UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC  20549





Form
10-K











(Mark
one)




x
            Annual Report Under Section 13
      or 15(d) of the Securities Exchange Act of
  1934





For the
fiscal year ended December 31, 2008





o
            Transition Report Under Section
      13 or 15(d) of the Securities Exchange Act of
  1934





For the
transition period from ______________ to _____________








Commission
File Number: 333-131168




DEER
CONSUMER PRODUCTS, INC.


(Exact
Name of Registrant as Specified in Its Charter)





Nevada
            20-5526104(State
      of Incorporation)
            (I.
      R. S.  Employer ID
Number)





Area 2,
1/F, Building M-6, Central High-Tech Industrial Park, Nanshan,
Shenzhen, China 518057


(Address
of Principal Executive Offices)





(86)
755-8602-8285


(Registrant’s
Telephone Number)







Securities
registered pursuant to Section 12 (b) of the Act - None




Securities
registered pursuant to Section 12(g) of the Act: None




Common Stock, $0.001 par
      value
            
            OTC Bulletin
      Board(Title
      of each class)
            
            (Name
      of each exchange on which
registered)










Indicate
by check mark if the registrant is a well known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o  No x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act. Yes o   No
x





Indicate
by check mark whether the registrant has (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 the Company was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes x   No o





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  x










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





Large
      accelerated filero
            Accelerated
      fileroNon-accelerated
      filer  o
            Smaller
      reporting company x





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
aggregate market value of the registrant’s common stock held beneficially by
non-affiliates of the registrant on June 30, 2008, the last business day of the
registrant’s most recently completed second fiscal quarter, was approximately
$45,000, based on the last sale price of the registrant’s common stock. For the
purposes of the foregoing calculation only, all of the registrant’s directors,
executive officers and holders of ten percent or greater of the registrant’s
outstanding common stock have been excluded in that such persons may be deemed
to be affiliates. This determination of affiliate status is not a determination
for other purposes.







As of
March 15, 2009, there were 23,235,625 shares of common stock
outstanding.







DOCUMENTS INCORPORATED BY
REFERENCE:




None










Deer
Consumer Products, Inc.





Index
to Contents





Page
      NumberPart
      IItem 1
                    Business
                    2Item 1A
                    Risk Factors
                    12Item 2
                    Properties
                    24Item 3
                    Legal Proceedings
                    25Item 4
                    Submission of Matters to a Vote of Security
      Holders
                    25Part
      IIItem 5
                    Market for Registrant’s Common Equity, Related
      StockholderMatters and Issuer
      Purchases of Equity Securities
                    25Item 6
                    Selected Financial Data
                    27Item 7
                    Management’s Discussion and Analysis of Financial
      Condition andResults of
      Operations
                    27Item 7A
                    Quantitative and Qualitative Disclosures About
      Market Risk
                    32Item 8
                    Financial Statements and Supplementary
      Data
                    32Item 9
                    Changes in and Disagreements with Accountants on
      Accounting andFinancial
      Disclosure
                    33Item 9A-T
                    Controls and Procedures
                    33Part
      IIIItem 10
                    Directors, Executive Officers and Corporate
      Governance
                    34Item 11
                    Executive Compensation
                    36Item 12
                    Security Ownership of Certain Beneficial Owners
      and Management andRelated
      Stockholder Matters
                    38Item 13
                    Certain Relationships and Related Transactions,
      and Director Independence
                    39Item 14
                    Principal Accountant Fees and
      Services
                    39Part
      IVItem 15
                    Exhibits and Financial Statement
      Schedules
                    39Signatures
                    
                    41Exhibits








SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS




In this report, the terms “Deer,”
“Company,” “we,” “us” and “our” refer to Deer Consumer Products, Inc. (“Deer”)
and its subsidiaries. This report contains forward-looking statements
regarding Deer which include, but are not limited to, statements concerning our
projected revenues, expenses, gross profit and income, mix of revenue, demand
for our products, the benefits and potential applications for our products, the
need for additional capital, our ability to obtain and successfully perform
additional new contract awards and the related funding and profitability of such
awards, the competitive nature of our business and markets, and product
qualification requirements of our customers. These forward-looking statements
are based on our current expectations, estimates and projections about our
industry, management’s beliefs, and certain assumptions made by us. Words such
as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “potential,”
“believes,” “seeks,” “hopes,” “estimates,” “should,” “may,” “will,” “with a view
to” and variations of these words or similar expressions are intended to
identify forward-looking statements. These statements are not guarantees of
future performance and are subject to risks, uncertainties and assumptions that
are difficult to predict. Therefore, our actual results could differ materially
and adversely from those expressed in any forward-looking statements as a result
of various factors. Such factors include, but are not limited to the
following:




·
            
            our
      goals and strategies;·
            
            our
      expansion plans;·
            
            our
      future business development, financial conditions and results of
      operations;·
            
            the
      expected growth of the market for our products;·
            
            our
      expectations regarding demand for our products;·
            
            Our
      ability to expand the Deer brand in China;·
            
            our
      expectations regarding keeping and strengthening our relationships with
      key customers;·
            
            our
      ability to stay abreast of market trends and technological
      advances;·
            
            competition
      in our industry in China;·
            
            general
      economic and business conditions in the regions in which we sell our
      products;·
            
            relevant
      government policies and regulations relating to our industry;
      and·
            
            market
      acceptance of our products.




Additionally,
this report contains statistical data that we obtained from various publicly
available government publications. Statistical data in these publications also
include projections based on a number of assumptions. The rapidly changing
nature of our customers' industries results in significant uncertainties in any
projections or estimates relating to the growth prospects or future condition of
our market. Furthermore, if any one or more of the assumptions underlying the
market data is later found to be incorrect, actual results may differ from the
projections based on these assumptions. You should not place undue reliance on
these forward-looking statements.




Unless
otherwise indicated, information in this report concerning economic conditions
and our industry is based on information from independent industry analysts and
publications, as well as our estimates. Except where otherwise noted, our
estimates are derived from publicly available information released by third
party sources, as well as data from our internal research, and are based on such
data and our knowledge of our industry, which we believe to be reasonable. None
of the independent industry publication market data cited in this report was
prepared on our or our affiliates’ behalf.




We do not
undertake any obligation to revise or update publicly any forward-looking
statements for any reason, except as required by law. Additional information on
the various risks and uncertainties potentially affecting our operating results
are discussed below and are contained in our publicly filed documents available
through the SEC’s website (www.sec.gov) or upon written request to our corporate
secretary at: Area 2, 1/F, Building M-6,
Central High-Tech Industrial Park, Nanshan, Shenzhen,
China.
  1


PART
I





Item
1 - Business





General





We are a
market leader in the design, manufacture and sale of home and kitchen electronic
appliances. Our company has successfully targeted consumers in the growing
Chinese marketplace as well as customers in more than 40 countries worldwide.
Our product lines include blenders, juicers, soy milk makers and other home and
kitchen electronic appliances designed to improve at-home lifestyles in today's
fast paced society. We are one of the largest manufacturers of small electric
blenders and juicers in China and manufacture of some of the leading kitchen
appliance brands in the world.





Deer has
traditionally acted as both an original equipment manufacturer (“OEM”) and
original design manufacturer (“ODM”) for international markets with
approximately 90%
and 95%
of our total sales made overseas in 2007 and 2008, of which North America and
Europe accounted for approximately 52%
of our total sales in 2008. While Deer has traditionally made the majority of
its sales in Europe and North America, urbanization, rising family incomes and
increased living standards have spurred the demand for small appliances in
China.  In addition we are rapidly expanding into emerging growth
countries in South America, Asia, Africa, and the Middle East. In 2008,
Deer had sales in over 40 countries.
 
 In 2008
Deer introduced its own brands of appliances to the domestic market. Management
believes that our Deer brands will grow significantly as the domestic demand for
our products increases in China with increased living
standards.


The
growth of our Deer brands is a result of our:




·
              aggressive
      sales efforts to retail stores and commercial purchasers in
      China;




·
              expanded
      direct sales through our new franchised retail stores and through popular
      Chinese internet portals; and




·
              targeted
      marketing efforts to customers in South America, Asia, Africa, and
      the Middle East.





We were
able to maintain our revenue growth in 2008 despite a global recession because
of our pricing and quality of our OEM and ODM products, strong sales to large
retailers and our aggressive expansion in China, South America, Asia, Africa,
and the Middle East.





Management
believes Deer is positioned to become a leading brand in China’s rapidly growing
home and kitchen electronic appliance sector and will continue to be a leading
international OEM and ODM.





We were
incorporated in Nevada on July 8, 2006 under the name of Tag Events Corp as a
musical event organization and promotion company with minimal operations. On
September 3, 2008 we changed our name to Deer Consumer Products, Inc. and
entered into and consummated a series of agreements which resulted in the
acquisition of all of the ordinary shares of Deer International Group Ltd, a
corporation organized under the laws of the British Virgin Islands (“Deer
International”) parent of its wholly-owned subsidiary, Winder Electric Co. Ltd.
(“Winder”), which is a wholly-owned foreign enterprise (“WOFE”) and responsible
for research, production and delivery of goods, and Delta International Limited
(“Delta”), which is a wholly owned subsidiary of Winder and primarily
responsible for sales.





The
acquisition of Deer’s ordinary shares was accomplished pursuant to the terms of
a Share Exchange Agreement and Plan of Reorganization, dated September 3, 2008
(the “Share Exchange Agreement”), by and between Deer International and the
Company. Pursuant to the Share Exchange Agreement, we acquired from Deer 50,000
ordinary shares, consisting of all of its issued and outstanding capital stock,
in exchange for the issuance of an aggregate of 18,050,000 shares of our common
stock to the shareholders of Deer International (the “Share
Exchange”).





Concurrently
with the closing of the transactions contemplated by the Share Exchange
Agreement and as a condition thereof, we entered into an agreement with Crescent
Liu, our former Director and Chief Executive Officer, pursuant to which he
returned 5,950,000 shares of our common stock to us for cancellation. Mr. Liu
was not compensated in any way for the cancellation of his shares of our common
stock. Upon completion of the foregoing transactions, we had an aggregate of
22,600,000 shares of common stock issued and outstanding.




2




Our
principal offices are located at Area 2, 1/F, Building M-6, Central High-Tech
Industrial Park, Nanshan, Shenzhen, China 518057.  Our telephone
number is (86) 755-8602-8285.





Industry
Overview




Electrical
appliances are generally segregated as electronics or household appliances.
Household appliances are then classified into large appliances, or white goods
such as washing machines and refrigerators, and small appliances. Small
appliances are further classified as:





l
                Kitchen –
      microwave, coffee maker, rice cooker, blender, etc.l
                Living –
      Electric fans, humidifiers, electric heaters, vacuums, etc.,
      orl
                Personal
      care – hairdryers, electric shavers, massagers, etc.




Deer’s
products generally fall into the kitchen sector of these classifications.
Current international and domestic market highlights for small household
electrical appliances are described below:





International
Market




l     Global
sales of small household electrical appliances grew from $77.94 billion in
2007 to $85.91 billion in 2008, of which China accounted for approximately 17%,
or 13.3 billion, in 2007 and 18%, or $15.7 billion, in 2008.1




l     China
is the leading manufacturer of small household electrical appliances producing
1.44 billion units in 2007 and 1.63 billion units in 2008, of which exports
accounted for 74.3%2;




l     In
the US, the top five firms control over 90% of the market while in Europe
the top five firms have approximately 60% market share. Top European market
participants include Electrolux, Bosch, Black & Decker, Phillips, and
Miele3;




l     Average
gross profit margins for small household electrical appliances are approximately
30%. These margins are higher than that of traditional home appliances such as
televisions and air conditioners which have margins of 5-6%4.




Small
      Electrical Appliances Production in China (2002-2008)5Year
                                                                                                                        
                                                                                                                        
                                                                                                                        Production
      Capacity
                                                                                                                            (Million
      Units)
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        Annual
      Growth
                                                                                                                            Rate
      (%)
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        Actual
      Production
                                                                                                                            Units
      (Million Units)
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        Annual
      Growth
                                                                                                                            Rate
      (%)
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        Capacity
                                                                                                                            Utilization
      (%)2002
                                                                                                                        
                                                                                                                        
                                                                                                                        848.0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        18.8%
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        758.3
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        20.3%
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        89.4%2003
                                                                                                                        
                                                                                                                        
                                                                                                                        951.0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        12.1%
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        896.7
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        18.3%
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        94.3%2004
                                                                                                                        
                                                                                                                        
                                                                                                                        1,102.0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        15.9%
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        1,001.5
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        11.7%
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        90.9%2005
                                                                                                                        
                                                                                                                        
                                                                                                                        1,263.5
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        14.7%
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        1,145.8
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        14.4%
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        90.7%2006
                                                                                                                        
                                                                                                                        
                                                                                                                        1,398.0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        10.6%
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        1,275.0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        11.3%
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        91.2%2007
                                                                                                                        
                                                                                                                        
                                                                                                                        1,578.0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        12.9%
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        1,440.0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        12.9%
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        91.3%2008
                                                                                                                        
                                                                                                                        
                                                                                                                        1,840.0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        16.6%
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        1,630.0
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        13.2%
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                                        88.6%






_________________________


1CCID
Consulting, 2007-2008 and 2008-2009 AnnualReport
of China’s Small Electrical Appliance Industry.


2 CCID Consulting, 2008-2009
AnnualReport of China’s Small Electrical
Appliance Industry


3 Assembly Magazine, “Appliance Assembly:
Environmental Restrictions Dictate European Designs” by Austin Weber, May 1,
2005.


4 CCID Consulting, 2008-2009
AnnualReport of China’s Small Electrical
Appliance Industry


5 CCID Consulting, 2008-2009
AnnualReport of China’s Small Electrical
Appliance Industry. “The
Information of Guang Dong Household Appliance”, Q3 2007.




3




Domestic
Market
  ●   A summary
of small electrical appliance consumption in China for 2003-2008 is as shown
below:


Small Electrical Appliances
      Consumption in China (2003-2008)6Year
                Sales
      ($ Billion)
                Growth
      Rate (%)2003
                7.732004
                9.04
                17.0%2005
                10.25
                13.3%2006
                11.69
                14.1%2007
                13.80
                18%2008
                15.74
                14%





Deer’s
products generally fall into the kitchen usage sector which accounted for
approximately 79% of China’s small electrical appliances consumption with $12.46
billion in sales in 2008 as shown below:




Small Electrical Appliances
      Consumption in China (2006-2007)7Year
                                                                        
                                                                        
                                                                        Kitchen
                                                                        
                                                                        
                                                                        Living
                                                                        
                                                                        
                                                                        Personal Care
                                                                        
                                                                        
                                                                        TotalSales
                                                                          ($
      Billion)
                                                                        
                                                                        Growth (%)
                                                                        
                                                                        
                                                                        Sales
                                                                          ($
      Billion)
                                                                        
                                                                        Growth (%)
                                                                        
                                                                        
                                                                        Sales
                                                                          ($
      Billion)
                                                                        
                                                                        Growth (%)
                                                                        
                                                                        
                                                                        Sales
                                                                          ($
      Billion)
                                                                        
                                                                        Growth   (%)2006
                                                                        
                                                                        
                                                                        9.14
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        1.50
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        1.05
                                                                        
                                                                        
                                                                        
                                                                        
                                                                        11.69
                                                                        
                                                                        14.10%2007
                                                                        
                                                                        
                                                                        10.46
                                                                        
                                                                        14.4%
                                                                        
                                                                        
                                                                        1.69
                                                                        
                                                                        13.0%
                                                                        
                                                                        
                                                                        1.16
                                                                        
                                                                        10.8%
                                                                        
                                                                        
                                                                        13.31
                                                                        
                                                                        13.9%2008
                                                                        
                                                                        
                                                                        12.40
                                                                        
                                                                        18.5%
                                                                        
                                                                        
                                                                        1.99
                                                                        
                                                                        17.7%
                                                                        
                                                                        
                                                                        1.34
                                                                        
                                                                        15.5%
                                                                        
                                                                        
                                                                        15.74
                                                                        
                                                                        18.4%




lIn
developed countries an average family has 20-30 different kinds of small
household electrical appliances whereas in China the current average is just 5,
demonstrating the vast potential of the market in China8;




lThe
main consumers of kitchen appliances in China are young couples aged 18-40 with
overall buyers being relatively young; and9




lIncreasing household incomes in China influence most people to want to
minimize the time they spend on household chores boosting the sales of microwave
ovens, toasters, and blenders.10







In North
America, Europe, and other developed regions the appliance industry is largely
cyclical with most sales dependent on replacements, new construction and new
product introduction. By contrast, in developing markets such as China, Brazil,
Mexico and Africa, the market is fueled by rising incomes, development of rural
areas, and the desire for a higher quality of life. The appliance market in
China has been and continues to display great strength and official estimates
for market growth are 9% annually through 2011.11
   Growth in China is the result of several large socio-economic
factors including improving economic conditions, urbanization, the addition of
modern kitchens, and an overall improvement in the quality of life that comes
with higher disposable incomes.





Management
believes that exports to the US have decreased for household electronic
appliances (including white goods) during 2008. However, exports of the same
products to European markets have maintained strong growth rates and we have
experienced significant growth in South America, Asia, Africa, and the Middle
East.  Generally due to the financial crisis, appreciation of the
Chinese currency, and higher labor costs and raw material costs during 2008,
exports of small electronic appliances declined. Nevertheless, revenues derived
from the sale of small electronic appliances have increased mainly due to
increased marketing efforts during 2008.


_________________________


6CCID Consulting, 2008-2009
AnnualReport of China’s Small Electrical
Appliance Industry


7 CCID Consulting, 2008-2009
AnnualReport of China’s Small Electrical
Appliance Industry


8The Information of Guang
Dong Household Appliance, Q3 2007,


9 Hong
Kong Trade Development Council, “Big Market for Small Electrical Appliances in
Mainland China” July 28,2006


10 Hong
Kong Trade Development Council, “China’s Home Appliance Market Switches On,”
August 29,2002


11CCID Consulting, 2008-2009
AnnualReport
of China’s Small Electrical Appliance Industry





4





Products




Both in
China and overseas, the Company manufactures home and kitchen electronic
appliances primarily for the consumer market.  In 2007 and 2008, 86%
and 95% of sales were made to the consumer market; 14% and 5%, respectively were
sold to the professional market. The Company’s premier products include blenders
and juice extractors which respectively accounted for 69.7% and 21.7% of sales
in 2008. Other products include food processors, popcorn makers, and meat
grinders. In 2008, the Company introduced a rice cooker, an electric water
kettle, and a pressure cooker to the domestic market. The Company also has plans
to expand into other growing appliances specific to different regions such as
humidifiers, dehumidifiers, and water heaters. Sales by product for 2007 and
2008 are as shown in the chart below:





Sales by Product ($ 000s)
(Unaudited)


Product
      Type
                                                                                        
                                                                                        
                                                                                        Blender
                                                                                        
                                                                                        
                                                                                        
                                                                                        Juicer
                                                                                        
                                                                                        
                                                                                        
                                                                                        Others
                                                                                        
                                                                                        
                                                                                        
                                                                                        Total2007
                                                                                        
                                                                                        
                                                                                        
                                                                                        2008
                                                                                        
                                                                                        
                                                                                        
                                                                                        2007
                                                                                        
                                                                                        
                                                                                        
                                                                                        2008
                                                                                        
                                                                                        
                                                                                        
                                                                                        2007
                                                                                        
                                                                                        
                                                                                        
                                                                                        2008
                                                                                        
                                                                                        
                                                                                        
                                                                                        2007
                                                                                        
                                                                                        
                                                                                        
                                                                                        2008Sales
      by Product
                                                                                        
                                                                                        $
                                                                                        22,040
                                                                                        
                                                                                        
                                                                                        $
                                                                                        29,811
                                                                                        
                                                                                        
                                                                                        $
                                                                                        6,655
                                                                                        
                                                                                        
                                                                                        $
                                                                                        9,275
                                                                                        
                                                                                        
                                                                                        $
                                                                                        4,781
                                                                                        
                                                                                        
                                                                                        
                                                                                        3,694
                                                                                        
                                                                                        
                                                                                        $
                                                                                        33,476
                                                                                        
                                                                                        
                                                                                        $
                                                                                        42,780%
      of Total Sales
                                                                                        
                                                                                        
                                                                                        65.8
                                                                                        %
                                                                                        
                                                                                        
                                                                                        69.7
                                                                                        %
                                                                                        
                                                                                        
                                                                                        19.9
                                                                                        %
                                                                                        
                                                                                        
                                                                                        21.7
                                                                                        %
                                                                                        
                                                                                        
                                                                                        14.3
                                                                                        %
                                                                                        
                                                                                        
                                                                                        8.6
                                                                                        %
                                                                                        
                                                                                        
                                                                                        100
                                                                                        %
                                                                                        
                                                                                        
                                                                                        100
                                                                                        %Gross
      Profit
                                                                                        
                                                                                        $
                                                                                        4,695
                                                                                        
                                                                                        
                                                                                        $
                                                                                        6,344
                                                                                        
                                                                                        
                                                                                        $
                                                                                        1,544
                                                                                        
                                                                                        
                                                                                        $
                                                                                        2,219
                                                                                        
                                                                                        
                                                                                        $
                                                                                        988
                                                                                        
                                                                                        
                                                                                        $
                                                                                        872
                                                                                        
                                                                                        
                                                                                        $
                                                                                        7,227
                                                                                        
                                                                                        
                                                                                        $
                                                                                        9,435Gross
      Profit Margin (%)
                                                                                        
                                                                                        
                                                                                        21.3
                                                                                        %
                                                                                        
                                                                                        
                                                                                        21.3
                                                                                        %
                                                                                        
                                                                                        
                                                                                        23.2
                                                                                        %
                                                                                        
                                                                                        
                                                                                        23.9
                                                                                        %
                                                                                        
                                                                                        
                                                                                        20.7
                                                                                        %
                                                                                        
                                                                                        
                                                                                        23.6
                                                                                        %
                                                                                        
                                                                                        
                                                                                        21.6
                                                                                        %
                                                                                        
                                                                                        
                                                                                        22.1
                                                                                        %




2007
Average exchange rate: $1=RMB 7.59


2008
Average exchange rate: $1=RMB 6.94





The
Company’s products have obtained the requisite safety approvals to sell in
dominant international markets including ETL (European Union), GS (Germany),
UL/CUL (US covering North America) and CB (International). Products are safe,
designed to be easy to use, and contain modern stylish features such as LCD
lighting, timers, and easy access buttons. Products in both the consumer and
professional market sell for approximately 70% of the price of imports of
comparable quality, and on a par with other domestic brands with 3 tiered
pricing to accommodate premium, moderate and no-frills customers’
needs.




New
Products




In 2008
Deer entered into agreements with various OEMs to manufacture products
including: rice cookers, pressure cookers, dehumidifiers, and electric water
kettles. These items were for sale in the domestic market under the Deer brand
starting in 2008. In just eight years time Deer has produced over 189 unique
product varieties with a minimum of 10 new product varieties brought to the
market annually.




