UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K





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





For
the fiscal year ended June 30, 2008





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





For
the transition period from ______ to ______





China
Dasheng Biotechnology Company


(Name of
small business issuer in its charter)





Nevada
            333-141327
            26-0162321(State
      or other jurisdiction
              of
      incorporation or organization)
            Commission
      File Number
            (I.R.S.
      Employer
              Identification
      No.)





Building
B 17th Floor


Century
Plaza


Qingyang
Road


Lanzhou,
Gansu


People's
Republic of China


Telephone
number: (86)931
8441248


(Address
and telephone number of principal executive offices)





c/o
American Union Securities


100
Wall Street 15th Floor


New
York, NY 10005


Telephone
number: (212)
232-0058


(Address
and telephone number of United States agent offices)








SECURITIES
REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None





SECURITIES
REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None





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




Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for at least the past 90 days. YES
[x] NO [  ]




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




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). YES [  ] NO [ x]




Revenues
of the registrant for its fiscal year ended June 30, 2008 were
$16,294,163.




The
aggregate market value of voting and non-voting common stock held by
non-affiliates of the registrant was $14,383,200 as of June
30, 2008.




The
number of shares outstanding of registrant's common stock as of June 30, 2008
was 30,000,000.




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









1







TABLE
OF CONTENTS




PagePart
      IITEMS
      1 AND 2.
            DESCRIPTION
      OF BUSINESS AND PROPERTIES
            3ITEM
      3.
            LEGAL
      PROCEEDINGS
            19ITEM
      4.
            SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
            19Part
      IIITEM
      5.
            MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            20ITEM
      6.
            MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            21ITEM
      7.
            FINANCIAL
      STATEMENTS
            F-1ITEM
      8.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
            26ITEM
      8A.
            CONTROLS
      AND PROCEDURES
            26ITEM
      8B.
            OTHER
      INFORMATION
            27Part
      IIIITEM
      9.
            DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERANCE;
      COMPLIANCE WITH SECTION 16(a)
            27ITEM
      10.
            EXECUTIVE
      COMPENSATION
            28ITEM
      11.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
            28ITEM
      12.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE
            29ITEM
      13.
            EXHIBITS
            29ITEM
      14.
            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
            30






2








PART
I




The
information in this document contains forward-looking statements which involve
risks and uncertainties, including statements regarding our capital needs,
business strategy and expectations. Any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking statements. In
some cases, you can identify forward-looking statements by terminology such as
“may,” “should,” “will,” “expect,” “plan,” “intend,” “anticipate,” “believe,”
“estimate,” “predict,” “potential,” “forecast,” “project,” or “continue,” the
negative of such terms or other comparable terminology. You should not rely on
forward-looking statements as predictions of future events or results. Any or
all of our forward-looking statements may turn out to be wrong. They can be
affected by inaccurate assumptions, risks and uncertainties and other factors
which could cause actual events or results to be materially different from those
expressed or implied in the forward-looking statements.




In
evaluating these statements, you should consider various factors, including the
risks described under “Risk Factors” and elsewhere. These factors may cause our
actual results to differ materially from any forward-looking statement. In
addition, new factors emerge from time to time and it is not possible for us to
predict all factors that may cause actual results to differ materially from
those contained in any forward-looking statements. We disclaim any obligation to
publicly update any forward-looking statements to reflect events or
circumstances after the date of this document, except as required by applicable
law.




ITEMS 1 AND 2.DESCRIPTION OF BUSINESS
AND PROPERTIES




In this
document, references to the “company,” “we,” “us” and “our” refer to China
Dasheng Biotechnology Company and our predecessors and subsidiaries, unless the
context otherwise requires.




History




Max
Nutrition, Inc. was organized as Wink Stone LLC, a limited liability company, in
March 2005 to succeed an unincorporated business conducted by our founder since
June 2004. It was converted into a corporation, incorporated in the state of
Nevada, on January 12, 2007 with the name Max Nutrition, Inc. We commenced
revenue producing operations in June 2004 as an unincorporated entity D/B/A Max
Nutrition. Max Nutrition operated within the nutritional supplements retail
industry.  We were a retailer, located in West Hollywood, California, of
health and wellness products, including vitamins, minerals, herbal, and
specialty supplements, sports nutrition products, diet products and athletic
sportswear.  Our product mix was focused on nutritional products, sold
under nationally recognized third-party brands.





We
discontinued operations during the fourth quarter of our fiscal year ended
October 31, 2007. On January 29, 2008, a closing (the “Closing”) was held
pursuant to an Agreement and Plan of Reorganization, dated as of January 29,
2008, (the “Agreement”) by and among the Company, Nicholas Stone (the “Control
Stockholder”) and American Spring Pharmaceutical, Inc., a Delaware corporation
(“ASPI”).  Pursuant to the Agreement, ASPI purchased an aggregate of
7,700,000 shares of the 10,000,000 shares of the Company’s issued and
outstanding stock for $183,000.00 or approximately $0.0238 per share and ASPI’s
transfer of 100% of the issued and outstanding shares of Gansu Biology Science
and Technology Stock Co., Ltd (“GDBS”) to the Company in exchange for 20,000,000
shares of the Company’s common stock.  Upon completion of the
transaction, ASPI will distribute the 27,700,000 shares of Company common stock
it received from the Company and the Company’s principal shareholder to its
shareholders, pro rata.  Nicholas Stone has agreed to indemnify the
Company and ASPI and its shareholders against any liabilities arising out of any
breach of the Agreement by the Company.




ASPI is
the owner of all of the issued and outstanding shares of GDBS, a corporation
organized under the laws of the People’s Republic of China (“PRC”) and a
developer, producer and marketer of bacteria based additives for crops and
livestock feeds. Accordingly, the Closing resulted in GDBS becoming a
subsidiary of the Company.




Under the
terms of the Agreement, all of the present officers and directors of the Company
resigned and Jinjun Qi, the Chairman and CEO of GDBS, became the sole officer
and director of the Company.  The Agreement required that the Company
complete the disposition of all of its “Max Nutrition” assets prior to
Closing.





The
Company filed a Current Report on Form 8-K dated January 29, 2008, which
contains further information regarding the Closing and the transaction involved
therein.







Our
Business




We are
engaged in the production, marketing and distribution of bacteria based
products, which are used as additives for livestock feed and crop cultivation.
These products have shown to increase yield in terms of harvest crop volume and
livestock weight. In addition, we have found that our bacteria based additives
have shown to increase sucrose levels in fruits and protein levels in
livestock.





We
operate under three subsidiary segments. Subsequent to Closing of the Agreement,
we acquired GDBS along with its subsidiaries. GDBS owns a 80% interest in Lüshen
Bio-tech Co., Ltd (“Lüshen”), a company incorporated in Haikou, Hainan Province
under the laws of China along with a 60% interest in Elemiss Food Co., Ltd.
(“Elemiss”), a company incorporated in Yangling, Shaanxi Province under the laws
of China. A chart of our organization follows:









3










Industry
overview and market condition




By 2009,
we estimate the Chinese market for biological and chemical agents used in
agricultural industries will exceed $20 billion dollars. This market primarily
includes fertilizers, herbicides, and pesticides. Within China, the term
biological product includes products with the “organic” label along with
products which do not use traditional chemical agents, but have not yet obtained
the approval to be recognized as “organic.” Products are awarded the right to be
labeled “organic” by the China Green Food Development Center, an agency under
the jurisdiction of the Ministry of Agriculture.





We
operate within the biological products and agents market. This space includes
organic fertilizers, non-chemical agents, and biological agents based additives.
By 2009, we estimate this market to exceed approximately $2.7 billion dollars.
More specifically, we believe the biological additives market within this space
will exceed approximately $400 million dollars.





China’s
population which exceeds 1.3 billion people is primarily fed by its farmers
using only about 15% of its total land area. The combination of limited arable
land and a massive population begs the longstanding question of how will China
feed its citizens? For now, the practical solution is to increase yield on the
current arable land.  China has been able to increase yield primarily
through the increased use of fertilizers and agents. We estimate that by 2009,
China’s fertilizer use will exceed 50 million metric tons. Related to our niche
market, we believe the demand for biological products will exceed 6 million
metric tons by 2009.








We
believe that the following competitive strengths enable us to compete
effectively in the fertilizer market in China:





·
            Strong
      Market Position.We are a leading manufacturer of fertilizer
      additive products in China.





·
            Recognized
      and Certified Product Offerings. Our AM/HM brand of fertilizer
      products have been certified by the PRC government at the provincial level
      which is an endorsement of the effectiveness of the products in all
      regions of China.





·
            Broad
      Customer Base.    We developed a diversified
      customer base of farmers and retailers located throughout China and are
      not dependent on, or heavily concentrated in, any single customer or
      customer base.




