a small portion of our revenue (approximately 1.35%) in the third
      quarter of 2008.





We
      are
      the first pork producer in China to receive “Green Food” certification from
      China’s Ministry of Agriculture. Green Food is an innovative certification
      program unique to China that is awarded to food processors who produce using
      environmentally sustainable methods and meet certain high technical standards
      of
      quality control, safety, and product quality, and generate low levels of
      pollution. The
      Green
      Food certification is based on standards defined by the Codex Alimentarius
      Commission (“CAC”), a joint body of the United Nations Food and Agriculture
      Organization and the World Health Organization. We also received ISO 9001:2000
      certification that covers our production, research and development and sales
      activities.





Currently
      we have a wholesale and retail distribution network and sell either directly
      or
      indirectly across northeast China, including supermarkets and hypermarkets.




As
      of
      September 30, 2008, we had 595 employees, of whom 423 were operating personnel,
      106 were sales personnel, 4 were research and development personnel and 62
      were
      administrative personnel.





Dalian
      Precious Sheen Investments Consulting Co., Ltd., or Chuming WFOE, is our holding
      company established in 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;




31




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.




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 are 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.





Pork
      is
      widely regarded as China’s most important source of meat and is consumed at a
      much higher rate than other categories of meat. China, which is the largest
      pork-consuming nation in the world, consumed a total of 52 million metric tons
      in 2006, over half of the global consumption. Despite a decline in 2007 due
      to
      the blue ear disease, or Porcine Reproductive and Respiratory Syndrome (PRRS),
      China’s pork production is expected to recover to 48 million metric tons in
      2008, according to a forecast from the United States Department of Agriculture
      Foreign Agriculture Service (USDA FAS) in Beijing. We believe that increasing
      levels of consumption of pork products in China is linked to the rapid
      development of the Chinese economy, urbanization and strong income growth.





Aside
      from increasing aggregate consumption, based on management’s research pork
      consumption patterns in recent years have shown two main characteristics. The
      first is that per capita pork is consumed at higher rates in the urban areas
      of
      China as opposed to rural areas, although the rate of growth in these urban
      consumption rates is relatively slight. The second is that consumers’
consumption preferences appear to have shifted from frozen meat to fresh meat,
      and from fat meat to lean meat, with a tendency toward high quality cuts.
      Management believes these trends continue to be very favorable to our business
      which is based on mechanized meat processing and sales to urban consumers.





During
      the third quarter, Beijing hosted the 29th Olympic Games. China’s state-owned
      electrical power grid had to cut the power supply to some provinces to ensure
      sufficient electricity supply to Beijing during the games. This resulted in
      occasional interruptions in production in our factories, due to intermittent
      power failures. Nevertheless, we managed to increase our production of various
      pork products. We increased total production to a company record high 23,490
      tons in the third quarter of 2008, as we produced 19,044 tons in the second
      quarter of 2008, and 16,892 tons for the third quarter of 2007. Fresh pork
      sales
      and production have been growing at a faster rate than frozen pork in terms
      of
      our revenue and production volume during the past several quarters.





Due
      to a
      shortage in supply, live hog prices rose significantly in 2007. Retail pork
      prices are an important component of China’s Consumer Price Index (CPI), a key
      inflation indicator. In order to moderate increases in the CPI and maintain
      the
      living standard of its lower-income population, the Chinese government (as
      it
      pertains to the pork industry) has implemented a number of policies to encourage
      pork production. These policies are now beginning to take effect, and as a
      result, the price of pork to consumers has stabilized during the past several
      months. In the near future, we expect pork prices to continue to stabilize,
      or
      even begin to decline.





In
      China,
      the pork processing industry remains fragmented, and we believe, inefficient.
      As
      smaller players experience pressure from margin compression and stricter
      government regulations, we believe scaled pork processors, like ourselves,
      will
      be positioned to make acquisitions on favorable terms in order to capture market
      share, gain scale, secure raw material, and access more customers. We expect
      that the combined factors of stricter hygiene regulations, increasing
      competition from well-financed players, and struggling meat suppliers, will
      induce industry consolidation in the coming years. We believe we are in a strong
      position to continue to take advantage of the Chinese government’s support for
      leading pork producers, these market consolidation trends, and the emerging
      hog
      supply situation. Management believes that this is a long-term
      trend.





Given
      the
      current competitive market conditions, we constantly strive to impose strict
      quality control in our products and utilize state-of-art slaughtering and
      cutting lines (which are imported from Stork Co. of the Netherlands), to ensure
      our product quality, increase awareness of our brand and develop customer
      loyalty. Our research suggests that consumers in China are increasingly
      conscious of food safety and nutrition, and they using their purchasing power
      to
      demand safer and higher quality food products for their families. For example,
      the recent tainted milk crisis in China prompted consumers to abandon milk
      and
      dairy products, and this has had a devastating impact on milk producers.




32




We place
      a very high priority on food safety and integrity. For the feeds which are
      used
      for our hogs, we control and monitor our feed sources by acquiring feeds only
      from qualified suppliers who are licensed in the nation or the province, and
      then carry out comprehensive tests to ensure quality. All of our production
      lines have also passed the Hazard Analysis and Critical Control Point (HACCP)
      test, which is certified by Moody International Certification Ltd. Management
      anticipates that companies such as ours, with quality meat processing and modern
      logistics systems, will benefit as they capture market share and build consumer
      brand loyalty.





Management
      believes that we need to broaden our geographic sales network and diversify
      our
      customer base. Currently our distribution network is still limited to Liaoning
      province, especially Dalian city. In the near future we need to further extend
      this network and penetrate to all the northeast provinces of China. A broader
      customer base can not only mitigate our reliance on certain big customers,
      but
      also bring us more opportunities. We believe a broader market for our products
      can increase demand for our products, reduce our vulnerability to market
      changes, and provide additional areas of growth in the future.