Production




With the
exception of certain third party manufacturing agreements, all production is
performed in-house with 13 tooling houses, 136 injection molding machines, 18
production lines and annual production capacity of 6 million
appliances.





As part
of our manufacturing best practices as well as our contribution to environmental
improvement, our manufacturing department recycles and reuses all plastic
scraps, defects, waste, and quality rejects to be reused as raw materials. At
current manufacturing levels approximately 14 tons of waste is recycled
monthly.




5




Deer
continues its cost control program to improve productivity by identifying
opportunities to replace manual assembly operations and improving workflow while
improving safety, quality, and efficiency which resulted in a reduction of its
headcount in 2008 by approximately 200 employees.





Third-party
manufacturers are evaluated from time to time in order to produce appliances not
currently manufactured by Deer. Based on market responses to those products,
management determines if such products would be more efficiently produced by
Deer.  To date, Deer only enters into short term production agreements
with its third party manufacturers.





Marketing





Current




International





During
2008 Deer attained its goal of increasing sales contacts in the international
market, especially with respect to the emerging markets in the Middle East,
Africa, and South America, as well as developing new products for existing
customers. In addition, it attended Hong Kong Electronic and China Import &
Export Fairs to expand its international exposure for its products.





During
2009, Deer plans to:





l
                Expand
      the January 2009 launch of the Deer brand of products in Hong Kong and
      Macau;




l
                Attend
      international trade shows to seek new customers and display product
      innovations;




l
                Expand
      production and distribution of popcorn makers and espresso coffee makers
      to international customers;
and




l
                Continue
      its marketing program in Middle East, Africa, and South
      America.




Domestic




Deer’s
Domestic Sales Director was previously employed by Midea, a leading domestic
appliance manufacturer. He is responsible for expanding Deer’s domestic
marketing and sales presence and was responsible for spearheading the entrance
of the Deer brand into the Chinese market in 2008.  During 2008, Deer
expanded its domestic marketing and sales field force, increased Deer’s domestic
counter presence, opened new franchise based retail stores and expanded its
e-commerce presence.  In addition, Deer expects to benefit from new
government policies to subsidize the purchase of small kitchen electronic
appliances in rural China. To date Deer has made the following
progress:





l      As
of December 31, 2008 Deer has increased its sales & marketing department to
98 employees with plans to double in 2009;




l      Deer’s
products were one of the fastest growing brands for small kitchen electronic
appliances on TaoBao, a leading internet web portal in China;




l      Deer
expand its sales of its products with leading electrical appliance chains,
supermarket chains and shopping malls; and




l      Rolled
out its franchised retail stores that exclusively sell Deer brand small kitchen
and home electrical appliances.







The
target customer in the Chinese market is a typical urban consumer, with Deer
offering varied models and pricing to fit high, mid and budget level buyers. As
China’s economy continues to grow, the urban domestic consumer is Deer’s ideal
customer.  Deer also expects to benefit from government subsidies to
rural Chinese citizens to encourage the purchase of small kitchen electronic
appliances. Deer has established a retail store franchise program for its
products in local markets.  Management believes this approach will
open new markets to the company for its brands while transferring the costs and
risks associated with retail store operations to the franchise
owners.  Deer expects that internet sales of its products over popular
Chinese web portals such as Alibaba, TaoBao and HC360.com will continue to grow
in 2009.  According to TaoBao, Deer’s small kitchen and home
electronic appliances were among the fastest growing brands purchased on its
website in 2008.





Deer has
7 registered brand names for sale in the domestic market including Deer, Kyowa,
D&R, Blendermate, K-tec, Blendtec, and NOWAKE from which they hope to attain
a new level of business domestically and transition from an ODM manufacturer to
OBM manufacturer. Deer gives each domestic product a two-year warranty compared
to the industry average of 1 year.




6




Domestic
product brand orientation is shown in the table below:







Product
                  Brand
                Brand
                  Property
                Customer
                Product
      CategoryAriete
      Disney
                Selling
      agent
                Residential
      (High-end)
                Coffee
      machine
                  Steam
      cleaner
                  Baby
      series
                  Other
      kitchen applianceDeer,
      Kyowa, D&R, Blendermate
                  K-tec,
      Blendtec,
                  NOWAKE
                Self-owned
                  brand
                Residential
      (Middle-high-end) product
                Food
      processor (includes blender and juicer)
                  Soymilk
      Maker
                  Electrical
      pressure cooker
                  Electrical
      kettle
                  Electrical
      rice cookerBartec
                Self-owned
                  brand
                Commercial:
      restaurants, bars, hotels
                Blender
      machine




Deer’s
new domestic slogan, “Healthy Living Through Modern Appliances,” is now
presented on several outdoor advertising venues in the Guangdong region and, as
sales representatives make inroads to further markets, the advertisements will
span the country. In addition to advertising, Deer also utilizes in store
product discounts and giveaways during special holidays to attract first-time
buyers, families on budgets, and those who wish to use the giveaways as
gifts.





Future




In light
of the continuing growth in the domestic appliance market and the slowdown in
the growth rate of Western markets, Deer has set its 2009 marketing strategy on
three goals;





1.
            Continue
      expanding its sales base in the domestic Chinese
  market;





2.
                  Continuing
      to grow its international OEM business as well as pursuing OBM
      opportunities abroad as Western brands choose to exit the
      market;3.
                  Pursuing
      further penetration and development of a wider customer base in the Middle
      East, Africa, and South America;4.
                  Continue
      expansion of direct sales of the Deer brand of small kitchen electronic
      appliances over the Internet and5.
                  Licensing
      additional franchises for Deer brand retail stores in local Chinese
      markets.
  7


Suppliers




Deer’s
major raw material purchases include petroleum-based resins and chemicals such
as AS, ABS, and silicon steel sheets. Micro-motors can be sourced from multiple
suppliers in the region. Currently, around 20% of raw materials are imported
with the majority sourced domestically through various local suppliers in China
based on cost and availablity. More than half of domestic materials can be
purchased within the Pearl River Delta region.





Deer
generally maintains positive cooperative relationships with more than two
suppliers for each raw material purchased. The suppliers have been approved by
Deer as to quality and delivery specifications. Cooperative relationships tend
to produce better results in terms of delivery, quality, and customer needs. In
the case of technical problems, Deer has the option to work with its suppliers
to solve the problem. However, Deer does not and cannot depend on any one
supplier. If the products do not satisfy the quality or supply requirements of
the Company, the Company can select another supplier.





Deer does
not maintain any fixed supply contracts. Goods are ordered on an as-needed basis
to meet production needs. If a change of suppliers is necessary, management
estimates it can
quickly fulfill supplies from another source without impacting
production. Strategic materials are purchased from several suppliers
including Sinochem, Jin Hai Development (HK) Co. Ltd and Guo Heng Company. There
are no sole source suppliers. The largest purchases by product in 2008 are as
shown in the table below:




The
      largest purchases by product in 2007 and 2008 are as shown in the table
      below:Top
      5 Raw Materials PurchasesItem
                                                                                                    
                                                                                                    
                                                                                                    Number
      of
                                                                                                        Suppliers
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    Total
      purchases
                                                                                                        $
      000s
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    %
      of Annual
                                                                                                        Purchases
                                                                                                    
                                                                                                    Domestic/
                                                                                                        Foreign2007
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    2008
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    2007
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    2008
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    2007
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    2008
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    20081
                                                                                                    
                                                                                                    Micro-motor
                                                                                                    
                                                                                                    
                                                                                                    7
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    12
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    $7,918
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    $8,810
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    41.0
      %
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    26.1
      %
                                                                                                    
                                                                                                    Domestic727
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    Foreign
                                                                                                    
                                                                                                    
                                                                                                    $7212
                                                                                                    
                                                                                                    Plastic
                                                                                                    
                                                                                                    
                                                                                                    7
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    14
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    2,394
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    5,807
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    22.0
      %
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    17.2
      %
                                                                                                    
                                                                                                    Domestic2,325
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    Foreign
                                                                                                    
                                                                                                    
                                                                                                    $5,1653
                                                                                                    
                                                                                                    Packaging
                                                                                                    
                                                                                                    
                                                                                                    5
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    11
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    1,823
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    2,639
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    8.6
      %
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    7.8
      %
                                                                                                    
                                                                                                    Domestic4
                                                                                                    
                                                                                                    Electric
      wire
                                                                                                    
                                                                                                    
                                                                                                    3
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    9
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    870
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    1,339
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    4.1
      %
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    4.0
      %
                                                                                                    
                                                                                                    Domestic5
                                                                                                    
                                                                                                    Falchion,
      Shaft
                                                                                                    
                                                                                                    
                                                                                                    5
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    10
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    693
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    1,049
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    3.3
      %
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    3.1
      %
                                                                                                    
                                                                                                    DomesticSubtotal
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    $16,750
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    $19,698
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    79.0
      %
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    58.2
      %
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    $19,644Total
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    $21,260
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    $
                                                                                                    100.0%
                                                                                                    
                                                                                                    
                                                                                                    
                                                                                                    100.0
      %




2007
      Average exchange rate: $1=RMB 7.59
 2008
Average exchange rate: $1=RMB 6.94 (source ONDA.com)


Customers




Deer
works with its customers through the ODM, OBM, and OEM models as
follows:





l      ODM
(Original Design Manufacturing): Deer provides expertise on product design and
manages all production;




l      OBM
(Original Brand Manufacturing): Deer’s own products designed and manufactured
based on the Company’s research to meet the needs of customers;




l      OEM
(Original Equipment Manufacturing): Deer manages all production with product
design and name provided by the client.





International
market




In the
international market Deer serves primarily as an ODM for large overseas
appliance manufacturers with sales made both direct to the brands and through
distributors. Since inception Deer has focused on establishing stable and
positive customer relationships and has developed a loyal and strong customer
base with foreign clients such as Focus Electric (5 years), Applica (4 years),
Home Depot (5 years), Sattar (8 years ) and Girmi (3 years)
with the top 10 customers generally accounting for approximately 51% of annual
sales. With its major domestic customers Deer has established terms of sale
covering delivery, payment, and pricing however there are no fixed agreements as
to sales quantities on a monthly or annual basis; all orders are placed on an as
needed basis by customers.




8




Domestic
(Chinese) market




In the
Chinese market, Deer has established sales agreements with several top appliance
chain stores such as Gome and Suning, hypermarts, and shopping centers with
their own brands as well as producing for Disney and Ariete under ODM
agreements.




Most
international OEM and ODM customers are looking for a high-quality and reliable
manufacturer to design and produce products that meets their quality and style
specifications in the time and pricing constraints allowed. In the domestic
market, most customers seek quality, convenience, and price (in that order). In
2007 and 2008 foreign sales accounted for 90% and
95% of total sales, respectively. Deer’s largest customers in 2008
are as shown in the table below:





Top Ten Customers in
      2008Customer
                                            Area
                                            Sales
      ($ 000s)
                                            %
      of Annual
                                            Product1
                                            
                                            FOCUS
      ELECTRIC
                                            North
      America
                                            $8,094
                                            18.92%
                                            Blender2
                                            
                                            APPLICA
                                            North
      America
                                            2,374
                                            5.55%
                                            Blender3
                                            
                                            DL
      TRADING LTD
                                            Asia
                                            2,011
                                            4.70%
                                            Blender4
                                            
                                            SANWAI
                                            Asia
                                            1,698
                                            3.97%
                                            Blender5
                                            
                                            SATTAR
                                            Mid-East
                                            1,643
                                            3.84%
                                            Juicer6
                                            
                                            WUNSCHE/DARIO
                                            EURO
                                            1,544
                                            3.61%
                                            Blender7
                                            
                                            EFA
                                            North
      America
                                            1,279
                                            2.99%
                                            Juicer8
                                            
                                            SINDELEN
                                            South
      America
                                            1,241
                                            2.90%
                                            Blender9
                                            
                                            ALGAM
                                            Mid-East
                                            1,082
                                            2.53%
                                            BlenderJuicer10
                                            
                                            PROSPECT
                                            Asia
                                            877
                                            2.05%
                                            BlenderSUBTOTAL
                                            
                                            21,843
                                            51.06%TOTAL
                                            
                                            42,780
                                            100.00%





Intellectual
Property




Patent
Rights




The
Chairman Ying He and his brother Fa’min He, a shareholder of Deer, own 103
product and design related patents and allow the Company to use their patents at
no charge.




9





Trademark
Rights




All
trademarks are registered with the State Administration for Industry &
Commerce of the PRC as shown below:




No.
              Certificate
      No.
              Brand
      Name
              Registration
      Date
              Valid
      Until1
              No3133609
              Kyowa
              08/21/2003
              08/20/20132
              No1977092
              Deer
              04/21/2003
              04/20/20133
              No3215570
              D&R
              02/14/2004
              02/13/20144
              No4390572
              Blendermate
              06/14/2007
              06/13/20175
              No4446484
              K—tec
              10/14/2007
              10/13/20176
              No4446483
              Blendtec
              11/14/2007
              11/13/20177
              No3133608
              NOWAKE
              08/21/2003
              08/20/2013




Copyrights




No.
              Certificate
      No.
              Works’s
      Name
              Author
              Registration
      Date1
              2007-F-08022
              Wan
      Zhong Yi Xin(万众一心
      )
              Ying
      He
              07/30/2007




Research and
Development




With the
aim of maintaining Deer’s competitive edge in the marketplace and keep pace with
new technologies, constant research and development work is required to find
improved efficiencies in design and cost. Deer’s R&D team is composed of 6
experienced designers.





In 2009,
Deer plans to spend $650,000 on new product development. In 2007 and 2008, Deer
spent $1,536,000 and $585,000, respectively, on research and development,
respectively.





While
Deer has no formal written alliances with universities we work with several
household electric associations on a consultant basis.





Governmental and
Environmental Regulation




Deer’s
products have obtained the requisite safety approvals to sell in international
markets including ETL (European Union) GS (Germany), UL/CUL (US covering North
America) and CB (International) licenses as well as obtaining the necessary
certifications to sell in the domestic market. Domestic licenses, which Deer has
obtained, are required for both the production and sale of goods.





The
business and company registrations are in compliance with the laws and
regulations of the municipal and provincial authorities of Guangdong Province
and China.





Competition





International




In the
international market Deer faces competition from foreign brands such as
Phillips, Samsung, Electrolux, Bosch, and Proctor-Silex. Overseas, Deer products
offer a cost advantage against the foreign branded products which are generally
priced 40-50% higher. In the overseas market, Deer also competes against other
OEM and ODM manufacturers which are located in China, more recently other OEM
and ODM manufacturers operate in Eastern Europe and other low labor cost
Southeast Asian countries. In order to compete effectively Deer employs the
following practices:




10




l     Customer
Service – The sales managers maintain close contact with customers
to uncover any special modifications or product needs to best fit their
respective markets. In addition, the sales director often travels to meet with
such customers during the year;




l     ODM ability –
For customers involved in multiple product lines such as Disney and Black &
Decker for whom it is not efficient to invest in the research and design of such
kitchen appliance products, Deer will design a product to meet their
specifications both technically and visually from start to finish allowing the
customer to concentrate on their other businesses;




l     Experience – 6
years of quality, stylish, and defect-free products which are completed on a
timely basis provide a competitive edge against other OEMs.







Domestic




In the
domestic market in China Deer faces competition not only from foreign brands
sporting high price tags and reputations, but also from other Chinese appliance
manufacturers, especially those who have operated in the market for over 5 years
such as Midea, Hisense, Galanz, Supor, Elec-Tech and Tsann Kuen (Taiwan) which
are priced comparably with Deer. In order to effectively compete in the domestic
market Deer has and will use a combination of:





l     3-tiered pricing -
premium, middle and budget versions of a product which is especially important
as appliances begin to penetrate third-tier cities and the traditional middle
income bracket consumers;




l     Reputation as a high quality
OEM producer - many Chinese purchasers of foreign brands are looking for
safety as well as price and style; Deer is known as a producer for foreign
brands and as such means the same safety and style at a better price to most
consumers, and;




l     Customer Service -
Deer offers a 2 year warranty in comparison to the industry average of 1 year
and has a 24 hour toll-free service number (400-888-5777) for all
customers.




Seasonality




Deer
typically experiences stronger third and fourth calendar quarters due to
seasonality generally caused by national holidays.  In addition,
customer demand for blender and juicer products are also influenced by the
weather.





Employees




As of
December 31, 2008 the Company had 850 employees which management believes will
increase during the next 12 months as follows:





Function
                  Unit
                Current
      #
                  Employees
                Recruitment
                  Budget
                Total
      after the
                  BudgetCEO
                1
                0
                1Technique
                38
                0
                38R&D
                6
                0
                6Manufacture
                642
                105
                747Quality
                15
                11
                26Sales
                98
                200
                298After
      service
                10
                30
                40Finance
                10
                0
                10Administration
                25
                0
                25HR
                5
                0
                5Total
                850
                346
                1196




11




Deer
maintains strong ties with its employees and staff and retention is stable.
Employee contracts adhere to both State and Provincial employment regulations
and all social security regulations. All compensation including social insurance
is paid in a timely manner to authorities and employees. There have been no
disputes and there are no collective bargaining agreements.





Salary
Policy




Generally,
Deer employees’ salaries are classified into five categories: hourly, piecework,
length of service, overtime including holiday pay, and awards. Awards include:
production awards, marketing awards and annual bonuses.





Benefits




1. All
Social Insurance required by State and Local laws.


2. Living
Quarters.


3.
Transportation Van which runs Monday through Friday and circulates to nearby
city/suburbs.


4.
Accidental Injury Insurance





Legal
Proceedings




Deer may
occasionally become involved in various lawsuits and legal proceedings, arising
in the ordinary course of business.  However, litigation is subject to
inherent uncertainties and an adverse result in these or other matters may arise
from time to time that may have an adverse affect on our business, financial
conditions, or operating results.  Deer is currently not aware of any
such legal proceedings or claims that will have, individually or in the
aggregate, a material adverse affect on our business, financial condition or
operating results.





Item
1A - Risk Factors





Our business and an investment in our securities
are subject to a variety of risks.  The following risk factors
describe the most significant events, facts or circumstances that could have a
material adverse effect upon our business, financial condition, results of
operations, ability to implement our business plan, and the market price for our
securities.  Many of these events are outside of our control. The
risks described below are not the only ones facing our
company.  Additional risks not presently known to us or that we
currently believe are immaterial may also impair our business
operations.  If any of these risks actually occurs, our business,
financial condition or results of operation may be materially adversely
affected.  In such case, the trading price of our common stock could
decline and investors in our common stock could lose all or part of their
investment.




Risks
Related to Our Business





Raw
materials price fluctuations




The
Company’s largest raw materials purchases consist of micro-motors and plastics
(AS, PP, ABS which are derived from petroleum) and stainless steel. As such
fluctuations in the price of oil and steel on the international market will have
an impact on the Company’s operating costs and related profits.





International oil prices reached new
highs in our third quarter but fell sharply in our fourth quarter. The price of
most plastics moves in relation to oil prices and all electrical appliance
manufacturers are affected by cost increases and benefit from decreases.
Management believes that any significant long-term increases or decreases in the
price of petroleum will be passed onto users in the form of higher or lower
manufacturer prices.  However, short term volatility in petroleum and
plastics prices can either result in short term increases or decreases in
manufacturing costs.





Economic
slowdown in US & European markets




Historically
the majority of the Company’s sales are made overseas withapproximately
52% of our total sales made in North Americanand European markets, in
2008 respectively. As such, any weakening economic conditions in these
markets could negatively impact the Company’s operating results. In order to
reduce such risk the Company has:




l
            initiated
      a flexible pricing strategy with international customers,
    andl
            begun
      a strong drive into the domestic market of China.





Exchange
Rates




12




As the
majority of the Company’s sales are currently made internationally any further
appreciation of the RMB negatively impacts the Company’s profit & loss
results. In order to limit exposure to such currency risk the Company may engage
in Forward Foreign Exchange agreements.





Loss
of or failure to renew any or all of its licenses and permits




In
accordance with the laws and regulations of the PRC, Deer is required to
maintain various licenses and permits in order to operate our electrical
appliance products manufacturing business. Deer is required to comply with
applicable hygiene and safety standards in relation to our production processes.
Deer production processes are subject to periodic inspections by the regulatory
authorities for compliance with applicable regulations. Failure to pass these
inspections, or the loss of or failure to renew such licenses and production
permits, or sales licenses could result in the temporary or permanent suspension
of some or all of our production or distribution operations and could adversely
affect our revenues and profitability.





We
can not be assured of the success of the Domestic Market Development & Brand
Campaign.




Since the
Company just recently initiated its own branding campaign in the domestic market
in China in the first quarter of 2008, and, while prospects for the domestic
market are encouraging, there exists uncertainty as to the Company’s ability to
build a strong market presence. The domestic market began to emerge in the 1990s
and established brand leaders with greater experience, market share, and
customer loyalty already exist such as Midea, Tsann Kuen, Supor, and Vatti,
thus, the ability of the Company to gain a stronghold in the market is
uncertain. In the combined international and domestic sales for 2008 management
estimates that only 10% of our revenues were generated from the Company’s own
brands.




We
derive a substantial part of our revenues from several major
customers.  If we lose any of these customers or they reduce the
amount of business they do with us, our revenues may be seriously
affected.




Our five
largest customers accounted for 36.5% of our revenues for the year ended
December 31, 2008 and our ten largest customers accounted for approximately 51%
our revenues for the year ended December 31, 2008.  Our largest
customer accounted for 18.9% of our revenues in the year ended December 31,
2008.  These customers may not maintain the same volume of business
with us in the future.  If we lose any of these customers or they
reduce the amount of business they do with us, our revenues may be seriously
affected.




We
cannot be certain that our product innovations and marketing successes will
continue.




We
believe that our past performance has been based on, and our future success will
depend, in part, upon our ability to continue to improve our existing products
through product innovation and to develop, market and produce new
products.  We cannot assure you that we will be successful in
introducing, marketing and producing any new products or product innovations, or
that we will develop and introduce in a timely manner innovations to our
existing products which satisfy customer needs or achieve market
acceptance.  Our failure to develop new products and introduce them
successfully and in a timely manner could harm our ability to grow our business
and could have a material adverse effect on our business, results of operations
and financial condition.





Our
technology may not satisfy the changing needs of our customers.




With any
technology, including the technology of our current and proposed products, there
are risks that the technology may not successfully address all of our customers’
needs.  While we have already established successful relationships
with our customers, there needs may change or vary.  This may affect
the ability of our present or proposed products to address all of our customers’
ultimate technology needs in an economically feasible manner.




We
may not be able to keep pace with rapid technological changes and competition in
our industry.