-4-




4









Products




We divide
our products into four main product lines as follows:





1.
            AM/HMTM
      bacteria based additives for crops.





These
      bacterial blends, composed of the Company’s proprietary and specially
      cultivated strain solution, Bulgaria lactobacillus, beer microzyme, and
      dark red spirilla, among other ingredients, can, in the opinion of
      management, substantially increase the beneficial microorganism colonies
      in soil, while inhibiting the reproduction of harmful fungi and
      putrefactive bacteria, and are intended to improve nutrient absorption,
      and reduce crop and livestock diseases. Management believes that the
      metabolites and mycelia generated by the above beneficial bacterial blends
      can also help decompose residual pesticide and other accumulated toxic
      matters, while increasing the organic nutrient content in soil and feed
      and thereby lead to higher meat and crop
yields.





2.
            AM/HMTM
      bacteria based additives for livestock
feed.





These
      bacterial blends are intended to soften the livestock feed and restrain
      the growth and reproduction of pathogenic bacteria, while supplying
      beneficial nutriments such as organic acid, vitamins, enzyme, antibiotics,
      mycelium protein, as well as other growth-enhancing substances, thereby
      balancing the nutrients in the
feed.





3.
            FGWTM
      bacterial based preservatives.





These
      preservatives when applied to animal specimens, the nontoxic, colorless,
      and side-effect free liquid helps preserve superior quality specimens for
      scientific research. When sprayed on agricultural produce, it can preserve
      the freshness under normal atmospheric and temperature
      conditions.





4.
            Bacteria
      based fertilizer.





Our
liquid fertilizer is suited for application on plants, specifically vegetable
and fruit leaves. When applied on plants, we have found that the plants'
resistance against freezing and disease increases. In
addition,  crops’ yield increases and shortened harvest periods can be
experienced.





Raw
Materials and Our Principal Suppliers




The
principal materials needed for production include bacterial stock solutions,
culture medium, and microzyme. The original strain stock solutions used in
production are developed in  the Beijing Central Research Lab, and
supplied to the Company through Dasheng Trading Co., Ltd. The Company then
develops and reconstitutes bacteria from the original stock solutions (“mother
bacteria”), and redistributes the mother bacteria solutions to the three
manufacturing plants in Lanzhou, Yangling and Haikou.   While
Dasheng Trading Co. Ltd. has been a principal supplier to the Company,
management intends to reduce its reliance on this related supplier in the
future.





Other raw
materials used in the three manufacturing plants include honey, sugar, and
fermentation agents. The Lanzhou plant purchases these raw materials from
Dasheng Trading Co., Ltd., while the Yangling and Haikou plants both purchase
them locally.  Management believes that there are adequate alternative
sources of supply for each of these raw materials.




5










Production




The
Company’s Lanzhou plant has a designed AM-/HM-based biological bacterial blends
output capacity of 2,000 metric tons per year, including 1,400 metric tons for
crops and 600 metric tons for live stock feeding. The actual product output in
2008 was 1607.08 metric tons as compared to 626.46 metric tons in
2007.




Lüshen
has a designed AM/HM output capacity of 1,700 metric tons per year, including
50% of AM and HM each, and preservatives output capacity of 40 metric tons per
year. We have reached full output capacity in 2008 as compared to 2007 when we
produced 1562.25 metric tons of products.








Elemiss
has a designed output capacity of 1,200 metric tons per year. Actual
outut in 2008 was 1106 metric tons as compared to 2007 when we produced
913.03 metric tons of products.








We use
our proprietarily developed multi-stage fermentation process to produce the live
bacteria cultures which are the active ingredients of our products. Solid
bacteria are then extracted and stored using controlled freeze drying
methods.







6






AM/HM PRODUCTION
PROCESS 
 The
following diagram demonstrates the typical production process of the AM-/HM-
based bacterial blends.






Facilities




Manufacturing Plants


The
manufacturing plant at 116 Wanxi Road, Lanzhou, Gansu Province covers a total
area of 46,400 sq meters, with a net use area of 26,300 sq meters.





The
Company’s manufacturing plant located at Hongming Farm in Haikou City, Hainan
Province, occupies an area of 22,142 sq meters, with a net use area of 6,940 sq
meters, including 4,100 sq meters of office and workshop space.





The
Company’s manufacturing plant located at West Xingyang Road, Yangling County,
Shaanxi Province, covers an area of 8,600 square meters, with a net use area of
2,600 square meters, including 2,000 square meters of office and workshop
space





The
Company owns each of its facilities free of any mortgage.





Key
equipment


The
principal equipment used in the production process includes (1) Twenty two
20m3stainless steel aerobic fermentation tanks; (2) Thirty Five
Hundred 220-Liter anaerobic fermentation barrels; (3) Four
1,500kg/hour aseptic automatic filling lines; in addition to (4) water
purification equipment; and (5) lab testing equipment. Substantially all of the
equipment described above used was purchased between 2001 and 2002.





All the
Company’s three manufacturing plants have unconstrained access to utilities
including water, electricity, gas and communication infrastructure to meet their
production needs.








7




Employees




As at
June 30, 2008, we had 689 staff and employees. The following table
summarizes the functional distribution of our employees:




Department
            
            HeadcountManagement
      and Administrative
            
            
            77Sales
      and Marketing
            
            
            157Production
            
            
            438Research
      and Development
            
            
            17Total
            
            
            689














All of
these employees were full-time. We do not have any payment obligations for any
retirees and are not currently retaining any contractors. The Company currently
has 689 full time employees, including 248 at the Company headquarters in
Lanzhou, 302 in Lüshen, and 139 in Elemiss. The Company purchases pension
insurance, medical insurance and unemployment insurance for all full time
employees in accordance with China’s Labor Law.  The Company’s
employees are not represented by a collective bargaining unit. Management
considers the Company’s relationships with its employees to be satisfactory, and
management believes that should the Company require additional employees at any
of its facilities that it will be able to meet its needs from the locally
available labor pool.









8


Distribution







The
Company sells its products through a combination of direct and indirect selling
methods. It currently employs 157 full time sales professionals, including 41 at
the Company headquarters in Lanzhou, responsible for northern China, 86 in
Haikou, responsible for southern China and 30 in Yangling, responsible for
central China. The Company has set up 13 regional sales companies throughout
China, which markets the Company’s products through a network of 22 provincial
level general distributors and 80 city/county level distributors. The Company
employs a target-profit pricing method. The headquarters in Lanzhou determines
the target profits for each of the three manufacturing plants, which in turn
work directly with general distributors to determine the prices of each of the
product series sold into the local distribution channel.





In an
effort to provide expedient services and save on shipping costs, the Company has
set up a repackaging center in Yangling, Shaanxi Province, where China’s first
and only Agricultural High-tech Demonstration Area is located.





The major
customers of the Company are a variety of institutional buyers, including
state-owned farms and plantations, fertilizer and feedstock manufacturers,
agricultural supplies companies, and agrotech research institutes across China.
..  The Company does not depend on any particular customer for sales of
its AM/HM and Bulgarian lactobacillus feed additive. Management believes that
the use of hazard-free biological preservatives will become more widespread and
the Company will be able to sell preservatives to a wider array of customers,
thereby significantly lower its dependence on any single customer.





Within
the Company’s agricultural markets, a significant portion of the required sales
effort includes providing customers with follow-up analysis regarding the
efficacy of the Company’s products.  The Company’s future growth is
dependant upon the Company being able to provide this type of benefit analysis
to its customers and the Company intends to increase the number of its staff
capable of providing such information as a part of its marketing
effort.




Customers




We sell
our products directly to customers and through distributor channels. We sell
directly to clients including farms and collectives (all state-owned) along with
private agricultural industries. We classify these as larger customers as
defined by those with annual orders exceeding 500,000 RMB or approximately
$73,529 dollars. These customers comprise approximately 91% and 78% of total
revenues for 2008 and 2007 respectively. We also sell through our distributor
channels which include 22 provincial distribution centers and 80 city level
vendors. The final end user of our products can range from an individual farmer
working his own plot of land to a state owned farm supported by the provincial
and central government.







9




Marketing
and Advertising




We
promote our products through the media by placing advertisements in newspapers
and magazines and on television in China. From time to time, we also sponsor
charitable events to increase public awareness of the benefits of our health
products.




Competition




Our
experience is that the compound fertilizer industry in China is highly
fragmented, consisting of numerous smaller regional manufacturers and larger,
domestic and international competitors.





Our major
competitors in China include Jiangxi Tianyi Bioengineering Development Co.,
Ltd., Guangxi Nanguochun Bioengineering Development Co., Ltd., Shaanxi Bodisen
Bioengineering Co., Ltd., Chengdu Nengsheng Biotech Co., Ltd., and Dalian Sanke
Tech (Group) Co., Ltd, Guangxi Beihai Penshibao Co., Ltd, Henan Luo Xiaowang
Group, and Shangdong Tianda 2116.




