**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**Form
      10-KSB**





(Mark
      One)





x
            ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934 FOR THE FISCAL YEAR ENDED:**DECEMBER
                31, 2006**





OR





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 No.**





**SHIMING
      U.S., INC.**





(Exact
      name of small business issuer as specified in it charter)





**Nevada**
            
            **6-0609457**(State
                or other jurisdiction of incorporation or organization)
            
            (IRS
                Employer Identification No.)




**12/F,
                Shanxi Zhengquan Building, Gaoxin 2nd Road**
              **Xian,
                Shanxi Province, China**(Address
                of principal executive
                offices)**(852)
                2823-0000**(Issuer’s
                telephone
                number)





Securities
      registered pursuant to Section 12(b) of the Act:





Title
                of each class
            
            Name
                of each exchange on which registeredNone
            
            None





Securities
      registered pursuant to Section 12(g) of the Act:





Common
      stock, $0.001 par value





(Title
      of
      Class)





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act o





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


Yes x No o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in this form, and no disclosure will be
      contained, to the best of registrant’s knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-KSB
      or any amendment to this Form 10-KSB o








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


Yes o No x





The
      issuer’s revenues for the fiscal year ended December 31, 2006:
      $5,532,601





As
      of
      January 25, 2007, the aggregate market value of the Common Stock held by
      non-affiliates, approximately 11,000,167,167 shares of Common Stock, was
      approximately $13,640,207, based on an average of the bid and ask prices of
      approximately $1.24 per share of Common Stock on such date.





The
      number of shares outstanding of the issuer’s Common Stock, $.001 par value, as
      of January 25, 2007 was 66,693,834 shares.





Documents
      Incorporated By Reference: None.





Transitional
      Small Business Disclosure Format (check one): Yes o No x








2





TABLE
      OF
      CONTENTS


TO
      ANNUAL
      REPORT ON FORM 10-KSB


FOR
      YEAR
      ENDED DECEMBER 31, 2006





PART
                I
            
            PageItem
                1.
            Description
                of Business
            5Item
                2.
            Description
                of Property
            14Item
                3.
            Legal
                Proceedings
            15Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            15PART
                IIItem
                5.
            Market
                for Registrant’s Common Equity and Related Stockholder Matters
            15Item
                6.
            Management’s
                Discussion and Analysis or Plan of Operation
            16Item
                7.
            Financial
                Statements
            33Item
                8.
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure
            34Item
                8A.
            Controls
                and Procedures
            34Item
                8B.
            Other
                Information
            34PART
                IIIItem
                9.
            Directors,
                Executive Officers, Promoters, Control Persons and Corporate Governance;
                Compliance with Section 16(a) of the Exchange Act
            35Item
                10.
            Executive
                Compensation
            36Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            38Item
                12.
            Certain
                Relationships and Related Transactions, and Director
                Independence
            39Item
                13.
            Exhibits
            40Item
                14.
            Principal
                Accountant Fees and Services
            40Signatures
            
            42








3





**CAUTION
      REGARDING FORWARD-LOOKING INFORMATION**





All
      statements contained in this Annual Report on Form 10-KSB (“Form 10-KSB”) for
      Shiming U.S., Inc., other than statements of historical facts, that address
      future activities, events or developments are forward-looking statements,
      including, but not limited to, statements containing the words “believe,”
“anticipate,” “expect” and words of similar import. These statements are based
      on certain assumptions and analyses made by us in light of our experience and
      our assessment of historical trends, current conditions and expected future
      developments as well as other factors we believe are appropriate under the
      circumstances. However, whether actual results will conform to the expectations
      and predictions of management is subject to a number of risks and uncertainties
      that may cause actual results to differ materially.





Such
      risks include, among others, the following: international, national and local
      general economic and market conditions: our ability to sustain, manage or
      forecast our growth; new product offerings and introduction; existing government
      regulations and changes in, or the failure to comply with, government
      regulations; adverse publicity; competition; the loss of significant customers
      or suppliers; fluctuations and difficulty in forecasting operating results;
      changes in business strategy or development plans; business disruptions; the
      ability to attract and retain qualified personnel; the ability to protect
      technology; and other factors referenced in this and previous
      filings.





Consequently,
      all of the forward-looking statements made in this Form 10-KSB are qualified
      by
      these cautionary statements and there can be no assurance that the actual
      results anticipated by management will be realized or, even if substantially
      realized, that they will have the expected consequences to or effects on our
      business operations. As used in this Form 10-KSB, unless the context requires
      otherwise, “we” or “us” or the “Company” means Shiming U.S., Inc.








4








**PART
      I**





**Item
                1.**
            **Description
                of Business.**





**Company
      Overview and History**





Shiming
      U.S., Inc. (previously named “Argenta Systems, Inc.”) is a consumer electronics
      company, with a particular focus on the design, development and manufacture
      of
      competitively-priced liquid crystal display (LCD) products, including
      high-definition TVs (HDTV) and computer monitors. Our manufacturing plant is
      located in the Changxin High and New Technology Industrial Garden in Shenzhen,
      China. For several years we have been involved in the research and development
      of consumer electronics products and technologies such as LCD, plasma displays,
      and household electronics.





The
      Company was originally formed in the State of Nevada on June 1, 1999 under
      the
      name “XIT Solutions.com, Inc.” with a principal business objective to engage in
      the vitamin and health food supplement business. On May 21, 2002, the Company
      changed its name to “Argenta Systems, Inc.” (“Argenta”) and amended its Articles
      of Incorporation to increase the authorized capital stock and to create a class
      of preferred stock.





On
      August
      25, 2006, we entered into an Agreement and Plan of Share Exchange (“Exchange
      Agreement”) with certain significant stockholders of Argenta (collectively, the
“Argenta Shareholders”), Shiming (Cayman) Ltd., a limited liability company
      incorporated under the laws of the Cayman Islands (“Shiming Cayman”), and each
      of the shareholders of Shiming Cayman (collectively, the “Shiming Cayman
      Shareholders”) (This transaction is referred to hereinafter as the “Share
      Exchange Transaction”). The closing of the Share Exchange Transaction (the
“Closing”) occurred on November 10, 2006 (the “Closing Date”).





On
      the
      Closing Date of the Exchange Agreement, we acquired Shiming Cayman by issuing
      57,693,834 shares of our common stock (the “Argenta Shares”) to the Shiming
      Cayman Shareholders and consultants, and in exchange, the Shiming Cayman
      Shareholders assigned 100% of the outstanding common stock of Shiming Cayman
      to
      Argenta. From and after the Closing Date, the Company’s primary operations
      consist of the operations of the business of Shiming Cayman. The Share Exchange
      Transaction was accounted for as a reverse merger (recapitalization) with
      Shiming Cayman deemed to be the accounting acquirer, and us as the legal
      acquirer. Accordingly, the historical financial information presented in future
      financial statements will be that of Shiming Cayman as adjusted to give effect
      to any difference in the par value of ours and Shiming Cayman’s stock with an
      offset to capital in excess of par value. The basis of the assets, liabilities
      and retained earnings of Shiming Cayman, the accounting acquirer, have been
      carried over in the recapitalization. Upon the Closing of the Exchange
      Transaction, we became a Chinese consumer electronics company that designs,
      develops and manufactures competitively-priced LCD products, including HDTV
      and
      computer monitors.





Shiming
      Cayman owns 100% of Shiming (Xi’an) Enterprise Management & Consulting Co.,
      Ltd. (“Shiming Management”), which is a wholly foreign owned enterprise under
      the laws of the Peoples’ Republic of China (“ PRC ”).
      Shiming Management operates, controls and beneficially owns the LCD business
      in
      China through a series of contractual arrangements with Shiming Technology
      Science & Technology Joint Stock Co., Ltd. (“Shiming Technology”), a joint
      stock limited liability company formed under the laws of the PRC. Shiming
      Technology and Shiming Cayman together own 100% of Shenzhen Seathan Technology
      Co., Ltd. (“Seathan Technology”), which designs and produces LCD products. These
      contractual arrangements include a Consulting Agreement and an Operating
      Agreement. Through these contractual arrangements, Shiming Management has the
      right to advise, consult, manage and operate Shiming Technology, and collect
      and
      own all of its net profits. In addition, Shiming Management, Shiming Technology
      and the Shiming Technology shareholders have entered into a series of agreements
      under which voting control over the outstanding shares of Shiming Technology
      will be vested in Shiming Management and the board of directors of the Shiming
      Management, including a Proxy and Voting Agreement (“Proxy Agreement”) and a
      Voting Trust and Escrow Agreement (“Voting Trust and Escrow Agreement”). In
      order to further reinforce the rights of Shiming Management to control and
      operate Shiming Technology, Shiming Technology and the Shiming Technology
      shareholders have granted Shiming Management the exclusive right and option
      to
      acquire all of the shares of Shiming Technology, or alternatively, all of the
      assets of Shiming Technology (“Option Agreement”). Further, the Shiming
      Technology shareholders have pledged all right title and interest in their
      shares of Shiming Technology to Shiming Management under an equity pledge
      agreement (the “Equity Pledge Agreement”). Collectively, the Consulting
      Agreement, Operating Agreement, Option Agreement, Equity Pledge Agreement,
      and
      Proxy Agreement are referred to herein as the “Restructuring Agreements,” copies
      of which are included with this current report on Form 8-K as Exhibits 10.1,
      10.2, 10.3, 10.4, and 10.5, respectively.


5





As
      a
      result of these contractual arrangements, which obligates Shiming to absorb
      a
      majority of the risk of loss from Shiming Technology’s activities and enable
      Shiming to receive a majority of its expected residual returns, the Company
      believes Shiming Technology is a variable interest entity (“VIE”) under FASB
      Interpretation No. 46R (“FIN 46R”), “Consolidation of Variable Interest
      Entities, an Interpretation of ARB No. 51”, because the equity investors in
      Shiming Technology do not have the characteristics of a controlling financial
      interest and the Company should be considered the primary beneficiary of Shiming
      Technology. Accordingly, the Company consolidates Shiming Technology’s results,
      assets and liabilities in the accompanying financial statements.





**Contractual
      Arrangements with Shiming Technology and Its Shareholders**





Our
      relationships with Shiming Technology and its shareholders are governed by
      a
      series of contractual arrangements. Under PRC laws, each of Shiming Management
      and Shiming Technology is an independent legal person and neither of them is
      exposed to liabilities incurred by the other party. Other than pursuant to
      the
      contractual arrangements between Shiming Management and Shiming Technology,
      Shiming Technology does not transfer any other funds generated from its
      operations to Shiming Management. On August 25, 2006, we entered into the
      following contractual arrangements:





***Consulting
      Services Agreement*** .
      Pursuant to the exclusive consulting services agreement between Shiming
      Management and Shiming Technology, Shiming Management has the exclusive right
      to
      provide to Shiming Technology general business operations services as well
      as
      consulting services related to the technological research, development, design
      and manufacturing of LCD products (the “Services”). Shiming Management also
      seconds employees to Shiming Technology for whom Shiming Technology bears the
      costs and expenses. Under this agreement, Shiming Management owns the
      intellectual property rights developed or discovered through research and
      development providing the Services for Shiming Technology. Shiming Technology
      pays a quarterly consulting service fees in Renminbi (“RMB”) to Shiming
      Management that is equal to all of Shiming Technology’s revenue for such
      quarter.





***Operating
      Agreement*** .
      Pursuant to the operating agreement among Shiming Management, Shiming Technology
      and the shareholders of Shiming Technology who collectively hold the majority
      of
      the outstanding shares of Shiming Technology (collectively “Shiming Technology’s
      Majority Shareholders”), Shiming Management provides guidance and instructions
      on Shiming Technology’s daily operations, financial management and employment
      issues. The shareholders of Shiming Technology must designate the candidates
      recommended by Shiming Management as their representatives on Shiming
      Technology’s board of directors. Shiming Management has the right to appoint
      senior executives of Shiming Technology. In addition, Shiming Management agrees
      to guarantee Shiming Technology’s performance under any agreements or
      arrangements relating to Shiming Technology’s business arrangements with any
      third party. Shiming Technology, in return, agrees to pledge its accounts
      receivable and all of its assets to Shiming Management. Moreover, Shiming
      Technology agrees that without the prior consent of Shiming Management, Shiming
      Technology will not engage in any transactions that could materially affect
      the
      assets, liabilities, rights or operations of Shiming Technology, including,
      without limitation, incurrence or assumption of any indebtedness, sale or
      purchase of any assets or rights, incurrence of any encumbrance on any of its
      assets or intellectual property rights in favor of a third party or transfer
      of
      any agreements relating to its business operation to any third party. The term
      of this agreement is ten (10) years from August 25, 2006 and may be extended
      only upon Shiming Management’s written confirmation prior to the expiration of
      the this agreement, with the extended term to be mutually agreed upon by the
      parties.





***Equity
      Pledge Agreement*** *.* Under
      the
      equity pledge agreement between the shareholders of Shiming Technology and
      Shiming Management, the shareholders of Shiming Technology pledged all of their
      equity interests in Shiming Technology to Shiming Management to guarantee
      Shiming Technology’s performance of its obligations under the technology
      consulting agreement. If Shiming Technology or Shiming Technology’s Majority
      Shareholders breaches its respective contractual obligations, Shiming
      Management, as pledgee, will be entitled to certain rights, including the right
      to sell the pledged equity interests. The Xian Majority Shareholders also agreed
      that upon occurrence of any event of default, Shiming Management shall be
      granted an exclusive, irrevocable power of attorney to take actions in the
      place
      and stead of the Xian Shareholders to carry out the security provisions of
      the
      equity pledge agreement and take any action and execute any instrument that
      Shiming Management may deem necessary or advisable to accomplish the purposes
      of
      the equity pledge agreement. The shareholders of Shiming Technology agreed
      not
      to dispose of the pledged equity interests or take any actions that would
      prejudice Shiming Management’s interest. The equity pledge agreement will expire
      two (2) years after Shiming Technology obligations under the exclusive
      consulting services agreement have been fulfilled.


6





***Option
      Agreement*** *.*  ** Under
      the
      option agreement between the shareholders of Shiming Technology and Shiming
      Management, the shareholders of Shiming Technology irrevocably granted Shiming
      Management or its designated person an exclusive option to purchase, to the
      extent permitted under PRC law, all or part of the equity interests in Shiming
      Technology for the cost of the initial contributions to the registered capital
      or the minimum amount of consideration permitted by applicable PRC law. Shiming
      Management or its designated person has sole discretion to decide when to
      exercise the option, whether in part or in full. The term of this agreement
      is
      ten (10) years from August 25, 2006 and may be extended prior to its expiration
      by written agreement of the parties.





***Proxy
      Agreement*** *.* Pursuant
      to the proxy agreement among Shiming Management, Shiming Technology’s Majority
      Shareholders, and Shiming Technology, Shiming Technology’s Majority Shareholders
      agreed to entrust all the rights to exercise their voting power to the person(s)
      appointed by Shiming Management. The parties entered into a proxy agreement
      where Shiming Technology’s Majority Shareholders have agreed to irrevocably
      grant a person to be designated by Shiming Management with the right to exercise
      Shiming Technology’s Majority Shareholders’ voting rights and their other rights
      including the attendance at and the voting of Shiming Technology’s Majority
      Shareholders’ shares at the shareholder’s meetings (or by written consent in
      lieu of meetings) in accordance with applicable laws and its Article of
      Association, including but not limited to the rights to sell or transfer all
      or
      any of his equity interests of the Company, and appoint and vote for the
      directors and Chairman as the authorized representative of the shareholders
      of
      Company. The proxy agreement may not be terminated without the unanimous consent
      of both Parties, except that Shiming Management may, by giving thirty (30)
      days
      prior written notice to Shiming Technology’s Majority Shareholders, terminate
      this Agreement.





**Recent
      Developments**





On
      January 25, 2007, the Board and the majority holders of the Company’s capital
      stock jointly approved an amendment to our Articles of Incorporation by written
      consent to change of our corporate name (“Name Change”) to our current name,
      Shiming U.S., Inc. The Certificate of Amendment and Certificate of Change to
      our
      Articles of Incorporation to effect the Name Change was filed with Nevada’s
      Secretary of State on February 26, 2007. The Company’s Name Change and its new
      trading symbol (OTCBB: SGUS) became effective on the OTC Bulletin Board on
      March
      5, 2007.





**Overview
      of Our Business**





**Our
      Industry**





The
      worldwide conversion of media content from analog to digital is a primary growth
      driver in the television market. This conversion is being mandated in the United
      States, Europe, and Asia. Similar to other countries, the Chinese government
      has
      set a target date of 2015 for conversion of all television transmissions to
      digital format. Declining per-unit production costs have made HDTV more
      accessible to more consumers. In addition, improved technology and has
      heightened the demand for digital devices.





According
      to China Engineering Group and China Investment Consultants, 35.5 million color
      TV were sold in China in 2005, including 1.3 million LCD HDTVs, representing
      about 3.6% of all TVs sold. Industry analysts project that by 2010, Chinese
      consumers will purchase 41 million TVs per year, and half of them will employ
      LCD technology. It is also projected that the LCD HDTV segment in China will
      increase from approximately 1.3 million units in 2005 to 20 million units in
      2010, representing a projected annual growth rate of well over 50%. In terms
      of
      sales, the LCD HDTV market in China is expected to reach a total market size
      of
      USD $30 billion by 2010.





Within
      the home electronics market, consumers are increasingly demanding larger and
      higher-resolution video screens for home entertainment purposes. Factors that
      differentiate products in this market include picture quality, resolution,
      contrast ratio, and pixel fill factor. We believe consumers are willing to
      spend
      more for a higher quality entertainment experience in their homes. We also
      believe consumers will continue to seek better quality products for their
      television, video, Internet, and other digital entertainment needs.


7





According
      to market research from China Internet Statistics and Development Report
      conducted by China National Network of Internet Center (CNNIC), in 1997, there
      were 620,000 Internet users in China. By June 30, 2005, the number of internet
      users in China grew to 103 million. From 2005 to 2006, in just one year, the
      number of Chinese internet users grew by another 20 million, or 19.4%, to a
      total of 123 million. Since internet usage, particularly broadband, is
      increasingly viewed as another form of home entertainment, and internet users
      tend to be relatively affluent and technology-savvy, we believe internet usage
      is highly correlated with increased demand for PCs and computer peripherals
      including LCD displays.





**Our
      Strategic Advantages**





·
            *Cost*.
                We have access to quality technical and engineering personnel, as
                well as
                access to skilled labor, at a lower cost than our competitors. We
                also
                maintain a low cost high capacity manufacturing facility in Shenzhen.
                These advantages permit us to produce quality products at a lower
                cost
                than our multi-national competitors, and maintain profitability.





·
            *Centralized
                sourcing*.
                We source the majority of our parts and components from top suppliers
                in
                mainland China, rather than relying extensively upon foreign suppliers.
                As
                a result, we are able to effectively manage our supply sources, with
                lower
                risk of delay and disruption.





·
            *Manufacturing
                capability*.
                We have our own manufacturing capacity, which allows us to control
                the
                volume of production and quickly adapt to market demand.





·
            *Tax
                advantages*.
                We are located in a special economic zone in Shenzhen, which allows
                us to
                benefit from favorable tax policies instituted by the Chinese government.





·
            *Exemption
                from Duties*.
                As a manufacturer in Shenzhen, we currently pay no tariffs for any
                of our
                imported LCD parts. Insofar as our competitors are located other
                cities
                where there is no such incentive policy, we derive a competitive
                advantage.





·
            *Proximity
                to Chinese Market*.
                As a manufacturer based in China, and our status as a domestic producer,
                we have access to a potentially vast, expanding market consisting
                of
                middle class households in China.





·
            *Access
                to Marketing Channels*.
                As a domestic producer in China based in Shenzhen, we believe we
                have an
                advantage in dealing with domestic distributors, retailers, and marketing
                channels within China, having our production facilities in close
                proximity
                to China’s national import and distribution center for electronic
                products. We consider our location in Shenzhen to be a significant
                advantage in both of our purchasing of parts and the sale of our
                products.





**Our
      Strategy**





We
      plan
      to expand our business and increase sales and profitability by:





·
            Gaining
                access to marketing channels within the PRC through strategic
                relationships with dealers and distributors;





·
            Continuing
                to develop a direct sale marketing channel in
                Shenzhen;





·
            Developing
                OEM relationships for opportunities to integrate our LCD products
                into a
                wider range of consumer electronics;





·
            Developing
                new products to replace existing ones within 18 months or less, and
                to
                continue to offer products that are comparable to the state of the
                art;





·
            Making
                significant technological improvements to our products that are customized
                to our target market; and







8


·
            Entering
                into strategic relationships with partners and
                developers.