While we
believe that we have hired or engaged personnel and outside consultants who have
the experience and ability necessary to keep pace with advances in technology,
and while we continue to seek out and develop “next generation” technology
through our research and development efforts, there is no guarantee that we will
be able to keep pace with technological developments and market demands in this
evolving industry and market.  In addition, our industry is highly
competitive.  Although we believe that we have developed strategic
relationships to best penetrate our existing markets, we face competition from
other manufacturers of product similar to our products.  Some of our
competitors’ advantages over us in both the areas of products, marketing, and
services include the following:




13




l
            Substantially
      greater revenues and financial resources;l
            Stronger
      brand names and consumer recognition;l
            The
      capacity to leverage marketing expenditures across a broader portfolio of
      products;l
            Pre-existing
      relationships with potential customers;l
            More
      resources to make acquisitions;l
            Lower
      labor and development costs; andl
            Broader
      geographic presence.




We will
face different market dynamics and competition if we expand our market to new
countries.  In some international markets, our future competitors
would have greater brand recognition and broader distribution than we currently
enjoy.  We may not be as successful as our competitors in generating
revenues in those markets due to our inability to provide products that are
attractive to the market in those countries, the lack of recognition of our
brand, and other factors.  As a result, any new expansion efforts
could be more costly and less profitable than our efforts in our existing
markets.




If we are
not as successful as our competitors in our target markets, our sales could
decline, our margins could be negatively impacted and we could lose market
share, any of which could materially harm our business.




We
are a major purchaser of certain goods and raw materials that we use in the
manufacturing process of our products, and price changes for the commodities we
depend on may adversely affect our profitability.




Our
profitability generally depends upon the margin between the cost to us of
certain raw materials used in the manufacturing process as well as our
fabrication costs associated with converting such raw materials into assembled
products compared to the selling price of our products, and the overall supply
of raw materials.  It is our intention to base the selling prices of
our products upon the associated raw materials costs to us.  However,
we may not be able to pass all increases in raw material costs and ancillary
acquisition costs associated with taking possession of the raw materials through
to our customers.  Although we are currently able to obtain adequate
supplies of raw materials, it is impossible to predict future
availability.  The inability to offset price increases of raw material
by sufficient product price increases, and our inability to obtain raw
materials, would have a material adverse effect on our consolidated financial
condition, results of operations and cash flows.




Our
products may contain defects, which could adversely affect our reputation and
cause us to incur significant costs.




Despite
testing by us defects may be found in existing or new products.  Any
such defects could cause us to incur significant return and exchange costs,
re-engineering costs, divert the attention of our engineering personnel from
product development efforts, and cause significant customer relations and
business reputation problems.  Any such defects could force us to
undertake a product recall program, which could cause us to incur significant
expenses and could harm our reputation and that of our products.  If
we deliver defective products, our credibility and the market acceptance and
sales of our products could be harmed.




Our
position in the marketplace could be negatively impacted if we experience delays
in launching our products.




We may
experience delays in bringing new products to market, due to design,
manufacturing or distribution problems.  Such delays could adversely
affect our ability to compete effectively and may adversely affect our
relationship with our customers.  Any such delays would adversely
affect our revenues and our ability to become profitable.




If
we are not able to manage our growth, we may not be profitable.




Our
success will depend on our ability to expand and manage our operations and
facilities.  There can be no assurance that we will be able to manage
our growth, meet the staffing requirements for our business or for additional
collaborative relationships or successfully assimilate and train new
employees.  In addition, to manage our growth effectively, we may be
required to expand our management base and enhance our operating and financial
systems.  If we continue to grow, there can be no assurance that the
management skills and systems currently in place will be adequate. Moreover,
there can be no assurance that we will be able to manage any additional growth
effectively.  Failure to achieve any of these goals could have a
material adverse effect on our business, financial condition or results of
operations.




14




We
face risks associated with managing international operations.




Almost
all of our operations are conducted in China.  There are a number of
risks inherent in doing business in such market, including the
following:




l
            unfavorable
      political or economical factors;l
            fluctuations
      in foreign currency exchange rates;l
            potentially
      adverse tax consequences;l
            unexpected
      legal or regulatory changes;l
            lack
      of sufficient protection for intellectual property
  rights;l
            difficulties
      in recruiting and retaining personnel, and managing international
      operations; andl
            less
      developed infrastructure.


Our inability to successfully manage the inherent risks in
our domestic and international activities could adversely affect our
business.   Because of the risks associated with conducting such
operations (including the risks listed above), there can be no assurances that
any new market expansion will be successful.




We
may not be able to adequately protect our technology and other proprietary
rights.




Our
success will depend in part on our ability to obtain and protect our products,
methods, processes and other technologies, to preserve our trade secrets, and to
operate without infringing on the proprietary rights of third parties both
domestically and abroad.  We have patents and patent applications
pending in China, and have worked and continue to work closely with Chinese
patent officials to preserve our intellectual property
rights.  Despite these efforts, any of the following occurrences may
reduce the value of our intellectual property:




l
            Our
      applications for patents and trademarks relating to our business may not
      be granted and, if granted, may be challenged or
    invalidated;l
            Issued
      patents and trademarks may not provide us with any competitive
      advantages;l
            Our
      efforts to protect our intellectual property rights may not be effective
      in preventing misappropriation of our technology;l
            Our
      efforts may not prevent the development and design by others of products
      or technologies similar to or competitive with, or superior to those we
      develop; orl
            Another
      party may obtain a blocking patent and we would need to either obtain a
      license or design around the patent in order to continue to offer the
      contested feature or service in our
products.




Effective
protection of intellectual property rights may be unavailable or limited in
certain foreign countries.  If we are unable to adequately protect our
proprietary rights, then it would have a negative impact on our
operations.




We
may be subject to claims that we have infringed the proprietary rights of
others, which could require us to obtain a license or change our
designs.




Although
we do not believe that any of our products infringe the proprietary rights of
others, there is no assurance that infringement or invalidity claims (or claims
for indemnification resulting from infringement claims) will not be asserted or
prosecuted against us or that any such assertions or prosecutions will not
materially adversely affect our business.  Regardless of whether any
such claims are valid or can be successfully asserted, defending against such
claims could cause us to incur significant costs and could divert resources away
from our other activities.  In addition, assertion of infringement
claims could result in injunctions that prevent us from distributing our
products.  If any claims or actions are asserted against us, we may
seek to obtain a license to the intellectual property rights that are in
dispute.  Such a license may not be available on reasonable terms, or
at all, which could force us to change our designs.




15




We
may need additional capital to execute our business plan and fund operations and
may not be able to obtain such capital on acceptable terms or at
all.




In our
rapidly changing industry, Capital requirements are difficult to plan for.
Although we currently expect to have sufficient funding for the next 12 months,
we expect that we will need additional capital to fund our future
growth.




Our
ability to obtain additional capital on acceptable terms or at all is subject to
a variety of uncertainties, including:




l
            Investors’
      perceptions of, and demand for, companies in our
  industry;l
            Investors’
      perceptions of, and demand for, companies operating in
    Chinal
            Conditions
      of the U.S. and other capital markets in which we may seek to raise
      funds;l
            Our
      future results of operations, financial condition and cash
      flows;l
            Governmental
      regulation of foreign investment in companies in particular
      countries;l
            Economic,
      political and other conditions in the United States, China, and other
      countries; andl
            Governmental
      policies relating to foreign currency
  borrowings.




We
may be required to pursue sources of additional capital through various means,
including joint venture projects and debt or equity financings.  There
is no assurance that we will be successful in locating a suitable financing
transaction in a timely fashion or at all.  In addition, there is no
assurance that we will be successful in obtaining the capital we require by any
other means.  Future financings through equity investments are likely
to be dilutive to our existing stockholders.  Also, the terms of
securities we may issue in future capital transactions may be more favorable for
our new investors.  Newly issued securities may include preferences,
superior voting rights, the issuance of warrants or other derivative securities,
and the issuances of incentive awards under equity employee incentive plans,
which may have additional dilutive effects.  Further, we may incur
substantial costs in pursuing future capital and/or financing, including
investment banking fees, legal fees, accounting fees, printing and distribution
expenses and other costs.  We may also be required to recognize
non-cash expenses in connection with certain securities we may issue, such as
convertible notes and warrants, which will adversely impact our financial
condition.




If we
cannot raise additional funds on favorable terms or at all, we may not be able
to carry out all or parts of our strategy to maintain our growth and
competitiveness or to fund our operations.  If the amount of capital
we are able to raise from financing activities, together with our revenues from
operations, is not sufficient to satisfy our capital needs, even to the extent
that we reduce our operations accordingly, we may be required to cease
operations.




We
face risks associated with currency exchange rate fluctuations.




Although
we currently transact parts of our business in U.S. dollars, a larger portion of
our revenues is denominated in other foreign
currencies.  Conducting business in currencies other than U.S. dollars
subjects us to fluctuations in currency exchange rates that could have a
negative impact on our operating results.  Fluctuations in the value
of the U.S. dollar relative to other currencies impact our revenues, cost of
revenues and operating margins and result in foreign currency translation gains
and losses.





Our
business could be subject to environmental liabilities.




As is the
case with manufacturers of similar products, we use certain hazardous substances
in our operations.  Currently we do not anticipate any material
adverse effect on our business, revenues or results of operations as a
result of compliance with Chinese environmental laws and
regulations.  However, the risk of environmental liability and charges
associated with maintaining compliance with environmental laws is inherent in
the nature of our business, and there is no assurance that material
environmental liabilities and compliance charges will not arise in the
future.




If
we lose our key personnel or are unable to attract and retain additional
qualified personnel, the quality of our services may decline and our business
may be adversely impacted.




We rely
heavily on the expertise, experience and continued services of our senior
management, including our President and Chief Executive Officer.  Loss
of his services could adversely impact our ability to achieve our business
objectives.  We believe our future success will depend upon our
ability to retain key employees and our ability to attract and retain other
skilled personnel.  The rapid growth of the economy in China has
caused intense competition for qualified personnel.  We cannot
guarantee that any employee will remain employed by us for any definite period
of time or that we will be able to attract, train or retain qualified personnel
in the future. Such loss of personnel could have a material adverse effect on
our business and company.  Moreover, qualified employees periodically
are in great demand and may be unavailable in the time frame required to satisfy
our customers’ requirements.  We need to employ additional personnel
to expand our business.  There is no assurance that we will be able to
attract and retain sufficient numbers of highly skilled employees in the
future.  The loss of personnel or our inability to hire or retain
sufficient personnel at competitive rates could impair the growth of our
business.




16




We
will incur significant costs as a result of operating as a public company, our
management will be required to devote substantial time to new compliance
initiatives.




While we
are a public company, our compliance costs to date have not been substantial in
light of our limited operations.  Deer began operating as a public
company in September of 2008.  As a public company with substantial
operations, we will incur increased legal, accounting and other
expenses.  The costs of preparing and filing annual and quarterly
reports, proxy statements and other information with the SEC and furnishing
audited reports to stockholders is time-consuming and costly.





It will
also be time-consuming, difficult and costly for us to develop and implement the
internal controls and reporting procedures required by the Sarbanes-Oxley Act of
2002 (the “Sarbanes-Oxley Act”).  Certain members of our management
have limited or no experience operating a company whose securities are traded or
listed on an exchange, nor with SEC rules and requirements (including SEC
reporting practices and requirements that are applicable to a publicly traded
company).  We will need to recruit, hire, train and retain additional
financial reporting, internal controls and other personnel in order to develop
and implement appropriate internal controls and reporting
procedures.  If we are unable to comply with the internal controls
requirements of the Sarbanes-Oxley Act, we may not be able to obtain the
independent accountant certifications required by the Sarbanes-Oxley
Act.





If
we fail to establish and maintain an effective system of internal controls, we
may not be able to report our financial results accurately or to prevent
fraud.  Any inability to report and file our financial results
accurately and timely could harm our business and adversely impact the trading
price of our common stock.




We are
required to establish and maintain internal controls over financial reporting,
disclosure controls, and to comply with other requirements of the Sarbanes-Oxley
Act and the rules promulgated by the SEC.  Our management, including
our Chief Executive Officer and Chief Financial Officer, cannot guarantee that
our internal controls and disclosure controls will prevent all possible errors
or prevent all fraud.  A control system, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met.  In addition, the design of
a control system must reflect the fact that there are resource constraints and
the benefit of controls must be relative to their costs.  Because of
the inherent limitations in all control systems, no system of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected.  These inherent
limitations include the realities that judgments in decision-making can be
faulty and that breakdowns can occur because of simple error or
mistake.  Further, controls can be circumvented by individual acts of
some persons, by collusion of two or more persons, or by management override of
the controls.  The design of any system of controls also is based in
part upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions.  Over time, a control may
become inadequate because of changes in conditions or the degree of compliance
with policies or procedures may deteriorate.  Because of inherent
limitations in a cost-effective control system, misstatements due to error or
fraud may occur and may not be detected.




Because
we are not yet required to comply with rules requiring the adoption of certain
corporate governance measures, our stockholders have limited protections against
interested director transactions, conflicts of interest and similar
matters.




The
Sarbanes-Oxley Act, as well as the rules enacted by the SEC and the national
stock exchanges as a result of the Sarbanes-Oxley Act, require implementation of
various measures relating to corporate governance.  These measures are
designed to enhance the integrity of corporate management and the securities
markets and apply to securities which are listed on those
exchanges.  Because we are not presently required to comply with many
of the corporate governance provisions, we have not yet adopted these
measures.




We do not
have a board member that qualifies as an “audit committee financial
expert” or that qualifies as “independent” as that term is used in the
rules of the Securities and Exchange Commission or the NASDAQ Marketplace
Rules.




17




Until we
comply with the corporate governance measures adopted by the national securities
exchanges after the enactment of Sarbanes-Oxley Act, regardless of whether such
compliance is required, the absence of standards of corporate governance may
leave our stockholders without protections against interested director
transactions, conflicts of interest and similar matters and investors may be
reluctant to provide us with funds in the future if we determine it is necessary
to raise additional capital.  We intend to comply with all applicable
corporate governance measures relating to director independence as soon as
practicable.





New
rules, including those contained in and issued under the Sarbanes-Oxley Act, may
make it difficult for us to retain or attract qualified officers and directors,
which could adversely affect the management of our business and our ability to
obtain or retain listing of our common stock.




We may be
unable to attract and retain those qualified officers, directors and members of
board of directors committees required to provide for our effective management
because of the rules and regulations that govern publicly held companies,
including, but not limited to, certifications by principal executive
officers.  The perceived personal risk associated with the
Sarbanes-Oxley Act may deter qualified individuals from accepting roles as
directors and executive officers.




Further,
some of these recent changes heighten the requirements for board or committee
membership, particularly with respect to an individual’s independence and level
of experience in finance and accounting matters.  We may have
difficulty attracting and retaining directors with the requisite
qualifications.  If we are unable to attract and retain qualified
officers and directors, the management of our business and our ability to obtain
or retain the listing of our common stock on any stock exchange (assuming we
elect to seek and are successful in obtaining such listing) could be adversely
affected.




We
are a holding company that depends on cash flow from our wholly-owned subsidiary
to meet our obligations.




After the
Share Exchange, we became a holding company with no material assets other than
the stock of our wholly-owned subsidiary.  Accordingly, all our
operations will be conducted by Deer, our wholly-owned subsidiary.  We
currently expect that the earnings and cash flow of our subsidiary will
primarily be retained and used by us in its operations.




All
of Deer’s liabilities survived the Share Exchange and there may be undisclosed
liabilities that could have a negative impact on our financial
condition.




Before
the Share Exchange, certain due diligence activities on the Company and Deer
were performed.  The due diligence process may not have revealed all
liabilities (actual or contingent) of the Company and Deer that existed or which
may arise in the future relating to the Company’s activities before the
consummation of the Share Exchange.  Notwithstanding that all of the
Company’s pre-closing liabilities were transferred to a third party pursuant to
the terms of the Share Exchange Agreement, it is possible that claims for such
liabilities may still be made against us, which we will be required to defend or
otherwise resolve.  The transfer pursuant to the Share Exchange
Agreement may not be sufficient to protect us from claims and liabilities and
any breaches of related representations and warranties.  Any
liabilities remaining from the Company’s pre-closing activities could harm our
financial condition and results of operations.




Because
Deer has become public by means of a share exchange, we may not be able to
attract the attention of major brokerage firms.




There may
be risks associated with Deer’s becoming public through the Share Exchange
Agreement. Analysts of major brokerage firms may not provide our company
coverage since there is no incentive to brokerage firms to recommend the
purchase of our common stock.  No assurance can be given that
brokerage firms will, in the future, want to conduct any secondary offerings on
our behalf.





New
accounting standards could result in changes to our methods of quantifying and
recording accounting transactions, and could affect our financial results and
financial position.




Changes
to Generally Accepted Accounting Principles in the United States (GAAP) arise
from new and revised standards, interpretations, and other guidance issued by
the Financial Accounting Standards Board, the SEC, and others.  In
addition, the U.S. Government may issue new or revised Cost Accounting Standards
or Cost Principles.  The effects of such changes may include
prescribing an accounting method where none had been previously specified,
prescribing a single acceptable method of accounting from among several
acceptable methods that currently exist, or revoking the acceptability of a
current method and replacing it with an entirely different method, among
others.  Such changes could result in unanticipated effects on our
results of operations, financial position, and other financial
measures.




18




Risks
Related to Our Business being Conducted in China




We
are subject to international economic and political risks over which we have
little or no control and may be unable to alter our business practice in time to
avoid the possibility of reduced revenues.




Our
business is conducted in China.  Doing business outside the United
States, particularly in China, subjects us to various risks, including changing
economic and political conditions, major work stoppages, exchange controls,
currency fluctuations, armed conflicts and unexpected changes in United States
and foreign laws relating to tariffs, trade restrictions, transportation
regulations, foreign investments and taxation.  We have no control
over most of these risks and may be unable to anticipate changes in
international economic and political conditions and, therefore, unable to alter
out business practice in time to avoid the possibility of reduced
revenues.




China’s
economic policies could affect our business.




Substantially
all of our assets are located in China and all of our revenue is derived from
our operations in China.  Accordingly, our results of operations and
prospects are subject, to a significant extent, to the economic, political and
legal developments in China.




While
China's economy has experienced significant growth in the past twenty years,
such growth has been uneven, both geographically and among various sectors of
the economy.  The Chinese government has implemented various measures
to encourage economic growth and guide the allocation of
resources.  Some of these measures benefit the overall economy of
China, but they may also have a negative effect on us.  For example,
operating results and financial condition may be adversely affected by the
government control over capital investments or changes in tax
regulations.  The economy of China has been transitioning from a
planned economy to a more market-oriented economy.  In recent years
the Chinese government has implemented measures emphasizing the utilization of
market forces for economic reform and the reduction of state ownership of
productive assets, and the establishment of corporate governance in business
enterprises; however, a substantial portion of productive assets in China are
still owned by the Chinese government.  In addition, the Chinese
government continues to play a significant role in regulating industry
development by imposing industrial policies.  It also exercises
significant control over China's economic growth through the allocation of
resources, the control of payment of foreign currency-denominated obligations,
the setting of monetary policy and the provision of preferential treatment to
particular industries or companies.




We
may have difficulty establishing adequate management, legal and financial
controls in China.




China
historically has not adopted a Western style of management and financial
reporting concepts and practices, as well as in modern banking, computer and
other control systems.  We may have difficulty in hiring and retaining
a sufficient number of qualified employees to work in China.  As a
result of these factors, we may experience difficulty in establishing
management, legal and financial controls, collecting financial data and
preparing financial statements, books of account and corporate records and
instituting business practices that meet Western standards.




Our
bank accounts are not insured or protected against loss.




We
maintain our cash with various banks and trust companies located in
China.  Our cash accounts are not insured or otherwise
protected.  Should any bank or trust company holding our cash deposits
become insolvent, or if we are otherwise unable to withdraw funds, we would lose
the cash on deposit with that particular bank or trust company.





As
we have limited business insurance coverage in China, any loss which we suffer
may not be insured or may be insured to only a limited extent.




The
insurance industry in China is still in an early stage of development and
insurance companies located in China offer limited business insurance
products.  In the event of damage or loss to our properties, our
insurance may not provide as much coverage as if we were insured by insurance
companies in the United States.




19




Tax
laws and regulations in China are subject to substantial revision, some of which
may adversely affect our profitability.




The
Chinese tax system is in a state of flux, and it is anticipated that China's tax
regime will be altered in the coming years.  Tax benefits that we
presently enjoy may not be available to us in the wake of these changes, and we
could incur tax obligations to the Chinese government that are significantly
higher than currently anticipated.  These increased tax obligations
could negatively impact our financial condition and our revenues, gross margins,
profitability and results of operations may be adversely affected as a
result.




Certain
tax exemptions that we presently enjoy in China are scheduled to expire over the
next several years.




As a
substantial portion of our operations are located in a privileged economic zone,
we are entitled to certain tax benefits.  When these exemptions
expire, our income tax expenses will increase, reducing our net income below
what it would be if we continued to enjoy these exemptions.




We
may face judicial corruption in China.




Another
obstacle to foreign investment in China is corruption.  There is no
assurance that we will be able to obtain recourse in any legal disputes with
suppliers, customers or other parties with whom we conduct business, if desired,
through China’s poorly developed and sometimes corrupt judicial
systems.





If
relations between the United States and China worsen, investors may be unwilling
to hold or buy our stock and our stock price may decrease.




At
various times during recent years, the United States and China have had
significant disagreements over political and economic
issues.  Controversies may arise in the future between these two
countries.  Any political or trade controversies between the United
States and China, whether or not directly related to our business, could reduce
the price of our common stock.




China
could change its policies toward private enterprise or even nationalize or
expropriate private enterprises.




Our
business is subject to significant political and economic uncertainties and may
be affected by political, economic and social developments in
China.  Over the past several years, the Chinese government has
pursued economic reform policies including the encouragement of private economic
activity and greater economic decentralization.  The Chinese
government may not continue to pursue these policies or may significantly alter
them to our detriment from time to time with little, if any, prior
notice.




Changes
in policies, laws and regulations or in their interpretation or the imposition
of confiscatory taxation, restrictions on currency conversion, restrictions or
prohibitions on dividend payments to stockholders, or devaluations of currency
could cause a decline in the price of our commonstock, should a market for our common stock ever
develop.  Nationalization or expropriation could even result in the
total loss of your investment.




The
nature and application of many laws of China create an uncertain environment for
business operations and they could have a negative effect on us.




The legal
system in China is a civil law system.  Unlike the common law system,
the civil law system is based on written statutes in which decided legal cases
have little value as precedents.  In 1979, China began to promulgate a
comprehensive system of laws and has since introduced many laws and regulations
to provide general guidance on economic and business practices in China and to
regulate foreign investment.  Progress has been made in the
promulgation of laws and regulations dealing with economic matters such as
corporate organization and governance, foreign investment, commerce, taxation
and trade.  The promulgation of new laws, changes of existing laws and
the abrogation of local regulations by national laws could cause a decline in
the price of our common stock.  In addition, as these laws,
regulations and legal requirements are relatively recent, their interpretation
and enforcement involve significant uncertainty.




As
we import goods into and export goods out of China, fluctuation of the Renminbi
may affect our financial condition by affecting the volume of cross-border money
flow.