Management
expects that a fairly recent development has the potential change the
competitive landscape in the Chinese fertilizer market in the near future. Due
to the Chinese government’s WTO commitment, China started to allow foreign
companies to gain the right to distribute and make retail sales of fertilizers
beginning on December 11, 2006. Because fertilizer products usually need to be
specifically formulated for local plant, soil and climate conditions, we believe
that there are not many foreign competitors in our selected markets that are
capable of producing customized fertilizers that compete with our products.
Nevertheless, as a result of the opening of the fertilizer market to foreign
producers, we expect that the amount of fertilizer imported to China will rise
significantly and that we will face increasing competition from non-Chinese
fertilizer manufacturers.












10








Government
Regulation




All
fertilizers produced in China must be registered with the PRC Ministry of
Agriculture. No fertilizers can be manufactured without such registration. There
are two kinds of registrations: interim registration and formal registration.
The interim registration is valid for one year and applies to fertilizers in the
stages of in-the-field testing and test selling. All fertilizers that have
completed in-the-field testing and test selling must obtain formal registration
which, once obtained, is valid for five years and thereafter may be renewed for
five year periods. We have obtained the necessary Formal Fertilizer Registration
Certificate for all of our fertilizer products from the PRC Ministry of
Agriculture. Such certificate was issued on September 3, 2002 and expired in
December, 2007, at which time we were required to renew the formal registration.
We had begun the process of renewing our certificate prior to December, 2007 and
its expected to be renewed by April, 2008.





Additionally,
fertilizer manufacturers in the PRC must have a manufacturing license to make
some types of fertilizer. We have a current and active license permitting us to
manufacture those types of fertilizer.




Other
than as mentioned in the first paragraph in this section, as of December 31,
2007, we believe that we are in material compliance with all registrations and
requirements for the issuance and maintenance of all licenses required by the
governing bodies. Other than as mentioned in the first paragraph in this
section, as of December 31, 2007, all license fees and filings are
current.




If we
were to lose any of these licenses, we would only have a limited time to
re-apply for such licenses and would face possible regulatory fines. However,
such licenses will generally only be revoked under rare circumstances, such as
when illegal activities have occurred. We are not subject to any environmental
controls or restrictions that require the outlay of capital or the obtaining of
a permit in order to engage in business operations.




Intellectual
Property




The Company is the proprietary owner of two
national patents: “A preparation method for preservative used for animal
specimens” (patent No. ZL 88105221.3) and “A manufacturing method for Sheep's
placental extract” (patent No. ZL 03134402.X). The Company is also expecting
approval of a third national patent for “A preparation method for special yield-
and quality-enhancing bacterial blends” (application No. 2005100857129). The
Company is the proprietary owner of two trademarks: DSTM
(trademark No. 1684077) and Lüshen BiotechTM
(trademark No. 1969521).  No assurance is given that these patents
will provide meaningful protection to the Company in the event of any
infringement or alleged infringement or that a court will not find that these
patents infringe upon any patents held by others.





Dasheng
obtained ISO-9001quality management systems certification for its AM &
HM-based bacterial blends manufacturing process in July 2007.





In
September 2002, DS AM biological bacterial blends and DS Bulgarian lactobacillus
live stock feed additive were certified by the China Green Product Development
Center as a “Grade A Green Food Raw Material”, with which the Company is
eligible to put “Green Food” label on its feed additives.





In
October 2004, DS AM-based biological bacterial blend was certified as an
additive in microbial fertilizer by the Ministry of Agriculture.




Taxation
and Local Governmental Support




The
Company is governed by the Income Tax Law of the People’s Republic of China
concerning foreign invested companies, which, until January 2008, generally
subject to tax at a statutory rate of 33% (30% state income tax plus 3% local
income tax) on income reported in the statutory financial statements after
appropriate tax adjustments.








Substantially
all of the Company’s taxable income and related tax expense are from PRC
sources. Dasheng, Lüshen and Elemiss file separate income tax returns under the
Income Tax Law of the People’s Republic of China concerning Foreign Investment
Enterprises and Foreign Enterprises and local income tax laws (the “PRC Income
Tax Law”). In accordance with the relevant income tax laws, the profits of the
Company derived from agribusiness are fully exempted from income taxes and the
profits of the Company


derived
from real estate are subject to income taxes





On March
16, 2007, the National People’s Congress of China approved the Corporate Income
Tax Law of the People’s Republic of China (the “New CIT Law”), which is
effective from January 1, 2008. Under the new law, the corporate income tax rate
applicable to all Companies, including both domestic and foreign-invested
companies, will be 25%, replacing the current applicable tax rate of
33%.  However, tax concession granted to eligible companies prior to
the new CIT laws will be grand fathered.





The
Company has been formally approved by the local tax bureau for the favorable tax
benefit enjoyed by the foreign invested company, which allows two-year tax
exemption from income tax from January 1, 2007 through December 31, 2008,
and  three-year 50% tax reduction from January 1, 2009 to December 31,
2011.   As a result of this tax reduction benefit, the Company is
still subject to income tax exemption for the year ended June 30,
2008.




11




Foreign
Exchange




Foreign
exchange in China is principally governed by the PRC Foreign Exchange Control
Regulations promulgated by the State Council and enforced on April 1, 1996, and
the Regulations on the Administration of Foreign Exchange Settlement, Sale and
Payment promulgated by the State Council and enforced on July 1, 1996. Under
these regulations, upon payment of the applicable taxes, foreign-invested
enterprises may convert the dividends they received in Renminbi into foreign
currencies and remit such amounts outside China through their foreign exchange
bank accounts.




If a
foreign-invested enterprise needs foreign exchange transaction services in
relation to the current account item, it may make such payment through its
foreign exchange account or make an exchange and payment at one of the
designated foreign exchange banks by providing applicable receipts and
certificates, and without an approval from the State Administration of Foreign
Exchange, or SAFE. If a foreign-invested enterprise distributes dividends to its
shareholders, it will be deemed as foreign exchange transaction services in
relation to the current account item, therefore, as long as it provides the
board resolutions and other documents authorizing the distribution of dividends,
it may make such payment through its foreign exchange account or make an
exchange and payment at one of the designated foreign exchange
banks.




Notwithstanding
the above, foreign exchange conversion matters under the capital account item
are still subject to regulatory restrictions, and a prior approval from SAFE or
its relevant branches is required before conversion between Renminbi and other
foreign currencies.





Item 1A. Risk
Factors





RISK
FACTORS




An
investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below, together with all of the other
information included in this report, before making an investment decision. If
any of the following risks actually occurs, our business, financial condition or
results of operations could suffer. In that case, the trading price of our
common stock could decline, and you may lose all or part of your
investment.





Risks
Related To Our Business





If
we fail to effectively expand our operations and capacity to satisfy demand for
our fertilizer products, our results of operations and business prospects could
be impaired.





Our
future success depends on our ability to expand our business to address the
growth in demand for our fertilizer products. Because our industry is highly
competitive, if we are unable to increase our production capabilities to meet
increased demand for our products, we may lose existing customers, as well as
potential additional customers, to competitors with greater production
capacities. If we are unable to satisfy existing customers’ increased demands
for products, such customers may terminate their relationships with us which
could reduce our revenues and significantly hurt our overall financial
performance. If we are unable to meet the demand of end user customers of any of
these distributors, such distributors may terminate their relationships with us
with respect to all of their end user customers in favor or one or more of our
competitors who could meet the demands of all of such customers. Failure to
continue to attract new customers may impair our revenue growth. If our
production capacity and revenues do not continue to grow, our competitive
position, margins and profits could materially decline.




Our
rapid expansion could significantly strain our resources, management and
operational infrastructure which could impair our ability to meet increased
demand for our products and hurt our business results.




To
accommodate the recent and anticipated growth of our production assets, we will
need to expend capital resources and dedicate personnel to implement and upgrade
our accounting, operational and internal management systems and enhance our
record keeping and contract tracking system. Such measures will require us to
dedicate additional financial resources and personnel to optimize our
operational infrastructure and to recruit more personnel to train and manage our
growing employee base. If we cannot successfully implement these measures
efficiently and cost-effectively, then we could fail to utilize our production
assets sufficiently to meet demand for our products and our operating costs
could increase disproportionately, either of which could impair our revenue
growth and hurt our overall financial performance.







12





We
depend heavily on Mr. JinJun Qi, our CEO and  President, Secretary and
director, and without his services our prospects would be severely
limited.





Our
future business and results of operations depend in significant part upon the
continuing contribution of Mr. Qi, our CEO and President. Mr. Qi has extensive
experience in the fertilizer additives industry and is directly involved in all
of our business operations. If Mr. Qi ceases to be employed by us, we may have
difficulty finding a suitable replacement with equal leadership and industry
experience, and our business would suffer because we will not have the
leadership needed to capitalize on market opportunities and to direct our
growth, leading to a possible decrease in revenues and inappropriate capital
investments in projects that may not benefit our long-term growth.





We
depend heavily on skilled personnel, and any loss of such personnel, or the
failure to continue to attract such personnel in the future, could harm our
business.