Our
      top
      ten customers accounted for 62.54% for our total sales for the quarter ended
      September 30, 2008. We plan to position our business to diversify our customer
      base, which is expected to lower this percentage gradually in the
      future.





Management
      presently anticipates continued growth in our sales growth. Nevertheless, our
      ability to meet increased customer demand and maintain profitability will
      however continue to depend on factors such as our production capacity,
      availability of working capital, input costs, as well as the other factors
      described throughout this report.





**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.




33




Our
      founders have directly or indirectly owned the three operating subsidiaries
      since their inception. We also own two intermediary holding companies. As
      of September 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





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 – Nine
      Months Ended September 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.




34




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





*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.




35




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.





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 September 30, 2008 and September 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****September 30,**
            
            **% of**
            
            **September 30,**
            
            **% of****2008**
            
            **Sales**
            
            **2007**
            
            **Sales**Sales
            
            $
            53,725,596
            
            
            100.00
            %
            $
            35,160,526
            
            
            100.00
            %Cost
                of Sales
            
            
            47,254,631
            
            
            87.96
            %
            
            29,430,153
            
            
            83.70
            %Gross
                Profit
            
            
            6,470,965
            
            
            12.04
            %
            
            5,730,373
            
            
            16.30
            %Selling
                Expenses
            
            
            878,893
            
            
            1.64
            %
            
            1,597,626
            
            
            4.54
            %General
                & Administrative Expenses
            
            
            734,976
            
            
            1.37
            %
            
            459,975
            
            
            1.31
            %Total
                Operating Expense
            
            
            1,613,869
            
            
            3.01
            %
            
            2,057,601
            
            
            5.85
            %Operating
                Income / (Loss)
            
            
            4,857,096
            
            
            9.04
            %
            
            3,672,772
            
            
            10.45
            %Other
                Income (Expense)
            
            
            (320,037
            )
            
            0.60
            %
            
            (418,298
            )
            
            1.19
            %Earnings
                Before Tax
            
            
            4,537,058
            
            
            8.44
            %
            
            3,254,474
            
            
            9.26
            %(Income
                Tax Expense) / Deferred Tax Benefit
            
            
            216,770
            
            
            0.40
            %
            
            749,504
            
            
            2.13
            %Net
                Income
            
            $
            4,320,288
            
            
            8.04
            %
            $
            2,504,970
            
            
            7.12
            %Earnings
                Per ShareBasic
            
            
            0.25
            
            
            
            
            
            0.19Diluted
            
            
            0.20
            
            
            
            
            
            0.15Weighted
                Average Shares OutstandingBasic
            
            
            17,272,756
            
            
            
            
            
            13,409,120Diluted
            
            
            21,182,756
            
            
            
            
            
            17,272,756




36




*Sales.* Our
      sales include revenues from sales of our fresh pork, frozen pork, and processed
      food products. During the quarter ended September 30, 2008, we had sales of
      $53,725,596 as compared to sales of $35,160,526 for the quarter ended September
      30, 2007, an increase of approximately 52.8%. Our sales for our various product
      categories in the third quarter of 2008 are summarized as follows:





**Sales
                by product category**
            
            **Third Quarter**
              **2008 (amount**
              **in dollars)**
            
            **% of**
              **Total**
              **Sales**
            
            **Third Quarter**
              **2007 (amount**
              **in dollars)**
            
            **% of**
              **Total**
              **Sales**
            
            **% of increase**
              **from**
              **2007 to 2008**Fresh Pork
            
            $
            42,858,853
            
            
            79.8
            %
            $
            27,499,174
            
            
            78.2
            %
            
            55.9
            %Frozen
                Pork
            
            
            4,618,716
            
            
            8.6
            %
            
            2,668,116
            
            
            7.6
            %
            
            73.1
            %Processed
                Food Products
            
            
            6,248,027
            
            
            11.6
            %
            
            4,993,236
            
            
            14.2
            %
            
            25.1
            %Total
                Sales
            
            $
            53,725,596
            
            
            100
            %
            $
            35,160,526
            
            
            100
            %
            
            52.80
            %





**Sales
                by product category, by weight of product**
            
            **Third Quarter**
              **2008**
              **(Weight in tons)**
            
            **% of**
              **Total**
              **Sales**
            
            **Third Quarter**
              **2007**
              **(Weight in tons)**
            
            **% of**
              **Total**
              **Sales**
            
            **% of change**
              **from**
              **2007 to 2008**Fresh Pork
            
            
            18,681
            
            
            79.5
            %
            
            12,922
            
            
            76.5
            %
            
            44.6
            %Frozen
                Pork
            
            
            2,190
            
            
            9.3
            %
            
            1,353
            
            
            8.0
            %
            
            61.9
            %Processed
                Food Products
            
            
            2,619
            
            
            11.2
            %
            
            2,617
            
            
            15.5
            %
            
            0
            %Total
                Sales
            
            
            23,490
            
            
            100.00
            %
            $
            16,892
            
            
            100.00
            %
            
            39.1
            %





In
      the
      third 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 third quarter of 2008 our sales volume of fresh pork
      and
      frozen pork (by weight) increased by 44.6% and 61.9% respectively. We
      significantly increased our sales of fresh pork and frozen pork, both by weight
      and by sales revenue, in the third quarter of 2008 as compared with the same
      period in 2007. The frozen pork category experienced the highest growth in
      sales
      volume both by weight and in terms of sales revenue due strong consumer demand.
      For processed food products, because we significantly increased its per-kilogram
      prices, our sales revenue for this product category increased by 25.1%, even
      though we did not increase their sales volume. 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 September 30, 2008, as compared
      to
      the same quarter last year:




**Average Per-Kilogram Price to Customers (in $US)****Third**
              **Quarter of**
              **2008**
            
            **Third**
              **Quarter of**
              **2007**
            
            **% change**
            
            **Change in**
              **Price**Fresh
                Pork
            
            $
            2.29
            
            $
            2.13
            
            
            7.5
            %
            $
            0.16Frozen
                Pork
            
            $
            2.11
            
            $
            1.87
            
            
            12.8
            %
            $
            0.24Processed
                Food Products
            
            $
            2.39
            
            $
            1.91
            
            
            25.1
            %
            $
            0.48




In
      the
      third quarter of 2008, we raised our prices for processed food products by
      25.1%, mostly because of strong demand for hog byproducts, and partially due
      to
      the rapid price increases for packaging material and food additives that have
      occurred since the second quarter of 2008. The price of live pigs increased
      rapidly starting from the third quarter of 2007, and the bulk of these increases
      occurred in late 2007. By the second quarter of 2008, live pig prices began
      to
      level off. As a result, we raised our prices for fresh pork and frozen pork
      only
      modestly during the third quarter, in contrast to our more substantial price
      increases during the second quarter of 2008.




37




We
      note
      that the above table showing average price per kilogram represents an average
      price per kilogram regardless of sales channel. Average sales prices per
      kilogram may vary depending on the sales channel used. For example, for sales
      through agents, our average price per kilogram is lower, because certain
      marketing costs are borne by the selling agent. In contrast, our average price
      per kilogram for supermarket sales is higher, because we absorb marketing costs,
      and pass on those costs to our supermarket customers.




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 September 30,**
            
            **Franchise Stores**
            
            **Supermarkets**
            
            **Restaurants****and**
              **Canteens**2007
            
            
            524
            
            
            98
            
            
            2,7822008
            
            
            702
            
            
            186
            
            
            3,226





As
      shown
      in the table above, as of September 30, 2008, as compared to September 30,
      2007,
      we significantly increased the number of participants in all three of these
      sales channels, particularly the supermarkets. We believe the sales from
      supermarkets and hypermarkets, like Carrefour, are likely to continue to yield
      higher profit margins. Their orders tend to be large and stable in quantity.
      Usually they have better credit. 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 third quarter
      of
      2008 as compared to the third quarter of 2007, by product category and by sales
      channel.




**Increase in Sales from Third Quarter of 2007 to Third Quarter of 2008****By Product Group and Sales Channel ($)****Product**
                **Category**
              
              **Franchise**
                **Operators**
              
              **Sales**
                **Agents**
              
              **Super**
                **Markets**
              
              **Restaurants**
                **and**
                **Canteens**
              
              **Total Increase ($)**Fresh Pork
              
              $
              2,342,668
              
              $
              7,805,136
              
              $
              5,211,875
              
              
              N/A
              2
              $
              15,359,679Frozen
                  Pork
              
              
              N/A
              1
              
              514,830
              
              
              N/A
              1
              
              1,435,770
              
              
              1,950,600Processed
                  Food Products
              
              
              481,625
              
              
              263,322
              
              
              469,601
              
              
              40,244
              
              
              1,254,792Total
                  Increase in Sales
              
              $
              2,824,293
              
              $
              8,583,288
              
              $
              5,681,476
              
              $
              1,476,014
              
              $
              18,565,071


_____________________________




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
      third 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
      third quarter of 2008, as compared to the same quarter in 2007, the majority
      of
      our increase in sales came from sales agents and supermarkets. The $5.68 million
      sales increase through supermarkets is partly 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. Besides developing new sales agents, we
      also
      extended credits to certain long-term sales agents who had demonstrated good
      credit records, and encouraged their purchases from us instead of from our
      competitors. This is the major reason that we were able to significantly
      increase the sales through sales agents.




38




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 and loyalty of our brand and
      availability of our products.




*Cost
      of Sales.* Cost of
      sales for the third quarter of 2008 increased by $17,824,478 or approximately
      60.57%, from $29,430,153 for the three months ended September 30, 2007 to
      $47,254,631 for the three months ended September 30, 2008. The increase in
      cost
      of goods sold is in tandem with the increase in sales of our products. Our
      cost
      of sales for our various product categories in the third quarter of 2008 is
      summarized as follows:





**Cost of Sales**
              ******by**
              **Product
                Category**
            
            **Third Quarter**
              **2008
                (in $ US)**
            
            **% of**
              **Overall**
              **Cost of**
              **Sales**
            
            **Third Quarter**
              **2007 (in $ US)**
            
            **% of**
              **Overall**
              **Cost of**
              **Sales**
            
            **%  increase**
              **from**
              **2007 to 2008**Fresh Pork
            
            $
            38,455,262
            
            
            81.4
            %
            $
            23,266,468
            
            
            79.1
            %
            
            65.3
            %Frozen
                Pork
            
            
            3,925,908
            
            
            8.3
            %
            
            2,268,904
            
            
            7.7
            %
            
            73.0
            %Processed
                Food Products
            
            
            4,873,461
            
            
            10.3
            %
            
            3,894,781
            
            
            13.2
            %
            
            25.1
            %Total
                Cost of Sales
            
            $
            47,254,631
            
            
            100.00
            %
            $
            29,430,153
            
            
            100.0
            %
            
            60.6
            %





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
            
            
            2.2513
            
            
            1.8104
            
            
            0.4409
            
            
            24.35
            %Fourth
                Quarter
            
            
            N/A
            
            
            1.8656
            
            
            N/A
            
            
            N/A
            %Average
                for Year to Date
            
            
            2.2676
            
            
            1.5219
            
            
            0.7457
            
            
            49.00
            %





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, live pig prices slightly
      dropped from their highs in the second quarter of 2008 and became stable in
      the
      third quarter of 2008. Management believes that while increases in live pig
      prices may occur in the future, management does not expect further rapid
      escalation in live pig prices of the scale seen during 2007.