20




Although
we use the United States dollar for financial reporting purposes, most of the
transactions effected by our operating subsidiaries are denominated in China’s
Renminbi.  The value of the Renminbi fluctuates and is subject to
changes in China’s political and economic conditions. Future movements in
the exchange rate of the Renminbi could adversely affect our financial condition
as we may suffer financial losses when transferring money raised outside of
China into the country or paying vendors for services performed outside of
China.





We
may not be able to obtain regulatory approvals for our products.




The
manufacture and sale of our products in China is regulated by The People's
Republic of China and the local provincial governments.  Although our
licenses and regulatory filings are up to date, the uncertain legal environment
in China and our industry may be vulnerable to local government agencies or
other parties who wish to renegotiate the terms and conditions of, or terminate
their agreements or other understandings with us.




It
will be extremely difficult to acquire jurisdiction and enforce liabilities
against our officers, directors and assets based in China.




As our
executive officers and several of our directors, including the Chairman of our
Board of Directors, are Chinese citizens, it may be difficult, if not
impossible, to acquire jurisdiction over these persons in the event a lawsuit is
initiated against us and/or our officers and directors by a stockholder or group
of stockholders in the United States.  Also, because our operating
subsidiaries and assets are located in China, it may be extremely difficult or
impossible for individuals to access those assets to enforce judgments rendered
against us or our directors or executive offices by United States
courts.  In addition, the courts in China may not permit the
enforcement of judgments arising out of United States federal and state
corporate, securities or similar laws.  Accordingly, United States
investors may not be able to enforce judgments against us for violation of
United States securities laws.





Risks
Related to Our Securities




Our
common stock price is subject to significant volatility, which could result in
substantial losses for investors.




Prices
for our shares are determined in the marketplace and may accordingly be
influenced by many factors, including, but not limited to:




l
            limited
      “public float” in the hands of a small number of persons whose sales or
      lack of sales could result in positive or negative pricing pressure on the
      market price for our common stockl
            technological
      innovations or new products and services by us or our
      competitors;l
            intellectual
      property disputes;l
            additions
      or departures of key personnel;l
            the
      depth and liquidity of the market for the shares;l
            quarter-to-quarter
      variations in our operating results;l
            announcements
      about our performance as well as the announcements of our competitors
      about the performance of their businesses;l
            investors’
      evaluations of our future prospects and the food industry
      generally;l
            changes
      in earnings estimates by, or failure to meet the expectations of,
      securities analysts;l
            our
      dividend policy; andl
            general
      economic and market conditions.




Additionally,
the stock market often experiences significant price and volume fluctuations
that are unrelated to the operating performance of the specific companies whose
stock is traded.  These market fluctuations could adversely affect our
share’s trading price.




The price
at which investors purchase shares of our common stock may not be indicative of
the price that will prevail in the trading market.  Investors may be
unable to sell their shares of common stock at or above their purchase price,
which may result in substantial losses.




21




Shares
of our common stock lack a significant trading market.




Shares of
our common stock are not eligible as yet for trading on any national securities
exchange.  Our common stock may be   quoted in the
over-the-counter market on the OTC Bulletin Board or in what are commonly
referred to as “pink sheets.”  These markets are highly
illiquid.  Although we intend to apply for listing of our common stock
on an exchange, there can be no assurance if and when the initial listing
criteria could be met or if such application would be granted, or that the
trading of the common stock will be sustained.  There is no assurance
that an active trading market in our common stock will develop, or if such a
market develops, that it will be sustained.  In addition, there is a
greater chance for market volatility for securities that are quoted on the OTC
Bulletin Board as opposed to securities that trade on a national
exchange.  This volatility may be caused by a variety of factors,
including the lackof readily available quotations, the
absence of consistent administrative supervision of “bid” and “ask” quotations
and generally lower trading volume.  As a result, an investor may find
it more difficult to dispose of, or to obtain accurate quotations as to the
market value of, the common stock, or to obtain coverage for significant news
events concerning us, and the common stock would become substantially less
attractive for margin loans, for investment by financial institutions, as
consideration in future capital raising transactions or other
purposes.




Future
sales of shares of our common stock by our stockholders could cause our stock
price to decline.




We cannot
predict the effect, if any, that market sales of shares of our common stock or
the availability of shares of common stock for sale will have on the market
price prevailing from time to time.  If our stockholders sell
substantial amounts of our common stock in the public market upon the
effectiveness of a registration statement, or upon the expiration of any holding
period under Rule 144, such sales could create a circumstance commonly referred
to as an “overhang” and in anticipation of which the market price of our common
stock could fall.  The existence of an overhang, whether or not sales
have occurred or are occurring, also could make it more difficult for our
Company to  raise additional financing through the sale of equity or
equity-related securities in the future at a time and price that we deem
reasonable or appropriate.  The shares of common stock issued in the
Share Exchange will be freely tradable upon the earlier of (i) effectiveness of
a registration statement covering such shares; and (ii) the date on which such
shares may be sold without registration pursuant to Rule 144 under the
Securities Act and the sale of such shares could have a negative impact on the
price of our common stock.





We
may issue additional shares of our capital stock or debt securities to raise
capital or complete acquisitions, which would reduce the equity interest of our
stockholders.




Our
articles of incorporation authorize the issuance of up to 75,000,000 shares of
common stock, par value $.001 per share.  After giving effect to Share
Exchange, there were approximately 52,400,000 authorized and unissued shares of
our common stock which have not been reserved and are available for future
issuance as of December 31, 2008.  Although we have no commitments as
of this date to issue our securities in connection with an acquisition, we
may issue a substantial number of additional shares of our common stock, to
complete a business combination or to raise capital.  The issuance of
additional shares of our common stock:




l
            may
      significantly reduce the equity interest of our existing stockholders;
      andl
            may
      adversely affect prevailing market prices for our common
      stock.




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.




Our
common stock may be subject to the “penny stock” rules adopted under Section
15(g) of the Securities Exchange Act of 1934.  The penny stock rules
apply to non-NASDAQ companies whose common stock trades at less than $5.00 per
share or that have tangible net worth of less than $5,000,000 ($2,000,000 if the
company has been operating for three or more years).  The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from those rules, to deliver a standardized risk disclosure
document prepared by the Securities and Exchange Commission, which contains the
following:




l
            a
      description of the nature and level of risk in the market for penny stocks
      in both public offerings and secondary trading;l
            a
      description of the broker’s or dealer’s duties to the customer and of the
      rights and remedies available to the customer with respect to violation to
      such duties or other requirements of securities
  laws;  22
  l
            a
      brief, clear, narrative description of a dealer market, including “bid”
      and “ask” prices for penny stocks and the significance of the spread
      between the “bid” and “ask” price;l
            A
      toll-free telephone number for inquiries on disciplinary
      actions;l
            definitions
      of significant terms in the disclosure document or in the conduct of
      trading in penny stocks; andl
            such
      other information and is in such form (including language, type, size and
      format), as the Securities and Exchange Commission shall require by rule
      or regulation.




Prior to
effecting any transaction in penny stock, the broker-dealer also must provide
the customer with the following:





l
            the
      bid and offer quotations for the penny stock;l
            the
      compensation of the broker-dealer and our salesperson in the
      transaction;l
            the
      number of shares to which such bid and ask prices apply, or other
      comparable information relating to the depth and liquidity of the market
      for such stock; andl
            monthly
      account statements showing the market value of each penny stock held
      in
              the
      customer’s account.





In
addition, the penny stock rules require that, prior to a transaction in a penny
stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser’s written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability
statement.




Due to
the requirements of penny stock rules, many brokers have decided not to trade
penny stocks. As a result, the number of broker-dealers willing to act as market
makers in such securities is limited.  If we remain subject to the
penny stock rules for any significant period, that could have an adverse effect
on the market, if any, for our securities.  Moreover, if our
securities are subject to the penny stock rules, investors will find it more
difficult to dispose of our securities.





We
have not paid dividends in the past and do not expect to pay dividends in the
future.  Any return on investment may be limited to the value of our
common stock.




We have
never paid cash dividends on our common stock and do not anticipate doing so in
the foreseeable future.  The payment of dividends on our common stock
will depend on earnings, financial condition and other business and economic
factors affecting it at such time as the board of directors may consider
relevant.  If we do not pay dividends, our common stock may be less
valuable because a return on your investment will only occur if our stock price
appreciates.




Capital
outflow policies in China may hamper our ability to declare and pay dividends to
our shareholders.




China has
adopted currency and capital transfer regulations.  These regulations
may require us to comply with complex regulations for the movement of
capital.  Although our management believes that we will be in
compliance with these regulations, should these regulations or the
interpretation of them by courts or regulatory agencies change, we may not be
able to pay dividends to our shareholders outside of China.  In
addition, under current Chinese law, we must retain a reserve equal to 10
percent of net income after taxes, not to exceed 50 percent of registered
capital.  Accordingly, this reserve will not be available to be
distributed as dividends to our shareholders.  We presently do not
intend to pay dividends in the foreseeable future.  Our management
intends to follow a policy of retaining all of our earnings to finance the
development and execution of our strategy and the expansion of our
business.





Taxation




We
will not obtain an opinion of legal counsel regarding the United States income
tax consequences of an investment in our securities.




We will
not obtain an opinion of counsel regarding the U.S. income tax consequences of
investing in our securities including whether we will be treated as a company
for U.S. income tax purposes. Recent changes in tax laws have not, as yet, been
the subject of administrative or judicial scrutiny or interpretation. Moreover,
there is no assurance that future legislation may not further affect the tax
consequences of an investment in our securities.




23




INVESTORS
ARE URGED TO CONSULT WITH THEIR TAX ADVISORS REGARDING THE POSSIBLE U.S.
FEDERAL, STATE, AND LOCAL TAX CONSEQUENCES OF INVESTING IN OUR
SECURITIES.





Item
2 - Properties


Description of
Property




1.
            Land
      usage rights:




Deer has
signed 50 year lease agreements for the properties in Yangjiang on which their
manufacturing, office, and employee dorms are located. The properties and
associated structures are as shown in the tables below:





Certificate
      No.
              Issuance
      Authority
              Location
              Measurement
                
                
                
                
                (m2)
              Designated
      Use
              Valid
      Until(2005)
      No1400008
              Yangjiang
                government
              Road
      5, District 3, Zhan Gang
                Science
      & Technology
                Park,Yangjiang
      High&New
                Technological
      Development
                Zone
              31216.95
              Industrial
              2050.7.22(2002)
      No11325
              Yangjiang
                government
              No.1,
      District 3, Zhan Gang
                Science
      & Technology
                Park,Yangjiang
      High&New
                Technological
      Development
                Zone
              33728
              Industrial
              2052.12.6(2004)
      No100
              Yangjiang
                government
              Room
      501, Block A, Bi Tao
                Garden,
      Zhapo Town, Yangjiang
                City.
              185.83
              Commercial
                Housing
              2062.9.30








2.
            Buildings:




Certificate
                No.
              Issuance
                Authority
              Location
              Measurement
                
                
                
                
                (m2)
              Designated
                Use
              Valid
      UntilC
      2329137
              Yangjiang
                government
              No.1,
      District 3, Zhan Gang
                Science
      & Technology
                Park,Yangjiang
      High&New
                Technological
      Development
                Zone.
              15030
              Industrial
              2052.12.6C
      1871973
              Yangjiang
                government
              Room
      501, Block A, Bi Tao
                Garden,
      Zhapo Town,
                Yangjiang City.
              92.44
              Housing
              2062.9.30C
      1871974
              Yangjiang
                government
              Room
      501, Block A, Bi Tao
                Garden,
      Zhapo Town,
                Yangjiang City.
              92.44
              Housing
              2062.9.30




We believe that our facilities are adequate for
our current operations for fiscal 2009.




24




Item
3 - Legal Proceedings





From time
to time, we may become involved in various lawsuits and legal proceedings, which
arise in the ordinary course of business.  However, litigation is
subject to inherent uncertainties and an adverse result in these or other
matters may arise from time to time that may have an adverse affect on our
business, financial conditions, or operating results.  We are
currently not aware of any such legal proceedings or claims that will have,
individually or in the aggregate, a material adverse affect on our business,
financial condition or operating results.





Item
4 - Submission of Matters to a Vote of Security Holders





None.








PART
II





Item
5 - Market for the Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities





Beginning
on May 16, 2007, our shares of common stock were quoted on the OTC Bulletin
Board on under the symbol "TGEV".  No trades of our common stock
occurred through the facilities of the OTC Bulletin Board until September 9,
2008. Our common stock became eligible for quotation on the OTC Bulletin
Board under the symbol “DCPI” on September 5, 2008.  The following
table sets forth the range of the high and low bid prices per share of our
common stock for each quarter (or portion thereof) beginning on May 16, 2007 as
reported by the OTC Bulletin Board.  These quotations represent
inter-dealer prices, without retail mark-up, markdown, or commission and may not
represent actual transactions.





High
                                    
                                    
                                    LowFiscal
      year ended December 31, 2007Quarter
      ended March 31, 2007
                                    
                                    $
                                    .25
                                    
                                    
                                    $
                                    .25Quarter
      ended June 30, 2007
                                    
                                    $
                                    .25
                                    
                                    
                                    $
                                    .25Quarter
      ended September 30, 2007
                                    
                                    $
                                    .25
                                    
                                    
                                    $
                                    .25Quarter
      ended December 31, 2007
                                    
                                    $
                                    .25
                                    
                                    
                                    $
                                    .25Fiscal
      year ended December 31, 2008
                                    
                                    $
                                    .25
                                    
                                    
                                    $
                                    .25Quarter
      ended March 31, 2008
                                    
                                    $
                                    .25
                                    
                                    
                                    $
                                    .25Quarter
      ended June 30, 2008
                                    
                                    $
                                    .25
                                    
                                    
                                    $
                                    .25Quarter
      ended September 30, 2008
                                    
                                    $
                                    4.00
                                    
                                    
                                    $
                                    2.25Quarter
      ended December 31, 2008
                                    
                                    $
                                    4.00
                                    
                                    
                                    $
                                    .51





On March
20, 2009, there were approximately 50 stockholders of record based on
information provided by our transfer agent.







We have
never declared or paid cash dividends on our common stock and do not anticipate
paying any cash dividends on our common stock in the foreseeable
future.





We did
not repurchase any of our common stock during 2008.


25


Dividends





We have
never paid any dividends on the common stock.  We currently anticipate
that any future earnings will be retained for the development of our business
and do not anticipate paying any dividends on the common stock in the
foreseeable future.





Securities authorized for issuance under equity
compensation plans





During
the year ended December 31, 2008, we did not have a formal equity compensation
plan in effect.  We did not grant any equity based compensation awards
during the year ended December 31, 2008 nor do we have any equity compensation
plan not previously approved by security holders.





The
following table provides aggregate information as of December 31, 2008 with
respect to all compensation plans (including individual compensation
arrangements) under which equity securities are authorized for
issuance.





Equity
Compensation Plan Information





Plan
      Category
                  
                  (a)
                    Number
      of
                    Securities
      to be
                    Issued
      Upon
                    Exercise
      of Outstanding
                    Options
                  
                  
                  (b)
                    Weighted-
                    Average
                    Exercise
      Price
                    of
      Outstanding
                    Options
                  
                  
                  (c)
                    Number
      of
                    Securities
                    Remaining
                    Available
                    for
      Future
                    Issuance
      Under
                    Equity
                    Compensation
                    Plans
      (excluding
                    securities
      reflected
                    in
      column (a))Equity
      compensation plans approved by security holders
                  
                  
                  -0-
                  
                  
                  
                  N/A
                  
                  
                  
                  -0-Equity
      compensation plans not approved by security holders
                  
                  
                  -0-
                  
                  
                  $
                  N/A
                  
                  
                  
                  -0-Total
                  
                  
                  -0-
                  
                  
                  $
                  N/A
                  
                  
                  
                  -0-








Recent
Sales of Unregistered Securities








We
completed an offering of 4,500,000 shares of our common stock at a price of
$0.001 per share to a total of seven purchasers on August 31,
2006.  The total amount received from this offering was
$4,500.  We completed this offering pursuant to Regulation S under the
Securities Act.  Of these shares, 3,000,000 shares were issued Artiom
Balykin, our former president and chief executive officer.





The
remaining purchasers in this offering were as follows:




Name
      of Subscriber
                        
                        Number
      of SharesElena
      Avdasseva
                        
                        
                        250,000Ludmila
      Balykin
                        
                        
                        250,000Jessamine
      Wong
                        
                        
                        250,000Chih-Chun
      Wu
                        
                        
                        250,000Albert
      Au
                        
                        
                        250,000Gan
      Lee Sue
                        
                        
                        250,000




26





We
completed an offering of 750,000 shares of our common stock at a price of $0.02
per share to a total of 22 purchasers on November 4, 2006.  The total
amount received from this offering was $15,000.  We completed this
offering pursuant to Regulation S under the Securities Act. The purchasers were
as follows:




Name
      of Subscriber
                          Number
      of SharesArthur
      Goutsouliak
                          25,000Braden
      Lichti
                          25,000Alexander
      Balykin
                          25,000Nikolai
      Avdassev
                          25,000Olena
      Moroz
                          25,000Ryan
      Nickson
                          25,000Albina
      Parrik
                          25,000Vartan
      Kaprielov
                          25,000Georgi
      Parrik
                          25,000Aivo
      Kutter
                          25,000Irina
      Balykin
                          50,000Caz
      Vasher
                          50,000Dmitry
      Lyakutin
                          50,000Maya
      Raskovic
                          50,000Oxana
      Avdaseva
                          50,000Tamara
      Ishutkina
                          50,000Andrey
      Simonenko
                          50,000Elena
      Dannikova
                          50,000Olga
      Malitski
                          50,000Anna
      Grabarnik
                          25,000Roland
      Asmar
                          25,000




On
February 6, 2009, we sold an aggregate of 645,625 Units at an offering price of
$0.80 per unit of for aggregate gross proceeds of approximately $508,500 to each
of the following persons:





Luis
      A. CarpioBu
      Qian BaiMichael
      J. MazzaC.
      Robert ShearerStrong
      Growth Capital, Ltd.Kenneth
      F. TenneyHans
      F.R. WiegandYue
      Ping Xu





Each Unit
consisted of one share of our common stock and a three year warrant to purchase
15% of one share of our common stock at an exercise price of $1.50 per share.
The Units sold represent an aggregate of 645,625 shares of our common stock and
warrants to purchase 96,844 shares of our common stock. The offering and sale of
the Units was exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) of the Securities Act and Regulation D and Regulation S
under the Securities Act. We compensated Martinez Ames Securities as a placement
agent that assisted in the sale of the Units in this private placement offering
by (i) paying cash equal to 9% of the gross proceeds from the sales of Units
placed and (ii) issuing them warrants to purchase that number of shares of
Common Stock equal to 10% of the Units placed. A total of $45,765 in cash was
paid to Martinez Ames Securities and warrants to purchase 64,562 shares of our
common stock.





The
Warrants granted to these placement agents had the same terms and conditions as
the Warrants granted in the offering.




Item
6 - Selected Financial Data





Not
applicable.





Item 7 - Management’s Discussion and Analysis of
Financial Condition and Results of Operations




27





CAUTIONARY STATEMENT FOR FORWARD-LOOKING
STATEMENTS




This
Annual Report on Form 10-K  includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.  We
have based these forward-looking statements on our current expectations and
projections about future events.  These forward-looking statements are
subject to known and unknown risks, uncertainties and assumptions about us that
may cause our actual results, levels of activity, performance or achievements to
be materially different from any future results, levels of activity, performance
or achievements expressed or implied by such forward-looking
statements.  In some cases, you can identify forward-looking
statements by terminology such as “may,” “will,” “should,” “could,” “would,”
“expect,” “plan,” anticipate,” believe,” estimate,” continue,” or the negative
of such terms or other similar expressions.  Factors that might cause
or contribute to such a discrepancy include, but are not limited to, those
listed under the heading “Risk Factors” and those listed  in our other
Securities and Exchange Commission filings.  The following discussion
should be read in conjunction with our Financial Statements and related Notes
thereto included elsewhere in this report. Throughout this Quarterly Report we
will refer to Deer Consumer Product, Inc.  as "Deer," the "Company,"
"we," "us," and "our."





Item
7.  Management’s Discussion and Analysis of Financial Condition and
Results of Operations





Overview





On
September 3, 2008, we entered into a share exchange agreement and plan of
reorganization with Deer International Group Limited (“Deer International”), a
company incorporated under the laws of British Virgin Islands (“BVI”) on
December 3, 2007 and holder of 100% of the shares of Winder Electrical Company,
Ltd. (“Winder”) since March 11, 2008.  Winder has a 100% owned
subsidiary, Delta International, Ltd., (“Delta”).  Winder and Delta
were formed and incorporated in the Guangdong Province of the PRC on July 20,
2001 and February 23, 2006, respectively.





Pursuant
to the share exchange agreement, we acquired from Deer International 50,000
ordinary shares, consisting of all of its issued and outstanding capital stock,
in exchange for the issuance of an aggregate of 18,050,000 shares of our common
stock.  Concurrently with the closing of the transactions contemplated
by the share exchange agreement and as a condition thereof, we entered into an
agreement with Crescent Liu, our former Director and Chief Executive Officer,
pursuant to which he returned 5,950,000 shares of our common stock for
cancellation. Mr. Liu was not compensated in any way for the cancellation of his
shares of our common stock. Upon completion of the foregoing transactions, we
had an aggregate of 22,600,000 shares of common stock issued and
outstanding.  In connection with the above transaction we changed our
name to Deer Consumer Products, Inc. on September 3, 2008.





The
exchange of shares with Deer International was accounted for as a reverse
acquisition under the purchase method of accounting since Deer International
obtained control of our company. Accordingly, the merger of the Deer
International into us was recorded as a recapitalization of Deer International,
Deer International being treated as the continuing entity. The historical
financial statements presented are the consolidated financial statements of Deer
International. The share exchange agreement has been treated as a
recapitalization and not as a business combination; therefore, no pro forma
information is disclosed. At the date of this transaction, the net liabilities
of the legal acquirer were $0.





As a
result of the reverse merger transactions described above the historical
financial statements presented are those of Deer International, the operating
entities.





We are
engaged in the manufacture, marketing, distribution and sale of home and kitchen
electrical appliances (blenders, food processors, choppers, juicers,
etc.).  The Company manufactures its products out of YangJiang, China
and operates corporate functions in Nanshan, Shenzhen, China.