**Overview
      of High-Definition TV Technologies**





Currently,
      there are several leading technologies available for HDTVs, each having its
      own
      advantages and disadvantages. The direct-view technologies are CRT, plasma,
      and
      LCD based panels. The rear projection technologies are digital light processing
      (DLP), high temperature polysilicon (HTPS), and liquid crystal on silicon
      (LCoS).





***CRT*** .
      Traditional cathode ray tube (CRT) displays utilize a vacuum tube in which
      images are produced by scanning an electron beam horizontally and vertically
      across a layer of phosphors inside the picture tube. When “excited” by the
      passing electron beam, the phosphor pattern will “glow” temporarily through an
      aperture grille or mask, producing individual pixels. CRT HDTVs have a wide
      viewing angle and fast video-response performance, however, they are generally
      not as bright as other types of displays, and CRT based equipment tends to
      be
      very bulky (at least 2 feet deep for a 40” screen) and heavy (averaging 300
      pounds for a 40” screen). According to a May 2004 technology white paper
      released by Dell Computer, CRT technology is gradually being replaced by
      flat-panel monitors for PCs, and CRT-based HDTVs are being replaced by thinner
      and more compact HDTVs.





***Plasma*** .
      Plasma
      displays possess some of the performance advantages of CRTs, but can be produced
      in thinner and more compact devices. Plasma technology is a direct-view display
      that enables the production large flat-panel televisions measuring less than
      six
      inches deep. Plasma technology utilizes tiny cells containing a mixture of
      gases, to form subpixels. When current is applied across these cells, the gas
      within them is ionized into plasma, and the plasma begins emitting photons.
      Like
      a CRT, the photons excite a phosphor layer on the inside surface of the display
      screen, producing visible pixels at the cell location. Unlike CRTs, however,
      the
      pixel intensity cannot be directly regulated. Instead, each cell is switched
      on
      and off rapidly and varying frequencies to create a color intensity that can
      be
      seem by the viewer. Plasma HDTVs are more expensive than other technologies,
      but
      its proponents claim that plasma renders better video-response times and better
      color performance than other technologies. However, plasma has many drawbacks
      widely recognized in the industry. First, plasma has a shorter life than LCD
      or
      CRT displays. The color performance of plasma displays may degrade over time.
      Also, like CRTs that utilize phosphors, static images displayed on the screen
      for a long time can leave a faint image “burned in” onto the screen, and this
      damage can be permanent. Plasma displays also have high energy consumption
      and
      general more excess heat than other technologies. Finally, the resolution in
      plasma displays tends to be more limited than in LCDs due to the minimum size
      in
      which plasma cells can be manufactured. As a result, plasma displays tend to
      be
      limited to a range of 37 inches to 55 inches.





***DLP*** .
      Digital
      light processing (DLP) involves a technology developed by Texas Instruments,
      using digital micromirrors. DLP technology is used in both front and rear
      projection televisions. DLP technology uses a digital micromirror device that
      contains a rectangular array of hinge-mounted individually movable microscopic
      mirrors, one for each pixel. The mirrors on a DLP chip can either tilt toward
      the light, creating a pixel of light, or swing away from the light, creating
      a
      dark pixel. Most displays are made using a single DLP chip. In order to generate
      a color image on a one-chip television, the light passes through a spinning
      color wheel containing cyan, magenta, and yellow filters. The color shade of
      each pixel is controlled though a dithering technique that varies the amount
      of
      time each micromirror reflects light to the screen, which enables a one-chip
      DLP
      television to display 16.7 million different colors. In a three-chip
      design, rather than using a color wheel, white light is divided into three
      colors through a prism, and each beam is focused onto each pixel to form a
      unique color. DLP technology is known for producing very high contrast images.
      However, DLPs are relatively expensive to manufacture, especially for larger
      devices with higher resolutions, and the manufacturing facilities involve major
      capital investments. DLP HDTVs also have image quality issues, particularly
      related to contrast ratio, unwanted video artifacts, and color distortion.
      Since
      DLPs use physical micromirrors that rely on a mechanical hinging motion, they
      are prone to malfunction - one or more micromirrors can become stuck, either
      on
      or off, resulting in a single pixel remaining fixed on the screen. Because
      of
      the color wheel, images on a DLP television may tend to have a distracting
      “rainbow” effect resulting from the shifting rainbow of colors.





***HTPS*** .
      High-temperature polysilicon (HTPS) displays use a transmissive technology
      and
      are currently available from only two large manufacturers in Japan. HTPS
      displays sandwich liquid crystal material between two layers of quartz
      high-temperature glass. To produce images, light passes from a projection lamp
      into a color management and display system. HTPS displays require special
      optical equipment that is large and expensive. HTPS, which have limited
      availability because they are produced only in Japan, also suffers from a low
      pixel fill factor that produces an undesirable “screen door” effect on images
      displayed to the viewer.


9





***LCoS*** .
      Liquid
      crystal on silicone (LCoS) is a hybrid between DLP and LCD technologies; it
      differs from LCD in that LCoS relies upon the reflection of light, rather than
      the passage of light through an LCD screen, to produce images. LCoS creates
      pixels by covering a reflective silicon chip with crystal material arranged
      in a
      grid pattern. Like DLP, the surface of an LCoS chip acts as a mirror to reflect
      light onto the inside of the display. Like direct-view LCD displays, discussed
      below, the orientation of crystal on the LCoS chip is controlled by applying
      current to the chip, thus controlling the amount of light that is reflected
      from
      the chip’s surface at each pixel location. The reflected light is then magnified
      and focused on the inside surface of the display panel to form an image. LCoS
      has certain advantages including a thin compact form factor, high resolution,
      a
      high pixel fill factor, and smoother pixels than DLP (resulting in more natural
      looking images). In addition, LCoS displays avoid the undesirable rainbow
      effects and mechanical malfunctions associated with DLP, will not “burn in,” and
      don’t create a “screen door” effect. However, LCoS is still a relatively new
      technology, which is expensive and difficult to obtain.





***LCD*** .
      Liquid
      crystal display (LCD) technology, sometimes referred to as thin-film transistor
      liquid crystal displays (TFT-LCD) allows thin and light form factors and high
      definition resolution at more affordable prices than plasma. LCD displays also
      have a longer life than plasma, and do not suffer from “burn in.” In addition,
      LCD technology avoids the undesirable “screen door” effects and mechanical
      micromirror failures associated with other technologies. LCD displays produce
      images by casting light, generated by one or more fluorescent bulbs or “back
      lights,” through a matrix of thin film transistors that supply voltage to liquid
      crystal filled cells sandwiched between polarized glass sheets. When hit with
      an
      electrical charge, the crystals change their shape and modulate light generated
      by the back lights, reproducing colors by attenuating particular wavelengths
      from the spectrum of white light until the correct color is produced. LCD
      displays are known for high brightness, contrast and resolution, especially
      for
      screen sizes from 17” to 40”. LCD technology provides excellent picture quality,
      a very thin form factor, rapid response times, extreme brightness, and exhibit
      superior bright room viewing properties. A drawback of LCD technology is that
      it
      traditionally has had a slower video-response time than other display
      technologies. LCD video-response times have been steadily improving, however,
      in
      the latest screen designs due to continuing advances in liquid crystal materials
      and associated control schemes. Industry analysts indicate that LCD HDTVs have
      already overtaken plasma HDTVs at screen sizes of 37 inches or less. We believe
      LCD technology will increasingly dominate the product category of HDTVs, and
      will eventually outsell plasma displays at screen sizes of over 40 inches within
      the next several years. Accordingly, we still produce plasma displays, but
      our
      focus continues to be on increasing production and sales of our LCD-based
      products.





**Our
      Principal Products and Their Markets**





***Computer
      Monitors and HDTVs*** .
      We
      offer a variety of LCD television sets ranging in sizes from 17 inches to 40
      inches. We manufacture and sell computer monitors that come in 17 inch and
      19
      inch sizes. In addition, we offer miniature television sets with screen sizes
      from 7 to 8 inches. Our plasma-based HDTVs range in size from 42 inches to
      63
      inches. All of our LCD products include displays based on sixth-generation
      TFT-LCD technology, which is the state of the art in LCD displays. In recent
      years, major advances in resolution ratio and light intensity have been made,
      enhancing the overall performance of LCD displays relative to other
      technologies. We source components from a variety of foreign and domestic
      suppliers located in Taiwan, Shenzhen, Shanghai and Beijing, including the
      display component, processing chassis and other parts.





We
      currently produce the following televisions and monitors:




Type
            
            SizesLCD
                Monitors
            
            17
                inch; 19 inchLCD
                TVs
            
            17
                inch; 19 inch; 20 inch; 27 inch;
              32
                inch; 40 inchPlasma
                TVs
            
            42
                inch; 46 inch; 50 inch; 63 inch





***LCD
      Displays for Vehicles*** .
      We work
      with a number of vehicle manufacturers to produce integrated LCD displays.
      For
      smaller passenger vehicles, we manufacture displays ranging is size from 7
      to 8
      inches. These displays are designed to receive broadcast TV programming and
      real-time traffic information via satellite. For larger vehicles including
      buses
      and trains, we manufacture 15 inch and 17 inch displays. Our larger displays
      are
      designed to receive advertisements and entertainment programming. Shiming sells
      its LCD displays to vehicle manufacturers through LCD distributors.


10





**Product
      Distribution Methods and Our Customers**





Our
      LCD
      products target end users who own and operate personal computers, as well as
      buyers of home entertainment products. We believe that users in this market
      generally speaking, are younger, affluent consumers and professionals, who
      value
      and demand products with the latest technology. We also believe purchasers
      of
      LCD TVs in China are generally younger more affluent households, especially
      newly married couples, who are willing to pay more for a high quality,
      technologically advanced home entertainment products.





We
      believe there are three types of consumers in the consumer electronics market
      in
      China: the price-driven consumer (who shops for the lowest price), the high-end
      consumer (who focuses primarily on acquiring the latest technology), and the
      value consumer (who seeks a combination of affordability and function, but
      will
      pay more for certain advanced features). Our current focus is on the value
      consumer, who may want the features and technology offered by multi-national
      brands, but will choose our brand because of its attractive price.





We
      sell
      our products to a number of distributors and resellers, including the
      following:





Chengdu
      Wanglutong Technology Engineering Co., Ltd.


Xi’an
      Yusheng Electrical Products Co., Ltd.


Shenzhen
      Kelanbo International Trade Co., Ltd.


Taiwan
      Ji
      Sen Enterprise Co., Ltd.


Taiwan
      Qian Teng Co., Ltd


Zhongdian
      Electronic Co., Ltd.





For
      the
      year ended December 31, 2005, our net revenue was $8.9 million, however, this
      revenue was principally derived from the sale of enterprise servers, including
      revenue from services relating to the server business.





For
      the
      fiscal year ending December 31, 2006, our net revenue was $5.5 million.
      Approximately 57% this revenue was derived from the sale of LCD products, and
      approximately 43% derived from the sale of enterprise servers or related
      services. During fiscal year 2006, sales to Chengdu Wanglutong Technology
      Engineering Co., Ltd., Xi’an Yusheng Electrical Products Co., Ltd. and Shenzhen
      Kelanbo International Trade Co., Ltd. accounted for approximately 41%, 27% and
      26% respectively, of our revenue.





For
      our
      LCD products for vehicles, our technical staff works with our OEM customers
      in
      the development stage to identify potential improvements to the design of the
      customer’s product in tandem with the customer’s efforts. We help our OEM
      customers incorporate our displays into their products, thereby reducing the
      time required to bring their products to market. By providing such support,
      we
      help our OEM customers through their design process and achieve cost-effective
      and manufacturable designs, which can be effectively mass produced.





**Sales
      and Marketing**





We
      believe we are currently one of the leading China-based suppliers of LCD
      products in the Greater China market. We believe our market position is due
      largely to the combination of low cost and quality that we offer in our
      products. However, we believe our sales and marketing channels are still
      premature and underdeveloped, and that we may potentially increase sales
      dramatically by launching an effective sales and marketing strategy. As a part
      of our strategy, we plan to increase market awareness, demand, and acceptance
      of
      our products by attending and exhibiting at industry conferences and
      expositions, and implementing publicity campaigns through print, television
      and
      online advertising. We also aim to secure positive product reviews in the
      media.





We
      also
      plan to promote our products as an international brand in markets other than
      Greater China. We intend to target distributors in Hong Kong and North America,
      who have access to leading home and automotive electronics
      retailers.


11





We
      are
      marketing our LCD products to various distributors for sale to their customers.
      These customers include high-end audio/video manufacturers, as well as
      distributors of high-end consumer electronics products and consumer electronics
      retailers. Our sales and marketing strategy is designed to enable consumer
      electronics resellers and consumer retail stores to address the premium portion
      of the LCD market. We initially plan to strengthen our market share with respect
      to our LCD products in China. We expect to capitalize on opportunities in the
      North American market through strategic alliances.





We
      market
      our LCD displays directly to OEMs and through distributors. We work with our
      OEMs to integrate our LCD products into manufactured vehicles.





Our
      Company currently has 45 customers throughout various regions of the PRC, as
      well as in Taiwan, England, India and Southeast Asia.





**Competition**





We
      face
      competition from a number of well recognized international consumer electronics
      companies such as JVC, LG Electronics, Panasonic, Philips, Samsung, Sharp,
      Sony,
      Thompson, and Toshiba, many of whom are operating in China. We estimate that
      Samsung and LG currently have a 20% share of the total international market
      for
      TFT-LCD displays. In addition, BOE, one of the leading Chinese LCD
      manufacturers, has an estimated 3% share of the total international market.
      All
      of these companies have greater market recognition, larger customer bases,
      and
      substantially greater financial, technical, marketing, distribution, and other
      resources than we have, which results in competitive advantages over
      us.





For
      LCD
      displays used in automotive and other consumer electronic devices, we believe
      that Texas Instruments, JVC, Hitachi, Aurora Systems, SpatiaLight, Epson, and
      Sony constitute our principal competitors.





Although
      we believe that the Chinese government strongly supports the development of
      technology firms such as ours, we face challenges brought by foreign competitors
      eager to enter the Chinese market. Many of these foreign firms, particularly
      from Japan and Korea, have mature well-developed research and development
      capabilities, and currently our access to leading international research and
      development talent is limited. Accordingly, in the short to medium term we
      seek
      to exploit our presently held advantages, until we are able to ramp up our
      R&D capabilities.





We
      face
      intense competition from other LCD product manufacturers; however, we believe
      we
      have competitive advantages resulting from our close relationships with leading
      producers of upstream components manufacturers in China, low labor and
      production costs, high volume manufacturing capabilities, and pro-development
      government policies resulting in low taxes and duties. We believe these
      advantages permit us to offer technologically comparable products at prices
      that
      are 30% lower than our competitors, while maintaining higher profits per unit
      sold.





12








**Product
      Pricing**





Our
      products are generally priced dramatically below our foreign competitors for
      comparable products, and we also believe we offer a cost advantage relative
      to
      our domestic peer producers. For instance, in October 2006, we positioned our
      SHIMING model S320T2 LCD TV for sale at an average cost per unit of USD $1,015
      on a retail basis. The table below indicates competing products which we believe
      offer a similar set of product features. While our product does not compete
      based upon superior technology or quality, we believe our customers would view
      our product as a substitute for the competing products below.




Manufacturer
            
            Name
                of Product
            
            Retail
                Price
              USD$
            
            Percentage
                higher than Shiming (%)Foreign
                Brands:
            
            
            JVC
            
            
            TC
                32LX50D
            
            $
            1,563
            
            
            53.9Sony
            
            
            KLV
                32A10
            
            $
            2,000
            
            
            97.0Sharp
            
            
            LCD
                32GA6
            
            $
            1,630
            
            
            60.6Phillips
            
            
            32PF9531
            
            $
            1,750
            
            
            72.0Toshiba
            
            
            32WL48C
            
            $
            2,075
            
            
            104.0LG
            
            
            30L210
            
            $
            2,812
            
            
            177.0Domestic
                Brands:
            
            
            Hi’er
            
            
            L32A9
                AK
            
            $
            1,200
            
            
            18.5Kangjia
            
            
            TM3008
            
            $
            1,624
            
            
            60.0Changhhong
            
            
            CHD
                W320C6L
            
            $
            1,124
            
            
            10.7Hensine
            
            
            TLM3288H
            
            $
            1,249
            
            
            23.0





**Manufacturing**





Our
      products are manufactured at our facilities in Shenzhen. We began producing
      and
      testing LCD products in the first quarter of 2006. Prior to this, we produced
      enterprise servers (SIPS/9000 series) for the Chinese market. In 2005, our
      management made a strategic decision to begin phasing out our server
      manufacturing business, in order to pursue the production of more profitable
      LCD
      products. By the third quarter of 2006, virtually all of our production capacity
      was principally devoted to the production of LCD products.





**Sources
      and Availability of Raw Materials and the Principal
      Suppliers**





We
      obtain
      the LCD panels for our LCD products from Shenzhen Jiguan Enterprise Ltd., and
      Blue and Gold Ventures LLC. We obtain the electronic components and
      subassemblies for our LCD products from Shehzhen Zhonglian Shuyuan electrical
      Products Co., Ltd. We obtain silicon wafers from Youlian Caixin Technology
      Co.,
      Ltd., , and video processing integrated circuits from Fushan Hongli electrical
      Products Co., Ltd., screens from Zhuhai Yanyu Digital Technoloy; lamps from
      Shenzhen Xinricheng Technology Co., Ltd., and printed circuit board assemblies
      and remote controls from various Asian suppliers.





Our
      strategy is to procure all of our parts and supplies from a limited number
      of
      suppliers, usually one or two for each type or category of part or supply item.
      Centralized purchasing allows us to exert the maximum amount of volume
      purchasing power and to negotiate the largest discounts per unit purchased.
      We
      have no long term agreements with our suppliers, and purchase parts and supplies
      on a purchase order basis. Management recognizes that this strategy also carries
      with it the potential disadvantages and risks of shortages and supply
      interruptions. We believe our suppliers are willing to continue to give us
      favorable pricing in order to secure our loyalty as purchasers or parts and
      supplies in the long term. Our suppliers generally are meeting our supply
      requirements, and we believe our relationships with our suppliers are
      stable.





**Patents,
      Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor
      Contracts**





We
      rely
      on a variety of intellectual property methods, including patents, trade secrets,
      trademarks, confidentiality agreements, licensing agreements, and other forms
      of
      contractual provisions, to protect and advance our intellectual property. We
      have filed a trademark application at the patent and trademark office of the
      Chinese government with regard to the “Shiming” brand name, and the registration
      is still pending as of the end of fiscal 2006. “Shiming” is the trademark we use
      for all of our LCD products.


13





**Government
      Approval and Regulation of the Company’s Principal Products or
      Services**





Our
      operations are subject to certain local regulatory requirements relating to
      environmental, waste management, health, and safety matters. There can be no
      assurance that material costs and liabilities will not arise from complying
      with
      these or from new, modified, or more stringent requirements. In addition, our
      past, current, or future operations may give rise to claims of exposure by
      employees or the public or to other claims or liabilities relating to
      environmental, waste management, or health and safety concerns.





**Research
      and Development**





Our
      research and development programs focus on advancing technology, developing
      design and manufacturing processes, and expanding our technology to serve new
      markets. We conduct the following research and development
      activities:





·
            ASIC
                design to combine and enhance functionality, reduce cost, and improve
                picture quality.





·
            Testing
                and incorporation of new liquid crystal solutions, in an effort to
                improve
                picture quality, cost, and
                manufacturability.





·
            Printed
                circuit board design.





·
            LCD
                product testing and development
                programs.





In
      2005,
      the Company spent approximately $320,000 or approximately 3.6% of the Company’s
      2005 net revenue on research and development of products. In 2006, the Company
      spent approximately $350,000 or approximately 6.3% of the Company’s 2006 net
      revenue on research and development of products.





**Employees**


At
      December 31, 2006, we employed a total of 326 persons, all of whom were
      full time employees, including management, administrative personnel,
      technicians, researchers and designers. In 2005, we employed a total of 69
      persons, all of whom were full time employees. We consider our relationship
      with
      our employees to be good, and none of our employees are represented by a union
      in collective bargaining with us.





**Item
                2.**
            **Description
                of Property.**





We
      occupy
      approximately 2,224 m 2 in a
      facility in Shenzhen, China, which houses our manufacturing operations, and
      our
      principal research, development, and engineering activities. The lease is
      renewable annually. Our annual rental expense for this facility is $90,000
      USD.
      In addition, we lease our office space, also in Shenzhen, with an area of 386
      m 2 ,
      which
      houses our corporate headquarters. The lease is for a term of two years, which
      expires in April 2008.