Although
      the prices of live pig have been volatile in the past years, management
      currently projects a 10% per year increase in the average price per kilogram
      for
      live pigs during the next several years. This expectation combines the factors
      of inflation, and the rising costs of inputs.





The
      following table shows our cost of sales in the third 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**
            
            **Third**
              **Quarter of 2008**
            
            **% of**
              **Product**
              **Group**
              **Sales**
            
            **Third Quarter**
              **of 2007**
            
            **% of Product**
              **Group Sales**
              **in the Third**
              **Quarter 2008**Fresh Pork
            
            $
            38,455,262
            
            
            89.7
            %
            $
            23,266,468
            
            
            84.6
            %Frozen
                Pork
            
            
            3,925,908
            
            
            85.0
            %
            
            2,268,904
            
            
            85.0
            %Processed
                Food Products
            
            
            4,873,461
            
            
            78.0
            %
            
            3,894,781
            
            
            78.0
            %Total
                Cost of Sales
            
            $
            47,254,631
            
            
            88.0
            %
            $
            29,430,153
            
            
            83.7
            %




39




During
      the third quarter our overall cost of sales as a percentage of sales decreased
      4.3% mainly because we increased the amount of our sales made through sales
      agents, who assumed the marketing expenses in selling our fresh pork products.





Our
      cost
      of sales as a percentage of sales of fresh pork increased significantly in
      the
      third quarter of 2008, as compared to the same period in 2007, primarily because
      the cost increases in live pigs primarily affected the grade-1 and grade-2
      categories, which we use to produce fresh pork products. The cost of sales
      as a
      percentage of sales of frozen pork remained constant, which was due to the
      use
      of grade-3 and grade-4 pigs for such products, and we were able to pass our
      increased cost to our frozen pork customers. During the third quarter of 2008,
      the cost of sales as a percentage of sales of processed food products also
      remained unchanged, because we were able to pass the input costs, including
      the
      increase in packaging material and food additives.




*Gross
      Profit.* Gross
      profit was $6,470,965 for the three months ended September 30, 2008 as compared
      to $5,730,373 for the same period in 2007, representing an increase of $740,592,
      or approximately 12.92%. 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 12.04% in
      the
      third quarter of 2008 as compared to 16.30% for the same period in 2007. The
      decrease in overall gross profit as a percentage of sales was mainly
      attributable to our decreased gross margin in fresh pork production as grade-1
      and grade-2 live pigs increased in price, and these increases were not entirely
      offset by higher fresh pork prices charged to customers. During the third
      quarter of 2008 our overall cost of sales as a percentage of sales decreased
      by
      4.3% mainly because we increased our sales made through sales agents, who
      assumed the marketing expenses in selling our fresh pork products.




The
      following table presents our gross profit for the three months ended September
      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**
            
            **Third**
              **Quarter**
              **of 2008**
            
            **% of**
              **Product**
              **Group**
              **Sales**
            
            **Third**
              **Quarter**
              **of 2007**
            
            **% of**
              **Product**
              **Group**
              **Sales**
            
            **% of**
              **increase**
              **from**
              **Third**
              **Quarter of**
              **2007 to**
              **Third**
              **Quarter of**
              **2008**Fresh Pork
            
            $
            4,403,591
            
            
            10.3
            %
            $
            4,232,706
            
            
            15.4
            %
            
            4.0
            %Frozen
                Pork
            
            
            692,808
            
            
            15.0
            %
            
            399,212
            
            
            15.0
            %
            
            73.5
            %Processed
                Food Products
            
            
            1,374,566
            
            
            22.0
            %
            
            1,098,455
            
            
            22.0
            %
            
            25.1
            %Total
                Gross Profit
            
            $
            6,470,965
            
            
            12.04
            %
            $
            5,730,373
            
            
            16.30
            %
            
            12.92
            %




As
      shown
      in the table above, frozen pork as a product category delivered the highest
      increase in gross profit from the third quarter of 2008 as compared with the
      same period in 2007. This was due to the strong demand for our frozen pork
      products, while gross margins for frozen pork remained healthy. As discussed
      above, our sales of frozen pork increased by 73.1%, and by weight we sold 61.9%
      more kilograms of frozen pork in the third quarter as compared to the year
      before, representing the largest gain in sales among the three product
      categories. Management attributes this to an increase in purchases of frozen
      pork by canteens and restaurants, however, it is unclear whether this upsurge
      in
      purchasing will necessarily continue at this rate.





However,
      our overall cost of sales as a percentage of sales decreased by 4.3% during
      the
      third quarter of 2008, mainly because we increased the amount of our sales
      conducted through sales agents, who assumed the marketing expenses in selling
      our products. Accordingly, we benefitted from increased sales through agents
      while not having to bear these marketing expenses.




40




The
      gross
      profit of our fresh pork products declined from 15.4% to 10.3%. This decrease
      was mostly because from the third quarter of 2008 we increased the sales of
      fresh pork through sales agents, who assumed the marketing expenses in selling
      our fresh pork products. As a result, our selling expenses associated with
      fresh
      pork were reduced significantly. Another reason was because for the third
      quarter of 2008, grade-1 and grade-2 live pigs increased significantly in price,
      and these increases were not entirely offset by higher fresh pork prices charged
      to customers.  We did increase our prices for fresh pork by 7.5% for the
      third quarter of 2008 as compared to the same period in 2007, but this price
      increase was not sufficient to overcome the increased cost of inputs, i.e.
      primarily live pigs. By comparison, we increased our prices to customers for
      frozen pork by 12.8% and processed food products by 25.1%, for the third quarter
      of 2008 versus the same period of 2007. We were able to increase our prices
      for
      processed food products by greater amounts because of the strong demand of
      pork
      viscera, so that we had relatively strong pricing power in this category. 
 We were able to raise our prices for frozen pork only moderately in
      response to input costs, by 12.8%, because the price of frozen pork was already
      elevated to a level where there was little difference from fresh pork, and
      consumers had a preference of fresh pork. This was also because of higher levels
      of competition within the frozen pork category, and accordingly, tighter pricing
      constraints. We did not raise our prices for fresh pork as much as we did for
      our other product categories because of competitive constraints, which are
      the
      strongest in the fresh pork category.