We
operate through our two wholly-owned subsidiaries, Winder Electric Co. Ltd.
(“Winder”), which is a wholly-owned foreign enterprise (“WOFE”) and responsible
for research, production and delivery of goods, and Delta International Limited
(“Delta”), which is a wholly owned subsidiary of Winder and primarily
responsible for sales. We have traditionally acted as both an original equipment
manufacturer (“OEM”) and original design manufacturer (“ODM”) for international
markets with 90%
and 95%
of sales made overseas in 2007 and 2008, of which North America and Europe
accounted for approximately 34%
and 18%
in 2008, respectively




28




Critical
Accounting Policies





In
presenting our financial statements in conformity with accounting principles
generally accepted in the United States, we are required to make estimates and
assumptions that affect the amounts reported therein. Several of the estimates
and assumptions we are required to make relate to matters that are inherently
uncertain as they pertain to future events. However, events that are outside of
our control cannot be predicted and, as such, they cannot be contemplated in
evaluating such estimates and assumptions. If there is a significant unfavorable
change to current conditions, it will likely result in a material adverse impact
to our results of operations, financial position and in liquidity. We believe
that the estimates and assumptions we used when preparing our financial
statements were the most appropriate at that time. Presented below are those
accounting policies that we believe require subjective and complex judgments
that could potentially affect reported results.





Use of Estimates. Our
discussion and analysis of our financial condition and results of operations are
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosures of contingent assets and liabilities. On an
ongoing basis, we evaluate our estimates, including those related to impairment
of long-lived assets, and allowance for doubtful accounts. We base our estimates
on historical experience and on various other assumptions that we believe to be
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; however, we believe that
our estimates, including those for the above-described items, are
reasonable.





Areas
that require estimates and assumptions include valuation of accounts receivable
and inventory, determination of useful lives of property and equipment,
estimation of certain liabilities and sales returns.





Accounts Receivable. We
maintain reserves for potential credit losses on accounts receivable. Management
reviews the composition of accounts receivable and analyzes historical bad
debts, customer concentrations, customer credit worthiness, current economic
trends and changes in customer payment patterns to evaluate the adequacy of
these reserves.





Advances to Suppliers. We
make advances to certain vendors for purchase of its material. The advances to
suppliers are interest free and unsecured.





Inventory. Inventory is
valued at the lower of cost (determined on a weighted average basis) or market.
We compare the cost of inventories with the market value and allowance is made
for writing down the inventories to their market value, if lower.





Long-Lived Assets. We apply
the provisions of Statement of Financial Accounting Standards No. 144,
“Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”),
which addresses financial accounting and reporting for the impairment or
disposal of long-lived assets and supersedes SFAS No. 121, “Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,”
and the accounting and reporting provisions of APB Opinion No. 30, “Reporting
the Results of Operations for a Disposal of a Segment of a Business.” We
periodically evaluate the carrying value of long-lived assets to be held and
used in accordance with SFAS 144. SFAS 144 requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets’ carrying amounts. In that event, a loss is
recognized based on the amount by which the carrying amount exceeds the fair
market value of the long-lived assets. Loss on long-lived assets to be disposed
of is determined in a similar manner, except that fair market values are reduced
for the cost of disposal. Based on our review, we believe that to date there
were no significant impairments of its long-lived assets.





Property and equipment:
Property and equipment are stated at cost. Expenditures for maintenance and
repairs are charged to earnings as incurred; additions, renewals and betterments
are capitalized. When property and equipment are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the
respective accounts, and any gain or loss is included in operations.
Depreciation of property and equipment is provided using the straight-line
method. For substantially all assets with estimated lives as
follows:





Buildings
                
                
                5-20
      yearsEquipment
                
                
                5-10
      yearsVehicles
                
                
                5
      yearsOffice
      equipment
                
                
                5-10
      years




29




Revenue Recognition. Our
revenue recognition policies are in compliance with Staff accounting bulletin
(SAB) 104. Sales revenue is recognized at the date of shipment to customers when
a formal arrangement exists, the price is fixed or determinable, the delivery is
completed, no other significant obligations exist and collectability is
reasonably assured. Payments received before all of the relevant criteria for
revenue recognition are satisfied are recorded as unearned revenue.





Foreign Currency Transactions and
Comprehensive Income. Accounting principles generally require that
recognized revenue, expenses, gains and losses be included in net income.
Certain statements, however, require entities to report specific changes in
assets and liabilities, such as gain or loss on foreign currency translation, as
a separate component of the equity section of the balance sheet. Such items,
along with net income, are components of comprehensive income. The functional
currency of the Company is Chinese Renminbi. The unit of Renminbi is in Yuan.
Translation gains are classified as an item of other comprehensive income in the
stockholders’ equity section of the balance sheet. Other comprehensive income in
the statements of income and other comprehensive income includes translation
gains recognized each period.





Currency
Hedging.  We have entered into a forward exchange agreement
with the Bank of China, whereby we have agreed to sell US dollars to the Bank of
China at a certain contractual rates. Since the contractual rate at which we
sells US dollars to the Bank of China was greater than the exchange rate on the
date of each exchange transaction, we have recognized foreign exchange
gains.








Results
of Operations for the Year Ended December 31, 2008 Compared to the Year Ended
December 31, 2007:





Years
      Ended December 31,2008
                  
                  
                  2007
                  
                  
                  $
      Change
                  
                  
                  %
      ChangeRevenues
                  
                  $
                  43,784,935
                  
                  
                  $
                  33,476,259
                  
                  
                  $
                  10,308,676
                  
                  
                  
                  30.8
                  %Cost
      of Revenue
                  
                  
                  34,125,019
                  
                  
                  
                  26,249,009
                  
                  
                  
                  7,876,010
                  
                  
                  
                  30.0
                  %Gross
      Profits
                  
                  
                  9,659,916
                  
                  
                  
                  7,227,250
                  
                  
                  
                  2,432,666
                  
                  
                  
                  33.7
                  %Selling,
      General and Administrative
                  
                  
                  5,421,580
                  
                  
                  
                  3,306,507
                  
                  
                  
                  2,115,073
                  
                  
                  
                  64.0
                  %Interest
      Expense and Financing Costs
                  
                  
                  558,663
                  
                  
                  
                  114,555
                  
                  
                  
                  444,108
                  
                  
                  
                  387.7
                  %Foreign
      Exchange gain
                  
                  
                  959,943
                  
                  
                  
                  90,707
                  
                  
                  
                  869,236
                  
                  
                  
                  958.3
                  %Income
      Tax Expense
                  
                  
                  1,302,045
                  
                  
                  
                  615,568
                  
                  
                  
                  686,477
                  
                  
                  
                  111.5
                  %Net
      Income
                  
                  
                  3,356,784
                  
                  
                  
                  3,421,592
                  
                  
                  
                  (64,808
                  )
                  
                  
                  -1.9
                  %





Revenues





Our
revenue for the year ended December 31, 2008 was $43,784,935 an increase of
$10,308,676 or 30.8% from $33,476,259 for the year ended December 31,
2007.  The increase in revenues was due to an increase in sales of our
core products: blenders and juice extractors.





Cost
of Revenue





Our cost
of revenue for the year ended December 31, 2008 increased by $7,876,010 or 30.0%
from $26,249,009 for the year ended December 31, 2007 to $34,125,019 for the
year ended December 31, 2008. The increased costs in 2008 were due to the
increases in sales.





Gross
Profit





Our gross
margin for the year ended December 31, 2008 was 22.1% compared to 21.6% for
2007.


The
increase in gross margin can be attributed to success in controlling variable
costs such as the design of new products and improving our sales order selection
capability to fit market needs.





Selling,
General and Administrative Expenses




30




Selling,
general and administrative expenses for the year ended December 31, 2008
increased by $2,115,073 or 64.0%, from $3,306,507 for the year ended December
31, 2007 to $5,421,580 for the year ended December 31, 2008.  Selling
expenses for the year ended December 31, 2008 increased by 88.0% or $1,336,464
in comparison to the same period in 2007 due to due to the hiring of a new sales
company for exporting services. In addition, we commenced domestic sales of our
brand name products in China and internationally and  incurred start
up costs including, establishing a “Deer” brand name, creating a distribution
network, and marketing the Deer brand name products.  General and
administrative expenses for the year ended December 31, 2008 increased by 43.5%
or $778,609 in comparison to the same period in 2007. The increase in our
operating expenses reflects the additional expenses incurred as a result of our
increased sales and the cost of being a publicly held
company.  Operating expenses include overhead expenses such as rent,
management and staff salaries, general insurance, marketing, accounting, legal
and offices expenses.





Interest
and Financing Cost





Interest
and financing costs for the year ended December 31, 2008 was $558,663 compared
to $114,555 for the year ended December 31, 2007 an increase of $444,108 or
387.7%. The change is principally due to an increase in the principal amount of
short term loans and notes payable outstanding.





Foreign
Exchange Gain





Foreign
exchange gain for the year ended December 31, 2008 was $959,943 an increase of
$869,236 or 958.3%, from $90,707 for the year ended December 31,
2007.  The increase is due to favorable foreign exchange transactions
the company experienced in 2008.





Income
Tax Expense





Our
effective tax rate for the year ended December 31, 2008 was 28.0% as opposed to
15.2% for the year ended December 31, 2007.  The effective tax rate in
2007 was only 15.2% due to one of our subsidiaries paying taxes at 50% of the
normal rate due to a tax break given by the Chinese government to companies in
the high-tech industry.  In 2008, two of our subsidiaries incurred net
losses which increased the effective tax rate to 28.0%.  In 2008, our
statutory income tax rate in China was 25%.





Off-Balance
Sheet Arrangements





There
were no off-balance sheet arrangements during the year ended December 31, 2008
that have, or are reasonably likely to have, a current or future affect on our
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to our
interests.





Liquidity
and Capital Resources





Cash
Flows





On
November 30, 2007, we decided to increase paid-in capital by $2,923,688 through
a board meeting. The new capital was from retained earnings distributable to
shareholders.




At
December 31, 2008, we had $2,782,026 in cash and cash equivalents on
hand.  Our principal demands for liquidity are to increase capacity,
inventory purchase, sales distribution, and general corporate
purposes.  We anticipate that the amount of cash we have on hand as of
the date of this report as well as the cash that we will generate from
operations will satisfy these requirements.





Net cash
flows provided by operating activities for the year ended December 31, 2008 was
$3,037,556 compared to $432,890 for the year ended December 31, 2007. This
change in cash flows from operating activities was due mainly to increases in
accounts payable and unearned revenue, offset by an increase in accounts
receivable, inventories and advances to suppliers.




We used
$3,838,893 in investing activities during the year ended December 31, 2008 for
the acquisition of property and equipment and an increase in our construction in
process.





Cash
provided from financing activities in the year ended December 31, 2008 was
$1,945,584 which included proceeds from a short term loan and short term notes
payable, and advances from a related party, offset by a payment to a shareholder
and repayment of notes payable.  The increase in the loan and note
balances is principally due to the increase in accounts
receivable.  As accounts receivables are collected these obligations
are paid down.




31




Assets





As of
December 31, 2008, our accounts receivable increased by $5,069,230 compared with
the balance as of December 31, 2007. The increase in accounts receivable during
the year ended December 31, 2008 was due primarily to increased
sales.  We intend to continue our efforts to maintain accounts
receivable at reasonable levels in relation to our sales.  Inventory
increased by $3,527,547 in the same period and advances to suppliers increased
by 2,198,146.





We
experienced a decrease in due from shareholder, short-term investments, and
restricted cash of $1,383,124, $107,307 and $250,286, respectively during year
ended December 31, 2008.





Liabilities





Our
accounts payable and other payables increased by $6,489,032 and 195,812,
respectively, during the year ended December 31, 2008. Unearned revenues
(payments received before all the relevant criteria for revenue recognition are
satisfied) increased by $3,236,375 and tax and welfare payable increased by
$636,408 over the same period.  Short-term loans and Notes payable
(short- and long-term) increased by $1,861,410 and $728,789, respectively, due
to the receipt of proceeds from new loans entered into during the year ended
December 31, 2008.  Balances due to related parties and shareholders
were reduced by $990,792.





We intend
to meet our liquidity requirements, including capital expenditures related to
the purchase of equipment, purchase of raw materials, and the expansion of our
business, through cash flow provided by operations.




We
maintain export insurance that covers losses arising from customers’ rejection
of our products, political risk, losses arising from business credit and other
credit risks including bankruptcy, insolvency and delay in
payment.


The
majority of our revenues and expenses were denominated primarily in RMB, the
currency of the PRC.





There is
no assurance that exchange rates between the RMB and the USD will remain stable.
We do engage in currency hedging. Inflation has not had a material impact on our
business.





Recent
developments





On
February 6, 2009, we received $508,500 from the placement of units of our
securities consisting of shares of common stock, par value $.001 per share, and
stock purchase warrants (15% warrant coverage) in a private placement exempt
from registration under the Securities Act, and that the private placement will
be extended through March 31, 2009. It is intended that the proceeds of the
private placement will be used primarily for working capital.  A total
of 625,000 units, each unit representing one share of our common stock and a
three year common stock purchase warrant in the amount of 15% of the units
purchased, were sold through the end of business February 6, 2009. Each unit is
priced at $.80 with $508,500 in total having been received. Fees of (i) 9% of
the securities placed payable in cash, and (ii) a number of common stock
purchase warrants equal to 10% of the number of units placed were paid to
participating selected dealers. The stock purchase warrants have a term of three
years and are exercisable for one share of common stock at an initial exercise
price of $1.50. The securities offered in the private placement have not been
registered under the Securities Act, or any state securities laws, and unless so
registered, may not be sold in the United States except pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act and applicable state securities laws.





Item
7A - Quantitative and Qualitative Disclosures about Market Risk





Not
applicable.





Item
8 - Financial Statements and Supplementary Data





The
financial statements, together with the report thereon, of Deer Consumer
Products, Inc. as listed under Item 15 appear in a separate section of this
report beginning on page F-1.begin on page F-1 of this document.





32





Item
9 - Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure





On September 3, 2008, we dismissed Dale Matheson
Carr Hilton Labonte LLP (“DMCHL”) as our independent accountant and engaged
Goldman, Parks, Kurland, Mohidin, LLP (“GPKM”) as its new principal independent
accountant. This decision was approved by the Board of Directors of the Company.
DMCHL audited the Company’s financial statements from its July 8, 2006
(inception) through June 30, 2008.





During the past two fiscal years, there have been no
disagreements or reportable events with DMCHL on any matter of accounting
principles, or practices, financial statement disclosure or auditing scope or
procedure, which disagreements if not resolved to the satisfaction of DMCHL
would have caused them to make reference thereto in their reports on the
financial statements for such year. DMCHL report on the Company’s financial
statements for the fiscal year ended 2007 did not contain an adverse opinion or
disclaimer of opinion, and was not modified as to uncertainty, audit scope, or
accounting principles.





During
our last recent fiscal year, there have been no disagreements or reportable
events with GPKM.





Item
9A (T).  Controls and Procedures





a)        Evaluation of disclosure controls and
procedures.





An
evaluation was performed, under the supervision and with the participation of
Company management, including the Chief Executive Officer (“CEO”) and the Chief
Financial Officer (“CFO”), of the effectiveness of the design and operation of
the Company’s disclosure controls and procedures (as defined in Rules 13a-14(c)
and 15d-14(c) under the Exchange Act). Based on that evaluation, management,
including the CEO and CFO, has concluded that, as of December 31, 2008, the
Company’s disclosure controls and procedures were adequate to ensure that
information required to be disclosed in reports that the Company files or
submits under the Exchange Act has been recorded, processed, summarized and
reported in accordance with the rules and forms of the SEC.





(b)         Report
of Management on Internal Control over Financial Reporting





The
following report shall not be deemed to be filed for purposes of Section 18
of the Exchange Act or otherwise subject to the liabilities of that section,
unless we specifically state that the report is to be considered “filed” under
the Exchange Act or incorporate it by reference into a filing under the
Securities Act or the Exchange Act.




Our management is
responsible for establishing and maintaining adequate internal control over
financial reporting as defined under Exchange Act Rules 13a-15(f). Internal
control over financial reporting is designed to provide reasonable assurance
regarding the reliability of our financial reporting and preparation of
financial statements for external purposes in accordance with U.S. GAAP.
Internal control over financial reporting includes maintaining records that in
reasonable detail accurately and fairly reflect our transactions; providing
reasonable assurance that transactions are recorded as necessary for preparation
of our financial statements in accordance with U.S. GAAP; providing
reasonable assurance that our receipts and expenditures are made in accordance
with authorizations of our management and directors; and providing reasonable
assurance that unauthorized acquisition, use or disposition of our assets that
could have a material effect on our financial statements would be prevented or
detected on a timely basis. Because of its inherent limitations, internal
control over financial reporting is not intended to provide absolute assurance
that a misstatement of our financial statements would be prevented or detected.
Furthermore, management does not expect that our disclosure controls and
procedures or our internal control over financial reporting will prevent or
detect all error and fraud. Any control system, no matter how well designed and
operated, is based upon certain assumptions and can provide only reasonable, not
absolute, assurance that its objectives will be met. Further, no evaluation of
controls can provide absolute assurance that misstatements due to error or fraud
will not occur or that all control issues and instances of fraud, if any, within
the Company have been detected.





An
evaluation was performed, under the supervision and with the participation of
Company management, including the CEO and the CFO, of the effectiveness of the
design and operation of the Company’s disclosure controls and procedures (as
defined in Rules 13a-14(c) and 15d-14(c) under the Exchange Act). Based on that
evaluation, management, including the CEO and CFO, has concluded that, as of
December 31, 2008, the Company’s disclosure controls and procedures were
adequate to ensure that information required to be disclosed in reports that the
Company files or submits under the Exchange Act has been recorded, processed,
summarized and reported in accordance with the rules and forms of the
SEC.




33




This
annual report on Form 10-K does not include an attestation report of our
independent registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by our
independent registered public accounting firm pursuant to temporary rules of the
SEC that permit us to provide only management’s report in this annual
report.





(c)
Changes in Internal Control over Financial Reporting.





There
were no changes in our internal controls over financial reporting (as such term
is defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) during the
period under review that materially affected, or are reasonably likely to
material affect, our internal control over financial reporting.





Item 9B. Other
Information


None.




PART III





Item
10 - Directors, Executive Officers and Corporate Governance





Our
executive officers and directors, and their ages, positions and biographical
information, as of March 15, 2009, are as follows:





Name
                  Position
                  AgeMr.
      Ying He
                  Chairman, &
      Chief Executive Officer
                  39Mr.
      Yuehua Xia
                  Chief
      Financial Officer
                  33Mr.
      Man Wai James Chiu
                  Chief
      Operating Officer & Director
                  46Mrs.
      Yongmei Wang
                  Corporate
      Secretary
                  33





Our
directors hold office for one-year terms or until their successors have been
elected and qualified.





We do not
have a majority of independent directors, have a separately designated audit
committee nor a person designated as an audit committee member financial expert.
We do not have a majority of independent board members, separately designated
audit committee or an audit committee member financial expert because the cost
of identifying, interviewing, appointing, educating, and compensating such
persons would outweigh the benefits to its stockholders at the present time.
However we expect to appoint additional directors.





Mr. Ying He, Chairman, Chief
Executive Officer and President


Mr. He
was appointed as our Chairman, Chief Executive Officer and President on
September 3, 2008. Mr. He was one of the original founders of Winder in 2001.
From June 2006, Mr. He has served as the Director of Winder. From July 2001 to
August 2006, Mr. He served as the Chairman of Winder. Prior to that time from
August 1999 to June 2001, Mr. He worked independently to establish the initial
business plan for Winder including arrangements with future customers,
suppliers, vendors, and site determination. Prior to that time from March 1996
to July 1999, Mr. He served as CEO of Dongguan Xin Dao Mould. From March 1993 to
December 1995, Mr. He served as the Senior Manager of Hong Kong Dongjiang Group,
Inc. Mr. He obtained his MBA degree from Zhongshan University in
2005.





Mr. Yuehua Xia,
CFO


Mr. Xia
was appointed as our Chief Financial Officer on September 3, 2008. Mr. Xia was
appointed CFO of Winder and its subsidiary in November, 2006. From February 2004
to November 2006, Mr. Xia served as CFO of Shenzhen Zheng Jia Investment and
Development Co., Ltd. From March 2002 to January 2004, Mr. Xia served as Finance
Manager of ACT International Holding Ltd., (Shenzhen). From September 1996 to
February 2002 Mr. Xia served as Vice Manager of Finance for Shengxiang
Industrial Ltd., (Shenzhen). Mr. Xia obtained his Bachelor’s degree in
Accounting from Zhongnan University of Finance & Economics in
1996.





Mr. Man Wai James Chiu, COO
& Director


Mr. Chiu
was appointed as our Chief Operations Officer and Director on September 3, 2008.
Mr. Chiu was appointed COO of Winder and it subsidiary in May 2007. Prior to
that time, from January 2001 to May 2007, Mr. Chiu served as the Sourcing
Director for Hamilton Beach Proctor-Silex, Inc., in China. Mr. Chiu obtained his
B.S. in Accounting & Economics from Hong Kong University, his MBA from
Australia Charles Stuart University in 2001, and his Bachelor’s degree in Law
from the University of London in 2006.




34




Mrs. Yongmei Wang, Corporate
Secretary


Mrs. Wang
was appointed as our Corporate Secretary on September 3, 2008. Mrs. Yongmei Wang
joined Winder upon inception in 2001 as Assistant General Secretary. Mrs. Wang
obtained her Bachelor’s degree in International Trade from Xian Foreign Language
Institute in July 1995.





There are
no family relationships between any of our directors, executive officers or
other key personnel and any other of our directors, executive officers or key
personnel.





No
bankruptcy petition has been filed by or against any business of which such
person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time.  No director has been
convicted in a criminal proceeding and is not subject to a pending criminal
proceeding (excluding traffic violations and other minor offenses).




No
director has been subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking
activities.





No
director has been found by a court of competent jurisdiction (in a civil
action), the SEC or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, that has not been reversed,
suspended, or vacated.





Our Board
has implemented a process by which stockholders may send written communications
to the attention of the Board, any committee of the Board or any individual
Board member, care of our Secretary at Area 2, 1/F, Building M-6, Central
High-Tech Industrial Park, Nanshan, Shenzhen, China 518057. This centralized
process will assist the Board in reviewing and responding to stockholder
communications in an appropriate manner. The name of any specific intended Board
recipient should be noted in the communication. Our Secretary will be primarily
responsible for collecting, organizing and monitoring communications from
stockholders and, where appropriate depending on the facts and circumstances
outlined in the communication, providing copies of such communications to the
intended recipients. Communications will be forwarded to directors if they
relate to appropriate and important substantive corporate or Board matters.
Communications that are of a commercial or frivolous nature or otherwise
inappropriate for the Board’s consideration will not be forwarded to the Board.
Any communications not forwarded to the Board will be made available to any of
our independent directors upon their request. There have been no material
changes to these procedures during the last fiscal year.





Corporate
Governance, Board Composition and Board Committees





Board
Independence




Messrs.
He and Chiu do not qualify as “independent” directors, as that term is defined
by applicable listing standards of The NASDAQ Stock Market and SEC rules,
including the rules relating to the independence standards of an audit committee
and the non-employee director definition of Rule 16b-3 promulgated under the
Exchange Act.  As a requirement to listing the Company’s common stock
on The NASDAQ Capital Market or other exchange, the Company intends to add
independent directors.  The board’s composition (and that of its
committees) will be subject to the corporate governance provisions of its
primary trading market, including the requirement for appointment of independent
directors in accordance with the Sarbanes-Oxley Act of 2002, and regulations
adopted by the SEC and NASD pursuant thereto.