The
agricultural chemicals business is specialized and requires the employment of
personnel with significant scientific and operational experience in the
industry. Accordingly, we must attract, recruit and retain a sizeable workforce
of technically and scientifically competent employees. Our ability to
effectively implement our business strategy will depend upon, among other
factors, the successful recruitment and retention of additional management and
other key personnel that have the necessary scientific, technical and
operational skills and experience with the fertilizer industry. These
individuals are difficult to find in the PRC and we may not be able to retain
such skilled employees. If we are unable to hire the correct individuals we may
not be able to produce enough product to optimize profits, research and
development initiatives may be delayed and we may encounter disruptions in
production and research which will negatively impact our financial
condition.





Any
disruption of the operations in our factories would damage our
business.





All of
our fertilizer products are currently manufactured in China. We currently
maintain insurance covering only our leased factories. Our operations could be
interrupted by fire, flood, earthquake and other events beyond our control. Any
disruption of the operations in our factories would have a significant negative
impact on our ability to manufacture and deliver products, because we would
likely not be able to outsource our production on terms favorable to the
company, if at all. Failure to be able to replace any lost production capability
would cause a potential diminution in sales, the cancellation of orders, loss of
valuable employees, damage to our reputation and potential
lawsuits.










13





If
we cannot protect the proprietary formula and manufacturing processes for our
concentrated organic liquid compound fertilizer it could increase our
competition and cause our operating results to suffer.





Our
success will depend in part on our ability to protect our proprietary formula
and manufacturing process for highly concentrated organic liquid compound
fertilizer products. We rely on trade secrets to protect our proprietary
formulas and manufacturing processes. We have not applied for patents for our
technology and formulas because we believe an application for such patents would
result in public knowledge of our proprietary technology and formulas and could
lead competitors to attempt to copy our products, thereby increasing
competition.





In
addition, our competitors may counterfeit our products and use our trademark.
These counterfeit products could damage our reputation and create confusion for
our customers.





Our
financial results would be negatively impacted by the lost sales to the fake
and/or competitive product or by lost sales from a damaged
reputation.




We may be exposed to potential risks
relating to our internal controls over financial reporting and our ability to
have those controls attested to by our independent auditors.





As
directed by Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404, the SEC
adopted rules requiring public companies to include a report of management on
the company’s internal controls over financial reporting in their annual
reports, including Form 10-K.  We are subject to this requirement
commencing with our fiscal year ending June 30, 2008 and a report of our
management is included under Item 9A of this Annual Report on Form 10-K. In
addition, SOX 404 requires the independent registered public accounting firm
auditing a company’s financial statements to also attest to and report on the
operating effectiveness of such company’s internal controls. However, this
annual report does not include an attestation report because under current law,
we will not be subject to these requirements until our annual report for the
fiscal year ending June 30, 2009.  We can provide no assurance that we will
comply with all of the requirements imposed thereby.  There can be no
assurance that we will receive a positive attestation from our independent
auditors.  In the event we identify significant deficiencies or material
weaknesses in our internal controls that we cannot remediate in a timely manner
or we are unable to receive a positive attestation from our independent auditors
with respect to our internal controls, investors and others may lose confidence
in the reliability of our financial statements.







14





We
may need to raise additional capital in the foreseeable future and may not be
able to do so on terms favorable to us or you or at all.





Part of
our strategy involves increasing our fertilizer production capacity by
constructing additional manufacturing facilities and making strategic
investments and acquisitions which require significant capital resources. As of
June 30, 2008, we had approximately $1.56 million in cash. Based on current
reserves and anticipated cash flow from our operations, we anticipate that the
available funds will be sufficient to meet our anticipated needs for working
capital, capital expenditures and business expansion for the next twelve months.
If we decide to expand our business operations more broadly than currently
anticipated or if cash flows from operations are inadequate for our capital
needs, we may seek to satisfy our future capital requirements from the sale of
our securities in public or private offerings, or through loans from financial
institutions or our controlling stockholders. Adequate funds may not be
available when needed or on terms satisfactory to us. A lack of funds also may
cause us to delay, reduce and/or abandon certain or all aspects of our organic
liquid compound fertilizer product research and development programs, close
facilities and/or lay-off employees which, in turn, will likely result in
decreased sales and profits.








If
additional funds are raised through the issuance of equity or convertible debt
securities, the percentage ownership of our stockholders will be reduced and our
stockholders may experience additional dilution. In addition, such equity or
convertible debt securities may have rights, preferences and privileges senior
to those of our common stock. This may reduce a stockholder's return on
investment or cause a complete loss in the investment.








Risks
Related To Our Industry








Adverse
weather conditions could reduce demand for fertilizer products.




The
demand for our organic fertilizer products fluctuates significantly with weather
conditions, which may delay the application of the fertilizer or render it
unnecessary at all. If any natural disasters, such as flood, drought, hail,
tornado or earthquake, occur, the demand for our products could be reduced. In
addition, in some cases, we allow our distributors to purchase our products
partially on credit. The distributors, in turn, may sell the fertilizer to
farmers on credit. If any natural disaster occurs, reduced crop yields may cause
farmers to default on their payments which could harm our cash flow and results
of operations. If we are unable to collect on our sales our cash flows will
decrease and we will have additional expenses from bad debts which will harm our
published financials results.




Competition
in the fertilizer industry in China and elsewhere is intense.




We
compete with approximately 300 small-sized, local Chinese fertilizer
manufacturers. The number of these small companies varies from time to time.
While we may have greater resources than our smaller competitors, it is possible
that these competitors have better access in certain local markets to customers
and prospects, an enhanced ability to customize products to a particular region
or locality and established local distribution channels within a small region.
Furthermore, we face competition from large domestic and international
fertilizer producers and traders who import fertilizers.  The quality of
the imported products is generally higher and more stable than fertilizers
produced in China. While our resources may not be as great as our larger
competitors, we believe our product quality, sales network, brand recognition
and sales network are superior. If our competitors are able to gain greater
market share or improve their sales efforts, our sales may decrease, we may be
forced to lower our prices, or our marketing costs may increase, all of which
could negatively impact our financial results.









15








Risks
Related To Doing Business In China





Adverse
changes in political and economic policies of the PRC government could impede
the overall economic growth of China, which could reduce the demand for our
products and damage our business.





We
conduct substantially all of our operations and generate most of our revenue in
China. Accordingly, our business, financial condition, results of operations and
prospects are affected significantly by economic, political and legal
developments in China. The PRC economy differs from the economies of most
developed countries in many respects, including:





·
            the
      higher level of government
involvement;




·
            the
      early stage of development of the market-oriented sector of the
      economy;





·
            the
      rapid growth rate;





·
            the
      higher level of control over foreign exchange;
  and





·
            the
      allocation of resources.








As the
PRC economy continues to transition from a planned economy to a more
market-oriented economy, the PRC government has implemented and continues to
implement various measures to encourage economic growth and guide the allocation
of resources by controlling payment of foreign currency-denominated obligations,
setting monetary policy and imposing policies that impact particular industries
or companies in different ways. While these measures may benefit the overall PRC
economy, they may also have a negative effect on us, especially if such measures
create an unfriendly environment for businesses in the agricultural sector of
the economy. For example, PRC governmental entities, whether local or national,
could implement additional regulations requiring the payment of increased taxes,
tariffs or other duties, or increase the level of government supervision,
review, licensing or other involvement in our operations and expansion efforts.
Such regulations could significantly increase our costs of doing business,
producing products or acquisition efforts. We may not be able to pass these
additional costs along to costumers by increasing the costs of our products, or
if we are forced to increase the prices of our products, our sales may be
negatively effected and our competitors, whether in other areas of the PRC or
internationally, may gain an advantage over the company.




If the
PRC government changes laws to which we are subject, particularly laws relating
to taxation, import and export tariffs, environmental regulations, land use
rights, property and other matters our business could be harmed. We believe that
our operations in China are in material compliance with all applicable legal and
regulatory requirements. However, the central or local governments of the
jurisdictions in which we operate may impose new, stricter regulations or
interpretations of existing regulations that would require additional
expenditures and efforts on our part to ensure our compliance with such
regulations or interpretations.




Uncertainties
with respect to the PRC legal system could limit the legal protections available
to you and us.




We
conduct substantially all of our business through our operating subsidiaries in
China. our operating subsidiaries are generally subject to laws and regulations
applicable to foreign investments in China and, in particular, laws applicable
to foreign-invested enterprises. The PRC legal system is based on written
statutes, and prior court decisions may be cited for reference, but have limited
precedential value. Since 1979, a series of new PRC laws and regulations have
significantly enhanced the protections afforded to various forms of foreign
investments in China.