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. Due to our advanced
      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.





*Selling
      Expenses.* Selling
      expenses totaled $878,893 for the three months ended September 30, 2008, as
      compared to $1,597,626 for the same period in 2007, a decrease of $718,733
      or
      45.0%. This decrease was due primarily to a decrease in our advertising
      expenses. During the three months ended September 30, 2007, we spent $800,000
      on
      a special marketing campaign in an effort to promote our brand. In contrast,
      during the three months ended September 30, 2008, we increased sales made
      through sales agents, who assumed certain marketing expenses in selling our
      fresh pork products, and as a result our overall marketing expenses were lower
      in that quarter in relation to the sales of fresh pork that we achieved.





*General
      and Administrative Expenses.* General
      and administrative expenses totaled $734,976 for the three months ended
      September 30, 2008 as compared to $459,975 for the same period in 2007, an
      increase of $275,001 or 59.79%. This increase is partially attributable to
      the
      increased expenses we incurred after we became a public company, and partially
      attributable to an increase in salary expenses. We incurred new expenditures
      such as legal fees, audit and review fees, investor relationship activity fees,
      and other similar types of expenses, which were necessary as a public company.
      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, especially in the earlier part of 2008, the salaries and the cost
      of
      benefits for our staff increased for the third 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 a total other expense of $320,037 for the three months
      ended September 30, 2008 as compared to total other expense of $418,298 for
      the
      same period in 2007. The slight decrease in other expenses in the third quarter
      of 2008 is primarily attributable to several offsetting factors. We received
      a
      one-time subsidy of more than $1 million from the Dalian City government, which
      we recorded as other income. This subsidy is due to efforts by the local
      government to keep the price of pork stable in local markets. It is
      non-recurring in nature and cannot be exactly determined for the coming periods.
      This additional other income was offset by higher interest expenses on our
      borrowing, and the fact that we
      accrued a liability of $399,500 in connection with the appointment of our new
      Chief Financial Officer on September 18, 2008, as this appointment occurred
      later than the target date we agreed under the terms of our December 2007
      financing. See Note 19 – Appointment of Chief Financial Officer, in our
      financial statements for the period ended September 30, 2008.





*Net
      Income* .
      Our net
      income for the three months ended September 30, 2008 was $4,320,288 as compared
      to $2,504,970 for the same period in 2007, an increase of $1,815,318 or 72.47%.
      This increase in net income is attributable to the factors described above,
      but
      primarily from the increase in sales, and our sustained efforts to manage
      our costs.





41





**Comparison
      of Nine Months Ended September 30, 2008 and September 30,
      2007.**





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





**Nine**
              **Months Ended**
            
            
            
            **Nine**
              **Months Ended****September 30,**
            
            **% of**
            
            **September 30,**
            
            **% of****2008**
            
            **Sales**
            
            **2007**
            
            **Sales**Sales
            
            $
            140,309,218
            
            
            100.00%
            
            $
            89,718,841
            
            
            100.00%Cost
                of Sales
            
            
            120,329,483
            
            
            85.76%
            
            
            74,966,451
            
            
            83.56%Gross
                Profit
            
            
            19,979,735
            
            
            14.24%
            
            
            14,752,390
            
            
            16.44%Selling
                Expenses
            
            
            3,463,947
            
            
            2.47%
            
            
            3,397,046
            
            
            3.79%General
                & Administrative Expenses
            
            
            1,881,138
            
            
            1.34%
            
            
            1,147,488
            
            
            1.28%Total
                Operating Expense
            
            
            5,345,085
            
            
            3.81%
            
            
            4,544,534
            
            
            5.07%Operating
                Income / (Loss)
            
            
            14,634,650
            
            
            10.43%
            
            
            10,207,856
            
            
            11.38%Other
                Income (Expense)
            
            
            (9,040
            )
            
            0.06%
            
            
            (1,159,765
            )
            
            1.30%Earnings
                Before Tax
            
            
            14,625,611
            
            
            10.42%
            
            
            9,048,091
            
            
            10.08%(Income
                Tax Expense) / Deferred Tax Benefit
            
            
            (449,138
            )
            
            0.32%
            
            
            (749,504
            )
            
            0.84%Net
                Income
            
            $
            14,176,473
            
            
            11.03%
            
            $
            8,298,587
            
            
            9.24%Earnings
                Per ShareBasic
            
            
            0.82
            
            
            
            
            
            0.62Diluted
            
            
            0.67
            
            
            
            
            
            0.48Weighted
                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 nine months ended September 30, 2008, we had sales
      of
      $140,309,218 as compared to sales of $89,718,841 for the same period of 2007,
      an
      increase of 56.39%. Our sales for our various product categories for the nine
      months period ended September 30, 2008 are summarized as follows:





**Sales
                by product**
              **category**
            
            **Nine Months Ended**
              **September 30,**
              **2008 (amount in**
              **$US)**
            
            **% of**
              **Total Sales**
            
            **Nine Months**
              **Ended September 30,**
              **2007 (amount**
              **in $US)**
            
            **% of**
              **Total**
              **Sales**
            
            **% of increase**
              **from**
              **2007 to 2008**Fresh Pork
            
            
            $108,494,763
            
            
            77.33
            %
            
            $70,294,209
            
            
            78.35
            %
            
            54.34
            %Frozen Pork
            
            
            11,043,748
            
            
            7.87
            %
            
            6,511,432
            
            
            7.26
            %
            
            69.61
            %Processed
                Food Products
            
            
            20,770,707
            
            
            14.80
            %
            
            12,913,200
            
            
            14.39
            %
            
            60.85
            %Total
                Sales
            
            
            $140,309,218
            
            
            100
            %
            
            $89,718,841
            
            
            100
            %
            
            56.39
            %





42





**Sales by product category,**
              **by weight of product**
              **(metric tons):**
            
            **Nine Months**
              **Ended September**
              **30,****2008**
              **(Weight in tons)**
            
            **% of**
              **Total**
              **Sales**
            
            **Nine Months**
              **Ended September**
              **30, 2007**
              **(Weight in tons)**
            
            **% of**
              **Total**
              **Sales**
            
            **% of change**
              **from**
              **2007 to 2008**Fresh Pork
            
            
            48,123
            
            
            80.14
            %
            
            35,596
            
            
            74.87
            %
            
            35.19
            %Frozen
                Pork
            
            
            4,449
            
            
            7.41
            %
            
            3,285
            
            
            6.91
            %
            
            35.43
            %Processed
                Food Products
            
            
            7,475
            
            
            12.45
            %
            
            8,665
            
            
            18.22
            %
            
            -13.73
            %Total
                Sales
            
            
            60,047
            
            
            100
            %
            $
            47,546
            
            
            100
            %
            
            26.29
            %





In
      the
      nine months ended September 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, we increased our sales of fresh pork and frozen pork,
      both by weight and by sales revenue, in the first nine months of 2008 as
      compared with the same period in the prior year. For processed food products,
      our sales by weight decreased by 13.73%, and management believe this is because
      increased prices to customers discouraged sales. As discussed previously, we
      increased our prices for processed food products to recoup our increased input
      costs, for such items as packaging material and food additives. However, because
      of higher per-kilogram prices, our overall sales revenue for this product
      category increased by 60.85%. 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 nine months ended September 30, 2008, as compared
      to
      the same quarter last year:


**Average Per-Kilogram Price to Customers (in $US)****Nine Months**
                **Ended September**
                **30, 2008**
              
              **Nine Months**
                **Ended September**
                **30, 2007**
              
              **% change**
              
              **Change in**
                **Price ($)**Fresh Pork
              
              $
              2.25
              
              $
              1.97
              
              
              14.21
              %
              $
              0.28Frozen
                  Pork
              
              $
              2.48
              
              $
              1.98
              
              
              25.25
              %
              $
              0.50Processed
                  Food Products
              
              $
              2.78
              
              $
              1.49
              
              
              86.58
              %
              $
              1.29
  In
        the
        nine months ended September 30, 2008, we raised our prices to our customers
        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 in response 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
        14.21% 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, possibly damaging customer goodwill, and would have
        been out of line with our competitors.
  Currently
        our principal sales channels consist of supermarkets, sales agents,
        Chuming-branded franchise stores, as well as restaurants and
        canteens.
 
 The
        following table shows the total increase in our sales, from the first nine
        months ending on September 30, 2008 as compared to same period of 2007, by
        product category and by sales channel.
  43
  **Increase in Sales from The Nine Months Ended September 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
              
              
              8,148,131
              
              
              14,409,956
              
              
              15,642,467
              
              
              N/A2
              
              
              38,200,554Frozen
                  Pork
              
              
              N/A1
              
              
              850,639
              
              
              N/A1
              
              
              3,681,667
              
              
              4,532,316Processed
                  Food Products
              
              
              3,714,216
              
              
              855,831
              
              
              3,015,022
              
              
              261,436
              
              
              7,857,505Total
                  Increase in Sales
              
              
              11,862,347
              
              
              16,127,426
              
              
              18,657,489
              
              
              3,943,113
              
              
              50,590,375
 _____________________________
  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 nine 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 nine 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 $18.66 million increase in sales through
        supermarkets was due to our efforts to expand the supermarket sales
        channel, combined with increases in our per-kilogram prices of fresh pork.
        Orders from supermarkets and hypermarkets tend to be large and stable in
        quantity. Also, typically our supermarket and hypermarket customers are more
        credit-worthy than our other types of customers. We also increased our sales
        through sales agents by $16.13 million for the first nine months of 2008.
        Aside
        from developing new sales agents, we also extended credit to certain
        long-standing sales agents who had have established good credit with us,
        and
        encouraged them to purchase their product through us instead of from our
        competitors. These efforts, management believes, is why we were able to
        significantly increase our sales through sales agents.
  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 nine months of 2008 increased by $45,363,032 or 60.5%,
        from
        $74,966,451 for the nine months ended September 30, 2007 to $120,329,483
        for the
        nine months ended September 30, 2008. This increase in cost of goods sold
        was in
        line with the increase in sales of our products. Our cost of sales for our
        various product categories in the nine months end 2008 is summarized as
        follows:
 
 **Cost of Sales**
                ******by**
                **Production Category:**
              
              **Nine Months**
                **Ended September 30,**
                **2008**
              
              **% of**
                **Overall**
                **Cost of**
                **Sales**
              
              **Nine Months**
                **Ended September 30,**
                **2007**
              
              **% of**
                **Overall**
                **Cost of**
                **Sales**
              
              **% of increase**
                **from**
                **2007 to 2008**Fresh Pork
              
              $
              94,805,397
              
              
              78.79
              %
              $
              59,873,173
              
              
              79.87
              %
              
              58.34
              %Frozen
                  Pork
              
              
              9,322,935
              
              
              7.75
              %
              
              5,535,723
              
              
              7.38
              %
              
              68.41
              %Processed
                  Food Products
              
              
              16,201,151
              
              
              13.46
              %
              
              9,557,555
              
              
              12.75
              %
              
              69.51
              %Total
                  Cost of Sales
              
              $
              120,329,483
              
              
              100
              %
              $
              74,966,451
              
              
              100
              %
              
              60.51
              %
  44
  The
        following table shows our cost of sales in the nine months ended September
        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.
  **Cost of Sales**
                **by Product Category:**
              