Director
Compensation




We do not
currently compensate our directors for acting as such, although we may do so in
the future, including with cash and/or equity.  We reimburse our
directors for reasonable expenses incurred in connection with their service as
directors.  As of December 31, 2008, none of our directors received
any compensation from us.





Code
of Ethics




35




We intend
to adopt a code of ethics that applies to our officers, directors and employees,
including our Chief Executive Officer and Chief Financial Officer, but have not
done so to date.





Board
Committees and Meetings





Audit
Committee





We intend
to establish an audit committee of the board of directors, which will consist of
independent directors, of which at least one director will qualify as a
qualified financial expert as defined in Item 407(d)(5)(ii) of Regulation
S-K.  The audit committee’s duties would be to recommend to
our board of directors the engagement of independent auditors to audit our
financial statements and to review our accounting and auditing
principles.  The audit committee would review the scope, timing and
fees for the annual audit and the results of audit examinations performed by the
internal auditors and independent public accountants, including their
recommendations to improve the system of accounting and internal
controls.  The audit committee would at all times be composed
exclusively of directors who are, in the opinion of our board of directors, free
from any relationship which would interfere with the exercise of independent
judgment as a committee member and who possess an understanding of financial
statements and generally accepted accounting principles.





Compensation
Committee





We intend
to establish a compensation committee of the board of directors.  The
compensation committee would review and approve our salary and benefits
policies, including compensation of executive officers.  The
compensation committee would also administer our stock option plans and
recommend and approve grants of stock options under such plans.





Stock
Incentive Plans





We have
currently no stock incentive plan adopted.  We intend to adopt a stock
incentive plan in order to further the growth and general prosperity of the
Company by enabling our employees, contractors and service providers to acquire
our common stock, increasing their personal involvement in the Company and
thereby enabling the Company to attract and retain its employees, contractors
and service providers.





Compliance
With Section 16(a) of the Exchange Act





Section 16(a)
of the Exchange Act requires our executive officers and directors and person who
own more than 10% of our common stock to file reports regarding ownership of and
transactions in our securities with the Commission and to provide us with copies
of those filings.  Based solely on our review of the copies received
by or a written representation from certain reporting persons we believe that
during fiscal year ended December 31, 2008, we believe that all eligible
persons are in compliance with the requirements of Section 16(a).





Item 11 - Executive
Compensation





As a “Smaller Reporting Company,” the we have
elected to follow scaled disclosure requirements for smaller reporting companies
with respect to the disclosure required by Item 402 of Regulation S-K. Under the
scaled disclosure obligations, the Company is not required to provide a
Compensation Discussion and Analysis, Compensation Committee Report and certain
other tabular and narrative disclosures relating to executive
compensation.




The
following table sets forth information concerning the compensation for the years
ended December 31, 2008 and 2007 of the principal executive officer, principal
financial officer, in addition to our three most highly compensated officers
whose annual compensation exceeded $100,000, and up to two additional
individuals for whom disclosure would have been required but for the fact that
the individual was not serving as an executive officer of the registrant at the
end of the last fiscal year. A discussion of each of the principal elements
comprising this executive compensation follows this table.





36


Summary
Compensation Table





Name
      and Principal Position
                Fiscal
                  Year
                Annual Salary
                Bonus
                Stock
      Awards
                Option
      Awards
                Total($)
                ($)
                ($)
                ($)
                ($)Ying
      He
                  President
      and Chief Executive Officer
                2007
                  2008
                24,660
                  24,660
                0
                0
                0
                24,660
                  24,660Yuehua
      Xia
                  Chief
      Financial Officer
                2007
                  2008
                24,660
                  24,660
                0
                0
                0
                24,660
                  24,660





Narrative
Disclosure to Summary Compensation Table.




Employment
Agreements




Neither
the Company nor its subsidiaries have employment agreements with their
respective officers.




Change-In-Control
Agreements





We do not
have any existing arrangements providing for payments or benefits in connection
with the resignation, severance, retirement or other termination of any of our
named executive officers, changes in their compensation or a change in
control.





Outstanding
Equity Awards at Fiscal Year-End




As of
December 31, 2008, there were no outstanding equity awards held by executive
officers of our company.




Stock
Incentive Plans




We had no
stock incentive plan during 2007 or 2008.





Compensation
of Directors





Director
Compensation





Name
                
                Fees Earned or
                  Paid in Cash ($)
                
                
                Option Awards
                  ($) (1)
                
                
                Total ($)Ying
      He, Chairman
                
                
                -
                
                
                
                -
                
                
                
                -Man
      Wai James Chiu
                
                
                -
                
                
                
                -
                
                
                
                -





Narrative
Disclosure to Director Compensation Table.





Messrs.
He and Chiu do not qualify as “independent” directors, as that term is defined
by applicable listing standards of The NASDAQ Stock Market and SEC rules,
including the rules relating to the independence standards of an audit committee
and the non-employee director definition of Rule 16b-3 promulgated under the
Exchange Act.  As a requirement to listing the Company’s common stock
on The NASDAQ Capital Market or other exchange, the Company intends to add
independent directors.  The board’s composition (and that of its
committees) will be subject to the corporate governance provisions of its
primary trading market, including the requirement for appointment of independent
directors in accordance with the Sarbanes-Oxley Act of 2002, and regulations
adopted by the SEC and NASD pursuant thereto.




We have
not compensated, and will not compensate, our non-independent directors, such as
Messrs. He and Chiu, for serving as our directors, although they are entitled to
reimbursements for reasonable expenses incurred in connection with attending our
board meetings.





We do not
maintain a medical, dental or retirement benefits plan for the
directors.





Impact
of Accounting and Tax Treatment of Compensation




Section 162(m)
of the Internal Revenue Code disallows a tax deduction to publicly held
companies for compensation paid to the principal executive officer and to each
of the three other most highly compensated officers (other than the principal
financial officer) to the extent that such compensation exceeds
$1.0 million per covered officer in any fiscal year. The limitation applies
only to compensation that is not considered to be performance-based.
Non-performance-based compensation paid to our executive officers during fiscal
2008 did not exceed the $1.0 million limit per officer, and we do not
expect the non-performance-based compensation to be paid to our executive
officers during fiscal 2009 to exceed that limit. Because it is unlikely that
the cash compensation payable to any of our executive officers in the
foreseeable future will approach the $1.0 million limit, we do not expect
to take any action to limit or restructure the elements of cash compensation
payable to our executive officers so as to qualify that compensation as
performance-based compensation under Section 162(m). We will reconsider
this decision should the individual cash compensation of any executive officer
ever approach the $1.0 million level.





37




Item
12 - Security Ownership of Certain Beneficial Owners and Management





The
following table provides information concerning beneficial ownership of our
common stock as of December 31, 2008, by:





l   each
stockholder, or group of affiliated stockholders, that we know beneficially owns
more than 5% of our outstanding common stock;




l   each
of our named executive officers;




l   each
of our directors; and




l    all
of our directors and executive officers as a group.





Unless
otherwise indicated, each of the shareholders named in the table below has sole
voting and investment power with respect to such shares of common
stock.  Except as otherwise indicated, the address of each of the
shareholders listed below is: c/o Deer Consumer Products, Inc. Area 2, 1/F,
Building M-6, Central High-Tech Industrial Park, Nanshan, Shenzhen, China
518057.




Except as
otherwise noted, the individual or his or her family members had sole voting and
investment power with respect to such shares. The percentages of beneficial
ownership set forth below are based on 22,600,000 shares of our common stock
issued and outstanding as of December 31, 2008.





Shares of
common stock subject to options, warrants, or other rights currently exercisable
or exercisable within 60 days of September 3, 2008, are deemed to be
beneficially owned and outstanding for computing the share ownership and
percentage of the stockholder holding such options and warrants, but are not
deemed outstanding for computing the percentage of any other
stockholder.





Name of Beneficial Owner
                  
                  Number of Shares Beneficially
      Owned
                  
                  
                  Percentage Beneficially
    Owned5%
      Stockholders:Sino
      Unity Limited (1)
                  
                  
                  1,940,375
                  
                  
                  
                  8.59
                  %True
      Olympic Limited (1)
                  
                  
                  1,805,000
                  
                  
                  
                  7.99
                  %Great
      Scale Holdings Limited (3)
                  
                  
                  1,444,000
                  
                  
                  
                  6.39
                  %New
      Million Holdings Limited (4)
                  
                  
                  1,444,000
                  
                  
                  
                  6.39
                  %Tiger
      Castle Limited (5)
                  
                  
                  1,263,500
                  
                  
                  
                  5.59
                  %Named
      Executive OfficersMr.
      Ying He (6)
                  
                  
                  8,348,125
                  
                  
                  
                  36.94
                  %Mr.
      Yuehua Xia
                  
                  
                  --
                  
                  
                  
                  *Man
      Wai James Chiu (7)
                  
                  
                  1,083,000
                  
                  
                  
                  4.79
                  %All
      Directors and Named Executive Officers as a Group
                  
                  
                  9,431,125
                  
                  
                  
                  41.73
                  %





(1) Sino
Unity Limited is 100% owned by YuHai Deng, our Manager of
Purchasing.


(2) True
Olympic Limited is 100% owned by ZongZhu Nie, our Manager of Quality
Control.


(3) Great
Scale Holdings Limited is 100% owned by FaMin He, our Manager of
Production.


(4) New
Million Holdings Limited is 100% owned by BaoZhi Li, our Manager or Corporate
Development.


(5) Tiger
Castle Limited is 100% owned by JingWu Chen, our Manager of Corporate
Development.


(6) Mr.
Ying He, our Chairman, Chief Executive Officer & President, holds his shares
through Achieve On Limited which is 100% owned by him.


(7) Mr.
Man Wai James Chiu, our Chief Operating Officer, holds his shares through Sharp
Champion Limited which is 100% owned by him.





38





Item
13 - Certain Relationships and Related Transactions, and Director
Independence





Under
Item 404 of SEC Regulation S-K, a related person transaction is any
actual or proposed transaction, arrangement or relationship or series of similar
transactions, arrangements or relationships, including those involving
indebtedness not in the ordinary course of business, since the beginning of our
last fiscal year, to which we or our subsidiaries were or are a party, or in
which we or our subsidiaries were or are a participant, in which the amount
involved exceeded or exceeds $120,000 and in which any of our directors,
nominees for director, executive officers, beneficial owners of more than 5% of
any class of our voting securities, or any member of the immediate family of any
of the foregoing persons, had or will have a direct or indirect material
interest.





There
were no transactions with any related persons (as that term is defined in Item
404 in Regulation SK) during the fiscal year ended 2008, or any currently
proposed transaction, in which we were or are to be a participant and the amount
involved was in excess of $120,000 and in which any related person had a direct
or indirect material interest.





Item 14 - Principal Accountant Fees and
Services





Audit
Fees.





The firm
of Goldman Parks Kurland Mohidin LLP (“GPKM”) has been selected by the board of
directors as the independent registered certified public accounting firm to
audit the books and accounts of our company and its subsidiaries for the fiscal
year ending December 31, 2008. This firm has served as independent public
accountants for our company since April 14, 2008.  Prior to September
3, 2008, we engaged Dale Matheson Carr Hilton Labonte LLP ("DMCHL") as our
independent accountants.





The
aggregate fees billed by GPKM, for professional services rendered for the audit
of our annual financial statements for the year ended December 31, 2008, and for
the reviews of the financial statements included in our Quarterly Reports on
Form 10-Q during the fiscal year were $107,500.





The
aggregate fees billed by DMCHL for the reviews of the financial statements
included in our Quarterly Reports on Form 10-Q during the fiscal year 2008 was
$5,000.





Audit
Related Fees.





We
incurred fees to auditors of $0, for audit related fees during the fiscal year
ended 2007, and for the fiscal year ended December 31, 2008 audit related fees
were $0.





Tax
Fees.





We
incurred no fees to auditors for tax compliance, tax advice and tax compliance
services during the fiscal year ended December 31, 2007 and the fiscal year
ended December 31, 2008





The Board of Directors has no formal audit
committee.  However, the entire Board of Directors is the Company's
defacto audit committee.  The Board of Directors discussed with the
auditors any relationships that may impact their objectivity and independence
and satisfied itself as to the auditors' independence. The Board also discussed
with management, the internal auditors and the independent auditors the quality
and adequacy of the Company's internal controls. It is the policy of the
Board of Directors, acting as the audit committee to pre-approve all services to
be performed by the independent accountants.





Item
15 - Exhibits, Financial Statement Schedules





(a)(1)                      Financial
Statements





See Index
to Consolidated Financial Statements on page F-1 of this
Form 10-K.




39





(a)(2)                      Financial Statement
Schedules:







Not
applicable.





(b)           Exhibits




The
exhibits required by this item are set forth on the Exhibit Index attached
hereto.








(c)                        Financial
Statement Schedules


Not
applicable.





40





Deer
Consumer Products, Inc and Subsidiaries


Consolidated
Financial Statements


For
the Years Ended December 31, 2008, and 2007





Contents




PageReport of Independent
      Registered Public Accounting Firm
                                  F-2Financial
      Statements:Consolidated
      Balance Sheets as of December 31, 2008 and 2007
                                  F-3Consolidated
      Statements of Income and Other Comprehensive Incomefor
      the years ended December 31, 2008 and 2007
                                  F-4Consolidated
      Statement of Stockholders' Equity for the years endedDecember
      31, 2008 and 2007
                                  F-5Consolidated
      Statements of Cash Flows for the years endedDecember
      31, 2008 and 2007
                                  F-6Notes
      to Consolidated Financial Statements
                                  F-7





F-1




Report
of Independent Registered Public Accounting Firm





Board of
Directors and Stockholders of


Deer
Consumer Products, Inc.





We have
audited the accompanying consolidated balance sheets of Deer Consumer Products,
Inc. and Subsidiaries as of December 31, 2008 and 2007, and the related
consolidated statements of income and other comprehensive income, stockholders'
equity, and cash flows for the years ended December 31, 2008 and 2007. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these 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 financial statements are free of material misstatement.
..  The Company is not required to have, nor were we engaged to
perform, an audit of internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting. Accordingly, we express no
such opinion.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the 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 Deer Consumer
Products, Inc. and subsidiaries as of December 31, 2008 and 2007 and the
consolidated results of their operations and their consolidated cash flows for
the years ended December 31, 2008 and 2007, in conformity with U.S. generally
accepted accounting principles.











Goldman
Parks Kurland Mohidin LLP


Encino,
California


March 20,
2009




F-2




DEER CONSUMER PRODUCTS, INC.
      AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETSAS
      OF DECEMBER 31, 2008 AND 2007
  2008
                                                                              
                                                                              
                                                                              2007ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
                                                                              
                                                                              $
                                                                              2,782,026
                                                                              
                                                                              
                                                                              $
                                                                              1,511,545Restricted
      cash
                                                                              
                                                                              
                                                                              200,099
                                                                              
                                                                              
                                                                              
                                                                              450,385Accounts
      receivable, net
                                                                              
                                                                              
                                                                              8,560,465
                                                                              
                                                                              
                                                                              
                                                                              3,491,235Advances
      to suppliers
                                                                              
                                                                              
                                                                              5,015,479
                                                                              
                                                                              
                                                                              
                                                                              2,817,333Other
      receivables
                                                                              
                                                                              
                                                                              489,286
                                                                              
                                                                              
                                                                              
                                                                              395,180Short
      term investments
                                                                              
                                                                              
                                                                              29,340
                                                                              
                                                                              
                                                                              
                                                                              136,647Due
      from shareholder
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              1,383,124Due
      from related party
                                                                              
                                                                              
                                                                              331,267
                                                                              
                                                                              
                                                                              
                                                                              -Inventories
                                                                              
                                                                              
                                                                              7,680,851
                                                                              
                                                                              
                                                                              
                                                                              4,153,304Other
      current assets
                                                                              
                                                                              
                                                                              13,342
                                                                              
                                                                              
                                                                              
                                                                              628,718Total
      current assets
                                                                              
                                                                              
                                                                              25,102,155
                                                                              
                                                                              
                                                                              
                                                                              14,967,471PROPERTY
      AND EQUIPMENT, net
                                                                              
                                                                              
                                                                              11,291,202
                                                                              
                                                                              
                                                                              
                                                                              8,576,102CONSTRUCTION
      IN PROGRESS
                                                                              
                                                                              
                                                                              892,897
                                                                              
                                                                              
                                                                              
                                                                              302,160INTANGIBLE
      ASSETS, net
                                                                              
                                                                              
                                                                              404,125
                                                                              
                                                                              
                                                                              
                                                                              387,541OTHER
      ASSETS
                                                                              
                                                                              
                                                                              39,689
                                                                              
                                                                              
                                                                              
                                                                              42,008TOTAL
    ASSETS
                                                                              
                                                                              $
                                                                              37,730,068
                                                                              
                                                                              
                                                                              $
                                                                              24,275,282LIABILITIES AND STOCKHOLDERS'
      EQUITYCURRENT
      LIABILITIES:Accounts
      payable
                                                                              
                                                                              $
                                                                              8,968,088
                                                                              
                                                                              
                                                                              $
                                                                              2,479,056Other
      payables
                                                                              
                                                                              
                                                                              760,632
                                                                              
                                                                              
                                                                              
                                                                              564,820Unearned
      revenue
                                                                              
                                                                              
                                                                              3,305,966
                                                                              
                                                                              
                                                                              
                                                                              69,591Accrued
      payroll
                                                                              
                                                                              
                                                                              168,282
                                                                              
                                                                              
                                                                              
                                                                              134,301Short
      term loans
                                                                              
                                                                              
                                                                              3,552,841
                                                                              
                                                                              
                                                                              
                                                                              1,691,431Due
      to shareholder
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              756,458Advances
      to shareholder
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              509,139Advances
      to related party
                                                                              
                                                                              
                                                                              274,805
                                                                              
                                                                              
                                                                              
                                                                              -Notes
      payable
                                                                              
                                                                              
                                                                              3,155,348
                                                                              
                                                                              
                                                                              
                                                                              3,160,059Tax
      and welfare payable
                                                                              
                                                                              
                                                                              1,533,013
                                                                              
                                                                              
                                                                              
                                                                              896,605Total
      current liabilities
                                                                              
                                                                              
                                                                              21,718,975
                                                                              
                                                                              
                                                                              
                                                                              10,261,460LONG-TERM
      LOAN
                                                                              
                                                                              
                                                                              733,500
                                                                              
                                                                              
                                                                              
                                                                              -TOTAL
      LIABILITIES
                                                                              
                                                                              
                                                                              22,452,475
                                                                              
                                                                              
                                                                              
                                                                              10,261,460STOCKHOLDERS'
      EQUITY:Common
      Stock, $0.001 par value; 75,000,000 shares authorized;22,600,000
      and 18,050,000 shares issued and oustandingas
      of December 31, 2008 and 2007, respectively
                                                                              
                                                                              
                                                                              22,600
                                                                              
                                                                              
                                                                              
                                                                              18,050Additional
      paid-in capital
                                                                              
                                                                              
                                                                              9,326,423
                                                                              
                                                                              
                                                                              
                                                                              9,330,973Development
      funds
                                                                              
                                                                              
                                                                              542,701
                                                                              
                                                                              
                                                                              
                                                                              343,232Statutory
      reserve
                                                                              
                                                                              
                                                                              1,085,403
                                                                              
                                                                              
                                                                              
                                                                              686,464Other
      comprehensive income
                                                                              
                                                                              
                                                                              2,345,698
                                                                              
                                                                              
                                                                              
                                                                              1,303,732Retained
      earnings
                                                                              
                                                                              
                                                                              1,954,768
                                                                              
                                                                              
                                                                              
                                                                              2,331,371Total
      stockholders' equity
                                                                              
                                                                              
                                                                              15,277,593
                                                                              
                                                                              
                                                                              
                                                                              14,013,822TOTAL LIABILITIES AND
      STOCKHOLDERS' EQUITY
                                                                              
                                                                              $
                                                                              37,730,068
                                                                              
                                                                              
                                                                              $
                                                                              24,275,282
  The
      accompanying notes are an integral part of these consolidated financial
      statements




F-3




DEER
      CONSUMER PRODUCTS, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOMEFOR
      THE YEARS ENDED DECEMBER 31, 2008 AND
2007


2008
                                                                                    
                                                                                    
                                                                                    2007Net
      Revenue
                                                                                    
                                                                                    $
                                                                                    43,784,935
                                                                                    
                                                                                    
                                                                                    $
                                                                                    33,476,259Cost
      of Revenue
                                                                                    
                                                                                    
                                                                                    34,125,019
                                                                                    
                                                                                    
                                                                                    
                                                                                    26,249,009Gross
      profit
                                                                                    
                                                                                    
                                                                                    9,659,916
                                                                                    
                                                                                    
                                                                                    
                                                                                    7,227,250Operating
      expensesSelling
      expenses
                                                                                    
                                                                                    
                                                                                    2,854,946
                                                                                    
                                                                                    
                                                                                    
                                                                                    1,518,482General
      and administrative expenses
                                                                                    
                                                                                    
                                                                                    2,566,634
                                                                                    
                                                                                    
                                                                                    
                                                                                    1,788,025Total
      operating expenses
                                                                                    
                                                                                    
                                                                                    5,421,580
                                                                                    
                                                                                    
                                                                                    
                                                                                    3,306,507Income
      from operations
                                                                                    
                                                                                    
                                                                                    4,238,336
                                                                                    
                                                                                    
                                                                                    
                                                                                    3,920,743Non-operating
      income (expense):Financing
      costs
                                                                                    
                                                                                    
                                                                                    (247,901
                                                                                    )
                                                                                    
                                                                                    
                                                                                    (194
                                                                                    )Interest
      income
                                                                                    
                                                                                    
                                                                                    13,870
                                                                                    
                                                                                    
                                                                                    
                                                                                    18,524Interest
      expense
                                                                                    
                                                                                    
                                                                                    (310,762
                                                                                    )
                                                                                    
                                                                                    
                                                                                    (114,361
                                                                                    )Other
      income (expense)
                                                                                    
                                                                                    
                                                                                    40,216
                                                                                    
                                                                                    
                                                                                    
                                                                                    64,698Realized
      loss on trading securities
                                                                                    
                                                                                    
                                                                                    (34,873
                                                                                    )
                                                                                    
                                                                                    
                                                                                    -Unrealized
      gain on trading securities
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    
                                                                                    57,043Foreign
      exchange gain
                                                                                    
                                                                                    
                                                                                    959,943
                                                                                    
                                                                                    
                                                                                    
                                                                                    90,707Total
      non-operating income (expense)
                                                                                    
                                                                                    
                                                                                    420,493
                                                                                    
                                                                                    
                                                                                    
                                                                                    116,417Income
      before income tax
                                                                                    
                                                                                    
                                                                                    4,658,829
                                                                                    
                                                                                    
                                                                                    
                                                                                    4,037,160Income
      tax
                                                                                    
                                                                                    
                                                                                    1,302,045
                                                                                    
                                                                                    
                                                                                    