We
      are
      under an operating lease agreement for a piece of land in the City of Xi’an
      which expires in 2013. As of December 31, 2006, we are not using this land
      in
      connection with our current business operations, and the land has been
      sub-leased to a third party for three years.





Except
      for our plans for expansion, which are contingent upon raising the necessary
      capital, we believe that our existing space is adequate for our current
      anticipated operations and for the coming year, and that suitable replacement
      and additional space will be available in the future on commercially reasonable
      terms. We currently do not own any real property.


14





**Item
                3.**
            **Legal
                Proceedings.**


We
      are
      not aware of any legal proceedings in which purchasers, any director, officer,
      or any owner of record or beneficial owner of more than five percent of any
      class of voting securities of the Company, or any affiliate of purchaser, or
      of
      any such director, officer, affiliate of the Company, or security holder, is
      a
      party adverse to Company or has a material interest adverse to the
      Company:





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





On
      December 28, 2006, the Board and the majority holders of our common stock
      consented in writing to an amendment to our Articles of Incorporation to change
      our corporate name (“Name Change”) to our current name, Shiming U.S., Inc. We
      announced the approval of these amendments and its details in a Definitive
      Information Statement on Schedule 14C filed with the Securities and Exchange
      Commission on January 26, 2007. The Certificate of Amendment and Certificate
      of
      Change to our Articles of Incorporation to effect the Name Change was filed
      with
      Nevada’s Secretary of State on February 26, 2007.





**PART
      II**





**Item
                5.**
            **Market
                For Common Equity And Related Stockholder
                Matters**





**Market
      Information**





Our
      common stock, par value $0.001 per share (“Common Stock”), is traded on the
      Over-The-Counter Bulletin Board (“OTCBB”) under the symbol “SGUS”. From the date
      of the change in control of our company on August 25, 2006 to the present,
      there
      has been no active trading market for our common stock. The following table
      sets
      forth, for the periods indicated, the reported high and low closing bid
      quotations for our common stock as reported on the OTCBB. The bid prices reflect
      inter-dealer quotations, do not include retail markups, markdowns or commissions
      and do not necessarily reflect actual transactions.





Common
      Stock


Quarter
                Ended
            
            High
                Bid
            
            Low
                BidDecember
                31, 2006
            
            $0.88
            
            $0.45September
                30, 2006
            
            $1.49
            
            $0.18June
                30, 2006
            
            $0.28
            
            $0.13March
                31, 2006
            
            $0.43
            
            $0.13December
                31, 2005
            
            $0.48
            
            $0.25


**Holders**





As
      of
      January 25, 2007, there were approximately 108 stockholders of record of our
      common stock and there was no stockholder of record of our preferred
      stock.





**Dividends**





We
      do not
      currently intend to pay any cash dividends in the foreseeable future on our
      Common Stock and, instead, intend to retain earnings, if any, for future
      operation and expansion. Any decision to declare and pay dividends in the future
      will be made at the discretion of our board of directors and will depend on,
      among other things, our results of operations, cash requirements, financial
      condition, contractual restrictions and other factors that our board of
      directors may deem relevant.





**Securities
      Authorized for Issuance Under Equity Compensation Plans**





The
      Company did not have any equity compensation plans in place for the fiscal
      year
      2006.


15





**Recent
      Sales of Unregistered Securities; Use of Proceeds from Registered
      Securities**





In
      connection with the share exchange transaction under the Exchange Agreement,
      we
      issued 57,666,834 shares of our common stock to the Shiming Cayman Shareholders
      and certain consultants, and in exchange, the Shiming Cayman Shareholders
      assigned 100% of the outstanding common stock of the Shiming Cayman to us.
      The
      recipients of 4,734,000 of these shares were accredited investors, and
      securities were issued to them in reliance on an exemption from the registration
      requirements of the Securities Act of 1933 (the “Securities Act”) under
      Regulation D. The other 52,932,834 shares were issued to non-US persons in
      reliance on an exemption from the registration requirements of the Securities
      Act under Regulation S. The shares issued have not been registered under the
      Securities Act or any state securities of “blue sky” laws, and the securities
      may not be offered or sold absent registration or an applicable exemption from
      the registration requirements of the Securities Act and applicable state
      securities laws. As a result of the transactions contemplated under the Exchange
      Agreement, (1) we acquired the business and operations of the Shiming Cayman,
      and as a result our principal business activities now consist of the business
      of
      the Shiming Cayman, and (2) the Shiming Cayman Shareholders now hold
      approximately 83.3% of our issued and outstanding stock.





**Repurchases
      of Equity Securities**





The
      Company did not repurchase any of its outstanding equity securities during
      the
      fourth quarter of the year ended December 31, 2006.





**Item
                6.**
            **Management’s
                Discussion And Analysis or Plan of
                Operation.**





The
      following management’s discussion and analysis should be read in conjunction
      with our consolidated financial statements and the notes thereto and the other
      financial information appearing elsewhere in this item. In addition to
      historical information, the following discussion contains certain
      forward-looking statements within the “safe harbor” provisions of the Private
      Securities Litigation Reform Act of 1995. These statements relate to our future
      plans, objectives, expectations and intentions. These statements may be
      identified by the use of words such as “may”, “will”, “could”, “expect”,
“anticipate”, “intend”, “believe”, “estimate”, “plan”, “predict”, and similar
      terms or terminology, or the negative of such terms or other comparable
      terminology. Although we believe the expectations expressed in these
      forward-looking statements are based on reasonable assumptions within the bound
      of our knowledge of our business, our actual results could differ materially
      from those discussed in these statements. Factors that could contribute to
      such
      differences include, but are not limited to, those discussed in the “Risk
      Factors” section of this Annual Report on Form 10-KSB. We undertake no
      obligation to update publicly any forward-looking statements for any reason
      even
      if new information becomes available or other events occur in the
      future.





Our
      financial statements are prepared in US Dollars and in accordance with
      accounting principles generally accepted in the United States. See “Exchange
      Rates” below for information concerning the exchanges rates at which Renminbi
      were translated into US Dollars at various pertinent dates and for pertinent
      periods.





Our
      consolidated financial statements included in this report have been prepared
      assuming the Company will continue as a going concern. The consolidated
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.





**Overview**





We
      are a
      consumer electronics company, with a particular focus on the development and
      manufacture of competitively-priced LCD products, including HDTVs and computer
      monitors. Our manufacturing plant is located in the Changxin High and New
      Technology Industrial Garden in Shenzhen, China. For several years we have
      been
      involved in the research and development of consumer electronics products and
      technologies such as LCD, plasma displays, and household
      electronics.





On
      November 10, 2006, the Company acquired Shiming Cayman and, as a result, Shiming
      Cayman’s VIE Shiming Technology, by way of the exchange of 57,666,834 shares of
      the Company’s common stock for 100% of the issued and outstanding common stock
      of Shiming Cayman. We accounted for this share exchange transaction as a reverse
      acquisition and recapitalization and, as a result, our consolidated financial
      statements are in substance those of Shiming Cayman, with the assets and
      liabilities, and revenues and expenses, of Argenta being included effective
      from
      the date of the stock exchange transaction. Please see Note 13 to our
      consolidated financial statements included in this report for further details
      of
      this stock exchange transaction.


16





Having
      no
      substantive operation of its own, Shiming Cayman, through its VIE, Shiming
      Management, engages in research, development, production, marketing and sales
      of
      bio-pharmaceutical and veterinary products in the People’s Republic of China
      (“China” or the “PRC”). Please see “Contractual Arrangements with Shiming
      Technology and its Shareholders” above and Note 12 to our consolidated financial
      statements included in this report for the contractual arrangements between
      Shiming Management and Shiming Technology and their impact on our consolidated
      financial statements.





**Critical
      Accounting Policies and Estimates**





Our
      management’s discussion and analysis of our financial condition or plan of
      operations are based on our consolidated 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
      consolidated financial statements appearing at the end of this prospectus,
      we
      believe that the following accounting policies are the most critical to aid
      you
      in fully understanding and evaluating our reported financial
      results.





***Allowance
      for Doubtful Accounts*** .
      We
      recognize an allowance for doubtful accounts to ensure accounts receivable
      are
      not overstated due to uncollectibility. An allowance for doubtful accounts
      is
      maintained for all customers based on a variety of factors, including the length
      of time the receivables are past due, significant one-time events and historical
      experience. An additional reserve for individual accounts is recorded when
      the
      Company becomes aware of a customer’s inability to meet its financial
      obligations, such as in the case of bankruptcy filings or deterioration in
      the
      customer’s operating results or financial position. If circumstances related to
      customers change, estimates of the recoverability of receivables would be
      further adjusted. There was no allowance for doubtful accounts as of December
      31, 2006.





***Property,
      Plant and Equipment*** .
      Property, plant and equipment is stated at cost. Depreciation is provided
      principally by use of the straight-line method over the useful lives of the
      related assets, except for leasehold properties, which are depreciated over
      the
      terms of their related leases or their estimated useful lives, whichever is
      less. Expenditure for maintenance and repairs, which do not improve or extend
      the expected useful life of the assets, are expensed to operations while major
      repairs are capitalized.





The
      estimated useful lives are as follows:





Leasehold
                property - Office
            37
                yearsLeasehold
                property - Quarters
            44
                yearsLeasehold
                improvements
            5
                yearsComputer
                equipment
            3
                yearsFurniture
                & Fixture
            5
                yearsTesting
                equipment
            5
                yearsOffice
                equipment
            5
                yearsMotor
                vehicle
            5
                years





The
      gain
      or loss on disposal of property, plant and equipment is the difference between
      the net sales proceeds and the carrying amount of the relevant assets, and,
      if
      any, is recognized in the statement of operations.





***Intangible
      Assets*** .
      Intangible assets consist of land use right and is amortized using the
      straight-line method over their estimated useful life of 44 years.


17





***Impairment
      of Assets*** .
      In
      accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144,
“Accounting for Impairment or Disposal of Long-Lived Assets”, we evaluate our
      long-lived assets to determine whether later events and circumstances warrant
      revised estimates of useful lives or a reduction in carrying value due to
      impairment. If indicators of impairment exist and if the value of the assets
      is
      impaired, an impairment loss would be recognized. As of December 31, 2006,
      no
      impairment loss has been recognized.





***Income
      Taxes*** .
      We
      account for income taxes under SFAS No. 109, “Accounting for Income Taxes”.
      Under SFAS No. 109, deferred tax assets and liabilities are recognized for
      the
      future tax consequences attributable to differences between the financial
      statement carrying amounts of existing assets and liabilities and their
      respective tax bases. Deferred tax assets and liabilities are measured using
      enacted tax rates expected to apply to taxable income in the years in which
      those temporary differences are expected to be recovered or settled. Under
      SFAS
      No. 109, the effect on deferred tax assets and liabilities of a change in tax
      rates is recognized in income in the period that includes the enactment
      date.





***Revenue
      Recognition*** .
      Revenue
      from goods sold is recognized when title has passed to the purchaser, which
      generally is at the time of delivery.





***Foreign
      Currency Transactions*** .
      Our
      functional currency is the Renminbi (“RMB”) and our reporting currency is the
      U.S. dollar. Our consolidated, balance sheet accounts are translated into U.S.
      dollars at the year-end exchange rates and all revenue and expenses are
      translated into U.S. dollars at the average exchange rates prevailing during
      the
      periods in which these items arise. Translation gains and losses are deferred
      and accumulated as a component of other comprehensive income in stockholders’
equity. Transaction gains and losses that arise from exchange rate fluctuations
      from transactions denominated in a currency other than the functional currency
      are included in the statement of operations as incurred.





Translation
      gains and losses were material for the year ended December 31, 2006, and is
      recorded as “Other Comprehensive Income” in the Company’s Consolidated
      Statements of Changes in Stockholders’ Deficit.





The
      PRC
      government imposes significant exchange restrictions on fund transfers out
      of
      the PRC that are not related to business operations. These restrictions have
      not
      had a material impact on us because it has not engaged in any significant
      transactions that are subject to the restrictions.





***Fair
      Value of Financial Instruments*** .
      SFAS
      No. 107, “Disclosures about Fair Values of Financial Instruments,” requires
      disclosing fair value to the extent practicable for financial instruments that
      are recognized or unrecognized in the balance sheet. The fair value of the
      financial instruments disclosed herein is not necessarily representative of
      the
      amount that could be realized or settled, nor does the fair value amount
      consider the tax consequences of realization or settlement. For certain
      financial instruments, including cash, accounts and other receivables, accounts
      payable, accruals and other payables, it was assumed that the carrying amounts
      approximate fair value because of the near term maturities of such obligations.
      The carrying amounts of long-term loans approximate fair value as the interest
      on these loans is minimal.





***Earnings
      Per Share*** .
      Basic
      earnings per share is computed by dividing the earnings for the year by the
      weighted average number of common shares outstanding for the period. Diluted
      earnings per share reflects the potential dilution of securities by including
      other potential common stock, including stock options and warrants, in the
      weighted average number of common shares outstanding for a period, if
      dilutive.





**Results
      of Operations - Year ended December 31, 2006 as compared to year ended December
      31, 2005**





***Sales*** *.* During
      fiscal year 2006, sales decreased from $8.9 million to $5.5 million,
      representing a decrease of _38_% compared to the prior year. The decrease in
      revenue was primarily attributable to our shift in business from sales of
      broadband servers in 2005 to LCD monitors in the third quarter of 2006, and
      the
      decrease in the sales of broadband servers in 2006.





***Cost
      of Sales*** *.* Cost
      of
      sales decreased from $3.4 million to $0.8 million in 2006 as compared to
      the prior year. Cost of sales as a percentage of net sales, decreased from
      38.5%
      in fiscal 2005 to 14.3% in fiscal 2006. The substantial decrease in cost of
      sales and cost of sales as a percentage of net sales is mainly due to our shift
      in business from sales in broadband servers in 2005 to LCD monitors in the
      third
      quarter of 2006.


18





***Selling,
      General and Administrative Expenses*** *.* Selling,
      general and administrative expenses decreased from $3.0 million in fiscal
      2005 to $2.7 million in fiscal 2006, a decrease of 11% compared with 2005.
      The decrease in general and administrative expenses reflected amortization
      expenses on land use rights. As a percentage of net sales, selling, general
      and
      administrative expenses increased from 34.0% in 2005 to 49% in
      2006.





***Non-Operating
      Income*** .
      Non-operating income mainly represented the rental income, short term investment
      interest for the year. Total non-operating income increased from $0.2 million
      in
      fiscal 2005 to $0.5 million in fiscal 2006.





**Liquidity
      and Capital Resources**





***Cash
      Flows*** *.* We have
      funded our operations through December 31, 2006 primarily through retained
      earnings and shareholder’s paid in capital. Net cash flow provided by operations
      was $5.7 million in fiscal 2005 and $3.1 million in fiscal 2006. Uses of cash
      were primarily to fund changes in working capital. Net cash flow provided by
      investing activities was $2.9 million for fiscal 2005 and $0.02 million was
      used
      in investing activities for fiscal 2006. Uses of cash flow for investing
      activities include capital expenditures for property and equipment and purchase
      of short-term investments. In 2005, net cash flow used in financing activities
      was approximately $8.2 million, and approximately $0.05 million in fiscal
      2006.





***Contractual
      Obligations and Off-Balance Sheet Arrangements*** *.* 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 table summarizes our contractual obligations as of December 31, 2006,
      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**
            
            **4-5
                Years**
            
            **5
                Years +****(in
                thousands)**Contractual
                Obligations:Total
                Indebtedness
            
            
            14
            
            
            14
            
            
            --
            
            
            --
            
            
            --Capital
                Lease Obligations
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            --Operating
                Leases
            
            
            273
            
            
            43
            
            
            129
            
            
            101
            
            
            --Total
                Contractual Obligations:
            
            
            287
            
            
            57
            
            
            129
            
            
            101
            
            
            --





Operating
      lease amounts include minimum lease payments under leased land under an
      operating lease agreement. The amounts presented are consistent with contractual
      terms and are not expected to differ significantly, unless a substantial change
      in our operation.





**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.


19





***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 December 31, 2006, we had approximately $3.6 million in cash
      and Nil in cash equivalents. A hypothetical 5% increase or decrease in either
      short term or long term 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*** .
      Our
      sales are principally in Renminbi. The translation of Renminbi amounts into
      US
      dollars are for reference purposes only. The People’s Bank of China sets and
      publishes daily a base exchange rate with reference primarily to the supply
      and
      demand of Renminbi against the United States dollar in the market during the
      prior day. The People’s Bank of China also takes into account other factors such
      as the general conditions existing in the international foreign exchange
      markets. Although Chinese governmental policies were introduced in 1996 to
      reduce restrictions on the convertibility of Renminbi into foreign currency
      for
      current amount items, conversion of Renminbi into any other currency for capital
      items, such as foreign direct investment, loans or security, requires the
      approval of the State Administration for Foreign Exchange. Renminbi which had
      been tightly pegged at RMB 8.28 for US $1 for the previous decade, was revalued
      on July 21, 2005 to Rmb 8.11 for US $1 following the removal of the peg to
      the
      US dollar and partly in response to pressure from the United States government.
      The Peoples Bank of China also announced that the Renminbi would float according
      to a basket of foreign currencies, rather then being strictly pegged to the
      US
      dollar, and would trade within a narrow 0.3% band against this basket of
      currencies, which is dominated by the US dollar, Euro, Japanese Yen and South
      Korean Won, with a smaller proportion made up of the British pound, Thai Baht
      and Russian Ruble. The translation of Renminbi amounts in this report is not
      a
      representation that the Renminbi amounts could actually be converted into United
      States dollars at that rate or at any other rate on that date or on any other
      date. However, see the section titled “Risk Factors - Fluctuation in the value
      of RMB relative to other currencies may have a material adverse effect on our
      business and/or an investment in our shares.”





**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 offering that are not historic facts are forward-looking statements that
      are subject to risks and uncertainties that could cause actual results to differ
      materially from those set forth in or implied by forward-looking statements.
      If
      any of the following risks actually occurs, our business, financial condition
      or
      results of operations could be harmed. In that case, the trading price of our
      common stock could decline, and you may lose all or part of your
      investment.*





**Risks
      Relating to Our Business**





**We
      face intense competition in our industry, and our competitors may be better
      positioned to capitalize on growing consumer demand in our geographic
      area.**





The
      consumer electronics industry is rapidly evolving and intensely competitive.
      Many of our current and potential competitors have longer operating histories,
      larger customer bases, greater brand recognition and significantly greater
      financial, marketing, technical, management and other resources than we do.
      In
      addition, some of our competitors have and may continue to offer a larger
      product line and carry a larger inventory than we do. We expect that competition
      will further intensify in the future.





We
      believe that the primary competitive factors in our industry include brand
      recognition, price, product selection, product availability and aftermarket
      customer service. We compete not only for customers, but also for retail shelf
      space and distribution channels. Some of our competitors could enter into
      exclusive distribution arrangements with major distributors forcing us to devote
      greater resources to marketing and promotional campaigns.





**We
      derive substantially all of our revenue from sales of LCD HDTVs and computer
      monitors, and any decline in demand for these products could severely harm
      our
      ability to generate revenue.**





We
      derive
      substantially all of our revenue from LCD HDTVs and computer monitors. As a
      result, we are particularly vulnerable to fluctuations in demand for these
      products, whether as a result of market demand, competition, product
      obsolescence, technological change, budget constraints of potential customers,
      or other factors. If our revenue derived from these products were to decline
      significantly, our business and operating results would be adversely
      affected.


20





**We
      will be required to attain and maintain profitability through a combination
      of
      increased revenue or lower expenses or to raise additional
      funds.**





To
      support our operations, we will be required to attain and maintain profitability
      through a combination of increased revenue or lower expenses or to raise
      additional funds. There can be no assurance that we will be able to become
      profitable or to raise additional funds on satisfactory terms. We had
      approximately $3.6 million in cash at December 31, 2006.





To
      remain
      competitive, we must fund our receivables and inventory and continue to make
      significant investments in product design and development, marketing, research
      and development, equipment, and facilities. As a result of the costs and
      expenses related to these expenditures, our failure to increase sufficiently
      our
      net sales to offset these costs and expenses would adversely affect our
      operating results. Rapid sales increases are also requiring substantial
      increases in working capital to fund our inventory and receivables.





We
      may
      likely need to obtain additional equity or debt financing to provide the funds
      required to expand our business. If such financing is not available on
      satisfactory terms, we may be unable to expand our business or to develop new
      business at the rate desired and our operating results may suffer. Debt
      financing increases expenses and must be repaid regardless of operating results.
      Equity financing could result in additional dilution to existing
      stockholders.