              **Nine Months**
                **Ended September**
                **30, 2008**
              
              **% of**
                **Product**
                **Group**
                **Sales**
              
              **Nine Months**
                **Ended September****30,**
                **2007**
              
              **% of Product**
                **Group Sales**Fresh Pork
              
              $
              94,805,397
              
              
              87.38
              %
              $
              59,873,173
              
              
              85.18
              %Frozen
                  Pork
              
              
              9,322,935
              
              
              84.42
              %
              
              5,535,723
              
              
              85.02
              %Processed
                  Food Products
              
              
              16,201,151
              
              
              78.00
              %
              
              9,557,555
              
              
              74.01
              %Total
                  Cost of Sales
              
              $
              120,329,483
              
              
              85.76
              %
              $
              74,966,451
              
              
              83.46
              %
 
 Our
        cost
        of sales as a percentage of sales of fresh pork increased by 2.2% in the
        first
        nine months of 2008, as compared to the same period in 2007, primarily because
        of the increase in the cost of inputs (i.e., live pigs), which were not
        completely offset by higher prices to our customers. In addition, during
        the
        three months ended September 30, 2008, we significantly increased sales of
        fresh
        pork through our sales agents, who assumed the marketing expenses in selling
        our
        fresh pork products. This sales channel typically provides us
        with lower profit margins. Our 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. The bulk of the
        cost
        increase in live pigs occurred in the grade-1 and grade-2 categories. Our
        cost
        of sales as a percentage of sales of processed food products increased around
        2%. This was primarily due to moderate price increases for grade-3 and grade-4
        live pigs, packaging material and food additives.
 
 *Gross
        Profit.* Gross
        profit was $19,979,735 for the nine months ended September 30, 2008 as compared
        to $14,752,390 for the same period in 2007, representing an increase of
        $5,227,345, or 35.43%. Management attributes the increase in gross profit
        to
        strong increases in sales revenue, driven by strong demand for our products,
        especially our fresh pork products, despite higher input costs and related
        price
        increases to our customers. Our gross profit as a percentage of sales was
        14.24%
        in the nine months ended September 30, 2008 as compared to 16.44% for the
        same
        period in 2007. The decrease in gross profit as a percentage of sales was
        attributable to these commodity and input price increases, and we did not
        (due
        to competitive and other factors) pass on all of these costs to our customers
        in
        the form of higher product prices.
 
 The
        following table presents our gross profit for the nine months ended September
        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**
              
              **Nine Months**
                **Ended September**
                **30,****2008**
              
              **% of**
                **Product**
                **Group**
                **Sales**
              
              
              **Nine Months**
                **Ended September**
                **30,****2007**
              
              **% of**
                **Product**
                **Group**
                **Sales**
              
              
              **% of**
                **Increase**
                **from First**
                **Nine Months**
                **of 2007 to**
                **First**
                **Nine Months**
                **of 2008**Fresh Pork
              
              $
              13,689,366
              
              
              12.62
              %
              
              $
              10,421,036
              
              
              14.82
              %
              
              
              31.36
              %Frozen
                  Pork
              
              
              1,720,813
              
              
              15.58
              %
              
              
              975,709
              
              
              14.98
              %
              
              
              76.37
              %Processed
                  Food Products
              
              
              5,569,556
              
              
              22.00
              %
              
              
              3,355,645
              
              
              25.99
              %
              
              
              65.98
              %Total
                  Gross Profit
              
              $
              19,979,735
              
              
              14.24
              %
              
              $
              14,752,390
              
              
              16.54
              %
              
              
              35.43
              %
 
 As
        shown
        in the table above, fresh pork as a product category delivered the lowest
        increase in gross profit from the first nine months of 2008 as compared with
        the
        same period in 2007. This is primarily because of an increase in the cost
        of
        inputs (i.e. live pigs), which was not completely offset by higher prices
        to our
        customers. In addition, particularly during the three months ended September
        30,
        2008, we significantly increased sales of fresh pork through our sales agents,
        who assumed certain marketing expenses in selling our fresh pork products.
        This
        sales channel typically provides us with lower profit
        margins.
  45
  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 per kilogram 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 more
        costly 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 25.99% to
        22.00%.
 
 *Selling
        Expenses.* Selling
        expenses totaled $3,463,947 for the nine months ended September 30, 2008,
        as
        compared to $3,397,046 for the same period in 2007, a slight increase of
        $66,901
        or 2%. This decrease is due to a decrease in advertising expenses. We increased
        the salary of sales employees, leading to the increase of selling expenses.
        However, we did not carry out any major marketing campaign during the past
        three
        quarters of 2008, which we did last year, resulting in a significant decrease
        in
        advertising expenses.
 