For
example, while contractual disputes occurs, the arbitration will be brought to
the China International Economic and Trade Arbitration Commission (“CIETAC”) in
accordance with CIETAC Arbitration Rules, the agreements are governed by PRC law
and an arbitration award may be challenged in accordance with PRC
law.  For example, a claim that the enforcement of an award in our
favor will be detrimental to the public interest, or that an issue does not fall
within the scope of the arbitration would require us to engage in administrative
and judicial proceedings to defend an award. China’s legal system is a civil law
system based on written statutes and unlike common law systems, it is a system
in which decided legal cases have little value as precedent. As a result,
China’s administrative and judicial authorities have significant discretion in
interpreting and implementing statutory and contractual terms, and it may be
more difficult to evaluate the outcome of administrative and judicial
proceedings and the level of legal protection available than in more developed
legal systems.  These uncertainties may impede our ability to enforce
the terms of the contracts that we may enter into with our business
partners.  Any inability to enforce agreement or an award thereunder
could materially and adversely affect our business and operation. The inability
to get the benefits of the contractual rights for which we bargained may also
negatively impact our financial results as we may have expenditures that are not
match with reciprocal benefits.




16








Accounting
laws in China mandate accounting practices which may not be consistent with U.S.
generally accepted accounting principles and therefore our financials and their
interpretation involve uncertainties.





The PRC
accounting laws require an annual "statutory audit" to be performed in
accordance with PRC accounting standards and the books of foreign invested
enterprises to be maintained in accordance with Chinese accounting laws. These
Chinese accounting practices which may not be consistent with U.S. generally
accepted accounting principles, or GAAP. Article 14 of the PRC Wholly
Foreign-Owned Enterprise Law requires a wholly foreign-owned enterprise to
submit certain periodic fiscal reports and statements to designated financial
and tax authorities. Noncompliance with such requirements may cause revocation
of our business license. The translation of the financial statements from the
requirements of the PRC to U.S. GAAP, requires interpretation and exercise of
judgment. This may increase costs or cause additional errors. Moreover, our PRC
accounting records may not convert directly into the needed U.S. GAAP accounting
records, causing inaccuracies or misstatements that could negatively impact our
ability to get a clean audit opinion in the U.S. or may lead to fines by certain
governmental bodies, which could negatively impact our financial performance
and/or stock price.





Restrictions
on currency exchange may limit our ability to receive and use our sales revenue
effectively.





Most of
our sales revenue and expenses are denominated in Renminbi. Under PRC law, the
Renminbi is currently convertible under the “current account,” which includes
dividends and trade and service-related foreign exchange transactions, but not
under the “capital account,” which includes foreign direct investment and loans.
Currently, our PRC operating subsidiaries may purchase foreign currencies for
settlement of current account transactions, including payments of dividends to
us, without the approval of the State Administration of Foreign Exchange, or
SAFE, by complying with certain procedural requirements. However, the relevant
PRC government authorities may limit or eliminate our ability to purchase
foreign currencies in the future. Since a significant amount of our future
revenue will be denominated in Renminbi, any existing and future restrictions on
currency exchange may limit our ability to utilize revenue generated in Renminbi
to fund our business activities outside China that are denominated in foreign
currencies.








17





Foreign
exchange transactions by PRC operating subsidiaries under the capital account
continue to be subject to significant foreign exchange controls and require the
approval of or need to register with PRC government authorities, including SAFE.
In particular, if our PRC operating subsidiaries borrow foreign currency through
loans from us or other foreign lenders, these loans must be registered with
SAFE, and if we finance the subsidiaries by means of additional capital
contributions, these capital contributions must be approved by certain
government authorities, including the Ministry of Commerce, or their respective
local counterparts. These limitations could affect our PRC operating
subsidiaries’ ability to obtain foreign exchange through debt or equity
financing. This could negatively impact our financial performance as it may
limit our ability to reallocate capital and to take advantage of market
opportunities.




Fluctuations
in exchange rates could hurt our business and the value of our
stock.





The value
of our common stock will be indirectly affected by the foreign exchange rate
between U.S. dollars and the Renminbi and between those currencies and other
currencies in which our sales may be denominated. Because substantially all of
our earnings and cash assets are denominated in Renminbi and the net proceeds
from this offering will be denominated in U.S. dollars, fluctuations in the
exchange rate between the U.S. dollar and the Renminbi will affect the relative
purchasing power of these proceeds, our balance sheet and our earnings per share
in U.S. dollars following this offering. In addition, appreciation or
depreciation in the value of the Renminbi relative to the U.S. dollar would
affect our financial results reported in U.S. dollar terms without giving effect
to any underlying change in our business or results of operations. Fluctuations
in the exchange rate will also affect the relative value of any dividend we
issue after this offering that will be exchanged into U.S. dollars and earnings
from, and the value of, any U.S. dollar-denominated investments we make in the
future. Since July, 2005, the Renminbi has no longer been pegged to the U.S.
dollar. Although the People’s Bank of China regularly intervenes in the foreign
exchange market to prevent significant short-term fluctuations in the exchange
rate, the Renminbi may appreciate or depreciate significantly in value against
the U.S. dollar in the medium to long term. Moreover, it is possible that in the
future the PRC authorities may lift restrictions on fluctuations in the Renminbi
exchange rate and lessen intervention in the foreign exchange
market.





Very
limited hedging transactions are available in China to reduce our exposure to
exchange rate fluctuations. To date, we have not entered into any hedging
transactions in an effort to reduce our exposure to foreign currency exchange
risk. While we may enter into hedging transactions in the future, the
availability and effectiveness of these transactions may be limited, and we may
not be able to successfully hedge our exposure at all. In addition, our foreign
currency exchange losses may be magnified by PRC exchange control regulations
that restrict our ability to convert Renminbi into foreign currencies. If
Renminbi weakens relative to the dollar our earnings will be less valuable in
terms of the equivalent U.S. Dollars which may negatively impact our stock
price.





We
own our PRC subsidiaries rather than merely having a contractual relationship
with such entities.





We own
our PRC subsidiaries, as opposed to having a mere contractual relationship with
entities who operate in the PRC. This makes our investment in the PRC more rigid
and long-term. We may be unable to quickly sell, dispose of our subsidiaries or
exit the PRC if conditions in the PRC become unfavorable for business. Should we
wish to exit the PRC and be unable to do so the value of stock may decrease due
to our inability to relocate our corporate operations.







18





Risks
Related To Our Common Stock




The
market price for our common stock may be volatile which could result in a
complete loss of your investment.




Our stock
is not widely traded or traded in great volume so the market price for our
common stock is likely to be highly volatile and subject to wide fluctuations in
response to factors including the following:




·
            actual
      or anticipated fluctuations in our quarterly operating
      results;





·
            announcements
      of new products by us or our
competitors;





·
            changes
      in financial estimates by securities
analysts;





·
            conditions
      in the fertilizer market;





·
            changes
      in the economic performance or market valuations of other companies
      involved in fertilizer production;





·
            announcements
      by our competitors of significant
acquisitions;





·
            additions
      or departures of key personnel; and





·
            potential
      litigation.





Our stock
price could change very quickly and could move in a negative direction at any
time.




Certain
of our stockholders hold a significant percentage of our outstanding voting
securities.





Our
Chairman, Chief Executive Officer, and President, Mr Jinjun Qi  is the
beneficial owner of approximately 38.4% of our outstanding common stock. As a
result, he possesses significant influence, giving him the ability, among other
things, to elect a majority of our Board of Directors and to authorize or
prevent significant corporate transactions. His ownership and control may also
have the effect of delaying or preventing a future change in control, impeding a
merger, consolidation, takeover or other business combination or discourage a
potential acquirer from making a tender offer. This might result in limitations
on, or a decrease in the price of, our common stock.





Our
common stock is quoted on the OTC bulletin board which may have an unfavorable
impact on our stock price and liquidity.





Our
common stock is quoted on the OTC Bulletin Board under the symbol "CDBT.OB." The
OTC Bulletin Board is a significantly more limited market than the New York
Stock Exchange or Nasdaq system. The quotation of our shares on the OTC Bulletin
Board may result in a less liquid market available for existing and potential
stockholders to trade shares of our common stock, could depress the trading
price of our common stock and could have a long-term adverse impact on our
ability to raise capital in the future.





We
are subject to penny stock regulations and restrictions.





The SEC
has adopted regulations which generally define so-called "penny stocks" to be an
equity security that has a market price less than $5.00 per share or an exercise
price of less than $5.00 per share, subject to certain exemptions. As of
December 31, 2007, the closing price for our common stock was $2.84 per share
and, therefore, it is designated a "penny stock." Although since February
3, 2005, we have met the net worth exemption from the "penny stock" definition,
no assurance can be given that such exemption will be maintained. As a "penny
stock," our common stock may become subject to Rule 15g-9 under the Exchange Act
of 1934, or the "Penny Stock Rule." This rule imposes additional sales practice
requirements on broker-dealers that sell such securities to persons other than
established customers and "accredited investors" (generally, individuals with a
net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or
$300,000 together with their spouses). For transactions covered by Rule 15g-9, a
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
sale. As a result, this rule may affect the ability of broker-dealers to sell
our securities and may affect the ability of purchasers to sell any of our
securities in the secondary market.