**We
      operating in a highly capital intensive industry, and our growth and operating
      results could be impaired if we are unable to meet our future capital
      needs.**





We
      may
      need to raise additional capital in the future to:





·
            effectively
                pursue our sales and marketing strategy;


·
            fund
                our research and development programs to develop new products;


·
            hire
                quality engineering talent;


·
            finance
                acquisitions; or


·
            expand
                our manufacturing capacity.





If
      we
      raise additional funds by issuing additional equity or convertible debt
      securities, the percentage ownership of our stockholders will be diluted.
      Furthermore, any new securities could have rights, preferences and privileges
      senior to those of our common stock. We currently do not have any commitments
      for financing. We cannot be certain that financing will be available when and
      to
      the extent required or that, if available, it will be on acceptable terms.
      If
      adequate funds are not available on acceptable terms, we may not be able to
      fund
      our expansion, develop or enhance our products or services or respond to
      competitive pressures.





**Our
      revenue depends on sales by various retailers and
      distributors.**





Our
      revenue depends on our sales through various national consumer electronics
      retailers in China, such as Xi’an Yusheng Electrical Products Co., Ltd, Shenzhen
      Kelanbo International Trade Co., Ltd., Ji Sen Enterprise Co., Ltd, and Qianteng
      Enterprise Co., Ltd.





These
      sales channels involve a number of special risks, including the
      following:





·
            our
                ability to secure and maintain favorable relationships with retailers
                and
                distributors;


·
            our
                lack of control over the timing of delivery of our products to
                end-users;


·
            our
                retailers and distributors are not subject to minimum sales requirements
                or any obligation to market our products to their
                customers;


·
            our
                retailers and distributors may terminate their relationships with
                us at
                any time; and


·
            our
                retailers and distributors market and distribute competing
                products.





**Competing
      companies and technologies could reduce the demand for our
      products.**


21





We
      compete with a number of the world’s leading electronics manufacturers,
      including JVC, LG Electronics, Panasonic, Phillips, Samsung, Sharp, Sony,
      Thompson, and Toshiba. We also compete with national manufacturers within China
      such as Hi’er, Kangjia, Changhhong and Hensine. Each of these and certain of our
      other competitors has greater financial, technical, sales, marketing, and other
      resources than we possess. Our competitors could introduce products with
      superior features and functionality at lower prices than our products, and
      could
      also bundle existing or new products with other more established products in
      order to compete with us. Our competitors could also gain market share by
      acquiring or forming strategic alliances with other competitors. Finally, we
      may
      face additional sources of competition in the future because new distribution
      methods offered by the Internet and electronic commerce have removed many of
      the
      barriers to entry historically faced by start-up companies in the consumer
      electronics industry. Any of the foregoing effects could cause our revenues
      to
      decline, which would harm our financial position and results of
      operations.





**We
      rely on a limited number of domestic parts suppliers for our parts, and any
      interruptions of these arrangements could disrupt our ability to fill customer
      orders.**





We
      purchase components for our products from principally mainland Chinese
      suppliers, and often we rely upon a sole supplier for certain types of parts
      or
      components. The loss of our relationship with a sole supplier, or the suppliers
      inability to furnish parts to us as anticipated in terms of cost, quality,
      and
      timeliness could adversely affect our ability to fill customer orders in
      accordance with required delivery, quality, and performance requirements. If
      this were to occur, the resulting decline in revenue and revenue potential
      would
      harm our business.





**Our
      suppliers must maintain satisfactory delivery schedules and their inability
      to
      do so could increase our costs, disrupt our manufacturing process, and result
      in
      our inability to deliver our products, which would adversely affect our results
      of operations.**





Our
      suppliers must maintain high levels of productivity and satisfactory delivery
      schedules. We do not have long-term arrangements with any of our suppliers
      that
      guarantee production capacity, prices, lead times, or delivery schedules. Our
      suppliers may supply many other customers, a number of which have greater
      production requirements than we do. As a result, our suppliers could determine
      to prioritize production capacity for other customers or reduce or eliminate
      services for us on short notice. Any such problems could result in our inability
      to deliver our products in a timely manner and adversely affect our operating
      results.





**Shortages
      of components and materials may delay or reduce our sales and increase our
      costs.**





Our
      inability or the inability of our suppliers to obtain sufficient quantities
      of
      components and other materials necessary for the production of our products
      could result in delayed sales or lost orders, increased inventory, and
      underutilized manufacturing capacity. For example, we may experience production
      delays if a supplier of one of the components we use in our products experiences
      quality and delivery issues. Some of the materials used in the production of
      our
      LCD display products are available only from a limited number of foreign
      suppliers. As a result, we are subject to increased costs, supply interruptions,
      and difficulties in obtaining certain materials.





We
      depend
      on Shenzhen Jiguan Enterprise Ltd. and Blue and Gold Ventures LLC for our LCD
      panels and on Shenzhen Zhonglian Shuyuan Electronic Products Co. Ltd. for the
      electronic components and subassemblies for our LCD products. We depend on
      Youlian Caixin Technology Co., Ltd. for the fabrication of silicon wafers;
      Fushan Hongli Electronic Products Co. Ltd. for video processing integrated
      circuits; Zhuhai Yanyu Digital Technology for screens; Shenzhen Xinricheng
      Technology Co. Ltd. for lamps, and various Asian suppliers for printed circuit
      board assembly and remote controls for our HDTV products. We do not have
      long-term contracts with any of these suppliers. As a result, none of them
      is
      obligated to supply us for any specific period, in any specific quantity, or
      at
      any specific price, except as provided in purchase orders from time to time.
      The
      termination of our arrangements with any of these suppliers, or their inability
      or unwillingness to provide us with the necessary amount or quality of supplies
      on a timely basis, would adversely affect our ability to manufacture and ship
      our products until alternative sources of supply could be arranged. We may
      not
      be able to secure alternative arrangements.





Materials
      and components for some of our major products may not be available in sufficient
      quantities to satisfy our needs because of shortages of these materials and
      components. Any supply interruption or shortages may result in lost sales
      opportunities.


22





We
      place
      orders for components, determine production, and plan inventory in advance
      based
      on our forecast of consumer demand, which is highly volatile and difficult
      to
      predict. We may experience a shortage of LCD panels, which may result in our
      inability to meet demand for our LCD televisions, or a surplus of LCD panels
      that may result in the recording of losses should LCD panel prices decline.
      We
      consume a large volume of parts and components for our products, and market
      fluctuations may cause a shortage of parts and components and may affect our
      production or the cost of goods sold. Our profitability may also be adversely
      affected by supply or inventory shortages or inventory adjustments that, as
      a
      result of efforts to reduce inventory by temporarily halting production or
      by
      reducing the price of goods, will lead to an increase in the ratio of cost
      of
      sales to sales. We write down the value of our inventory when components or
      products have become obsolete, when inventory exceeds the amount expected to
      be
      used, or when the value of the inventory is otherwise recorded at a higher
      value
      than net realizable value. Such inventory adjustments can have a material
      adverse effect on our operating income and profitability.





**Our
      business depends on new products and technologies.**





We
      operate in a rapidly evolving industry. Technological advances, the introduction
      of new products, and new design and manufacturing techniques could adversely
      affect our business unless we are able to adapt to the changing conditions.
      As a
      result, we will be required to expend substantial funds for and commit
      significant resources to the following:





·
            designing
                and developing new products and product enhancements that appeal
                to
                consumers;


·
            meeting
                the expectations of our retail and OEM customers in terms of product
                design, features, product price, performance, and
                service;


·
            expanding
                our manufacturing capabilities;


·
            continuing
                research and development activities on existing and potential
                products;


·
            engaging
                additional engineering and other technical
                personnel;


·
            purchasing
                advanced design, production, and test equipment;
                and


·
            maintaining
                and enhancing our technological capabilities.





We
      may be
      unable to recover any expenditures we make relating to one or more new products
      or technologies that ultimately prove to be unsuccessful for any reason. In
      addition, any investments or acquisitions made to enhance our products, sales
      channels, or technologies may prove to be unsuccessful.





Our
      future operating results will depend to a significant extent on our ability
      to
      provide new products that compare favorably on the basis of time to
      introduction, cost, and performance with the products of competitive suppliers
      and evolving technologies. Our success in attracting new customers and
      developing new business depends on various factors, including the
      following:





·
            innovative
                development of new products;


·
            efficient,
                timely, and cost-effective manufacture of our
                products;


·
            the
                acceptance of our technology;


·
            utilization
                of advances in technology; and


·
            development
                and maintenance of a successful aftermarket service and support program.





Our
      future success depends on our ability to address the rapidly changing needs
      of
      our customers by developing, acquiring, and introducing new products and product
      updates on a timely basis. We must also extend the operation of our products
      to
      new formats and keep pace with technological developments and emerging industry
      standards. We intend to commit substantial resources to developing new products,
      product features, and technological advances in the HDTV market. This market
      is
      relatively new, and industry standards for the HDTV market are evolving and
      changing. If the HDTV market does not develop as anticipated, or if demand
      for
      our products and services in this market does not materialize or occurs more
      slowly than we expect, we will have expended substantial resources and capital
      without realizing sufficient revenue, and our business and operating results
      could be adversely affected.





**We
      must protect our intellectual property and could be subject to infringement
      claims by others.**





We
      believe that our future success may depend in part on our ability to protect
      our
      proprietary technology. We rely on a combination of patent, trade secret, and
      trademark laws, confidentiality procedures, and contractual provisions to
      protect our intellectual property. We seek to protect certain aspects of our
      technology under trade secret laws, which afford only limited protection. We
      face risks associated with our intellectual property, including the
      following:


23





·
            intellectual
                property laws may not protect our intellectual property
                rights;


·
            third
                parties may challenge, invalidate, or circumvent any patents issued
                to
                us;


·
            rights
                granted under patents issued to us may not provide competitive advantages
                to us;


·
            unauthorized
                parties may attempt to obtain and use information that we regard
                as
                proprietary despite our efforts to protect our proprietary
                rights;


·
            others
                may independently develop similar technology or design around any
                patents
                issued to us; and


·
            effective
                protection of intellectual property rights may be limited or unavailable
                in some foreign countries in which we
                operate.





We
      may
      not be able to obtain effective patent, trademark, service mark, copyright,
      and
      trade secret protection in every country in which our products are produced
      or
      sold. We may find it necessary to take legal action in the future to enforce
      or
      protect our intellectual property rights or to defend against claims of
      infringement and such action may be unsuccessful. In addition, we may not be
      able to obtain a favorable outcome in any intellectual property
      litigation.





Third
      parties could claim that we are infringing their patents or other intellectual
      property rights. In the event that a third party alleges that we are infringing
      its rights, we may not be able to obtain licenses on commercially reasonable
      terms from the third party, if at all, or the third party may commence
      litigation against us. Litigation can be very expensive and can distract our
      management time and attention, which could adversely affect our
      business.





**Our
      dealings with customers and suppliers in foreign countries expose us to a
      variety of risks.**





We
      are
      exposed to certain risks relating to the fact that our operations are in China,
      and we seek to sell our products internationally, and purchase from suppliers
      based in other countries. Purchasing supplies and selling products
      internationally expose us to various economic, political, and other risks,
      including the following:





·
            the
                burdens and costs of compliance with local laws and regulatory
                requirements as well as changes in those laws and
                requirements;


·
            imposition
                of governmental controls, including trade and employment restrictions
                and
                restrictions on currency conversion or the transfer of
                funds;


·
            transportation
                delays or interruptions and other effects of less developed
                infrastructures;


·
            fluctuations
                in foreign currency exchange rates and difficulties in hedging foreign
                currency transaction exposures;


·
            economic
                instability, such as higher interest rates and inflation, which could
                reduce our customers’ ability to obtain financing for consumer electronic
                products or which could make our products more expensive in those
                countries;


·
            overlap
                of tax issues;


·
            tariffs
                and duties;


·
            longer
                payment cycles for sales in foreign countries and difficulties in
                collecting accounts receivable;


·
            difficulties
                in coordinating the activities of our geographically dispersed and
                culturally diverse operations;


·
            seasonal
                reductions in business activity in the summer months in Asia and
                in other
                periods in other countries;


·
            costs
                and delays associated with developing our products in multiple languages;
                and


·
            political
                unrest, war, or terrorism in areas in which we do
                business.





Changes
      in policies by the PRC or foreign governments resulting in, among other things,
      increased duties, changes in the current tariff structures, higher taxation,
      currency conversion limitations, restrictions on the transfer or repatriation
      of
      funds, limitations on imports or exports, or the expropriation of private
      enterprises could adversely affect our ability to manufacture or sell products
      in foreign markets and to purchase materials or equipment from foreign
      suppliers. In addition, international trade policies, such as “most favored
      nation” status and trade preferences for certain Asian nations, could affect the
      attractiveness of our products to customers abroad.


24





While
      we
      transact business predominantly in Chinese Renminbi and bill and collect most
      of
      our sales in Renminbi, we may in the future collect a portion of our revenue
      in
      other currencies. In the future, customers may make payments in foreign
      currencies.





Fluctuations
      in foreign currency exchange rates could affect our cost of goods and operating
      margins and could result in exchange losses. In addition, currency devaluation
      can result in a loss to us if we hold deposits of that currency. Hedging foreign
      currencies can be difficult, especially if the currency is not freely traded.
      We
      cannot predict the impact of future exchange rate fluctuations on our operating
      results.





**The
      cyclical nature of the consumer electronics industry may cause substantial
      period-to-period fluctuations in our operating results.**





The
      consumer electronics industry has experienced significant economic downturns
      at
      various times, characterized by diminished product demand, accelerated erosion
      of average selling prices, intense competition, and production overcapacity.
      In
      addition, the consumer electronics industry is cyclical in nature. We may
      experience substantial period-to-period fluctuations in our operating results,
      at least in part because of general industry conditions or events occurring
      in
      the general economy.





**Our
      operating results may have significant periodic and seasonal
      fluctuations.**





In
      addition to the variability resulting from the short-term nature of the
      commitments of our customers, other factors may contribute to significant
      periodic and seasonal quarterly fluctuations in our results of operations.
      These
      factors include the following:





·
            effectiveness
                in managing manufacturing
                processes;


·
            changes
                in cost and availability of labor and
                components;


·
            the
                timing and volume of orders relative to our
                capacity;


·
            market
                acceptance of our products;


·
            product
                introductions or enhancements by us and our
                competitors;


·
            evolution
                in the life cycles of products;


·
            timing
                of expenditures in anticipation of future
                orders;


·
            product
                mix;


·
            pricing
                and availability of competitive
                products;


·
            changes
                or anticipated changes in economic
                conditions;


·
            the
                cancellation or deferral of product purchases as a result of weak
                or
                uncertain economic and industry conditions or the anticipation of
                new
                products or product updates by us or our
                competitors;


·
            changes
                in the competitive landscape due to mergers, acquisitions, or strategic
                alliances that could allow our competitors to gain market
                share;


·
            the
                unpredictability of the timing and magnitude of our sales through
                direct
                sales channels and indirect sales
                channels;


·
            the
                seasonal nature of our sales;


·
            changes
                in our pricing and distribution terms or those of our competitors;
                and


·
            the
                possibility that our business will be adversely affected as a result
                of
                the threat of terrorism or military actions taken by the United States
                or
                its allies.





You
      should not rely on the results of prior periods as an indication of our future
      performance. Our operating expense levels are based, in significant part, on
      our
      expectations of future revenue. If we have a shortfall in revenue or orders
      in
      any given quarter, we may not be able to reduce our operating expenses quickly
      in response. Therefore, any significant shortfall in revenue or orders could
      have an immediate adverse effect on our operating results for that quarter.
      In
      addition, we may experience high operating expenses, and our operating results
      may fall below the expectations of investors, if we fail to manage our business
      effectively.





**Our
      products are complex and may require modifications to resolve undetected errors
      or unforeseen failures, which could lead to an increase in our costs, a loss
      of
      customers, or a delay in market acceptance of our
      products.**


25





Our
      products are complex and may contain undetected errors or experience unforeseen
      failures when first introduced or as new versions are released. These errors
      could cause us to incur significant re-engineering costs, divert the attention
      of our engineering personnel from product development efforts, and cause
      significant customer relations and business reputation problems. If we deliver
      products with defects, our credibility and the market acceptance and sales
      of
      our products could be harmed. Defects could also lead to liability for defective
      products as a result of lawsuits against us or against our customers. We also
      may agree to indemnify our customers in some circumstances against liability
      from defects in our products. A successful product liability claim could require
      us to make significant damage payments.





**We
      do not sell our automotive LCD products to end users and depend on the market
      acceptance of the products of our customers.**





We
      do not
      sell our automotive LCD products to end users. Instead, we design and develop
      LCD products that our OEM customers incorporate into their products. As a
      result, our success depends on the ability of our OEM customers to sell their
      products. Any significant slowdown in the demand for our customers’ products
      would adversely affect our business.





Because
      our success in the automotive LCD display products business depends on the
      widespread market acceptance of our customers’ products, we must establish
      relationships for our LCD display products with OEMs in industries that have
      significant growth potential. Our failure to establish relationships with OEMs
      in those high-growth markets would reduce our revenue potential.





Our
      dependence on the success of the products of our OEM customers exposes us to
      a
      variety of risks, including the following:





·
            our
                ability to supply products for customers on a timely and cost-effective
                basis;


·
            our
                success in maintaining customer satisfaction with our
                products;


·
            our
                ability to match our manufacturing capacity with customer demand
                and to
                maintain satisfactory delivery
                schedules;


·
            customer
                order patterns, changes in order mix, and the level and timing of
                orders
                placed by customers that we can complete in a quarter;
                and


·
            the
                cyclical nature of the industries and markets that we
                serve.





Our
      failure to address these risks would adversely affect our results of
      operations.





**We
      have not reached definitive agreements with any traditional consumer electronics
      retailers to sell our LCD HDTVs.**





We
      have
      not reached definitive agreements with any traditional consumer electronics
      retailers to sell our LCD HDTVs. The inability to secure retailers to sell
      our
      LCD HDTVs would substantially impede our revenue growth and could require us
      to
      write off substantial investments that we have made in this aspect of our
      business. We anticipate that our initial LCD HDTV sales will be to a limited
      number of customers. As a result, we will face the risks inherent in relying
      on
      a concentration of customers. Any material delay, cancellation, or reduction
      of
      orders by one of these customers would adversely affect our operating
      results.





In
      addition, we make significant decisions, including production schedules,
      component procurement commitments, facility requirements, personnel needs,
      and
      other resource requirements, based on our estimates of customer requirements.
      The short-term nature of our customers’ commitments and the possibility of rapid
      changes in demand for our products reduce our ability to estimate accurately
      the
      future requirements of those customers. Our operating results may be materially
      and adversely affected as a result of the failure to obtain anticipated orders
      and deferrals or cancellations of purchase commitments because of changes in
      customer requirements. Because many of our costs and operating expenses are
      relatively fixed, a reduction in customer demand can harm our gross margins
      and
      operating results.





On
      occasion, customers may require rapid increases in production, which can stress
      our resources and reduce operating margins. Although we have had a net increase
      in our manufacturing capacity over the past few years, we may not have
      sufficient capacity at any given time to meet all of our customers’ demands or
      to meet the requirements of a specific project.


26





**We
      are subject to lengthy development periods and product acceptance
      cycles.**





We
      sell
      our LCD display products to OEMs, which then incorporate them into the products
      they sell. OEMs make the determination during their product development programs
      whether to incorporate our LCD display products or pursue other alternatives.
      This may require us to make significant investments of time, capital and
      resources well before our OEM customers introduce their products which
      incorporating our products, and before we can be sure that we will generate
      any
      significant sales to our OEM customers or even recover our investments of time,
      capital and other resources.





During
      an
      OEM customer’s entire product development process, we face the risk that our
      products will fail to meet our OEM customer’s technical, performance, or cost
      requirements or will be replaced by a competing product or alternative
      technology. Even if we offer products that are satisfactory to an OEM customer,
      the customer may delay or terminate its product development efforts. The
      occurrence of any of these events would adversely affect our revenue. The
      lengthy development period also means that it is difficult to immediately
      replace an unexpected loss of existing business.





**Our
      Shenzhen facility and its high-volume LCD display manufacturing line are
      important to our success.**





Our
      Shenzhen facility and its high-volume LCD display manufacturing line are
      important to our success. We currently produce all of our LCD displays on this
      dedicated line. This facility also houses our principal research, development,
      engineering, design, and certain managerial operations. Any event that causes
      a
      disruption of the operation of this facility for even a relatively short period
      of time would adversely affect our ability to produce our LCD displays and
      to
      provide technical and manufacturing support for our customers.