                                                                                    615,568Net
      income
                                                                                    
                                                                                    
                                                                                    3,356,784
                                                                                    
                                                                                    
                                                                                    
                                                                                    3,421,592Other
      comprehensive incomeForeign
      currency translation gain
                                                                                    
                                                                                    
                                                                                    1,041,966
                                                                                    
                                                                                    
                                                                                    
                                                                                    822,146Comprehensive
      Income
                                                                                    
                                                                                    $
                                                                                    4,398,750
                                                                                    
                                                                                    
                                                                                    $
                                                                                    4,243,738Weighted
      average shares outstanding :Basic
                                                                                    
                                                                                    
                                                                                    19,533,425
                                                                                    
                                                                                    
                                                                                    
                                                                                    18,050,000Diluted
                                                                                    
                                                                                    
                                                                                    19,533,425
                                                                                    
                                                                                    
                                                                                    
                                                                                    18,050,000Earnings
      per share:Basic
                                                                                    
                                                                                    $
                                                                                    0.17
                                                                                    
                                                                                    
                                                                                    $
                                                                                    0.19Diluted
                                                                                    
                                                                                    $
                                                                                    0.17
                                                                                    
                                                                                    
                                                                                    $
                                                                                    0.19


The
      accompanying notes are an integral part of these consolidated financial
      statements






F-4


DEER
      CONSUMER PRODUCTS, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENT OF STOCKHOLDERS' EQUITYFOR
      THE YEARS ENDED DECEMBER 31, 2008 AND
2007
 Other
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              TotalCommon
                                                                              
                                                                              
                                                                              Additional
      Paid
                                                                              
                                                                              
                                                                              Comprehensive
                                                                              
                                                                              
                                                                              Statutory
                                                                              
                                                                              
                                                                              Development
                                                                              
                                                                              
                                                                              Retained
                                                                              
                                                                              
                                                                              Stockholders'Shares
                                                                              
                                                                              
                                                                              Stock
                                                                              
                                                                              
                                                                              in
      Capital
                                                                              
                                                                              
                                                                              Income
                                                                              
                                                                              
                                                                              Reserve
                                                                              
                                                                              
                                                                              Funds
                                                                              
                                                                              
                                                                              Earnings
                                                                              
                                                                              
                                                                              EquityBalance
      December 31, 2006
                                                                              
                                                                              
                                                                              18,050,000
                                                                              
                                                                              
                                                                              $
                                                                              18,050
                                                                              
                                                                              
                                                                              $
                                                                              6,407,285
                                                                              
                                                                              
                                                                              $
                                                                              481,586
                                                                              
                                                                              
                                                                              $
                                                                              337,642
                                                                              
                                                                              
                                                                              $
                                                                              168,821
                                                                              
                                                                              
                                                                              $
                                                                              2,356,700
                                                                              
                                                                              
                                                                              $
                                                                              9,770,084Capital
      contribution by stockholders
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              2,923,688
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              2,923,688Common
      stock dividend distribution
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              (2,923,688
                                                                              )
                                                                              
                                                                              
                                                                              (2,923,688
                                                                              )Change
      in foreign currency translation gain
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              822,146
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              822,146Net
      income
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              3,421,592
                                                                              
                                                                              
                                                                              
                                                                              3,421,592Transfer
      to statutory reserve and development funds
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              348,822
                                                                              
                                                                              
                                                                              
                                                                              174,411
                                                                              
                                                                              
                                                                              
                                                                              (523,233
                                                                              )
                                                                              
                                                                              
                                                                              -Balance
      December 31, 2007
                                                                              
                                                                              
                                                                              18,050,000
                                                                              
                                                                              
                                                                              
                                                                              18,050
                                                                              
                                                                              
                                                                              
                                                                              9,330,973
                                                                              
                                                                              
                                                                              
                                                                              1,303,732
                                                                              
                                                                              
                                                                              
                                                                              686,464
                                                                              
                                                                              
                                                                              
                                                                              343,232
                                                                              
                                                                              
                                                                              
                                                                              2,331,371
                                                                              
                                                                              
                                                                              
                                                                              14,013,822Shares
      issued in merger with Tag Events Corp.
                                                                              
                                                                              
                                                                              4,550,000
                                                                              
                                                                              
                                                                              
                                                                              4,550
                                                                              
                                                                              
                                                                              
                                                                              (4,550
                                                                              )Change
      in foreign currency translation gain
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              1,041,966
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              1,041,966Net
      income
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              3,356,784
                                                                              
                                                                              
                                                                              
                                                                              3,356,784Transfer
      to statutory reserve and development funds
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              398,939
                                                                              
                                                                              
                                                                              
                                                                              199,469
                                                                              
                                                                              
                                                                              
                                                                              (598,408
                                                                              )
                                                                              
                                                                              
                                                                              -Deemed
      dividend to major shareholders - settlement of receivable
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              (3,134,979
                                                                              )
                                                                              
                                                                              
                                                                              (3,134,979
                                                                              )Balance,
      December 31, 2008
                                                                              
                                                                              
                                                                              22,600,000
                                                                              
                                                                              
                                                                              $
                                                                              22,600
                                                                              
                                                                              
                                                                              $
                                                                              9,326,423
                                                                              
                                                                              
                                                                              $
                                                                              2,345,698
                                                                              
                                                                              
                                                                              $
                                                                              1,085,403
                                                                              
                                                                              
                                                                              $
                                                                              542,701
                                                                              
                                                                              
                                                                              $
                                                                              1,954,768
                                                                              
                                                                              
                                                                              $
                                                                              15,277,593





The
accompanying notes are an integral part of these consolidated financial
statements




F-5




DEER CONSUMER PRODUCTS, INC.
      AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
      FLOWSFOR THE YEARS ENDED DECEMBER
      31, 2008 AND 2007
  2008
                                                                            
                                                                            
                                                                            2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
                                                                            
                                                                            $
                                                                            3,356,784
                                                                            
                                                                            
                                                                            $
                                                                            3,421,592Adjustments
      to reconcile net income to net cashused
      in operating activities:Depreciation
                                                                            
                                                                            
                                                                            1,199,578
                                                                            
                                                                            
                                                                            
                                                                            795,531Amortization
                                                                            
                                                                            
                                                                            18,723
                                                                            
                                                                            
                                                                            
                                                                            18,509Loss
      on disposal of fixed assets
                                                                            
                                                                            
                                                                            351,257
                                                                            
                                                                            
                                                                            
                                                                            -Realized
      loss on short term investments
                                                                            
                                                                            
                                                                            34,873
                                                                            
                                                                            
                                                                            
                                                                            -Unrealized
      loss on short term investments
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            (57,043
                                                                            )(Increase)
      / decrease in assets:Accounts
      receivable
                                                                            
                                                                            
                                                                            (7,821,066
                                                                            )
                                                                            
                                                                            
                                                                            (2,423,876
                                                                            )Other
      receivable
                                                                            
                                                                            
                                                                            210,696
                                                                            
                                                                            
                                                                            
                                                                            435,100Inventories
                                                                            
                                                                            
                                                                            (3,180,080
                                                                            )
                                                                            
                                                                            
                                                                            (549,092
                                                                            )Due
      from shareholder
                                                                            
                                                                            
                                                                            1,454,375
                                                                            
                                                                            
                                                                            
                                                                            (1,328,793
                                                                            )Due
      from related party
                                                                            
                                                                            
                                                                            (325,509
                                                                            )
                                                                            
                                                                            
                                                                            -Advances
      to suppliers
                                                                            
                                                                            
                                                                            (1,965,833
                                                                            )
                                                                            
                                                                            
                                                                            (251,437
                                                                            )Tax
      rebate receivable
                                                                            
                                                                            
                                                                            158,989
                                                                            
                                                                            
                                                                            
                                                                            51,484Other
      assets
                                                                            
                                                                            
                                                                            215,234
                                                                            
                                                                            
                                                                            
                                                                            (40,357
                                                                            )Increase
      / (decrease) in current liabilities:Accounts
      payable
                                                                            
                                                                            
                                                                            6,205,438
                                                                            
                                                                            
                                                                            
                                                                            (556,796
                                                                            )Unearned
      revenue
                                                                            
                                                                            
                                                                            3,175,324
                                                                            
                                                                            
                                                                            
                                                                            (849,077
                                                                            )Other
      payables
                                                                            
                                                                            
                                                                            156,499
                                                                            
                                                                            
                                                                            
                                                                            499,020Due
      to related party
                                                                            
                                                                            
                                                                            (795,427
                                                                            )
                                                                            
                                                                            
                                                                            726,744Accrued
      payroll
                                                                            
                                                                            
                                                                            24,138
                                                                            
                                                                            
                                                                            
                                                                            61,536Tax
      and welfare payable
                                                                            
                                                                            
                                                                            563,573
                                                                            
                                                                            
                                                                            
                                                                            479,845Net
      cash provided by operating activities
                                                                            
                                                                            
                                                                            3,037,566
                                                                            
                                                                            
                                                                            
                                                                            432,890CASH
      FLOWS FROM INVESTING ACTIVITIESAcquisition
      of property and equipment
                                                                            
                                                                            
                                                                            (3,627,873
                                                                            )
                                                                            
                                                                            
                                                                            (2,191,640
                                                                            )Acquisition
      of intangible assets
                                                                            
                                                                            
                                                                            (8,319
                                                                            )
                                                                            
                                                                            
                                                                            (162,263
                                                                            )Construction
      in process
                                                                            
                                                                            
                                                                            (559,651
                                                                            )
                                                                            
                                                                            
                                                                            111,835Changes
      in restricted cash
                                                                            
                                                                            
                                                                            276,966
                                                                            
                                                                            
                                                                            
                                                                            (307,229
                                                                            )Purchases
      of short-term investments
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            (131,280
                                                                            )Proceeds
      from short-term investments
                                                                            
                                                                            
                                                                            79,984
                                                                            
                                                                            
                                                                            
                                                                            -Net
      cash used in investing activities
                                                                            
                                                                            
                                                                            (3,838,893
                                                                            )
                                                                            
                                                                            
                                                                            (2,680,577
                                                                            )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from issuance of notes payable
                                                                            
                                                                            
                                                                            2,969,781
                                                                            
                                                                            
                                                                            
                                                                            1,795,227Proceeds
      from issuance of short term loans
                                                                            
                                                                            
                                                                            4,176,723
                                                                            
                                                                            
                                                                            
                                                                            885,108Payment
      on notes payable
                                                                            
                                                                            
                                                                            (3,192,128
                                                                            )
                                                                            
                                                                            
                                                                            -Payment
      on notes short term loans
                                                                            
                                                                            
                                                                            (2,464,203
                                                                            )
                                                                            
                                                                            
                                                                            -Change
      in advance to shareholder, net
                                                                            
                                                                            
                                                                            (535,367
                                                                            )
                                                                            
                                                                            
                                                                            424,397Change
      in advance to related party, net
                                                                            
                                                                            
                                                                            270,028
                                                                            
                                                                            
                                                                            
                                                                            -Proceeds
      from issuance of long-term note
                                                                            
                                                                            
                                                                            720,750
                                                                            
                                                                            
                                                                            
                                                                            -Net
      cash provided by financing activities
                                                                            
                                                                            
                                                                            1,945,584
                                                                            
                                                                            
                                                                            
                                                                            3,104,732Effect
      of exchange rate changes on cash and cash equivalents
                                                                            
                                                                            
                                                                            126,224
                                                                            
                                                                            
                                                                            
                                                                            75,476NET
      INCREASE IN CASH & CASH EQUIVALENTS
                                                                            
                                                                            
                                                                            1,270,481
                                                                            
                                                                            
                                                                            
                                                                            932,521CASH
      & CASH EQUIVALENTS, BEGINNING BALANCE
                                                                            
                                                                            
                                                                            1,511,545
                                                                            
                                                                            
                                                                            
                                                                            579,024CASH
      & CASH EQUIVALENTS, ENDING BALANCE
                                                                            
                                                                            $
                                                                            2,782,026
                                                                            
                                                                            
                                                                            $
                                                                            1,511,545SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Interest
      paid
                                                                            
                                                                            $
                                                                            310,762
                                                                            
                                                                            
                                                                            $
                                                                            113,356Income
      taxes paid
                                                                            
                                                                            $
                                                                            725,125
                                                                            
                                                                            
                                                                            $
                                                                            112,743Settlement
      of receivable as a deemed dividend
                                                                            
                                                                            $
                                                                            3,314,979
                                                                            
                                                                            
                                                                            $
                                                                            -




The
accompanying notes are an integral part of these consolidated financial
statements




F-6




DEER
CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007





Note
1 - Organization and Basis of Presentation





Organization and Line of
Business





Deer
Consumer Products, Inc., formerly known as Tag Events Corp., (hereinafter
referred to as the “Company” or “Deer”) was incorporated in the State of Nevada
on July 18, 2006.





On
September 3, 2008, the Company entered into a share exchange agreement and plan
of reorganization with Deer International Group Limited (“Deer International”),
a company incorporated under the laws of British Virgin Islands (“BVI”) on
December 3, 2007 and acquired 100% of the shares of Winder Electrical Company,
Ltd. (“Winder”) on March 11, 2008. Winder has a 100% owned subsidiary, Delta
International, Ltd., (“Delta”). Winder and Delta were formed and incorporated in
the Guangdong Province of the PRC on July 20, 2001 and February 23, 2006,
respectively.





Pursuant
to the share exchange agreement, the Company acquired from Deer International
50,000 ordinary shares, consisting of all of its issued and outstanding capital
stock, in exchange for the issuance of an aggregate of 18,050,000 shares of the
Company’s common stock. Concurrently with the closing of the transactions
contemplated by the share exchange agreement and as a condition thereof, the
Company entered into an agreement with Crescent Liu, its former Director and
Chief Executive Officer, pursuant to which he returned 5,950,000 shares of the
Company’s common stock to the Company for cancellation. Mr. Liu was not
compensated in any way for the cancellation of his shares of the Company’s
common stock. Upon completion of the foregoing transactions, the Company had an
aggregate of 22,600,000 shares of common stock issued and outstanding. In
connection with the above transaction the Company changed its name to Deer
Consumer Products, Inc. on September 3, 2008.





The
exchange of shares with Deer International was accounted for as a reverse
acquisition under the purchase method of accounting since Deer International
obtained control of the Company. Accordingly, the merger of the Deer
International into the Company was recorded as a recapitalization of Deer
International, Deer International being treated as the continuing entity. The
historical financial statements presented are the consolidated financial
statements of Deer International. The share exchange agreement has been treated
as a recapitalization and not as a business combination; therefore, no pro forma
information is disclosed. At the date of this transaction, the net liabilities
of the legal acquirer were $0.





As a
result of the reverse merger transactions described above the historical
financial statements presented are those of Deer International and its operating
entities.





The
Company is engaged in manufacture, marketing, distribution and sale of household
appliances (blenders, food processors, choppers, juicers, etc.). The Company
manufactures its products out of YangJiang, China and operates corporate
functions in Nanshan, Shenzhen, China.





Basis of
Presentation





The
accompanying consolidated financial statements include the accounts of Deer
International, and its 100% wholly-owned subsidiary Winder and Winder’s
wholly-owned subsidiary Delta. All significant inter-company accounts and
transactions have been eliminated in consolidation.





The
accompanying consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of
America.  The Company’s functional currency is the Chinese Yuan
Renminbi (RMB); however the accompanying consolidated financial statements have
been translated and presented in United States Dollars ($).





Foreign Currency
Translation





The
accounts of the Company were maintained, and their consolidated financial
statements were expressed in the Chinese Yuan Renminbi (RMB). Such consolidated
financial statements were translated into U.S. Dollars (USD) in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 52, "Foreign Currency
Translation," with the RMB as the functional currency. According to the
Statement, all assets and liabilities were translated at the exchange rate on
the balance sheet date, stockholder's equity are translated at the historical
rates and statement of operations items are translated at the weighted average
exchange rate for the year. The resulting translation adjustments are reported
under other comprehensive income in accordance with SFAS No. 130, "Reporting
Comprehensive Income”.







F-7




DEER
CONSUMER PRODUCTS, INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER
31, 2008 AND 2007




Note
2 - Summary of Significant Accounting Policies





Use of
Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ materially from these
estimates upon which the carrying values were based.





Cash and Cash
Equivalents





Cash and
cash equivalents include cash on hand, cash in time deposits and all highly
liquid investments with original maturities of three months or
less.





Restricted
Cash





Restricted
cash consists of monies restricted by the Company’s lender and monies restricted
under a letter of credit and a bank acceptance.  As of December 31,
2008 and 2007, total restricted cash amounted to $200,099 (interest rate of
0.36% per annum) and $450,385 (interest rate of 0.72% per annum),
respectively.





Accounts
Receivable





The
Company maintains reserves for potential credit losses on accounts receivable.
Management reviews the composition of accounts receivable and analyzes
historical bad debts, customer concentrations, customer credit worthiness,
current economic trends and changes in customer payment patterns to evaluate the
adequacy of these reserves.








Investments





The
Company purchased various stocks during 2007 and in 2008 the Company was
required to purchase an equity fund for a bank loan requirement.  The
investments are trading securities that were bought and held principally for the
purpose of selling them in the near term and are reported at fair value, with
unrealized gains and losses included in earnings.





Advances to
Suppliers





The
Company makes advances to certain vendors for purchase of its material. The
advances to suppliers are interest free and unsecured.





Inventories





Inventories
are valued at the lower of cost (determined on a weighted average basis) or
market. The Company compares the cost of inventories with the market value and
allowance is made for writing down the inventories to their market value, if
lower.





Property &
Equipment





Property
and equipment are stated at cost. Expenditures for maintenance and repairs are
charged to earnings as incurred; additions, renewals and betterments are
capitalized. When property and equipment are retired or otherwise disposed of,
the related cost and accumulated depreciation are removed from the respective
accounts, and any gain or loss is included in operations. Depreciation of
property and equipment is provided using the straight-line method for
substantially all assets with estimated lives as follows:




F-8


DEER
CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007




Buildings
              5-20
      yearsEquipment
              5-10
      yearsVehicles
              5
      yearsOffice
      equipment
              5-10
      years





At
December 31, 2008 and 2007, the following are the details of the property and
equipment:





2008
                
                
                2007Building
                
                $
                1,889,916
                
                
                $
                1,552,881Equipment
                
                
                14,232,539
                
                
                
                10,597,224Vehicle
                
                
                34,735
                
                
                
                91,873Office
      Equipment
                
                
                430,177
                
                
                
                320,867Total
                
                
                16,587,367
                
                
                
                12,562,845Less
      accumulated depreciation
                
                
                (5,296,165
                )
                
                
                (3,986,743
                )$
                11,291,202
                
                
                $
                8,576,102





Depreciation
expense for the years ended December 31, 2008 and 2007 was $1,199,578 and
$795,531, respectively.





Long-Lived
Assets





The
Company applies the provisions of SFAS No. 144, “Accounting for the Impairment
or Disposal of Long-Lived Assets” (“SFAS 144”), which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets and
supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of,” and the accounting and reporting
provisions of APB Opinion No. 30, “Reporting the Results of Operations for a
Disposal of a Segment of a Business.” The Company periodically evaluates the
carrying value of long-lived assets to be held and used in accordance with SFAS
144. SFAS 144 requires impairment losses to be recorded on long-lived assets
used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets’ carrying amounts. In that event, a loss is recognized based on the
amount by which the carrying amount exceeds the fair market value of the
long-lived assets. Loss on long-lived assets to be disposed of is determined in
a similar manner, except that fair market values are reduced for the cost of
disposal. Based on its review, the Company believes that, as of September 30,
2008 there were no significant impairments of its long-lived
assets.





Intangible
Assets





Intangible
assets consist of rights to use land and computer software. The Company
evaluates intangible assets for impairment, at least on an annual basis and
whenever events or changes in circumstances indicate that the carrying value may
not be recoverable from its estimated future cash flows. Recoverability of
intangible assets is measured by comparing their net book value to the related
projected undiscounted cash flows from these assets, considering a number of
factors including past operating results, budgets, economic projections, market
trends and product development cycles. If the net book value of the asset
exceeds the related undiscounted cash flows, the asset is considered impaired,
and a second test is performed to measure the amount of impairment
loss.


Net
intangible assets at December 31, 2008 and 2007 are as follows:




F-9


DEER
CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007




2008
                    
                    
                    2007Right
      to use land
                    
                    $
                    450,335
                    
                    
                    $
                    420,828Computer
      software
                    
                    
                    76,906
                    
                    
                    
                    8,822Total
                    
                    
                    527,241
                    
                    
                    
                    492,650Less
      accumulated amortization
                    
                    
                    (123,116
                    )
                    
                    
                    (42,109
                    )Intangibles,
      net
                    
                    $
                    404,125
                    
                    
                    $
                    387,541





Per the
People's Republic of China's (“PRC”) governmental regulations, the Government
owns all land. The Company has recognized the amounts paid for the acquisition
of rights to use land as intangible asset. The Company is amortizing over the
period the Company has use of the land which range from 45 to 50 years and
computer software is amortized over 1-2 years.





Amortization
expense for the years ended December 31, 2008 and 2007 was $18,723 and $18,509,
respectively.





Fair Value of Financial
Instruments





Certain
of the Company’s financial instruments, including cash and cash equivalents,
restricted cash, accounts receivable, accounts payable, accrued liabilities and
short-term debt, carrying amounts approximate fair value due to their short
maturities. In addition, the Company has long-term debt with financial
institutions. The carrying amount of the long-term loan approximate their fair
value based on current rates for instruments with similar
characteristics.





On
January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements. SFAS
No. 157 defines fair value, establishes a three-level valuation hierarchy for
disclosures of fair value measurement and enhances disclosures requirements for
fair value measures. The carrying amounts reported in the balance sheets for
receivables and current liabilities each qualify as financial instruments and
are a reasonable estimate of fair value because of the short period of time
between the origination of such instruments and their expected realization and
their current market rate of interest. The three levels are defined as
follow:







·
            Level
      1 inputs to the valuation methodology are quoted prices (unadjusted) for
      identical assets or liabilities in active markets.·
            Level
      2 inputs to the valuation methodology include quoted prices for similar
      assets and liabilities in active markets, and inputs that are observable
      for the asset or liability, either directly or indirectly, for
      substantially the full term of the financial
instrument.·
            Level
      3 inputs to the valuation methodology are unobservable and significant to
      the fair value measurement.





As of
December 31, 2008, the Company did not identify any assets and liabilities that
are required to be presented on the balance sheet at fair value.





Concentration of Credit
Risk





Cash
includes cash on hand and demand deposits in accounts maintained within China.
Certain financial instruments, which subject the Company to concentration
of credit risk, consist of cash. Balances at financial institutions within China
are not covered by insurance.  The Company has not experienced any
losses in such accounts as of December 31, 2008
and  2007.