19




Unless
exempt, for any transaction involving a penny stock, the rules require delivery,
prior to any transaction in a penny stock, of a disclosure schedule prepared by
the SEC relating to the penny stock market. Disclosure is also required to be
made about sales commissions payable to both the broker-dealer and the
registered representative and current quotations for the securities. Finally,
monthly statements are required to be sent disclosing recent price information
for the penny stock held in the account and information on the limited market in
the penny stock.





There can
be no assurance that our common stock will qualify for exemption from the Penny
Stock Rule. In any event, even if our common stock were exempt from the Penny
Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act,
which gives the SEC the authority to restrict any person from participating in a
distribution of a penny stock if the SEC determines that such a restriction
would be in the public interest.





Item
1B. Unresolved Staff Comments.




We
currently do not have any unresolved comments of issues with the Staff of the
Corporation Finance Division of the U.S. Securities and Exchange
Commission.







ITEM 3. LEGAL PROCEEDINGS




We have
not been involved in any material litigation or claims arising from our ordinary
course of business. We are not aware of any material potential litigation or
claims against us which would have a material adverse effect upon our results of
operations or financial condition.




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




None.




20




PART
II




ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS




Market
Information




Our
common stock has been quoted on the OTC Bulletin Board since February 13, 2008.
It is currently quoted under the symbol “CDBT” and, prior to March 6, 2008, was
quoted under the symbol “MXNU.”  Quotations for our common stock reflect
inter-dealer prices without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions. We have generally had very low
trading volume for our common stock. Set forth below is information with respect
to the high and low sales prices of our common stock for the periods indicated.
There were no reported sales of our common stock on the OTC Bulletin Board prior
to February 13, 2008.




Period
            
            High
            
            
            LowQuarter
      Ended March 31, 2008
            
            $
            2.10
            
            
            $
            1.85Quarter
      Ended June 30, 2008
            
            $
            2.20
            
            
            $
            0.50Quarter
      Ended September 30, 2008
            
            $
            1.95
            
            
            $
            1.50





Security
Holders




At June
30, 2008 there were 30,000,000 shares our common stock outstanding held by
approximately 19 stockholders of record.





Equity
Compensation Plans




We do not
have any equity compensation plans. We have not granted any stock options or
other equity awards since our inception.








21





ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION




The
following discussion should be read in conjunction with the financial statements
and the notes thereto appearing elsewhere in this Form 10-K. The following
discussion contains forward-looking statements reflecting our plans, estimates
and beliefs. Our actual results could differ materially from those discussed in
the forward-looking statements. You are also urged to carefully review and
consider our discussions regarding the various factors which affect our
business, including the information provided under the caption “Risk Factors.”
See the cautionary note regarding forward-looking statements at the beginning of
Part I of this Form 10-K.




General




Max
Nutrition, Inc. was organized as Wink Stone LLC, a limited liability company, in
March 2005 to succeed an unincorporated business conducted by our founder since
June 2004. It was converted into a corporation, incorporated in the state of
Nevada, on January 12, 2007 with the name Max Nutrition, Inc. We commenced
revenue producing operations in June 2004 as an unincorporated entity D/B/A Max
Nutrition.


We
discontinued operations during the fourth quarter of our fiscal year ended
October 31, 2007.


On
January 29, 2008, a closing (the “Closing”) was held pursuant to an Agreement
and Plan of Reorganization, dated as of January 29, 2008, (the “Agreement”) by
and among the Company, Nicholas Stone (the “Control Stockholder”) and American
Spring Pharmaceutical, Inc., a Delaware corporation
(“ASPI”).  Pursuant to the Agreement, ASPI purchased an aggregate of
7,700,000 shares of the 10,000,000 shares of the Company’s issued and
outstanding stock for $183,000.00 or approximately $0.0238 per share and ASPI’s
transfer of 100% of the issued and outstanding shares of Gansu Biology Science
and Technology Stock Co., Ltd (“GDBS”) to the Company in exchange for 20,000,000
shares of the Company’s common stock.  Upon completion of the
transaction, ASPI distributed the 27,700,000 shares of Company common stock it
received from the Company and the Company’s principal shareholder to its
shareholders, pro rata.  Nicholas Stone has agreed to indemnify the
Company and ASPI and its shareholders against any liabilities arising out of any
breach of the Agreement by the Company.




We
accounted for the share exchange as a recapitalization whereby the historical
financial statements and operations of the ASPI and GDBS become our historical
financial statements, with no adjustment to the carrying value of the assets and
liabilities. Our issued and outstanding common stock immediate prior to the
share exchange is accounted for at the net book value at the time of the
transaction.




Upon
consummation of the share exchange, we changed our fiscal year end from October
31 to June 30 to conform to the year end date of ASPI and GDBSI. We filed an
annual report on Form 10-KSB on February 13, 2008 for fiscal year ended October
31, 2007. This annual report was our last filing under our previous fiscal year
end date of October 31, and as a nutritional supplement company. In our
future filings with the SEC, we will report our business activities as a
developer, producer and marketer of additives for fertilizers and animal feed
based on our new fiscal year end date of June 30. The historical financial
statements of ASPI and GDBS will become our historical financial
statements.




The
results of operations related to Max Nutrition, Inc. are not material and are
therefore not included in the discussion below. Unless otherwise noted, all
references to the “company,” “we,” “us” and “our” hereafter in this section
refer to the current business of China Dasheng Biotechnology Company or the
historical business of ASPI, GDBS, and its subsidiaries, as
applicable.






22







Overview




We
primarily manufacture and sell additives to fertilizers and animal feed. These
additives are mainly created from live bacteria, which we produce using advanced
proprietary fermentation technology. Currently, our products are sold throughout
China.





We sell
our products directly to our clients which include private and state owned
farms, village collectives, and retails and through distributors. We classify
core customers to be any customer with annual purchases exceeding $500,000 RMB
or approximately $73,500 USD. Presently, 91% of our revenues are generated
through these types of customers. Our distributors comprise the rest of our
revenues. These distributors sell our products to various retail outlets
including stores and village marketplaces or use their own network of
commissioned salespersons to sell our products to the final
end-user.






Results
of Operations for Fiscal Year Ended June 30, 2007 Compared with the Fiscal Year
Ended June 30, 2008







Our net
sales totaled $16.29 million for the fiscal year ended June 30, 2008, a 63.6%
increase compared to our net sales of $9.96 million for the fiscal year ended
June 30, 2007. The growth in net sales primarily resulted from positive feedback
and awareness of our products through our massive advertisement campaigns in
2008. In addition, with more spending on seminars and field demonstrations, the
Company was able to increase the number of orders from its core
customers.





AM/HMTM
bacterial blends for crops continued to be our best selling product. We have
enjoyed strong growth in demand for our AM/HMTM bacterial blends for livestock
feed product line as well. In addition, our new bacteria based fertilizer
product line accounted for 6.8% of our sales revenue during the year ended June
30, 2008.






23





The
following is a breakdown of revenue by product, by region, and by subsidiary for
the fiscal years ended June 30, 2007 and 2008 respectively.




Net
      Sales in USD
            
            
            Percentage
      of Total
            
            
            Net
      Sales in USD
            
            
            Percentage
      of TotalTotal
      Revenue
            
            $
            9,961,792
            
            
            
            100
            %
            
            $
            16,294,163
            
            
            
            100
            %Product
      lineAM/HMTM
      Crop additives
            
            $
            6,552,408
            
            
            
            65.8
            %
            
            $
            9,386,241
            
            
            
            57.6
            %AM/HMTM
      Livestock feed additives
            
            $
            3,082,501
            
            
            
            30.9
            %
            
            $
            5,467,691
            
            
            
            33.6
            %FGWTM
      Preservatives
            
            $
            326,883
            
            
            
            3.3
            %
            
            $
            331,683
            
            
            
            2.0
            %AM/HMTM
      Fertilizer
            
            
            -
            
            
            
            0
            %
            
            $
            1,108,548
            
            
            
            6.8
            %RegionNorthwest
            
            $
            2,859,034
            
            
            
            28.7
            %
            
            $
            6,102,568
            
            
            
            37.4
            %Southwest
            
            $
            268,968
            
            
            
            2.7
            %
            
            $
            328,367
            
            
            
            2.1
            %Northern
            
            $
            488,127
            
            
            
            4.9
            %
            
            $
            1,392,698
            
            
            
            8.5
            %Northeast
            
            $
            159,388
            
            
            
            1.6
            %
            
            $
            433,193
            
            
            
            2.7
            %Central
            
            $
            308,815
            
            
            
            3.1
            %
            
            $
            460,283
            
            
            
            2.8
            %Eastern
            
            $
            458,242
            
            
            
            4.6
            %
            
            $
            1,186,533
            
            
            
            7.3
            %South
            
            $
            5,419,218
            
            
            
            54.4
            %
            
            $
            6,390,521
            
            
            
            39.2
            %SubsidiaryHainan
      Lüshen
            
            $
            5,130,322
            
            
            
            51.5
            %
            
            $
            6,566,549
            
            
            
            40.3
            %Yangling
      Elemiss
            
            $
            2,669,760
            
            
            
            26.8
            %
            
            $
            3,666,183
            
            
            
            22.5
            %Gansu
      Dasheng
            
            $
            2,161,710
            
            
            
            21.7
            %
            
            $
            6,061,431
            
            
            
            37.2
            %




Cost
of Sales





Cost of
sales for the year ended June 30, 2008 was $8.79 million compared with $5.83
million for the fiscal year ended June 30, 2007. This 50.7% increase in cost of
sales was primarily caused by increased sales volume and the addition of our new
bacteria based fertilizer product line




Gross
profit




Gross
profit increased to $7.50 million for the fiscal year ended June 30, 2008 from
$4.13 million for the 2007 fiscal year. This represents an 81.7% increase, which
reflects primarily increases in sales volume.  Our gross profit margin
increased to 46.0% from 43.1% in fiscal year 2007. This was primarily due the
introduction of our new fertilizer product line.