 *General
        and Administrative Expenses.* General
        and administrative expenses totaled $1,881,138 for the nine months ended
        September 30, 2008 as compared to $1,147,488 for the same period in 2007,
        an
        increase of $733,650 or 64%. This increase is partially attributable to an
        increase in expenses we incurred after we became a public company, and partially
        attributable to an increase in salary expenses. We incurred additional
        expenditures during this period that we did not incur in the prior year,
        such as
        legal fees, audit and review fees, investor relationship activity fees, and
        other similar expenses, which were necessary as a public company. 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, especially in the earlier part of 2008, salaries and the cost of benefits
        for our staff increased for the third quarter of 2008 in comparison 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 expenses of $9,040 for the nine months
        ended September 30, 2008 as compared to other expenses $1,159,765 for the
        same
        period in 2007, representing a reduction of $1,150,725. This decrease in
        other
        expenses is primarily attributable to a price subsidy in the amount of
        approximately $1 million 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
        was a policy adopted by Dalian metropolitan government to accelerate the
        introduction of new technology into the city. We are not obligated to fulfill
        any specific obligations in exchange for these benefits. The subsidy and
        interest reimbursement was offset by an accrued a liability of $399,500 in
        connection with the appointment of our new Chief Financial Officer on September
        18, 2008, as this appointment occurred later than the target date we agreed
        under the terms of our December 2007 financing.  See Note 19 –
Appointment of Chief Financial Officer, in our financial statements for the
        period ended September 30, 2008.
  *Net
        Income* .
        Our net
        income for the nine months ended September 30, 2008 was $14,176,473 as compared
        to $8,298,587 for the same period in 2007, an increase of $5,877,886 or 70.83%.
        This increase in net income is attributable to the factors described above,
        but
        primarily from the increase in sales, and our efforts to manage our costs,
        as compared to the same period in 2007.
  46
  **LIQUIDITY
        AND CAPITAL RESOURCES**
  **Cash
        Flows**
 
 ***Nine
        Months Ended September 30, 2008***
 
 As
        of
        September 30, 2008, we had cash and cash equivalents of $11,672,377, other
        current assets of $45,618,760 and current liabilities of $33,290,011. At
        September 30, 2007, we had $ 2,457,434 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.
 
 Net
        cash
        used in operating activities was $307,586 for the nine months ended on September
        30, 2008, while net cash flow sourced from operating activities was $3,534,957
        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, 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
        used in investing activities was $1,638,371 for the nine months ended September
        30, 2008, compared to cash used in investing activities of $4,177,864 in
        the
        same period in 2007. This is primarily due to the following factors: first,
        we
        purchased equipments with the amount of $2,689,418 and land use rights of
        $904,031 in the third quarter of 2008, while we paid $847,063 to purchase
        equipment and paid $3,333,506 to purchase land use rights for the nine months
        ended September 30, 2007. Second, we received additional funds in the amount
        of
        $2,019,333 released from our escrow account in the nine months ended
        September 30, 2008, relating to our $17 million private placement in December
        2007.
 
 Net
        cash
        used in financing activities was $964,516 for the nine months ended on September
        30, 2008, as compared to net cash used in financing activities of $82,880
        in the
        same period in 2007. The cash was used as payment of bank loan interest and
        repayment of a small portion of principal.
 
 **Capital
        Commitments**
 
 In
        the
        first quarter of 2008, 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.
  47
  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
        September 30, 2008, we had outstanding borrowings under two loans from the
        Bank
        of China, in the amount of $4,376,304 and $2,042,275 respectively, on which
        we
        pay interest at a rate of 8.217% and 8.019% per annum respectively. As of
        September 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 nine months ended
        September 30, 2008 and 2007, which was in each instance a gain, was $550,999
        and
        $1,174,740, 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 September 30, 2008, the market
        foreign
        exchanges rate was increased to 6.8551 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 nine months and three months ended September 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 September 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
              
              $
              6,418,579
              
              $
              6,418,579
              
              $
              —
              
              $
              —
              
              $
              —Other
                  Indebtedness
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —Capital
                  Lease Obligations
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —Operating
                  Leases
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —Purchase
                  Obligations
              
              $
              417,551,300
              
              $
              27,431,300
              
              $
              390,120,000
              
              $
              —
              
              $
              —Total
                  Contractual Obligations:
              
              $
              423,969,879
              
              $
              33,849,879
              
              $
              390,120,000
              
              $
              —
              
              
              —
  48
  As
        indicated in the table, as of September 30, 2008 we had $423,969,879 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
        September 30, 2008, management projected minimum quantities of hogs as detailed
        in the following table:
  **Year**
              
              **Hogs**
              
              **Price Per Hog**
              
              **Amount**2008
              
              
              130,000
              
              $
              211.01
              
              $
              27,431,3002009
              
              
              800,000
              
              $
              232.21
              
              $
              185,768,0002010
              
              
              800,000
              
              $
              255.44
              
              $
              204,352,000$
              417,551,700
 
 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.
 
 **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 September 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.
  49
  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
        stockholders’ 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 an 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 an 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.
 
 As
        of
        September 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 September 30, 2008 that have materially
        affected, or are reasonably likely to materially affect, our internal control
        over financial reporting.
 
 **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 report 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.*
  50
  ***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
  ·
              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.
  51





**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.





**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.




52




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.





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.




53





**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.





**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.




54




**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.





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.




55




**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.




56




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.




57




**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.




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.




58




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.





**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.




59




**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”).





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.




60




**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.





***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.




61




**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.





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.




62




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.





**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.




63




**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.





**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.




64




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.




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





None.





**ITEM
      6.         
EXHIBITS**





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





**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)




65




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)10.15
            
            Employment
                Agreement with Yizhao Zhang (5)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.**
            
            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 Quarterly Report on Form 10-Q on May 20, 2008 and
                incorporated herein by reference.(5)
            
            Previously
                filed with our Current Report on Form 8-K on September 23, 2008 and
                incorporated herein by
                reference.


66




**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:  November
                19, 2008
            By:
            /s/
                Shi HuashanShi
                HuashanPresident and Chief Executive Officer(Principal Executive Officer)Dated:  November
                19, 2008
            By:
            /s/
                Yizhao ZhangYizhao
                ZhangChief Financial Officer(Principal Financial and Accounting Officer)




67