**We
      must effectively manage our growth.**





The
      failure to manage our growth effectively could adversely affect our operations.
      Our ability to manage our planned growth effectively will require us
      to:





·
            enhance
                our operational, financial, and management
                systems;


·
            expand
                our facilities and equipment; and


·
            successfully
                hire, train, and motivate additional employees, including the technical
                personnel necessary to operate our production facility in
                Shenzhen.





**We
      depend on key personnel.**





Our
      operations depend substantially on the efforts and abilities of our senior
      management as well as our technical, sales, and other key personnel. The loss
      of
      services of one or more of our key employees or the inability to add key
      personnel could have a material adverse effect on our business. Although we
      maintain employment agreements with certain key personnel, we do not currently
      have any key person life insurance covering any officer or employee or
      employment agreements with most of our employees.





**Our
      future operating results may fluctuate and cause the price of our common stock
      to decline.**





We
      expect
      that our revenues and operating results will continue to fluctuate significantly
      from quarter to quarter due to various factors, many of which are beyond our
      control. The factors that could cause our operating results to fluctuate
      include, but are not limited to:





·
            seasonality
                of the business;


·
            price
                competition from other
                manufacturers;


·
            general
                price increases by suppliers and
                manufacturers;


·
            our
                ability to maintain and expand our distribution
                relationships;


·
            increases
                in the cost of advertising;


·
            unexpected
                increases in shipping costs or delivery
                times;


·
            our
                ability to build and maintain customer
                loyalty;


·
            the
                introduction of new services, products and strategic alliances by
                us and
                our competitors;


·
            the
                success of our brand-building and marketing
                campaigns;


·
            government
                regulations, changes in tariffs, duties, and
                taxes;








27




·
            the
                amount and timing of operating costs and capital expenditures relating
                to
                expansion of our business, operations and infrastructure;
                and


·
            general
                economic conditions as well as economic conditions specific to our
                sector.





If
      our
      quarterly revenues or operating results fall below the expectations of investors
      or securities analysts, the price of our common stock could significantly
      decline.





**We
      have limited control over the actions of our distributors, retailers or their
      vendors.**





We
      rely
      on distributors for the sale of our products, and those parties maintain
      inventory and prepare merchandise for shipment to retailers and individual
      customers. We have limited control over the products that our distributors
      purchase or keep in stock, and our arrangements with our distributors do not
      require them to set aside any amount of inventory to satisfy demand. Our
      distributors may not accurately forecast the products that will be in high
      demand. In addition, we have limited control over their sales process, shipping
      and order processing procedures. Although we have not experienced disruptions
      in
      the past, nor do we presently foresee possible disruptions in the near future,
      a
      widespread inability of our distributors to successfully supply our branded
      products, if it occurred, would substantially harm our business.





We
      also
      rely on retailers to sell our products to end users. We have limited control
      over the products that retailers purchase or keep in stock, and the arrangements
      between distributors and retailers may not require them to set aside any amount
      of inventory to satisfy demand. The retailers who sell our products may not
      accurately forecast the products that will be in high demand. In addition,
      we
      have limited control over their sales process, shipping and order processing
      procedures.





**Our
      ability to manage our future growth is uncertain.**





We
      are
      currently anticipating a period of growth as a result of our corporate growth
      strategy, which aims to among other things, further develop our distribution
      channels, expand our line of products, and increase our manufacturing capacity.
      In pursuing these objectives, the resulting strain on our managerial,
      operational, financial and other resources could be significant. Success in
      managing such expansion and growth will depend, in part, upon the ability of
      senior management to manage effectively. Any failure to manage the anticipated
      growth and expansion could have a material adverse effect on our
      business.





**Increased
      product returns will decrease our revenues and impact profitability, and we
      have
      little or no history of product returns.**





We
      began
      selling our LCD products in the first quarter of 2006, and accordingly, it
      is
      difficult for us to estimate or calculate our historical rate of product
      returns, and the impact of those returns on our financial results. We currently
      make allowances for product returns in our financial statements based on an
      industry average. However, there can be no assurance that our actual rate of
      product returns will be lower than the industry average. If our rate of product
      returns in the future turns out to be higher than expected, this could
      negatively affect our business, and would harm our financial
      results.





**Risks
      Related to Doing Business in China**





**Adverse
      changes in economic and political policies of the PRC government could have
      a
      material adverse effect on the overall economic growth of China, which could
      adversely affect our business.**





All
      of
      our business operations are currently conducted in China. Accordingly, our
      results of operations, financial condition and prospects are subject to a
      significant degree to economic, political and legal developments in China.
      China’s economy differs from the economies of most developed countries in many
      respects, including with respect to the amount of government involvement, level
      of development, growth rate, control of foreign exchange and allocation of
      resources. While the PRC economy has experienced significant growth in the
      past
      20 years, growth has been uneven across different regions and among various
      economic sectors of China. The PRC government has implemented various measures
      to encourage economic development and guide the allocation of resources. Some
      of
      these measures benefit the overall PRC economy, but may also have a negative
      effect on us. For example, our financial condition and results of operations
      may
      be adversely affected by government control over capital investments or changes
      in tax regulations that are applicable to us. Since early 2004, the PRC
      government has implemented certain measures to control the pace of economic
      growth. Such measures may cause a decrease in the level of economic activity
      in
      China, which in turn could adversely affect our results of operations and
      financial condition.


28





**Our
      operating subsidiaries in the PRC are subject to restrictions on paying
      dividends and making other payments to us.**





We
      are a
      holding company incorporated in Nevada and do not have any assets or conduct
      any
      business operations other than through the operations of the Shiming Group.
      As a
      result of our holding company structure, we rely entirely on dividend payments
      from the Shiming Group. However, PRC regulations currently permit payment of
      dividends only out of accumulated profits, as determined in accordance with
      PRC
      accounting standards and regulations. Our subsidiaries in China are also
      required to set aside a portion of their after-tax profits according to PRC
      accounting standards and regulations to fund certain reserve funds. The PRC
      government also imposes controls on the conversion of RMB 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. See “Government control of currency conversion may
      affect the value of your investment.” Furthermore, if our subsidiaries in China
      incur debt on their own in the future, the instruments governing the debt may
      restrict their ability to pay dividends or make other payments. If we are unable
      to receive all of the revenues from our operations through contractual or
      dividend arrangements, we may be unable to pay dividends to our
      stockholders.





**Fluctuation
      in the value of RMB relative to other currencies may have a material adverse
      effect on our business and/or an investment in our shares.**





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.
      Although the exchange rate between RMB and the U.S. dollar has been effectively
      pegged by the People’s Bank of China since 1994, there can be no assurance that
      these currencies will remain pegged to the U.S. dollar, especially in light
      of
      the significant international pressure on the Chinese government to permit
      the
      free floatation of the RMB, which would result in fluctuations in the exchange
      rate between the RMB and the U.S. dollar, and other geopolitical factors. If
      the
      RMB were to increase in value against the dollar, for example, products offered
      by mainland Chinese producers would become more expensive relative to other
      international producers, to consumers outside of China, which may translate
      into
      a decrease in sales. On the other hand, a decrease in the value of the RMB
      against the dollar would have the opposite effect. Such a decrease in sales,
      if
      it occurred, would adversely affect our financial results.





**Risks
      Related to an Investment in Our Securities**





**To
      date, we have not paid any cash dividends 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
      not
      to pay any dividends. We intend to retain all earnings for the company’s
      operations.





**The
      Application of the “Penny Stock” Rules Could Adversely Affect the Market Price
      of Our Common Stock and Increase Your Transaction Costs to Sell Those
      Shares.**





As
      long
      as the trading price of our common shares is below $5 per share, the open-market
      trading of our common shares will be subject to the “penny stock” rules. The
“penny stock” rules impose additional sales practice requirements on
      broker-dealers who sell securities to persons other than established customers
      and accredited investors (generally those with assets in excess of $1,000,000
      or
      annual income exceeding $200,000 or $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 shares, and may result in decreased
      liquidity for our common shares and increased transaction costs for sales and
      purchases of our common shares as compared to other securities.


29





**Our
      Common Shares are 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.**





The
      Company cannot predict the extent to which an active public market for its
      common stock will develop or be sustained. However, the Company does not rule
      out the possibility of applying for listing on the Nasdaq National Market or
      other exchanges.





Our
      common shares have historically been sporadically or “thinly-traded” on the
“Over-the-Counter Bulletin Board”, meaning that the number of persons interested
      in purchasing our common shares at or near bid prices at any given time may
      be
      relatively small or non-existent. 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-averse 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 became 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 which 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 for our common stock is particularly volatile given our status
      as a
      relatively small company with a small and thinly traded “float” and lack of
      current revenues 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 shares 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. First,
      as noted above, our common shares are 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 that 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. Secondly, we are a speculative or “risky” investment due to our
      lack of revenues or profits to date and uncertainty of future market acceptance
      for our current and potential products. As a consequence of this enhanced risk,
      more risk-adverse investors may, under the fear of losing all or most of their
      investment in the event of negative news or lack of progress, be more inclined
      to sell their shares on the market more quickly and at greater discounts than
      would be the case with the stock of a seasoned issuer. The following factors
      may
      add to the volatility in the price of our common shares: actual or anticipated
      variations in our quarterly or annual operating results; adverse outcomes;
      the
      termination of our contractual agreements with Shiming Technology; and additions
      or departures of our key personnel, as well as other items discussed under
      this
“Risk Factors” section, as well as elsewhere in this Form 10-KSB. Many of these
      factors are beyond our control and may decrease the market price of our common
      shares, regardless of our operating performance. We cannot make any predictions
      or projections as to what the prevailing market price for our common shares
      will
      be at any time, including as to whether our common shares will sustain their
      current market prices, or as to what effect that the sale of shares or the
      availability of common shares for sale at any time will have on the prevailing
      market price. However, the Company does not rule out the possibility of applying
      for listing on the Nasdaq National Market or other exchanges.





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 prearranged 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.


30





**Volatility
      in Our Common Share Price May Subject Us to Securities
      Litigation.**





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.
      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.





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





Following
      the closing of the Share Exchange Transaction under the Exchange Agreement,
      our
      officers and directors will collectively control, directly or indirectly,
      approximately 44% of our outstanding ordinary shares. Thus, our management
      stockholders could exert substantial influence over matters such as electing
      directors and approving mergers or other business combination transactions.
      While all of our stockholders are entitled to vote on matters submitted to
      our
      stockholders for approval, because of the significant percentage ownership
      and
      concentration of voting power held by our management stockholders, elections
      of
      our board of directors and other corporate decisions will generally be within
      the influence of this stockholder. There can be no assurance that matters voted
      upon by our stockholders who are also officers and directors, will be viewed
      favorably by all stockholders of the company, or that voting decisions of our
      management stockholders will be agreeable to all other
      stockholders.





**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 our company
      and
      may discourage lawsuits against our directors, officers and
      employees.**





Our
      articles of incorporation do not contain any specific provisions that eliminate
      the liability of our directors for monetary damages to our company and
      stockholders, however 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
      stockholders against our directors and officers even though such actions, if
      successful, might otherwise benefit our company and stockholders.





**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 the company and its affiliates may lead to future liability for
      the company.**





Prior
      to
      our entry into the Agreement and Plan of Share Exchange on August 25, 2006,
      our
      predecessor company has been engaged in operations. Although for a period of
      two
      years after the Closing Date the major shareholders of our predecessor company
      will indemnify us 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 in the Share Exchange Agreement, any liabilities relating
      to
      such prior business against which we are not completely indemnified may have
      a
      material adverse effect on us.


31





**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 this 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.





**You
      may face difficulties in protecting your interests, and your ability to protect
      your rights through the U.S. federal courts may be limited, because our
      subsidiaries are incorporated in non-U.S. jurisdictions, we conduct
      substantially all of our operations in China, and all of our officers reside
      outside the United States.**





Although
      we are incorporated in Nevada, we conduct substantially all of our operations
      in
      China through our wholly owned subsidiaries in China. All of our officers reside
      outside the United States and some or all of the assets of those persons are
      located outside of the United States. As a result, it may be difficult or
      impossible for you to bring an action against us or against these individuals
      in
      China in the event that you believe that your rights have been infringed under
      the securities laws or otherwise. Even if you are successful in bringing an
      action of this kind, the laws of the PRC may render you unable to enforce a
      judgment against our assets or the assets of our directors and
      officers.





As
      a
      result of all of the above, our public shareholders may have more difficulty
      in
      protecting their interests through actions against our management, directors
      or
      major stockholders than would shareholders of a corporation doing business
      entirely within the United States.





**If
      we fail to maintain an effective system of internal controls, we may not be
      able
      to accurately report our financial results or prevent
      fraud.**





We
      will
      be subject to reporting obligations under the U.S. securities laws. The
      Securities and Exchange Commission, or the SEC, as required by Section 404
      of
      the Sarbanes-Oxley Act of 2002, adopted rules requiring every public company
      to
      include a management report on such company’s internal controls over financial
      reporting in its annual report, which contains management’s assessment of the
      effectiveness of the company’s internal controls over financial reporting. In
      addition, an independent registered public accounting firm must attest to and
      report on management’s assessment of the effectiveness of the company’s internal
      controls over financial reporting. These requirements will first apply to our
      annual report on Form 10-KSB for the fiscal year ending December 31, 2006.
      Our
      management may conclude that our internal controls over our financial reporting
      are not effective. Moreover, even if our management concludes that our internal
      controls over financial reporting are effective, our independent registered
      public accounting firm may still decline to attest to our management’s
      assessment or may issue a report that is qualified if it is not satisfied with
      our controls or the level at which our controls are documented, designed,
      operated or reviewed, or if it interprets the relevant requirements differently
      from us. Our reporting obligations as a public company will place a significant
      strain on our management, operational and financial resources and systems for
      the foreseeable future. Effective internal controls, particularly those related
      to revenue recognition, are necessary for us to produce reliable financial
      reports and are important to help prevent fraud. As a result, our failure to
      achieve and maintain effective internal controls over financial reporting could
      result in the loss of investor confidence in the reliability of our financial
      statements, which in turn could harm our business and negatively impact the
      trading price of our stock. Furthermore, we anticipate that we will incur
      considerable costs and use significant management time and other resources
      in an
      effort to comply with Section 404 and other requirements of the Sarbanes-Oxley
      Act.





**We
      will incur increased costs as a result of being a public
      company.**





As
      a
      public company, we will incur significant legal, accounting and other expenses
      that we did not incur as a private company. In addition, the Sarbanes-Oxley
      Act,
      as well as new rules subsequently implemented by SEC have required changes
      in
      corporate governance practices of public companies. We expect these new rules
      and regulations to increase our legal, accounting and financial compliance
      costs
      and to make certain corporate activities more time-consuming and costly. In
      addition, we will incur additional costs associated with our public company
      reporting requirements. We are currently evaluating and monitoring developments
      with respect to these new rules, and we cannot predict or estimate the amount
      of
      additional costs we may incur, or the timing of such costs.


32





**Item
                7.**
            **Financial
                Statements.**





**The
      information required by Item 7 and an index thereto commences on the next
      page.**








33






**SHIMING
        U.S., INC. AND SUBIDIARIES**
 **CONSOLIDATED
        FINANCIAL STATEMENTS**
  **December
        31, 200** **6
        And 2005**
  **Together
        With Report Of**
 **Independent
        Registered Public Accounting Firm**
    
 **SHIMING
          U.S., INC. AND SUBSIDIARIES**
  **INDEX
          TO CONSOLIDATED FINANCIAL STATEMENTS**
  Report
                    of Independent Registered Public Accounting Firm
                F-2Consolidated
                    Balance Sheet
                F-3Consolidated
                    Statements of Operations
                F-4Consolidated
                    Statements of Changes in Stockholders’ Equity
                F-5Consolidated
                    Statements of Cash Flows
                F-6Notes
                    to Consolidated Financial Statements
                F-7




F-1


**REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 To
        the
        Board of Directors and Shareholders
 Shiming
        U.S., Inc. And Subsidiaries
 
 We
        have
        audited the accompanying consolidated balance sheet of Shiming U.S., Inc.
        and
        Subsidiaries as of December 31, 2006, and the related consolidated statements
        of
        operations, stockholders’ equity, and cash flows for the each of the two years
        ended December 31, 2006. These consolidated financial statements are the
        responsibility of the Company’s management. Our responsibility is to express an
        opinion on these consolidated financial statements based on our audits.
 
 We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the
        consolidated statements are free of material misstatement. An audit includes
        examining, on a test basis, evidence supporting the amounts and disclosures
        in
        the consolidated financial statements. An audit also includes assessing the
        accounting principles used and significant estimates made by management,
        as well
        as evaluating the overall consolidated financial statement presentation.
        We
        believe that our audits provide a reasonable basis for our opinion.
 
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the consolidated financial position of
        Shiming U.S., Inc. and its subsidiaries as of December 31, 2006 and
        the results of its consolidated operations and its consolidated cash flows
        for
        each of the two years ended December 31, 2006 in conformity with accounting
        principles generally accepted in the United States of America.
 
 Gruber
        & Company, LLC
 Lake
        Saint Louis, Missouri 63367
 April
        6,
        2007
 F-2


Shiming,
          U.S., Inc. and Subsidiaries
 Consolidated
          Balance Sheets
 December
          31, 2006
 
 2006**Assets****Current
                    assets**Cash
                    and equivalents
                
                $
                3,554,547Accounts
                    receivable
                
                
                3,154,764Prepaid
                    expenses, deposits and other receivables - Third parties
                
                
                528,098Prepaid
                    expenses, deposits and other receivables - Related parties
                
                
                --Short-term
                    investment
                
                
                12,741,447**Total
                    current assets**
                
                
                19,978,856Property,
                    plant and equipment, net
                
                
                2,750,346Intangilble
                    assets, net
                
                
                5,393,306**Total
                    assets**
                
                
                28,122,508**Liabilities
                    and stockholders' equity****Current
                    liabilities**Accounts
                    payable and accrued expenses
                
                
                141,134Deferred
                    revenues
                
                
                --Short-term
                    loans
                
                
                38,580Due
                    to related parties
                
                
                538,981**Total
                    current liabilities**
                
                
                718,695Long-term
                    loans
                
                
                154,320**Total
                    liabilities**
                
                
                873,015**Stockholders'
                    equity**Preferred
                    stock, $.001 par value, 25,000,000 shares authorized;
                
                
                --no
                    shares issued and outstandingCommon
                    stock; $.001 par value; 175,000,000 shares authorized;66,693,834
                    shares issued and outstanding
                
                
                66,694Additional
                    paid-in capital
                
                
                22,463,630Donated
                    capital
                
                
                203,600Statutory
                    surplus reserve fund
                
                
                1,950,538Retained
                    earnings
                
                
                1,532,574Accumulated
                    other comprehensive income
                
                
                1,032,457**Total
                    stockholders' equity**
                
                
                27,249,493**Total
                    liabilities and stockholders' equity**
                
                $
                28,122,508
    See
            accompanying notes to consolidated financial statements
 F-3
  Shiming,
            U.S., Inc. and Subsidiaries
 Consolidated
          Statement of Operations
 For
          the
          Years Ended December 31, 2006 and 2005
   2006
                
                2005Revenues,
                    net
                
                $
                5,532,601
                
                $
                8,917,613Cost
                    of revenues
                
                
                792,078
                
                
                3,432,435Gross
                    profit
                
                
                4,740,523
                
                
                5,485,178ExpensesSelling
                
                
                42,530
                
                
                --General
                    and administrative
                
                
                2,691,130
                
                
                3,070,640Total
                    operating expenses
                
                
                2,733,660
                
                
                3,070,640Income
                    from operations
                
                
                2,006,863
                
                
                2,414,538Other
                    income (expense)Other
                    income
                
                
                509,045
                
                
                203,187Interest
                    expense
                
                
                (12,050
                )
                
                (11,541
                )Total
                    other income (expense)
                
                
                496,995
                
                
                191,646Income
                    from operations
                
                
                2,503,858
                
                
                2,606,184Income
                    tax
                
                
                --
                
                
                --Net
                    income
                
                $
                2,503,858
                
                $
                2,606,184Earnings
                    per share
                
                $
                0.23
                
                $
                0.29Weighted
                    average common shares outstanding
                
                
                11,115,638
                
                
                9,000,000
   See
            accompanying notes to consolidated financial statements
 F-4
  Shiming,
          U.S., Inc. and Subsidiaries
 Statements
          of Cash Flows
  For
                    the years endedDecember
                    31,2006
                
                2005**Cash
                    flows from operating activities**Net
                    income
                