Selling
expenses and General and Administrative Expenses




Selling
expenses were $641,852 or 3.9% of net sales for the fiscal year ended June 30,
2008 compared with $506,943 or 5.01% of net sales for the fiscal year ended June
30, 2007. This decrease of the selling expenses to net sales ratio was a result
of our management’s ability to better control costs related to the sale of our
products. General and administrative expenses were $1.56 million or 9.6% of net
sales for the year ended June 30, 2008 compared with 895,119 or 9.0% of net
sales for the year ended June 30, 2007. General and administrative expenses
primarily consisted of salaries & wages, professional fees, depreciation of
fixed assets and amortization of intangible assets. The most significant general
and administrative expense incurred during the fiscal year 2008 was the $300,605
in professional fees related to going public in January of 2008.




Net
Income





Net
income increased to $4.64 million in fiscal year 2008 compared to $1.99 in
fiscal year 2007. This 133% increase is primarily due to our increase in net
sales along with our ability to better control our operating expenses. As our
products gain more market approval, we in turn are able to expand our order
volume with existing customer in addition to recruiting new customers on the
strength of our existing base.







24






Liquidity
and Capital Resources




We had
cash and cash equivalents of $1.56 million and working capital of $6.93 million
as of June 30, 2008, and cash and cash equivalents of $1.31 million and working
capital of $6.67 million as of June 30, 2007.





Cash
generated from operations was $4.10 million for the fiscal year ended June 30,
2008 compared to $0.39 million in cash generated by operative activities for the
fiscal year ended June 30, 2007. Primarily, our cash from operations were a
result of our $4.64 million in net income. The main expenditure from operations
was related to advances to suppliers which included an advance to Dasheng
Trading Company, our primary materials suppliers. In addition, in contrast to
2007, we were able to collect a significant portion of our account
receivables.





Cash used
in investing activities totaled $3.9 million in fiscal year 2008 compared to
$151,791 in fiscal year 2007. This was primarily due to the $35 million RMB or
approximately $5,102,710 USD real estate investment in the Changlin Real Estate
Development project.





Cash used
in financing activities totaled $927,016 in fiscal year 2008 as compared to
cash used of $994,175 in fiscal year 2007. This was due the repayment
of debt.










25






Off-Balance
Sheet Arrangements




We do not
have any off-balance sheet arrangements.




Critical
Accounting Policies




This Management's
Discussion and Analysis discusses our consolidated financial statements for
the fiscal years ended June 30, 2007 and 2008. These financial statements have
been prepared in accordance with generally accepted accounting principles in the
United States. In preparing these financial statements, we are required to make
estimates and assumptions affecting the reported amounts of assets and
liabilities and the 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. On an ongoing basis, we evaluate our estimates and
judgments. We base our estimates and judgments on historical experience and on
various other factors we believe are reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions.




Investment
in real estate ventures





The
Company had two joint ventures for real estate projects in China to develop
commercial and residential real estate in China. The Company’s ownership
interests in the two ventures are 17.5% and 16.5%, respectively. As a result,
the Company accounts for these two ventures based on cost method of
accounting.




Impairment
of long-lived assets




Long-lived
assets, which include property, plant and equipment and intangible assets, are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.





Recoverability
of long-lived assets to be held and used is measured by a comparison of the
carrying amount of an asset to the estimated undiscounted future cash flows
expected to be generated by the asset.  If the carrying amount of an
asset exceeds its estimated undiscounted future cash flows, an impairment charge
is recognized by the amount by which the carrying amount of the asset exceeds
the fair value of the assets.  Fair value is generally determined
using the asset’s expected future discounted cash flows or market value, if
readily determinable.




Revenue
recognition




The
Company utilizes the accrual method of accounting.  In accordance with
the provisions of Staff Accounting Bulletin (“SAB”) 104, sales revenue is
recognized when products are shipped and payments of the customers and
collection are reasonably assured.  Payments received before all of
the relevant criteria for revenue recognition are satisfied are recorded as
unearned revenue.





The
Company follows the guidance of the Securities and Exchange Commission’s Staff
Accounting Bulletin 104 (“SAB No.104”) for revenue recognition. The Company
records revenue when persuasive evidence of an arrangement exists, product
delivery has occurred and the title and risk of loss transfer to the buyer, the
sales price to the customer is fixed or determinable, and collectability is
reasonably assured. For sale of AM, HM, live stock feed additive, and FGW
biological preservatives for agriculture businesses, the Company derives the
majority of its revenue from sales contracts with customers with revenues being
generated upon the shipment of goods. Persuasive evidence of an arrangement is
demonstrated via invoice, product delivery is evidenced by warehouse shipping
log as well as a signed bill of lading from the trucking or rail company and
title transfers upon shipment, based on either free on board (“FOB”) factory or
destination terms; the sales price to the customer is fixed upon acceptance of
the purchase order and there is no separate sales rebate, discount, or volume
incentive. When the Company recognizes revenue, no provisions are made
for returns because, historically, there have been very few sales returns
and adjustments that have impacted the ultimate collection of
revenues.




Foreign
currency translation




The
Company’s functional currency is the Renminbi (“RMB”). For financial reporting
purposes, RMB has been translated into United States dollars ("USD") as the
reporting currency. Assets and liabilities are translated at the exchange rate
in effect at the balance sheet date. Revenues and expenses are translated at the
average rate of exchange prevailing during the reporting period. Translation
adjustments arising from the use of different exchange rates from period to
period are included as a component of stockholders' equity as "Accumulated other
comprehensive income". Gains and losses resulting from foreign currency
translations are included in accumulated other comprehensive
income.  There is no significant fluctuation in exchange rate for the
conversion of RMB to USD after the balance sheet date.






26






Recent
Accounting Pronouncements




In July
2006, the FASB issued FASB Interpretation (“FIN”) No. 48, “Accounting for
Uncertainty in Income Taxes,” which prescribes a comprehensive model for how a
company should recognize, measure, present and disclose in its financial
statements uncertain tax positions that the company has taken or expects to take
on a tax return (including a decision whether to file or not to file a return in
a particular jurisdiction). The accounting provisions of FIN No. 48 are
effective for fiscal years beginning after December 15, 2006. The adoption of
this Interpretation did not have a material impact on the Company’s financial
position and results of operations.





In
September 2006, the SEC issued SAB No. 108, which provides guidance on the
process of quantifying financial statement misstatements. In SAB No. 108, the
SEC staff establishes an approach that requires quantification of financial
statements errors, under both the iron-curtain and the roll-over methods, based
on the effects of the error on each of The Company’s financial statements and
the related financial statement disclosures. SAB No. 108 is generally effective
for annual financial statements in the first fiscal year ending after November
15, 2006. The transition provisions of SAB No. 108 permits existing public
companies to record the cumulative effect in the first year ending after
November 15, 2006 by recording correcting adjustments to the carrying values of
assets and liabilities as of the beginning of that year with the offsetting
adjustment recorded to the opening balance of retained earnings. The adoption of
SAB No. 108 did not have a material effect on the Company’s financial position
or results of operations.




In
September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements”. SFAS No.
157 defines fair values, establishes a framework for measuring fair value, and
expands disclosures about fair value measurements.  This Statement
shall be effective for financial statements issued for fiscal years beginning
after November 25, 2007, and interim periods within those fiscal years. Earlier
application is encouraged provided that the reporting entity has not yet issued
financial statements for that fiscal year, including financial statements for an
interim period within that fiscal year.  The Company is currently
evaluating the impact of adopting SFAS No. 157 on its financial position and
results of operations.