Revenue
Recognition




The
Company’s revenue recognition policies are in accordance with the Securities and
Exchange Commission (“SEC”) Staff Accounting Bulletin (SAB) No.
104.  Sales revenue is recognized at the date of shipment to customers
when a formal arrangement exists, the price is fixed or determinable, the
delivery is completed, no other significant obligations of the Company exist and
collectability is reasonably assured. Payments received before all of the
relevant criteria for revenue recognition are satisfied are recorded as unearned
revenue.




F-10




DEER
CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007




Unearned
Revenue





The
Company has recorded payments for goods before all relevant criteria for revenue
recognition are satisfied under unearned revenue.





Advertising
Costs





The
Company expenses the cost of advertising as incurred or, as appropriate, the
first time the advertising takes place. Advertising costs for the years ended
December 31, 2008 and 2007 was $111,634 and $31,821, respectively.





Income
Taxes





The
Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases of assets and
liabilities and their financial reporting amounts at each period end based on
enacted tax laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.





The
Company adopted the provisions of FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, on January 1, 2007. As a result of the
implementation of FIN 48, the Company made a comprehensive review of its
portfolio of tax positions in accordance with recognition standards established
by FIN 48. As a result of the implementation of Interpretation 48, the Company
recognized no material adjustments to liabilities or stockholders’ equity. When
tax returns are filed, it is highly certain that some positions taken would be
sustained upon examination by the taxing authorities, while others are subject
to uncertainty about the merits of the position taken or the amount of the
position that would be ultimately sustained. The benefit of a tax position is
recognized in the financial statements in the period during which, based on all
available evidence, management believes it is more likely than not that the
position will be sustained upon examination, including the resolution of appeals
or litigation processes, if any. Tax positions taken are not offset or
aggregated with other positions. Tax positions that meet the
more-likely-than-not recognition threshold are measured as the largest amount of
tax benefit that is more than 50 percent likely of being realized upon
settlement with the applicable taxing authority. The portion of the benefits
associated with tax positions taken that exceeds the amount measured as
described above is reflected as a liability for unrecognized tax benefits in the
accompanying balance sheets along with any associated interest and penalties
that would be payable to the taxing authorities upon examination. Interest
associated with unrecognized tax benefits are classified as interest expense and
penalties are classified in selling, general and administrative expenses in the
statements of income. The adoption of FIN 48 did not have a material impact on
the Company’s financial statements.





Foreign Currency
Transactions and Comprehensive Income





Accounting
principles generally require that recognized revenue, expenses, gains and losses
be included in net income. Certain statements, however, require entities to
report specific changes in assets and liabilities, such as gain or loss on
foreign currency translation, as a separate component of the equity section of
the balance sheet. Such items, along with net income, are components of
comprehensive income. The functional currency of the Company is Chinese
Renminbi. The unit of Renminbi is in Yuan. Translation gains of $2,345,697 and
$1,303,732 at December 31, 2008 and 2007, respectively, are classified as an
item of other comprehensive income in the stockholders’ equity section of the
consolidated balance sheet. During the years ended December 31, 2008 and 2007,
other comprehensive income in the consolidated statements of income and other
comprehensive income included translation gains of $1,041,965 and $822,146,
respectively.





Currency
Hedging





The
Company has entered into a forward exchange agreement with the Bank of China,
whereby the Company has agreed to sell US dollars to the Bank of China at a
certain contractual rates. Since the contractual rate at which the Company sells
US dollars to the Bank of China was greater than the exchange rate on the date
of each exchange transaction, the Company has recognized foreign exchange gains
of $959,943 and $90,707 for the year ended December 31, 2008 and 2007,
respectively.




F-11




DEER
CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007


At
December 31, 2008, the Company has outstanding forward exchange contracts to
sell $ 8,110,770 at exchange rates ranging from RMB 7.1772 to RMB
7.406.   The fair value of the contracts was approximately
$13,000.





Basic and Diluted Earnings
Per Share





Earnings
per share is calculated in accordance with SFAS No. 128, “Earnings Per Share”.
SFAS No. 128 superseded Accounting Principles Board Opinion No.15 (APB 15). Net
earnings per share for all periods presented has been restated to reflect the
adoption of SFAS No. 128. Basic earnings per share is based upon the weighted
average number of common shares outstanding. Diluted earnings per share is based
on the assumption that all dilutive convertible shares and stock options were
converted or exercised. Dilution is computed by applying the treasury stock
method. Under this method, options and warrants are assumed to be exercised at
the beginning of the period (or at the time of issuance, if later), and as if
funds obtained thereby were used to purchase common stock at the average market
price during the period. There were no options, warrants or dilutive securities
outstanding as of December 31, 2008 and 2007




Statement of Cash
Flows





In
accordance with SFAS No. 95, “Statement of Cash Flows,” cash flows from the
Company’s operations are calculated based upon the local currencies. As a
result, amounts related to assets and liabilities reported on the statement of
cash flows will not necessarily agree with changes in the corresponding balances
on the balance sheet.





Recent
Pronouncements





In
February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
159, “The Fair Value Option for Financial Assets and Financial Liabilities“.
SFAS 159 permits entities to choose to measure many financial assets and
financial liabilities at fair value. Unrealized gains and losses on items for
which the fair value option has been elected are reported in earnings. SFAS
159 is effective for fiscal years beginning after November 15, 2007. The
adoption of SFAS 159 did not have a material impact on the Company’s financial
position and results of its operations.





In June
2007, the FASB issued FASB Staff Position No. EITF 07-3, “Accounting for
Nonrefundable Advance Payments for Goods or Services Received for use in Future
Research and Development Activities” (“FSP EITF 07-3”), which addresses whether
nonrefundable advance payments for goods or services that used or rendered for
research and development activities should be expensed when the advance payment
is made or when the research and development activity has been
performed.  The Task Force reached a consensus that nonrefundable
advance payments for goods or services that will be used or rendered for future
research and development activities should be deferred and capitalized. Such
amounts should be recognized as an expense as the related goods are delivered or
the related services are performed. Entities should continue to evaluate whether
they expect the goods to be delivered or services to be rendered. If an entity
does not expect the goods to be delivered or services to be rendered, the
capitalized advance payment should be charged to expense. Management does not
believe this pronouncement will have an impact on the Company’s financial
statements.





In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business
Combinations.” SFAS No. 141R which changes how a reporting enterprise
accounts for the acquisition of a business. SFAS No. 141R requires an
acquiring entity to recognize all the assets acquired and liabilities assumed in
a transaction at the acquisition-date fair value, with limited exceptions, and
applies to a wider range of transactions or events. SFAS No. 141R is
effective for fiscal years beginning on or after December 15, 2008 and
early adoption and retrospective application is prohibited. This pronouncement
will likely have a material impact on business acquisitions made after January
1, 2009.





In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements”, which is an amendment of Accounting Research
Bulletin (“ARB”) No. 51.  SFAS 160 clarifies that a noncontrolling
interest in a subsidiary is an ownership interest in the consolidated entity
that should be reported as equity in the consolidated financial
statements.  SFAS 160 changes the way the consolidated income
statement is presented, thus requiring consolidated net income to be reported at
amounts that include the amounts attributable to both parent and the
noncontrolling interest.  SFAS 160 is effective for the fiscal years,
and interim periods within those fiscal years, beginning on or after December
15, 2008.  Based on current conditions, the Company does not expect
the adoption of SFAS 160 to have a significant impact on its results of
operations or financial position.




F-12




DEER
CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007


In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities an amendment of FASB Statement No. 133.” SFAS 161 changes
the disclosure requirements for derivative instruments and hedging activities.
Entities are required to provide enhanced disclosures about (a) how and why an
entity uses derivative instruments, (b) how derivative instruments and related
hedged items are accounted for under SFAS 133 and its related interpretations,
and (c) how derivative instruments and related hedged items affect an entity’s
financial position, financial performance, and cash flows. The Company has not
evaluated the impact that SFAS 161 may have on its results of operations or
financial position.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” SFAS 162 identifies the sources of accounting principles
and the framework for selecting the principles to be used in the preparation of
financial statements of nongovernmental entities that are presented in
conformity with generally accepted accounting principles (GAAP) in the United
States (the GAAP hierarchy). SFAS 162 will not have an impact on the Company’s
financial statements.





In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts, an interpretation of FASB Statement No. 60.” The scope of
SFAS 163 is limited to financial guarantee insurance (and reinsurance)
contracts, as described in this Statement, issued by enterprises included within
the scope of Statement 60. Accordingly, SFAS 163 does not apply to financial
guarantee contracts issued by enterprises excluded from the scope of Statement
60 or to some insurance contracts that seem similar to financial guarantee
insurance contracts issued by insurance enterprises (such as mortgage guaranty
insurance or credit insurance on trade receivables). SFAS 163 also does not
apply to financial guarantee insurance contracts that are derivative instruments
included within the scope of FASB Statement No. 133, “Accounting for Derivative
Instruments and Hedging Activities.” SFAS 163 will not have an impact on the
Company’s financial statements.





Note
3 - Inventories





Inventories
as of December 31, 2008 and 2007 consisted of the following:





2008
                    
                    
                    2007Raw
      material
                    
                    $
                    3,960,022
                    
                    
                    $
                    2,817,203Work
      in process
                    
                    
                    1,326,719
                    
                    
                    
                    189,190Finished
      goods
                    
                    
                    2,394,110
                    
                    
                    
                    1,146,911Total
                    
                    $
                    7,680,851
                    
                    
                    $
                    4,153,304





Note
4 - Short Term Loans





Short
term loans at December 31, 2008 and 2007 are as follows:





2008
                  
                  
                  2007Short
      term bank loans with the Bank of China.  As of December 31,
      2008, the term of the loan was 5 months, with an interest of
      5.990%.  As of December 31, 2007 the term of the loan was 5
      months, with an interest rate of 6.820% (per annum).  The loans
      are collateralized by buildings and land use rights.
                  
                  $
                  487,544
                  
                  
                  
                  98,231Short
      term loans with Industrial and Commercial Bank.  As of December
      31, 2007 the term of the loan was 3 months, with an interest rate of
      6.820% (per annum).  The loan was collateralized by buildings
      land use rights and equipment.
                  
                  
                  --
                  
                  
                  
                  685,440Short
      term loans with ABN-AMRO China, Shenzhen Branch.  As of December
      31, 2007, the term of the loan was 2.5 months, with and an interest rate
      of 7.350% (per annum). The loan was collateralized by a cash
      deposit.
                  
                  
                  --
                  
                  
                  
                  907,760Short
      term loans with Agricultural Bank of China.    As of
      December 31, 2008, the term of the loan was 12 months, with an interest of
      7.950%.  The loan is collateralized by
equipment.
                  
                  
                  3,065,297$
                  3,552,841
                  
                  
                  $
                  1,691,431





F-13




DEER
CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007




Interest
expense on short term loans was $310,762 and $113,356 for years ended December
31, 2008 and 2007, respectively.





Note
5 - Notes Payable





Notes
payable at December 31, 2008 and 2007 consist of multiple banker's acceptance
notes from Bank of China payable to the Company’s vendors. The terms of the
notes range from 0-3 months, with no interest rate on the notes. The Company
deposits 10% of the notes’ par value with the bank, refundable when the notes
paid.  Notes payable at December 31, 2008 and 2007 amounted to
$3,155,348 and $3,160,059, respectively.





Note
6 – Long-Term Loan





On
November 14, 2008, the Company entered into a long-term loan agreement with an
unrelated party.  The loan was for $733,500 at 8.10%, due on October
20, 2010 and secured by certain fixed assets of the Company.








Note
7 – Stockholders’ Equity





On
November 30, 2007, the Company decided to increase its paid-in capital by
$2,923,688 through a board meeting. The new capital was from retained earnings
distributable to the shareholder.





On
December 20, 2008, 50HZ, a related party, owned by two shareholders of Deer
International transferred an intangible asset (a patent) to the Company as a
settlement of a related party receivable.  The asset’s historical
costs could not be corroborated with supporting documentation and was recorded
at a zero costs basis by the Company.  The settlement of the related
party receivable of $ 3,314,979 through the transfer of the intangible asset
with zero cost basis is considered a deemed dividend of $3,314,979 to the
majority shareholders of the Company as they own 100% of 50HZ.








Note
8 - Employee Common Welfare





The total
expense for the employee common welfare was $59,147 and  $2,316 for
the years ended December 31, 2008 and
2007,  respectively.  The Chinese government abolished the
14% welfare plan policy at the beginning of 2007.  The Company is not
required to establish welfare and common welfare reserves.




Note
9 - Statutory Reserve and Development Fund





As
stipulated by the Company Law of the PRC, net income after taxation can only be
distributed as dividends after appropriation has been made for the
following:





i.
            Making
      up cumulative prior years’ losses, if
any;





ii.
            Allocations
      to the “Statutory surplus reserve” of at least 10% of income after tax, as
      determined under PRC accounting rules and regulations, until the fund
      amounts to 50% of the Company’s registered
  capital;





iii.
            Allocations
      of 5-10% of income after tax, as determined under PRC accounting rules and
      regulations, to the Company’s “Statutory common welfare fund” (“SCWF”),
      which is established for the purpose of providing employee facilities and
      other collective benefits to the Company’s employees;
  and




F-14




DEER
CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER
31, 2008 AND 2007


iv.
            Allocations
      to the discretionary surplus reserve, if approved in the stockholders’
      general meeting.  The Company allocates 5% of income after tax
      as development fund. The fund is for enlarging its business and increasing
      capital.





Pursuant
to the new Corporate Law effective on January 1, 2006, there is now only one
"Statutory surplus reserve" requirement. The reserve is 10% of income after tax,
not to exceed 50% of registered capital.





The
Company has appropriated $398,939 and $199,469, and $348,822 and $174,411 as
reserve for the statutory surplus reserve and development fund for the years
ended December 31, 2008 and 2007, respectively.





Note
10 - Related Party Transactions





Due from
shareholder amounted to $0 and $1,383,124 as of December 31, 2008 and 2007,
respectively. Due from related party amounted to $331,267 and $0 as of December
31, 2008 and 2007, respectively. The Company collects a portion of its sales
through a collection company controlled through a former shareholder and current
related party. Due from shareholder and related party represents account
receivables from that company.  The above parties are considered
related parties through common ownership of the Company’s CEO.





Due to
shareholder amounted to $0 and $756,458 as of December 31, 2008 and 2007,
respectively. Due to shareholder is non-interest bearing and are payable or
receivable on demand.





Advance
to shareholder amounted to $0 and $509,139 as of December 31, 2008 and 2007,
respectively.  Advances to related party amounted to $274,805 and $0
as of December 31, 2008 and 2007, respectively. Advances to shareholder and
related party are non interest bearing and are payable or receivable on
demand.





Purchases
from shareholders amounted to $0 and $726,744 for years ended December 31, 2008
and 2007, respectively.





Note 11 - Taxes





Local PRC
Income Tax





Pursuant
to the tax laws of China, general enterprises are subject to income tax at an
effective rate of 25% and 33% for the years ended December 31, 2008 and 2007,
respectively.





A
reconciliation of tax at United States federal statutory rate to provision for
income tax recorded in the financial statements for years ended December 31,
2008 and 2007 are as follows:





2008
                  
                  
                  2007Tax
      provision at statutory rate
                  
                  
                  34
                  %
                  
                  
                  34
                  %Foreign
      tax rate difference
                  
                  
                  (9
                  %)
                  
                  
                  (1
                  %)Current
      operation losses not utilized
                  
                  
                  3
                  %
                  
                  
                  -Effect
      of tax holiday
                  
                  
                  -
                  
                  
                  
                  (18
                  %)28
                  %
                  
                  
                  15
                  %





The
Company operates in a privileged economic zone which entitles them to certain
tax benefits (tax holiday) as follows:





·
            Winder
      Electric - Exempt from provincial tax and 100% exemption from federal tax
      from January 1, 2002 to December 31, 2003 and 50% exemption from federal
      tax from January 1, 2004 to December 31,
2006.





If the
Company had not been exempt from paying income taxes due to operating in a
privileged economic zone, net income for year ended December 31, 2007 would have
been lower by approximately $717,000 and earnings per share would have been
$0.15.  In 2008, the Company did not receive favorable tax
treatment.




F-15


Note
12 – Geographical Sales
 
 Geographical
distribution of sales is as follows:
  Years
      EndedDecember
      31,Geographical
      Areas
                
                2008
                
                
                2007North
      America
                
                $
                14,899,350
                
                
                $
                12,861,388Europe
                
                
                7,842,437
                
                
                
                5,885,907South
      America
                
                
                6,294,899
                
                
                
                4,962,848Middle
      East
                
                
                6,921,928
                
                
                
                3,914,135Asia
                
                
                5,532,985
                
                
                
                2,357,150China
                
                
                2,048,297
                
                
                
                3,462,861Africa
                
                
                245,039
                
                
                
                31,970$
                43,784,935
                
                
                $
                33,476,259


Note 13 – Subsequent Event





On
February 6, 2009, the Company received $508,500 from the placement of units of
its securities consisting of shares of common stock, par value $.001 per share,
and stock purchase warrants (15% warrant coverage) in a private placement exempt
from registration under the Securities Act, and that the private placement will
be extended through March 31, 2009. It is intended that the proceeds of the
private placement will be used primarily for working capital.  A total
of 625,000 units, each unit representing one share of the Company’s common stock
and a three year common stock purchase warrant in the amount of 15% of the units
purchased, were sold through the end of business February 6, 2009. Each unit is
priced at $.80 with $508,500 in total having been received. Fees of (i) 9% of
the securities placed payable in cash, and (ii) a number of common stock
purchase warrants equal to 10% of the number of units placed were paid to
participating selected dealers. The stock purchase warrants have a term of three
years and are exercisable for one share of common stock at an initial exercise
price of $1.50. The securities offered in the private placement have not been
registered under the Securities Act, or any state securities laws, and unless so
registered, may not be sold in the United States except pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act and applicable state securities laws.




F-16





SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this report on Form 10-K to be signed on
its behalf by the undersigned, thereunto duly authorized.




DEER
      CONSUMER PRODUCTS, INC.Date:
      March 30, 2009
              By:
              /s/
      Ying HeYing
      HeChief
      Executive Officer (Principal Executive Officer)


Pursuant
to the requirements of the Securities Exchange Act of 1934, this report on
Form 10-K has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated:




Signature
                            
                            
                            Title
                            
                            Date/s/Ying
      He
                            
                            
                            Chairman
      of the Board & Chief Executive Officer
                            
                            March
      30, 2009Ying
      He/s/
      Yuehua Xia
                            
                            
                            Chief
      Financial Officer and Treasurer
                            
                            March
      30, 2009Yuehua
      Xia/s/Man
      Wai James Chiu
                            
                            
                            Director
                            
                            March
      30, 2009Man
      Wai James Chiu
   41


EXHIBIT
INDEX





Exhibit No.
              
              Description2.1
              
              Share
      Exchange Agreement and Plan of Reorganization by and between Deer
      International Group Limited and TAG Events Corp., dated September 3, 2008.
      (Incorporated herein by reference to Exhibit 2.1 to the Current Report on
      Form 8-K filed on September 5, 2008).2.2
              
              Return
      to Treasury Agreement by and between the Company and Crescent Liu, dated
      August 26, 2008. (Incorporated herein by reference to Exhibit 2.2 to
      the Current Report on Form 8-K filed on September 5,
      2008).3.1
              
              Articles
      of Incorporation (Incorporated herein by reference to Exhibit 3.1 to the
      Company’s Form SB-2 filed on February 8, 2007).3.2
              
              By-Laws
      (Incorporated herein by reference to Exhibit 3.2 to the Company’s Form
      SB-2 filed on February 8, 2007).3.3
              
              Articles
      of Exchange of Deer International Group Limited and TAG Events Corp. filed
      September 3, 2008. (Incorporated herein by reference to Exhibit 3.3
      to the Current Report on Form 8-K filed on September 5,
      2008).3.4
              
              Articles
      of Merger between Deer Consumer Products, Inc. and TAG Events Corp.
      amending the Articles of Incorporation filed with the Secretary of State
      of the State of Nevada on September 3, 2008. (Incorporated herein by
      reference to Exhibit 3.4 to the Current Report on Form 8-K filed on
      September 5, 2008)4
              
              Specimen
      Stock Certificate.16.1
              
              Letter
      from Dale Matheson Carr Hilton Labonte LLP, dated September 3,
      2008.  (Incorporated herein by reference to Exhibit 16.1 to the
      Current Report on Form 8-K filed on September 5,
    2008)21
              
              Subsidiaries31.1
              
              Certification
      of the Chief Executive Officer pursuant to Exchange Act
      Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302
      of the Sarbanes-Oxley Act of 2002.31.2
              
              Certification
      of the Chief Financial Officer pursuant to Exchange Act
      Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302
      of the Sarbanes-Oxley Act of 2002.32
              
              Certifications
      of the Chief Executive Officer and Chief Financial Officer pursuant to
      18 U.S.C. Section 1350, as adopted pursuant to Section 906
      of the Sarbanes-Oxley Act of 2002.
 99.1
                  
                  Lock-up
      Agreement between Sino Unity Limited and Deer Consumer Products, Inc.,
      dated September 3, 2008 (Incorporated herein by reference to Exhibit 99.1
      to the Current Report on Form 8-K filed on December 2,
    2008).99.2
                  
                  Lock-up
      Agreement between True Olympic Limited and Deer Consumer Products, Inc.,
      dated September 3, 2008. (Incorporated herein by reference to Exhibit 99.2
      to the Current Report on Form 8-K filed on December 2,
    2008).99.3
                  
                  Lock-up
      Agreement between Great Scale Holdings Limited and Deer Consumer Products,
      Inc., dated September 3, 2008. (Incorporated herein by reference to
      Exhibit 99.3 to the Current Report on Form 8-K filed on December 2,
      2008).99.4
                  
                  Lock-up
      Agreement between New Million Holdings Limited and Deer Consumer Products,
      Inc., dated September 3, 2008. (Incorporated herein by reference to
      Exhibit 99.4 to the Current Report on Form 8-K filed on December 2,
      2008).99.5
                  
                  Lock-up
      Agreement between Tiger Castle Limited and Deer Consumer Products, Inc.,
      dated September 3, 2008. (Incorporated herein by reference to Exhibit 99.5
      to the Current Report on Form 8-K filed on December 2,
    2008).99.6
                  
                  Lock-up
      Agreement between Achieve On Limitedand
      Deer Consumer Products, Inc., dated September 3, 2008. (Incorporated
      herein by reference to Exhibit 99.6 to the Current Report on Form 8-K
      filed on December 2, 2008).99.7
                  
                  Lock-up
      Agreement between Sharp Champion Limited and Deer Consumer Products, Inc.,
      dated September 3, 2008. (Incorporated herein by reference to Exhibit 99.7
      to the Current Report on Form 8-K filed on December 2,
    2008).99.8
                  
                  Lock-up
      Agreement between Sourceland Limited and Deer Consumer Products, Inc.
      dated September 3, 2008.  (Incorporated herein by reference to
      Exhibit 99.8 to the Current Report on Form 8-K filed on December 2,
      2008).
  
 42