                $
                2,503,858
                
                $
                2,606,184Adjustments
                      to reconcile net loss to net cash used inoperating
                      activities:Depreciation
                    and amortization
                
                
                1,435,765
                
                
                1,437,778Written-off
                    intangible asset
                
                
                --
                
                
                953,919Changes
                    in assets and liabilities:Accounts
                    receivable
                
                
                (1,220,096
                )
                
                1,006,496Prepaid
                    expenses
                
                
                526,814
                
                
                (252,715
                )Accounts
                    payable and accruals
                
                
                (150,330
                )
                
                (12,030
                )Deferred
                    revenues
                
                
                (25,934
                )
                
                (52,815
                )Net
                    cashprovided
                    byoperating activities
                
                
                3,070,077
                
                
                5,686,817Cash
                    flow from investing activitiesPurchase
                    of property and equipment
                
                
                (16,103
                )
                
                (2,066
                )Loan
                    repaid by a third party
                
                
                --
                
                
                2,854,364Net
                    cash(used
                    in)/provided
                    byinvesting
                    activities
                
                
                (16,103
                )
                
                2,852,298Cash
                    flow from financing activitiesPurchase
                    of short term investments
                
                
                (186,446
                )
                
                (9,563,612
                )Advances
                    from related party
                
                
                174,498
                
                
                4,852,931Principal
                    paid on long-term loans
                
                
                (38,425
                )
                
                (36,991
                )Repayment
                    to related parties
                
                
                --
                
                
                (3,407,467
                )Net
                    cashused
                    infinancing activities
                
                
                (50,373
                )
                
                (8,155,139
                )Net
                    change in cash
                
                
                3,003,601
                
                
                383,976Cash,
                    beginning of year
                
                
                550,946
                
                
                166,970Cash,
                    end of year
                
                $
                3,554,547
                
                $
                550,946Supplemental
                    disclosure of cash flow information:Cash
                    paid for income taxes
                
                
                --
                
                
                --Cash
                    paid for interest
                
                $
                11,868
                
                $
                12,000
   See
            accompanying notes to consolidated financial statements
 F-5
  Shiming
          U.S., Inc. and Subsidiaries
 Consolidated
          Statements of Changes in Stockholders' Deficit
 For
          the
          Years Ended December 31, 2006
 StatutoryAdditional
                  
                  
                  
                  Surplus
                  
                  Retained
                  
                  Other
                  
                  TotalPreferred
                      Stock
                  
                  Common
                  
                  Paid-in
                  
                  Donated
                  
                  Reserve
                  
                  Earnings
                  
                  Comprehensive
                  
                  Stockholders'Shares
                  
                  Stock
                  
                  Shares
                  
                  Stock
                  
                  Capital
                  
                  Capital
                  
                  Fund
                  
                  (Deficit)
                  
                  Income
                  
                  DeficitBalance,
                      December 31, 2004
                  
                  
                  --
                  
                  $
                  --
                  
                  
                  9,000,000
                  
                  $
                  9,000
                  
                  $
                  40,575
                  
                  
                  167,600
                  
                  $
                  --
                  
                  $
                  (349,318
                  )
                  $
                  
                  
                  $
                  (132,143
                  )Donated
                      consulting
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  36,000
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  36,000Net
                      loss for the year
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (110,247
                  )
                  
                  
                  
                  
                  (110,247
                  )Balance,
                      December 31, 2005
                  
                  
                  --
                  
                  
                  --
                  
                  
                  9,000,000
                  
                  
                  9,000
                  
                  
                  40,575
                  
                  
                  203,600
                  
                  
                  --
                  
                  
                  (459,565
                  )
                  
                  
                  
                  
                  (206,390
                  )Recapitalization
                      onreverse
                      acquisition
                  
                  
                  
                  
                  
                  
                  
                  
                  57,693,834
                  
                  
                  57,694
                  
                  
                  22,423,055
                  
                  
                  
                  
                  
                  1,438,819
                  
                  
                  
                  
                  
                  
                  
                  
                  23,919,568Transfer
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  511,719
                  
                  
                  (511,719
                  )
                  
                  
                  
                  
                  0Change
                      in exchange rate
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1,032,457
                  
                  
                  1,032,457Net
                      income for the year
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  2,503,858
                  
                  
                  
                  
                  
                  2,503,858Balance,
                      December 31, 2006
                  
                  
                  --
                  
                  $
                  --
                  
                  
                  66,693,834
                  
                  $
                  66,694
                  
                  $
                  22,463,630
                  
                  $
                  203,600
                  
                  $
                  1,950,538
                  
                  $
                  1,532,574
                  
                  $
                  1,032,457
                  
                  $
                  27,249,493
 See
                accompanying notes to consolidated financial statements
 F-5
 **SHIMING
        U.S., INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 1.
        The
        Company
 
 Shiming,
        U.S., Inc. (formerly Argenta Systems, Inc.) is a consumer electronics maker
        based in China, with a particular focus on the development and manufacture
        of
        competitively-priced liquid crystal display (LCD) products, including
        high-definition TV’s (HDTV) and computer monitors. Shiming was originally formed
        in 1999 as Shanxi Shiming Science & Technology Joint Stock Company, Ltd.
        under the laws of the PRC. In November, 2006, the Company combined with Argenta
        Systems, Inc., a corporation incorporated in Nevada on June 1, 1999. On March
        5,
        2007, the Company changed its name to Shiming, U.S., Inc.
 
 2.
        Summary of Significant Accounting Policies
 
 (a)
        Basis
        of Presentation
 
 The
        accompanying consolidated financial statements are prepared in accordance
        with
        the accounting principles generally accepted in the United States of America
        (“US GAAP”). The consolidated financial statements include the accounts of
        Shiming, U.S., Inc. and its wholly owned subsidiaries. All material intercompany
        balances and transactions have been eliminated from the consolidated financial
        statements.
 
 (b)
        Use
        of Estimates
 
 In
        preparing consolidated financial statements in conformity with US GAAP,
        management is required 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 and revenues
        and
        expenses during the reported periods. Significant estimates include
        depreciation. Actual results could differ from those estimates.
 
 (c)
        Cash
        and Cash Equivalents
 
 The
        Company considers all highly liquid investments with original maturities
        of
        three months or less at the time of purchase to be cash equivalents. As of
        December 31, 2006, the Company did not have any cash equivalents.
 
 (d)
        Short-term Investment
 
 The
        Company classifies its short-term investment as held-to-maturity debt securities
        and is measured at amortized cost (which approximates fair value) with interest
        and realized gains and losses, if any, reported in non-operating income in
        the
        income statement.
  F-7
  
 **SHIMING
        U.S., INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 (e)
        Allowance for Doubtful Accounts
 
 The
        Company recognizes an allowance for doubtful accounts to ensure accounts
        receivable are not overstated due to uncollectibility. An allowance for doubtful
        accounts is maintained for all customers based on a variety of factors,
        including the length of time the receivables are past due, significant one-time
        events and historical experience. An additional reserve for individual accounts
        is recorded when the Company becomes aware of a customer’s inability to meet its
        financial obligations, such as in the case of bankruptcy filings or
        deterioration in the customer’s operating results or financial position. If
        circumstances related to customers change, estimates of the recoverability
        of
        receivables would be further adjusted. There was no allowance for doubtful
        accounts as of December 31, 2006.
 
 (f)
        Property, Plant and Equipment
 
 Property,
        plant and equipment is stated at cost. Depreciation is provided principally
        by
        use of the straight-line method over the useful lives of the related assets,
        except for leasehold properties, which are depreciated over the terms of
        their
        related leases or their estimated useful lives, whichever is less. Expenditures
        for maintenance and repairs, which do not improve or extend the expected
        useful
        life of the assets, are expensed to operations while major repairs are
        capitalized.
 
 The
        estimated useful lives are as follows:
 YearsBuildings
                  and leasehold improvements
              5
                  -
                  44Fixtures
                  and equipment
              5Motor
                  Vehicles
              5Computer
                  equipment
              3
 
 The
        gain
        or loss on disposal of property, plant and equipment is the difference between
        the net sales proceeds and the carrying amount of the relevant assets, and,
        if
        any, is recognized in the statement of operations.
 
 (g)
        Intangible Assets
 
 Intangible
        assets consist of land use right  and
        is
        amortized using the straight-line method over their estimated useful life
        of 44
        years.
  F-8
  **SHIMING
        U.S., INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 (h)
        Impairment of Assets
 
 In
        accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144,
        "Accounting for Impairment or Disposal of Long-Lived Assets", the Company
        evaluates its long-lived assets to determine whether later events and
        circumstances warrant revised estimates of useful lives or a reduction in
        carrying value due to impairment. If indicators of impairment exist and if
        the
        value of the assets is impaired, an impairment loss would be recognized.
        As of
        December 31, 2006, no impairment loss has been recognized.
 
 (i)
        Income Taxes
 
 The
        Company accounts for income taxes under SFAS No. 109, "Accounting for Income
        Taxes". Under SFAS No. 109, deferred tax assets and liabilities are recognized
        for the future tax consequences attributable to differences between the
        financial statement carrying amounts of existing assets and liabilities and
        their respective tax bases. Deferred tax assets and liabilities are measured
        using enacted tax rates expected to apply to taxable income in the years
        in
        which those temporary differences are expected to be recovered or settled.
        Under
        SFAS No. 109, the effect on deferred tax assets and liabilities of a change
        in
        tax rates is recognized in income in the period that includes the enactment
        date.
 
 (j)
        Revenue Recognition
 
 Revenue
        from goods sold is recognized when title has passed to the purchaser, which
        generally is at the time of delivery.
 
 (k)
        Foreign Currency Transactions
 
 The
        Company’s functional currency is Renminbi (“RMB”) and its reporting currency is
        U.S. dollars. The Company’s consolidated, balance sheet accounts are translated
        into U.S. dollars at the year-end exchange rates and all revenue and expenses
        are translated into U.S. dollars at the average exchange rates prevailing
        during
        the periods in which these items arise. Translation gains and losses are
        deferred and accumulated as a component of other comprehensive income in
        stockholders’ equity. Transaction gains and losses that arise from exchange rate
        fluctuations from transactions denominated in a currency other than the
        functional currency are included in the statement of operations as
        incurred.
 
 The
        PRC
        government imposes significant exchange restrictions on fund transfers out
        of
        the PRC that are not related to business operations. These restrictions have
        not
        had a material impact on the Company because it has not engaged in any
        significant transactions that are subject to the restrictions.
  F-9
  **SHIMING
        U.S., INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 (l)
        Fair
        Value of Financial Instruments
 
 SFAS
        No.
        107, “Disclosures about Fair Values of Financial Instruments”, requires
        disclosing fair value to the extent practicable for financial instruments
        that
        are recognized or unrecognized in the balance sheet. The fair value of the
        financial instruments disclosed herein is not necessarily representative
        of the
        amount that could be realized or settled, nor does the fair value amount
        consider the tax consequences of realization or settlement.
 
 For
        certain financial instruments, including cash, accounts and other receivables,
        accounts payable, accruals and other payables, it was assumed that the carrying
        amounts approximate fair value because of the near term maturities of such
        obligations. The carrying amounts of long-term loans approximate fair value
        as
        the interest on these loans is minimal.
 
 (m)
        Earnings Per Share
 
 Basic
        earnings per share is computed by dividing the earnings for the year by the
        weighted average number of common shares outstanding for the period. Diluted
        earnings per share reflects the potential dilution of securities by including
        other potential common stock, including stock options and warrants, in the
        weighted average number of common shares outstanding for a period, if
        dilutive.
 
 (n)
        Accumulated Other Comprehensive Income
 
 Accumulated
        other comprehensive income represents the change in equity of the Company
        during
        the periods presented from foreign currency translation adjustments.
 
 (o)
        Profit Appropriation
 
 In
        accordance with PRC regulations, the Company is required to make appropriations
        to the statutory surplus reserve and statutory public welfare fund, based
        on
        after-tax net income determined in accordance with PRC GAAP. They are
        non-distributable other than in liquidation.
 
 Appropriation
        to the statutory surplus reserve should be at least 10% of the after-tax
        net
        income determined in accordance with the PRC GAAP until the reserve is equal
        to
        50% of the entity’s registered capital. The profit appropriations made to the
        statutory surplus reserve fund for the years ended December 31, 2006 and
        2005
        amounted to approximately $299,000 and $261,000 respectively.
 
 Appropriations
        to the statutory public welfare fund are made on the same basis as statutory
        surplus fund, at 5% and are generally optional at the discretion of the Board
        of
        Directors. The profit appropriations made to the statutory public welfare
        fund
        for each of the years ended December 31, 2006 and 2005 amounted to approximately
        $149,000 and $130,000, respectively.
 
 
  F-10
  **SHIMING
        U.S., INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 (p)
        Stock-Based Compensation
 
 In
        March
        2004, the FASB issued a proposed statement, Share-Based Payment, which addresses
        the accounting for share-based payment transactions in which an enterprise
        receives employee services in exchange for equity instruments of the enterprise
        or liabilities that are based on the grant-date fair value of the enterprise's
        equity instruments or that may be settled by the issuance of such equity
        instruments. The proposed statement would eliminate the ability to account
        for
        share-based compensation transactions using Accounting Principles Board ("APB")
        Opinion No. 25, Accounting for Stock Issued to Employees, and generally would
        require instead that such transactions be accounted for using a fair-value-based
        method. In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment,
        which is a revision of SFAS No. 123. Generally, the approach in SFAS No.
        123(R)
        is similar to the approach described in SFAS No. 123. However, SFAS No. 123(R)
        requires all share-based payments to employees, including grants of employee
        stock options, to be recognized in the income statement based on their
        grant-date fair values. Pro forma disclosure is no longer an alternative.
 
 As
        permitted by SFAS No. 123, for 2005, the Company accounted for share-based
        payments to employees using APB Opinion No. 25's intrinsic value method and,
        as
        such, generally recognized no compensation cost for employee stock options.
 
 Effective
        January 1, 2006, we have adopted SFAS No. 123(R)'s fair value method of
        accounting for share based payments. Accordingly, the adoption of SFAS No.
        123(R)'s fair value method may have a significant impact on the Company's
        results of operations as we are required to recognize the cost of employee
        services received in exchange for awards of equity instruments based on the
        grant-date fair value of those awards. SFAS No. 123(R) permits public companies
        to adopt its requirements using either the "modified prospective" method
        or the
        "modified retrospective" method.
 
 The
        Company adopted SFAS No. 123(R) using the modified prospective method. In
        April
        2005, the SEC delayed the effective date of SFAS No. 123(R), which is now
        effective for public companies for annual, rather than interim periods that
        begin after June 15, 2005. The impact of the adoption of SFAS No. 123(R)
        cannot
        be predicted at this time because it will depend on levels of share-based
        payments granted in the future.
 
 (q)
        Revenue Recognition
 
 Revenue
        is recognized in accordance with SEC Staff Accounting Bulletin No. 101, “Revenue
        Recognition in Financial Statements”. The Company recognizes revenue when the
        significant risks and rewards of ownership have been transferred to the customer
        pursuant to applicable laws and regulations, including factors such as when
        there has been evidence of a sales arrangement, the performance has occurred,
        or
        service have been rendered, the price to the buyer is fixed or determinable,
        and
        collectability is reasonably assured
 
  F-11
  **SHIMING
        U.S., INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 (r)
        New
        Accounting Pronouncements
 
 In
        March
        2004, the FASB approved the consensus reached on the Emerging Issues Task
        Force
        (EITF) Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and
        Its
        Application to Certain Investments." The objective of this Issue is to provide
        guidance for identifying impaired investments. EITF 03-1 also provides new
        disclosure requirements for investments that are deemed to be temporarily
        impaired. In September 2004, the FASB issued a FASB Staff Position (FSP)
        EITF
        03-1-1 that delays the effective date of the measurement and recognition
        guidance in EITF 03-1 until after further deliberations by the FASB. The
        disclosure requirements are effective only for annual periods ending after
        June
        15, 2004. The Company has evaluated the impact of the adoption of the disclosure
        requirements of EITF 03-1 and does not believe it will have an impact to
        the
        Company's overall combined results of operations or combined financial position.
        Once the FASB reaches a final decision on the measurement and recognition
        provisions, the Company will evaluate the impact of the adoption of EITF
        03-1.
 
 In
        November 2004, the FASB issued SFAS No. 151 "Inventory Costs, an amendment
        of
        ARB No. 43, Chapter 4”, (" SFAS No. 151"). The amendments made by SFAS 151
        clarify that abnormal amounts of idle facility expense, freight, handling
        costs,
        and wasted materials (spoilage) should be recognized as current-period charges
        and require the allocation of fixed production overheads to inventory based
        on
        the normal capacity of the production facilities. The guidance is effective
        for
        inventory costs incurred during fiscal years beginning after June 15, 2005.
        Earlier application is permitted for inventory costs incurred during fiscal
        years beginning after November 23, 2004. The Company has evaluated the impact
        of
        the adoption of SFAS 151, and does not believe the impact will be significant
        to
        the Company's overall results of operations or financial position.
 
 In
        December 2004, the FASB issued SFAS No.152, "Accounting for Real Estate
        Time-Sharing Transactions-an amendment of FASB Statements No. 66 and 67"
        ("SFAS
        152") SFAS 152 amends SFAS No. 66, "Accounting for Sales of Real Estate",
        to
        reference the financial accounting and reporting guidance for real estate
        time-sharing transactions that is provided in AICPA Statement of Position
        (SOP)
        04-2, "Accounting for Real Estate Time-Sharing Transactions". SFAS 152 also
        amends SFAS No. 67, "Accounting for Costs and Initial Rental Operations of
        Real
        Estate Projects", to state that the guidance for (a) incidental operations
        and
        (b) costs incurred to sell real estate projects does not apply to real estate
        time-sharing transactions. The accounting for those operations and costs
        is
        subject to the guidance in SOP 04-2. SFAS 152 is effective for financial
        statements for fiscal years beginning after June 15, 2005, with earlier
        application encouraged. The Company has evaluated the impact of the adoption
        of
        SFAS 152, and does not believe the impact will be significant if any, to
        the
        Company's overall results of operations or financial position since the Company
        does not enter into such transactions.
 
 In
        December 2004, the FASB issued SFAS No.153, "Exchanges of Nonmonetary Assets,
        an
        amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions."
        The
        amendments made by SFAS 153 are based on the principle that exchanges of
        nonmonetary assets should be measured based on the fair value of the assets
        exchanged. Further, the amendments eliminate the narrow exception for
        nonmonetary exchanges
  F-12
  
 **SHIMING
        U.S., INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 of
        similar productive assets and replace it with a broader exception for exchanges
        of nonmonetary assets that do not have commercial substance. Previously,
        Opinion
        29 required that the accounting for an exchange of a productive asset for
        a
        similar productive asset or an equivalent interest in the same or similar
        productive asset should be based on the recorded amount of the asset
        relinquished. Opinion 29 provided an exception to its basic measurement
        principle (fair value) for exchanges of similar productive assets. That
        exception required that some nonmonetary exchanges, although commercially
        substantive, to be recorded on a carryover basis. By focusing the exception
        on
        exchanges that lack commercial substance, the FASB believes SFAS No.153 produces
        financial reporting that more faithfully represents the economics of the
        transactions. SFAS No.153 is effective for nonmonetary asset exchanges occurring
        in fiscal periods beginning after June 15, 2005. Earlier application is
        permitted for nonmonetary asset exchanges occurring in fiscal periods beginning
        after the date of issuance. The provisions of SFAS No.153 shall be applied
        prospectively. The Company has evaluated the impact of the adoption of SFAS
        153,
        and does not believe the impact will be significant to the Company's overall
        results of operations or financial position.
 
 In
        December 2004, the FASB issued SFAS No.123 (revised 2004), "Share-Based Payment"
        ("SFAS 123(R)"). SFAS 123(R) will provide investors and other users of financial
        statements with more complete and neutral financial information by requiring
        that the compensation cost relating to share-based payment transactions be
        recognized in financial statements. That cost will be measured based on the
        fair
        value of the equity or liability instruments issued. SFAS 123(R) covers a
        wide
        range of share-based compensation arrangements including share options,
        restricted share plans, performance-based awards, share appreciation rights,
        and
        employee share purchase plans. SFAS 123(R) replaces SFAS No. 123, "Accounting
        for Stock-Based Compensation", and supersedes APB Opinion No. 25, "Accounting
        for Stock Issued to Employees". SFAS 123, as originally issued in 1995,
        established as preferable a fair-value-based method of accounting for
        share-based payment transactions with employees. However, that statement
        permitted entities the option of continuing to apply the guidance in Opinion
        25,
        as long as the footnotes to financial statements disclosed what net income
        would
        have been had the preferable fair-value-based method been used. Public entities
        (other than those filing as small business issuers) will be required to apply
        SFAS 123(R) as of the first interim or annual reporting period that begins
        after
        June 15, 2005. This pronouncement is effective for the Company, a small business
        issuer, as of the first interior annual reporting period that begins after
        December 15, 2005. The Company has evaluated the impact of the adoption of
        SFAS
        123(R), and does not believe the impact will be significant to the Company's
        overall results of operations or financial position.
 
 In
        May,
        2005, The FASB issued SFAS No. 154, entitled Accounting Changes and Error
        Corrections - a replacement of APB Opinion No. 20 and FASB Statement No.
        3. This
        Statement replaces APB Opinion No. 20, Accounting Changes and FASB Statement
        No.
        3, Reporting Accounting Changes in Interim Financial Statements, and changes
        the
        requirements for the accounting for and reporting of a change in accounting
        principle. This statement applies to all voluntary changes in accounting
        principle. It also applies to changes required by an accounting pronouncement
        in
        the unusual instance that the pronouncement does not include specific transition
        provisions. Opinion 20 previously required that most voluntary changes in
        accounting principle be recognized by including in net income of the period
        of
        the change the cumulative effect of changing
  F-13
  
 **SHIMING
        U.S., INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 to
        the
        new accounting principle. This Statement requires retrospective application
        to
        prior periods’ financial statements of changes in accounting principle, unless
        it is impracticable to determine either the period-specific effects
        or the cumulative effect of the change. This Statement defines as the
        application of a different accounting principle to prior accounting periods
        as
        if that principle had always been used or as the adjustment of previously
        issued
        financial statements to reflect a change in the reporting entity. This statement
        also redefines restatement as the revising of previously issued financial
        statements to reflect the correction of an error. The adoption of SFAS 154
        did
        not impact the financial statements.
 
 In
        February, 2006, FASB issued SFAS No. 155, “Accounting for Certain Hybrid
        Financial Statements”. SFAS No. 155 amends SFAS No. 133, “Accounting for
        Derivative Instruments and Hedging Activities” and SFAS No. 140, “Accounting for
        Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”.
        SFAS No. 155, permits fair value measurement for any hybrid financial instrument
        that contains an embedded derivative that otherwise would require bifurcation,
        clarifies which interest-only strips and principal-only strips are not subject
        to the requirements of SFAS No. 133, establishes a requirement to evaluate
        interest in securitized financial assets to identify interests that are
        freestanding derivatives or that are hybrid financial statements that contain
        an
        embedded derivative requiring bifurcation, clarifies that concentrations
        of
        credit risk in the form of subordination are not embedded derivatives, and
        amends SFAS No. 140 to eliminate the prohibition on the qualifying
        special-purpose entity from holding a derivative financial instrument that
        pertains to a beneficial interest other than another derivative financial
        instrument. This statement is effective for all financial instruments acquired
        or issued after the beginning of the Company’s first fiscal year that begins
        after September 15, 2006. Management believes that this statement will not
        have
        a significant impact on the financial statements.
 
 In
        March,
        2006 FASB issued SFAS 156 “Accounting For Servicing of Financial Assets” this
 Statement
        amends FASB Statement No. 140, “Accounting for Transfers and Servicing of
        Financial Assets and Extinguishment of Liabilities”, with respect to the
        accounting for separately recognized servicing assets and servicing liabilities.
        This Statement:
 
 Requires
        an entity to recognize a servicing asset or servicing liability each time
        it
        undertakes an obligation to service a financial asset by entering into a
        servicing contract.
 
 Requires
        all separately recognized servicing assets and servicing liabilities to be
        initially measured at fair value, if practicable.
 
 Permits
        an entity to choose “Amortization method” or “Fair value measurement method” for
        each class of separately recognized servicing assets and servicing
        liabilities.
 
 At
        its
        initial adoption, permits a one-time reclassification of available-for-sale
        securities to trading securities by entities with recognized servicing rights,
        without calling into question the treatment of other available-for-sale
        securities under Statement 115, provided that the available-for-sale securities
 F-14
 
 
 **SHIMING
        U.S., INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 are
        identified in some manner as offsetting the entity’s exposure to changes in fair
        value of servicing assets or servicing liabilities that a servicer elects
        to
        subsequently measure at fair value.
 
 Requires
        separate presentation of servicing assets and liabilities subsequently measured
        at fair value in the statement of financial position and additional disclosures
        for all separately recognized servicing assets and servicing
        liabilities.
 
 Management
        believes that this statement will not have a significant impact on the financial
        statements.
 
 In
        September 2006, FASB issued SFAS 157 ‘Fair Value Measurements’. This Statement
        defines fair value, establishes a framework for measuring fair value in
        generally accepted accounting principles (GAAP), and expands disclosures
        about
        fair value measurements. This Statement applies under other accounting
        pronouncements that require or permit fair value measurements, the Board
        having
        previously concluded in those accounting pronouncements that fair value is
        the
        relevant measurement attribute. Accordingly, this Statement does not require
        any
        new fair value measurements. However, for some entities, the application
        of this
        Statement will change current practice. This Statement is effective for
        financial statements issued for fiscal years beginning after November 15,
        2007,
        and interim periods within those fiscal years. Management is currently
        evaluating the effect of this pronouncement on financial
        statements.
 
 In
        September 2006, FASB issued SFAS 158 “Employers’ Accounting for Defined Benefit
        Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87,
        88, 106, and 132(R).
 This
        Statement improves financial reporting by requiring an employer to recognize
        the
        overfunded or underfunded status of a defined benefit postretirement plan
        (other
        than a multiemployer plan) as an asset or liability in its statement of
        financial position and to recognize changes in that funded status in the
        year in
        which the changes occur through comprehensive income of a business entity
        or
        changes in unrestricted net assets of a not-for-profit organization. This
        Statement also improves financial reporting by requiring an employer to measure
        the funded status of a plan as of the date of its year-end statement of
        financial position, with limited exceptions. An employer with publicly traded
        equity securities is required to initially recognize the funded status of
        a
        defined benefit postretirement plan and to provide the required disclosures
        as
        of the end of the fiscal year ending after December 15, 2006. An employer
        without publicly traded equity securities is required to recognize the funded
        status of a defined benefit postretirement plan and to provide the required
        disclosures as of the end of the fiscal year ending after June 15, 2007.
        However, an employer without publicly traded equity securities is required
        to
        disclose the following information in the notes to financial statements for
        a
        fiscal year ending after December 15, 2006, but before June 16, 2007, unless
        it
        has applied the recognition provisions of this Statement in preparing those
        financial statements. The requirement to measure plan assets and benefit
        obligations as of the date of the employer’s fiscal year-end statement of
        financial position is effective for fiscal years ending after December 15,
        2008.
        The management is currently evaluating the effect of this pronouncement on
        financial statements.
 
  F-15
 
 **SHIMING
        U.S., INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 
 **3.
        Short-term Investment, at cost**
 
 The
        short-term investment have a fixed return of 3.5% per annum and will mature
        on
        various dates within the next twelve months.
 **4.
          Property, Plant and Equipment, net**
  CostBuildings
                    and leasehold improvements
                
                
                966,612Fixtures
                    and equipment
                
                
                6,601,292Motor
                    vehicle
                
                
                102,880Computer
                    equipment
                
                
                39,4117,710,195Accumulated
                    depreciationBuildings
                    and leasehold improvements
                
                
                99,684Fixtures
                    and equipment
                
                
                4,773,077Motor
                    vehicle
                
                
                56,584Computer
                    equipment
                
                
                30,5044,959,849Carrying
                    valueBuildings
                    and leasehold improvements
                
                
                866,928Fixtures
                    and equipment
                
                
                1,828,215Motor
                    vehicle
                
                
                46,296Computer
                    equipment
                
                
                8,9072,750,346




Depreciation
        expense for each of the years ended December 31, 2006 and 2005 was approximately
        $1,372,000 and $1,314,000, respectively.
 F-16




**SHIMING
        U.S., INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 **5.
        Intangible Assets, net**
 
 CostLand
                  use right
              
              
              5,707,027Less
                  - Accumulated amortization
              
              
              313,7215,393,306
 
 Amortization
        expense for each of the years ended December 31, 2006 and 2005 amounted to
        approximately $130,000 and $177,000 respectively. The amortization periods
        of
        land use right is 44 years. The estimated amortization expenses for the five
        years ending December 31, 2007, 2008, 2009 and 2010 amounts to approximately
        $130,000, $130,000, $130,000, and $130,000, respectively.
 
 **6.
        Short-term / Long-term loans**
 
 Long-term
                  loans
              
              
              192,900Less
                  - current portion
              
              
              38,580154,320
 
 The
        loans
        are unsecured, bear interest at 0.26% per month and are repayable monthly
        from
        April 26, 2002 to April 26, 2012.
 
 Further
        minimum principal payments under the long-term loans as of December 31, 2006
        are
        as follows:-
 
 2007
              
              
              37,0002008
              
              
              37,0002009
              
              
              37,0002010
              
              
              37,0002011-2012
              
              
              44,900192,900
 
 
  F-17
  **SHIMING
        U.S., INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 **7.
        Income Taxes**
 
 The
        Company’s operating subsidiaries are subject to PRC Income Tax. Pursuant to the
        PRC Income Tax Laws, the prevailing statutory rate of enterprise income tax
        is
        33% (30% national income tax plus 3% local income tax).
 
 Pursuant
        to the relevant laws and regulations in the PRC, the Company‘s subsidiary,
        Shaanxi Shiming is entitled to an exemption from PRC income tax starting
        from
        its first profitable year to December 31, 2006.
 
 Pursuant
        to the relevant laws and regulations in the PRC, the Company‘s subsidiary,
        Shenzhen Seathan is entitled to an exemption from PRC income tax starting
        from
        its first two profitable year to December 31, 2008. Shenzhen Seathan is then
        entitled to a 50% exemption from January 1, 2009 onwards.
 
 A
        reconciliation between taxes computed at the statutory rate of 33% and the
        Company’s effective tax rate is as follows:-
 December
                  31,2006
              
              2005US$
              
              US$Income
                  before income tax
              
              
              2,503,858
              
              
              2,606,184Income
                  tax on pretax income at statutory rate
              
              
              826,273
              
              
              860,000Tax
                  effect of exemptions
              
              
              (826,273
              )
              
              (860,000
              )-
              
              
              –
              
              
              –
 
 The
        Company’s subsidiary, Shaanxi Shiming is also subject to value-added tax
        (“VAT”). Pursuant to a document obtained from Tax Bureau in Xi’an, the Company’s
        subsidiary, Shaanxi Shiming is entitled to an exemption from VAT for sales
        transactions incurred before December 31, 2006. The exemption applied to
        2003,
        2004, 2005 and 2006. The tax liabilities for the mentioned periods were borne
        by
        its customers.
 
 
 **8.
        Retirement and Welfare Benefits**
 
 The
        Company has no retirement plans or post-employment benefit for its employees.
 
 
 **9
        .**  **Related
        Party Transactions**
 
 Purchase
        from Shenzhen Yaxun of $640,873 had been prepaid in 2005, as of December
        31,
        2006, the Company has no balances with Shenzhen Yaxun.
 
 Purchases
        during the year
 
 December
                  31,2006
              
              2005US$’
              
              US$’Purchase
                  from Yaxun640,873
              
              
              3,432,436
 
 The
        balance due to related parties at December 31, 2006 was mainly due to Mr.
        Wang
        Shiming, Chairman of the Company. The payable has no stated terms for repayment
        and are not interest bearing.
  F-18
  **SHIMING
        U.S., INC. AND SUBSIDIARIES**
 **NOTES
        TO FINANCIAL STATEMENTS (continued)**
 
 
 **10.**  **Concentrations
        and Credit Risk**
 
 The
        Company operates principally in the PRC and grants credit to its customers
        in
        this geographic region. Although the PRC is economically stable, it is always
        possible that unanticipated events in foreign countries could disrupt the
        Company’s operations.
 
 Financial
        instruments that potentially subject the Company to a concentration of credit
        risk consist of cash and accounts receivable.
 
 At
        December 31, 2006 the Company had credit risk exposure of uninsured cash
        in
        banks of approximately $3,555,000.
 
 A
        substantial portion of revenue was generated from three customers for the
        years
        ended December 31, 2006 and 2005. For the year ended December 31, 2006 these
        three customers accounted for approximately $1,655,159 (29%), $1,478,615
        (26%)
        and $2,398,827 (45%) of total sales, respectively. For the year ended December
        31, 2005, two customers accounted for approximately $6,921,000 (56%) and
        $5,339,000 (44%) of total sales, respectively.
 
 At
        December 31, 2006, these two customers accounted for 52% and 48% of accounts
        receivable, respectively.
 
 The
        Company does not require collateral to support financial instruments that
        are
        subject to credit risk.
 
 **11.
        Commitments and Contingencies**
 
 As
        of
        December 31, 2006, the Company leased land under an operating lease agreement
        expiring in 2013.
 
 Rental
        expenses for the years ended December 31, 2006 and 2005 amounted to $43,000
        and
        $43,000, respectively and are included in general and administrative expenses
        on
        the statement of operations.
 
 The
        leased land above was sub-leased to a third party with rental income of $158,000
        for 3 years. The rental income was received by the Company and credited to
        the
        statement of operations over the sub-lease term. Rental income for the year
        ended December 31, 2006 and 2005 amount to $26,500 and $53,000,
        respectively.
 
 The
        Company leases a facility in Shenzhen, China which houses its manufacturing
        operations. The lease is renewable annually. The annual rental expense for
        this
        facility is $90,000. The Company also leases office space in Shenzhen, China
        which houses its corporate headquarters. The lease is for a term of two years,
        which expires in April, 2008.
 
 The
        future minimum lease payments under the above-mentioned leases as of December
        31, 2006 are as follows:-
 
 Year
                  ending December 31,
              
              US$2007
              
              
              133,0002008
              
              
              73,0002009
              
              
              43,00020010
              
              
              43,0002011-2013
              
              
              101,000393,000
 
 
 As
        of
        December 2006 and 2005, the Company did not have any contingent
        liabilities.
  F-19
  
 **SHIMING
        U.S., INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS (continued)**
 
 **12.
        Variable Interest Entities**
 
 In
        January, 2003, the Financial Accounting Standards Board (FASB) issued
        Interpretation 46, Consolidation of Variable Interest Entities, an
        interpretation of ARB No. 151(FIN 46). In December, 2003, the FASB modified
        FIN
        46 to make certain technical corrections and address certain implementation
        issues that had arisen. FIN 46 provides a new framework for identifying variable
        interest entities (VIE’s) and determining when a company should include the
        assets, liabilities, noncontrolling interests and results of activities of
        a VIE
        in its consolidated financial statements.
 
 In
        general, a VIE is a corporation, partnership, limited-liability corporation,
        trust, or any other legal structure used to conduct activities or hold assets
        that either (1) has an insufficient amount of equity to carry out its principal
        activities without additional subordinated financial support, (2) has a group
        of
        equity owners that are unable to make significant decisions about its
        activities, or (3) has a group of equity owners that do not have the obligation
        to absorb losses or the right to receive returns generated by its
        operations.
 
 FIN
        46
        requires a VIE to be consolidated by the party with an ownership, contractual
        or
        other financial interest in the VIE (a variable interest holder) that will
        absorb a majority of the risk of loss from the VIE’s activities, is entitled to
        receive a majority of the VIE’s residual returns (if no other variable interests
        absorb a majority of the VIE’s losses), or both. A variable interest holder that
        consolidates the VIE is called the primary beneficiary. Upon consolidation,
        the
        primary beneficiary generally must initially record all of the VIE’s assets,
        liabilities, and noncontrilling interests at fair value and subsequently
        account
        for the VIE as if it were consolidated based on majority voting interest.
        FIN 46
        also requires disclosures about VIEs that the variable interest holder is
        not
        required to consolidate but in which it has a significant variable interest.
 
 FIN
        46
        was effective immediately for VIEs created after January 31, 2003. For VIEs
        created before January 31, 2003, the provisions of FIN 46, as revised, were
        adopted as of March 31, 2004. The adoption of FIN 46 did not have significant
        effect on the Company’s financial statements.
 
 On
        March
        29, 2006, the Company and its wholly owned subsidiary, Shiming Science and
        Technology Joint Stock Company Limited formed a new company, Shenzhen Seathan
        Technology Co., Ltd.. The Company owns 30% of the new company, and Shiming
        Science and Technology Joint Stock Company Limited owns 70% of the new company.
        Upon the adoption of FIN 46, the Company will consolidate Shenzhen Seathan
        Technology Co. Ltd since it was determined to be a variable interest entity
        and
        the Company is its primary beneficiary.
 
 **13.
        Acquisition**
 
 On
        August
        26, 2006, Argenta Systems, Inc. a Nevada Corporation (“Argenta”) completed a
        share exchange with significant stockholders of Argenta, Shiming Cayman Co.,
        Ltd., and each of the shareholders of Shiming Cayman Co., Ltd. Upon the closing
        of the share exchange agreement, Argenta acquired Shiming Cayman Co., Ltd.
        by
        issuing 57,693,834 of its common stock for 100% of the shareholders outstanding
        common stock of Shiming Cayman Co., Ltd. The transaction was deemed to be
        a
        reverse acquisition, whereby “Argenta” is considered the accounting acquire, and
        Shiming Cayman Co., Ltd. is considered the accounting acquirer. The consolidated
        financial statements of the combined entity are those of Shiming Cayman Co.,
        Ltd. with the assets and liabilities and revenues and expenses of Argenta
        being
        included effective from the date of the consummation of the Exchange
        Transaction. Argenta was deemed to be a continuation of the business of the
        operating company, (Shiming Cayman Co., Ltd.)










F-20





**Item
                8.**
            **Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure.**





As
      reported in a Form 8-K Current Report filed with the Commission on November
      17,
      2006 and as amended in a Form 8-K/A filed on February 12, 2007, Manning &
Elliott LLP, Chartered Accountants (“Manning Elliott”) resigned as the Company’s
      independent accountants ,
      effective November 13, 2006. D uring
      the
      fiscal years ended December 31, 2005 and 2004, and the subsequent interim
      periods ended March 31, June 30, and September 30, 2006, through the date
      of the resignation, there were no disagreements between the Company and Manning
      Elliott on any matter of accounting principles or practice, financial statement
      disclosure, or auditing scope or procedure, which if not resolved to the
      satisfaction of Manning Elliott , would have caused Manning Elliott to make
      reference to the subject matter of the disagreement in connection with its
      reports.







**Item
                8A.**
            **Controls
                and Procedures.**





As
      of the
      end of the period covered by this report, we carried out an evaluation of the
      effectiveness of the design and operation of our disclosure controls and
      procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange
      Act).
      This evaluation was carried out under the supervision and with the participation
      of our management, principally our Chief Executive Officer and Chief Financial
      Officer. Based upon this evaluation, our Chief Executive Officer and Chief
      Financial Officer have concluded that our disclosure controls and procedures
      were effective as of the end of the period covered by this report to ensure
      that
      information required to be disclosed by us in reports that we file or submit
      under the Exchange Act is recorded, processed, summarized and reported within
      the time periods specified in Securities and Exchange Commission rules and
      forms, and that such information is accumulated and communicated to our
      management, including our Chief Executive Officer and Chief Financial
      Officer.





Our
      disclosure controls and procedures provide our Chief Executive Officer and
      Chief
      Financial Officer reasonable assurances that our disclosures are appropriate.
      However, company management, including our Chief Executive Officer and Chief
      Financial Officer, does not expect that our disclosure controls and procedures
      or our internal controls will prevent all human error. A control system, no
      matter how well designed and implemented, can provide only reasonable, not
      absolute, assurance the objectives of the control system are met. Furthermore,
      the design of a control system must reflect the fact there are internal resource
      constraints, and the benefit of controls must be weighed relative to their
      corresponding costs. Because of the limitations in all control systems, no
      evaluation of controls can provide complete assurance all control issues and
      instances of error, if any, within our company are detected. These inherent
      limitations include the realities that judgments in decision-making can be
      faulty, and that breakdowns can occur due to human error or mistake.
      Additionally, controls, no matter how well designed, could be circumvented
      by
      the individual acts of specific persons within the organization. The design
      of
      any system of controls is also based in part upon certain assumptions about
      the
      likelihood of future events, and there can be no assurance any design will
      succeed in achieving its stated objectives under all potential future
      conditions.





During
      the last fiscal quarter to which this report relates, there were no changes
      in
      the Company’s internal controls or other factors that could significantly affect
      these controls subsequent to the date of their evaluation and there were no
      corrective actions with regard to deficiencies and material
      weaknesses.





**Item
                8B.**
            **Other
                Information.**





None.








34





**PART
      III**





**Item
                9.**
            **Directors,
                Executive Officers, Promoters and Control Persons; Compliance with
                Section
                16(a) of the Exchange Act**





**DIRECTORS
      AND EXECUTIVE OFFICERS**





The
      following table sets forth the names and ages of our directors and executive
      officers, as of the date of this report:




**Name**
            
            **Age**
            
            **Position**Shiming
                Wang
            
            49
            
            Chairman
                of the Board of Directors and Chief Executive OfficerChun’an
                Liu
            
            49
            
            Chief
                Financial Officer and DirectorCunhu
                Yang
            
            44
            
            SecretaryKanming
                Wang
            
            63
            
            DirectorNairang
                Liu
            
            42
            
            DirectorGenrong
                Qu
            
            56
            
            Director





***Mr.
      Shiming Wang*** serves
      as our Chairman of the Board and Chief Executive Officer. Mr. Wang has been
      an
      entrepreneur for 26 years, and served in various management capacities for
      Shanxi Shiming Science & Technology since 1999, of which he is President,
      founder and a principal shareholder. Shanxi Shiming Science & Technology’s
      business primarily consists of the manufacturing of liquid crystal display
      (LCD)
      products. Mr. Wang has extensive experience in the management of businesses
      in
      various fields, including metallurgy, machinery, food processing, trading,
      software development and computer hardware. Mr. Wang owns several companies
      in
      China such as Shananxi Meixian Non-ferrous Manufacturing Co., Ltd., which is
      Shaanxi Shiming’s largest shareholder, Shenzhen Yaxun Science & Technology
      Joint Stock Co., Ltd., Baoji Lufeng Food Co., Ltd. and Xi’an Non-ferrous Metal
      Processing Agency. Mr. Wang received a master’s degree in Engineering from Xi’an
      Jiaotong University.





***Mr.
      Chun’an Liu*** is
      our
      Chief Financial Officer. M r .
      Liu is
      a licensed Certified Public Accountant, has held numerous managerial and
      professional capacities for private firms in China. Mr. Liu has served as an
      accountant for Xi’an Electrical Appliance Factory, Xi’an Zhengdatongyong
      Technology Institute since June 1990.  From March 1992 to August
      1993, Mr. Liu also served as the manager of the Office of Finance of Xi’an
      Huaheng Science & Technology Industry Company.  From September 1993 to
      December 2002, Mr. Liu served as the Chief Financial Officer of Shanxi
      Changxiang Air-Condition Import Co., Ltd. and Lanzhou Yellow-River Group Co.,
      Ltd. (Xi’an Branch).  Since June 2003, Mr. Liu served as the Chief
      Financial Officer of Shanxi QinAPangGong Tourism Development Corp. Mr. Liu
      holds
      a Bachelor of Economics degree from China Central Administration University
      and graduated from the Shan’Xi College of Finance.





***Mr.
      Cunhu Yang*** is our
      Secretary. Mr. Yang previously worked at the Zhengzhou Machinery
      Institute.  From 1989 to 1994, Mr. Yang was the section chief of China West
      Electricity Group.  From 1994 to 2001, Mr. Yang served as a senior
      supervisor and department manager for West Security Co., Ltd.  Mr. Yang
      also served as the secretary of the Board of Directors of Shanxi Chaoxun Science
      Technology Corp. from 2001 to 2004.  In 2004, Mr. Yang joined Shanxi
      Shiming Science Technology Corp. as its vice general manager.  Mr. Yang
      holds a MBA degree from Xi’an University of Technology.


35





***Mr.
      Kanming Wang*** is a
      member of our board of directors. Mr. Wang has been a manager of Guangzhou
      Heluo
      Co., Ltd. since 1990. Prior to this, Mr. Wang has held various administrative
      posts within a large state-owned enterprise. Mr. Wang has been an investor
      in
      the clothing processing and electrical appliance industries since
      1979.





***Mr.
      Nairang Liu*** is a
      member of our board of directors. Since 1991, Mr. Liu has been a director and
      general manager of Hainan Shengda Investment and Management Co., Ltd. Mr. Liu
      has substantial experience investing in Chinese private enterprises, and has
      been involved in the commercial trading business since 1996.





***Mr.
      Genrong Qu*** is a
      member of our board of directors. Mr. Qu has experience in management and public
      administration, and since 1990 he has served as a General Administrator of
      the
      Telecommunications division of the Wei River Administration Bureau in Xingping
      County, Xianyang City. Mr. Qu graduated from Xi’an Polytechnic University in
      1970.





**Family
      Relationships**





There
      are
      no family relationships between or among any of the current directors, executive
      officers or persons nominated or charged by the Company to become directors
      or
      executive officers.





**Involvement
      in Certain Legal Proceedings**





There
      are
      no orders, judgments, or decrees of any governmental agency or administrator,
      or
      of any court of competent jurisdiction, revoking or suspending for cause any
      license, permit or other authority to engage in the securities business or
      in
      the sale of a particular security or temporarily or permanently restraining
      any
      of our officers or directors from engaging in or continuing any conduct,
      practice or employment in connection with the purchase or sale of securities,
      or
      convicting such person of any felony or misdemeanor involving a security, or
      any
      aspect of the securities business or of theft or of any felony. Nor are any
      of
      the officers or directors of any corporation or entity affiliated with us so
      enjoined.





**Section
      16(a) Beneficial Ownership Reporting Compliance:**





Section
      16(a) of the Exchange Act requires the Company’s officers, directors, and
      persons who beneficially own more than 10% of the Common Stock to file reports
      of ownership and changes in ownership with the Commission. These reporting
      persons also are required to furnish the Company with copies of all Section
      16(a) forms they file. Based solely on the Company’s review of these reports or
      written representations from certain reporting persons, during the fiscal year
      ended December 31, 2004, and during the current fiscal year, the Company
      believes that all filing requirements applicable to the Company’s officers,
      directors, greater-than-ten-percent beneficial owners and other persons subject
      to Section 16(a) of the Exchange Act were met.





**Code
      of Ethics**





For
      the
      year ended December 31, 2006, we did not have a formal written code of
      ethics applicable to our principal executive officer and principal financial
      officer, because the board of directors has not determined it to be immediately
      necessary from a management perspective to adopt a formal code at this time.
      However, we plan to adopt and approve a formal written code of ethics in the
      near future.





**Audit
      Committee and Audit Committee Financial Expert**





The
      Company does not have a separately designated audit committee of our Board,
      as
      it is not required to, and the functions customarily delegated to this committee
      are performed by the full Board. As the Company does not maintain an audit
      committee, it does not have an audit committee “financial expert” within the
      meaning of Item 407(d)(5) of Regulation SB.





**Item
                10.**
            **Executive
                Compensation**





The
      following summary compensation table indicates the cash and non-cash
      compensation earned during the fiscal year ended December 31, 2006 by the Chief
      Executive Officer and each of our other four highest paid executives, whose
      total compensation (paid by us or our predecessor, Shiming Cayman) exceeded
      $100,000 during the fiscal year ended December 31, 2006.


36








SUMMARY
                  COMPENSATION TABLEName
                  and Principal Position
              Year
              Salary
                  ($)
              Bonus
                  ($)
              Stock
                  Awards ($)
              Option
                  Awards ($)
              Non-Equity
                  Incentive Plan Compensation ($)
              Nonqualified
                  Deferred Compensation Earnings ($)
              All
                  Other Compensation ($)
              Total
                  ($)Shiming
                  Wang
                (1)
              2006
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-2005
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/A
              N/ADoug
                  Levell
                (2)
              2006
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-2005
              -0-
              -0-
              -0-
              -0-
              -0-
              -0-
              12,000
                  (3)
              12,000





(1)
            In
                connection with the Share Exchange Transaction (described in Item
                1 above)
                (the “Transaction”), Mr. Shiming Wang was appointed as the Company’s Chief
                Executive Officer and a director on November 10, 2006, but he did
                not
                receive any compensation for 2006. Mr. Wang is party to an executive
                employment agreement with the Company. The agreement is terminable
                at will
                by either Mr. Wang or the Company upon a three-month prior notice
                to the
                other party.





(2)
            As
                of December 31, 2005, Mr. Doug Levell was the Chief Executive Officer
                of
                the Company. In connection with the Transaction, Mr. Levell resigned
                as
                the Company’s Chief Executive Officer and Chief Financial Officer on
                November 10, 2006, but he did not receive any compensation for
                2006.





(3)
            The
                Company issued Mr. Levell a promissory note (the “Note”) for $12,000 in
                connection with consulting services provided by Mr. Levell to the
                Company.
                Mr. Levell subsequently released the Company of its obligations under
                the
                Note in 2006.





**Outstanding
      Equity Awards at Fiscal Year-End Table**





**OUTSTANDING
                  EQUITY AWARD AT FISCAL YEAR-END**Name
              Number
                  of Securities Underlying Unexercised Options (Exercisable)
                  (#)
              Number
                  of Securities Underlying Unexercised Options (Unexercisable)
                  (#)
              Equity
                  Incentive Plan Awards: Number of Securities Underlying Unexercised
                  Unearned Options (#)
              Option
                  Exercise Price ($)
              Option
                  Exercise Date
              Number
                  of Shares or Units of Stock that have not Vested (#)
              Market
                  Value of Shares or Units of Stock that have not Vested ($)
              Equity
                  Incentive Plan Awards: Number of Unearned Shares, Units or other
                  Rights
                  that have not Vested (#)
              Equity
                  Incentive Plan Awards: Market or Payout Value of Unearned
                ($)Shiming
                  Wang
              --
              --
              --
              --
              --
              --
              --
              --
              --









37


**COMPENSATION
      OF DIRECTORS**





The
      Company paid no compensation to its Directors for any services provided as
      a
      Director during the year ended December 31, 2006 .
      However, the Company intends to review and consider future proposals regarding
      compensation to its Directors.





**Item
                11.**
            **Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters**





**Security
      Ownership of Certain Beneficial Owners and Management**





The
      following table sets forth, as of January 25, 2007, certain information
      regarding the ownership of the Company’s capital stock by the following persons
      on such date: each of the directors and executive officers, each person who
      is
      known to be a beneficial owner of more than 5% of any class of our voting stock,
      and all of our officers and directors as a group. Unless otherwise indicated
      below, to our knowledge, all persons listed below had sole voting and investing
      power with respect to their shares of capital stock, except to the extent
      authority was shared by spouses under applicable community property
      laws.





Beneficial
      ownership is determined in accordance with the rules of the Securities and
      Exchange Commission and generally includes voting or investment power with
      respect to securities. Shares of our common stock subject to options, warrants
      or convertible securities exercisable or convertible within 60 days of January
      25, 2007 were deemed outstanding for computing the percentage of the person
      or
      entity holding such options, warrants or convertible securities but are not
      deemed outstanding for computing the percentage of any other person, and was
      based on 66,693,834 shares of the Common Stock issued and outstanding on a
      fully
      diluted basis, as of January 25, 2007.





Title
                of
              Class
            Name
                and Address
              Of
              Beneficial
                Owners (1)
            Amount
              Of
                Beneficial Ownership
            Percent
              Of
              Class
                (2)Common
                Stock
            Shiming
                Wang (3)
            24,426,149
                (4)
            36.6%Common
                Stock
            Chun’an
                Liu (3)
            --
            --Common
                Stock
            Cunhu
                Yang (3)
            173,911
            0.3%Common
                Stock
            Kanming
                Wang (3)
            --
            --Common
                Stock
            Nairang
                Liu (3)
            1,665,201
            2.5%Common
                Stock
            Genrong
                Qu (3)
            1,406,063
            2.1%Common
                Stock
            Shaanxi
                Meixian Shiming Non-Ferrous Metallurgy Co., Ltd. (5)
            18,235,632
            27.3%Common
                Stock
            Rui
                Wang (6)
            25,811,578
            38.7%Common
                Stock
            All
                directors, directors nominees and executive officers as a group (6
                total)
            27,671,324







(1)
            Unless
                otherwise noted, the address for each of the named beneficial owners
                is:
                12/F, Shanxi Zhengquan Building, Gaoxin 2nd Road, Xian, Shanxi Province,
                China.





(2)
            Based
                on the number of outstanding shares of common stock of the Company
                as of
                January 25, 2007.





(3)
              
              (4)
            An
                executive officer and/or director of the Company.
              
              Includes
                18,235,632 shares of common stock held by Shaanxi Meixian Shiming
                Non-Ferrous Metallurgy Co., Ltd., of which Mr. Shiming Wang is a
                majority
                shareholder and director. Mr. Wang hereby disclaims beneficial ownership
                in such shares except to the extent of his pecuniary interest therein.





(5)
            The
                mailing address of Shaanxi Meixian Shiming Non-Ferrous Metallurgy
                Co.,
                Ltd. is Liubao Valley, Tangyu Town, Mei County, Shaanxi Province,
                China.





(6)
            Includes
                1,305,287 shares held directly by Mr. Rui Wang. Mr. Wang is also
                a trustee
                and holder of record of 24,506,291 shares on behalf of various non-U.S.
                individuals, pursuant to The Shiming Voting Trust dated January 24,
                2006.







38


**Securities
      Authorized for Issuance under Equity Compensation Plans**





The
      Company did not have any equity compensation plans in place for the fiscal
      year
      2006.





**Item
                12.**
            **Certain
                Relationships and Related Transactions, and Director
                Independence**





Set
      forth
      below are the related party transactions exceeding $120,000 since the last
      fiscal year between Shiming Technology’s shareholders, officers and/or
      directors, and Shiming Technology, with whom the Company has contractual
      arrangements which give the Company the ability to substantially influence
      Shiming Technology’s daily operations and financial affairs, appoint its senior
      executives and approve all matters requiring shareholder approval.





**Related
      Party Transactions**





Amounts
      receivable from and payable to related parties are summarized as
      follows:





Year
                ended December 31,2006
            
            2005Amounts
                due from related parties:Xi’an
                Nonferrous Metal Smelting and Processing Factory (1)
            
            $
            --
            
            $
            615,000Total
            
            $
            --
            
            $
            615,000Purchases
                from related parties:Shenzhen
                Yaxun Science & Technology Joint Stock Co., Ltd. (2)
            
            $
            640,873
            
            $
            3,432,436Total
            
            $
            640,873
            
            $
            3,432,436Amount
                due to related parties:Shiming
                Wang (3)
            
            $
            538,981
            
            $
            349,000Total
            
            $
            538,981
            
            $
            349,000







(1)
            Amounts
                due from Xi’an Nonferrous Metal Smelting and Processing Factory (“Xi’an
                Metal”) represent amounts prepaid to vendors for the purchase of goods.
                Mr. Shiming Wang is a shareholder of Xi’an Metal.





(2)
            Purchase
                from Shenzhen Yaxun Scient & Technology Joint Stock Co., Ltd.
                (“Shenzhen Yaxun”) of $640,873 had been prepaid in 2005. As of December
                31, 2006, the Company has no balance with Shenzhen Yaxun. Mr. Shiming
                Wang
                is a shareholder of Shenzhen Yaxun.(3)
            Amounts
                due to Mr. Shiming Wang represent loans from Mr. Wang to fund the
                Company’s operations. These loans are unsecured, non-interest bearing and
                has not specific repayment terms.




**Director
      Independence**





The
      Company does not have a separately designated audit, compensation or nominating
      committee of our Board, as it is not required to, and the functions customarily
      delegated to these committees are performed by the full Board. We have
      determined, however, that none of our directors is “independent” as that term is
      defined in Section 4200 of the NASD Marketplace Rule.


39





**Item
                13.**
            **Exhibits**





**Exhibit
                Number**
            
            **Description**2
            
            Agreement
                and Plan of Share Exchange among Argenta Systems, Inc., Shiming (Cayman)
                Co., Ltd., Global Warming Solutions Corp., Roxborough Financial Group,
                Inc., and all of the shareholders of Shiming (Cayman) Co.,
                Ltd.(1)3.1
            
            Articles
                of Incorporation, as amended (2)3.2
            
            Amended
                and Restated Bylaws (1)10.1
            
            Consulting
                Services Agreement (English translation) (2)10.2
            
            Operating
                Agreement (English translation) (2)10.3
            
            Option
                Agreement (English translation) (2)10.4
            
            Equity
                Pledge Agreement (English translation) (2)10.5
            
            Proxy
                and Voting Agreement (English translation) (2)16
            
            Letter
                from Manning Elliott, LLP (4)17.1
            
            Letter
                of Resignation from Douglas Levell to the Board of Directors
                (2)17.2
            
            Letter
                of Resignation from Joann Hilton to the Board of Directors
                (2)23.1
            
            Consent
                of Gruber & Company, LLC (3)31.1
            
            Section 302
                Certification by the Corporation’s Chief Executive Officer
                (3)31.2
            
            Section 302
                Certification by the Corporation’s Chief Financial Officer
                (3)32.1
            
            Section 906
                Certification by the Corporation’s Chief Executive Officer
                (3)32.2
            
            Section 906
                Certification by the Corporation’s Chief Financial Officer
                (3)








(1)
            Incorporated
                by reference from the Registrant’s Current Report on Form 8-K filed on
                August 31, 2006(2)
            Incorporated
                by reference from the Registrant’s Current Report on Form 8-K filed on
                November 13, 2006(3)
            Filed
                herewith(4)
            Incorporated
                by reference from the Registrant’s Current Report on Form 8-K/A filed on
                February 12, 2007





**Item
                14.**
            **Principal
                Accountant Fees and
                Services.**





CHANGE
      OF
      AUDITOR





The
      Company’s preceding principal independent auditor was Manning Elliott LLP,
      Chartered Accountants (“Manning Elliott”). Manning Elliott performed the audit
      for the fiscal years ended December 31, 2004 and 2005. Manning Elliott resigned
      as the Company’s independent auditor effective November 13, 2006. On November
      13, 2006, we engaged Gruber & Company, LLC (“Gruber”) to review the
      unaudited financial statements through the quarter ended September 30, 2006
      and
      to audit the Company’s financial statements for the fiscal years ended December
      31, 2005 and 2006. The following are the services provided and the amount
      billed.




AUDIT
      FEES





The
      aggregate fees billed for professional services rendered by Manning Elliott
      for
      the audit of our annual financial statements and the reviews of the unaudited
      financial statements included in our quarterly reports on Form 10-QSB for
      fiscal years 2006 and 2005 were $11,250 and $7,400, respectively.





The
      aggregate fees billed by the newly appointed auditor, Gruber, for
      the audit of our annual financial statements and the reviews of the unaudited
      financial statements included in our quarterly reports on Form 10-QSB for
      fiscal years 2006 and 2005 was $40,000.





AUDIT
      RELATED FEES





There
      were no fees billed for services reasonably related to the performance of the
      audit or review of the financial statements outside of those fees disclosed
      above under “Audit Fees” for the year ended December 31, 2006.





TAX
      FEES


40





For
      the
      year ended December 31, 2006, Manning Elliott billed the Company $4,550 for
      services in tax compliance, tax advice and tax planning work to the Company,
      and
      no fees were billed by Gruber for such services.





ALL
      OTHER FEES





There
      were no other fees billed by Manning Elliott or Gruber during the last two
      fiscal years for products and services provided by Manning Elliott or
      Gruber.





PRE-APPROVAL
      POLICIES AND PROCEDURES





Prior
      to
      engaging its accountants to perform particular services, our board of directors
      obtains an estimate for the service to be performed. All of the services
      described above were approved by the board of directors in accordance with
      its
      procedure.





41





**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




**SHIMING
                U.S., INC.**
              (Registrant)Date:
              April 17, 2007
            By:
            /s/ Shiming
              WangShiming
                Wang
              Chief
                Executive Officer ****Date:
              April 17, 2007
            By:
            /s/ Chun’an
              LiuChun’an
                Liu
              Chief
                Financial Officer




In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.





**Name**
            
            **Title**
            
            **Date**/s/
                Shiming WangShiming
                Wang
            
            Chief
                Executive Officer / Director
            
            April
                17, 2007/s/
                Chun’an LiuChun’an
                Liu
            
            Chief
                Financial Officer / Director
            
            April
                17, 2007/s/
                Cunhu YangCunhu
                Yang
            
            Secretary
            
            April
                17, 2007/s/
                Kanming WangKanming
                Wang
            
            Director
            
            April
                17, 2007/s/
                Nairang LiuNairang
                Liu
            
            Director
            
            April
                17, 2007/s/
                Genrong QuGenrong
                Qu
            
            Director
            
            April
                17, 2007








42