In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of FASB Statement No.
115.  SFAS No. 159 permits entities to choose to measure many
financial instruments and certain other items at fair value that are not
currently required to be measured at fair value.   Unrealized
gains and losses on items for which the fair value option has been selected are
reported in earnings.  SFAS No. 159 also establishes presentation and
disclosure requirements designed to facilitate comparisons between entities that
choose different measurement attributes for similar types of assets and
liabilities.  SFAS No. 159 is effective for fiscal years beginning
after November 15, 2007.  The Company has not yet determined the
impact, if any, on its financial statements.





In
December 2007, the FASB issued SFAS No 141 (Revised 2007), Business Combinations
(“SFAS No. 141(R)”) to significantly change the accounting for business
combinations.  Under SFAS No. 141(R), an acquiring entity will be
required to recognize all the assets acquired and liabilities assumed in a
transaction at the acquisition date fair value with limited exceptions and will
change the accounting treatment for certain specific items,
including:





•   acquisition
costs will generally be expensed as incurred;





•   noncontrolling
interests will be valued at fair value at the date of acquisition;
and





•   liabilities
related to contingent consideration will be recorded at fair value at the date
of acquisition and subsequently remeasured each subsequent reporting
period





SFAS No.
141(R) is effective for fiscal years beginning after December 15,
2008.   The Company will adopt SFAS No. 141(R) on January 1,
2009, and the Company has not yet determined the impact, if any, on its
financial statements.





In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements – An Amendment of ARB No. 51, to establish new
accounting and reporting standards for the noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary.  SFAS No. 160
requires the recognition of a noncontrolling interest (minority interest) as
equity in the consolidated financial statements and separate from the parent’s
equity.  The amount of net income attributable to the noncontrolling
interest will be included in consolidated net income on the face of the income
statement.  SFAS No. 160 clarifies that changes in a parent’s
ownership interest in a subsidiary that do not result in deconsolidation are
equity transactions if the parent retains its controlling financial
interest.  In addition, SFAS No. 160 requires that a parent recognize
a gain or loss in net income when a subsidiary is
deconsolidated.  SFAS No. 160 also includes expanded disclosure
requirements regarding the interests of the parent and its noncontrolling
interest.  SFAS No. 160 is effective for fiscal years beginning after
December 15, 2008.  The Company will adopt SFAS No. 160 on January 1,
2009, and the Company has not yet determined the impact, if any, on its
financial statements.






27




ITEM
7. FINANCIAL STATEMENTS








CHINA
DASHENG BIOTECHNOLOGY COMPANY








TABLE
OF CONTENTS














Reports
      of Independent Registered Public Accounting Firms
            F-1Consolidated
      Balance Sheets as of June 30, 2008 and June 30, 2007
            F-3Consolidated
      Statements of Operation for the years ended June 30, 2008 and
      2007
            F-4Consolidated
      Statements of Changes in Stockholders’ Equity for the years ended June 30,
      2008 and 2007
            F-5Consolidated
      Statements of Cash Flows for the years ended June 30, 2008 and
      2007
            F-6Notes to Consolidated Financial
      Statements
            F7-F21













28










REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM







To The
Board of Directors and Stockholders


China
Dasheng Biotechnology Company


Lanzhou,
Gansu Province, People's Republic of China





We have
audited the accompanying consolidated balance sheet of China Dasheng
Biotechnology Company (“Dasheng”) as of June 30, 2008 and the related
consolidated statements of operations, cash flows and changes in stockholders’
equity for the year then ended. These financial statements are the
responsibility of Dasheng’s management. Our responsibility is to express an
opinion on these financial statements based on our audit.




We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. Dasheng is not required to have,
nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Dasheng’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
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.




In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of China Dasheng Biotechnology Company
as of June 30, 2008 and the results of its operations and its cash flows for the
periods described in conformity with accounting principles generally accepted in
the United States of America.









/s/
Malone & Bailey, PC





www.malone-bailey.com


Houston,
Texas


October
14, 2008





F-1





























REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the
Board of Directors and Stockholders


Gansu
Dasheng Biology Science and Technology Stock Co., Ltd.




We have
audited the accompanying consolidated balance sheet of Gansu Dasheng Biology
Science and Technology Stock Co., Ltd. and Subsidiaries (the “Company”) as of
June 30, 2007, and the related consolidated statements of income and
comprehensive income, stockholders’ equity and cash flows for the fiscal years
ended June 30, 2007 and 2006.  These consolidated 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 financial statements are free of material misstatement.  The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purposes 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 amount 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 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 financial position of the Company as of June 30,
2007, and the related consolidated statements of income and comprehensive
income, stockholders’ equity and cash flows for the fiscal years ended June 30,
2007 and 2006 in conformity with accounting principles generally accepted in the
United States of America.






/s/Li & Company,
PC


Li &
Company, PC




Skillman,
New Jersey


January
11, 2008







F-2







CHINA
DASHENG BIOTECHNOLOGY COMPANY


(FORMERLY
NAMED AS MAX NUTRITION INC.)


CONSOLIDATED BALANCE
SHEETS  AS OF JUNE 30,
2008 and 2007




2008
            
            
            2007ASSETSCurrent
      assets:Cash
      & cash equivalents
            
            $
            1,561,403
            
            
            $
            1,316,569Accounts
      receivable,net of allowance for doubtful accounts of
            
            
            3,244,476
            
            
            
            3,180,325of  $16,303  and
      $243,398 respectivelyInventories
            
            
            561,883
            
            
            
            833,436Advances
      to supplier
            
            
            1,486,379
            
            
            
            198,515Due
      from related parties
            
            
            1,580,820
            
            
            
            1,757,325Prepayments
      and other current assets
            
            
            35,675
            
            
            
            1,887,955Total
      Current Assets
            
            
            8,470,636
            
            
            
            9,174,125Investment
      in Real Estate ventures
            
            
            6,483,437
            
            
            
            1,244,160Property, plant and
      equipment,net of accumulated depreciation
            
            
            1,618,829
            
            
            
            1,730,439Land
      use rights, net
            
            
            1,531,555
            
            
            
            1,446,059Notes
      Receivable
            
            
            998,502
            
            
            
            1,194,126Long-term
      prepayments
            
            
            1,150,082
            
            
            
            537,638Other
      assets
            
            
            -
            
            
            
            64,454Total
      Assets
            
            
            20,253,041
            
            
            
            15,391,001LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable
            
            
            725,680
            
            
            
            953,033Accrued
      expenses and other payables
            
            
            809,463
            
            
            
            1,544,128Total
      Current Liabilities
            
            
            1,535,143
            
            
            
            2,497,161Long-term
      payable-land use right
            
            
            1,459,137
            
            
            
            1,314,814Long-term
      debt,net of current maturities
            
            
            -
            
            
            
            1,103,521Minority
      Interest
            
            
            1,564,957
            
            
            
            1,342,504Stockholders'
      EquityPreferred
      stock, $0.001 par value, 1,000,000 shares authorized,- 0
      - shares issued and outstanding at June 30, 2008 and 2007
            
            
            -
            
            
            
            -Common
      stock, $0.001 and $0.1208 par value, 74,000,000 and 32,080,000 shares
      authorized,30,000,000
      and 32,080,000 shares issued and outstanding at June 30, 2008 and 2007
      respectively
            
            
            30,000
            
            
            
            3,876,035Additional
      paid-in-capital
            
            
            3,846,035
            
            
            
            177,487Statutory
      surplus reserve and common welfare fund
            
            
            1,837,187
            
            
            
            1,049,826Retained
      earnings
            
            
            8,009,800
            
            
            
            3,371,464Accumulated
      other comprehensive income
            
            
            1,970,782
            
            
            
            658,189Total
      Stockholders' Equity
            
            
            15,693,804
            
            
            
            9,133,001Total
      Liabilities and Stockholders' Equity
            
            $
            20,253,041
            
            
            $
            15,391,001





See
accompanying notes to the Consolidated Financial Statements.











F-3




CHINA
DASHENG BIOTECHNOLOGY COMPANY


(FORMERLY
NAMED AS MAX NUTRITION INC.)


CONSOLIDATED
STATEMENTS OF OPERATION


FOR
THE YEARS ENDED JUNE 30, 2008  AND 2007




2008
            
            
            2007Net
      Sales
            
            $
            16,294,163
            
            
            $
            9,961,792Cost
      of Sales
            
            
            (8,790,328
            )
            
            
            (5,832,260
            )Gross
      Profit
            
            
            7,503,835
            
            
            
            4,129,532Operating
      ExpensesSelling  and
      general and administrative expenses
            
            
            2,202,437
            
            
            
            1,402,062Other
      operating expenses (income)
            
            
            226,426
            
            
            
            (22,952
            )Total
      Operating Expenses
            
            
            2,428,863
            
            
            
            1,379,110Income
      from operations
            
            
            5,074,972
            
            
            
            2,750,422Other
      Income and ExpensesInterest
      income
            
            
            158,600
            
            
            
            -Interest
      expenses
            
            
            (41,760
            )
            
            
            (92,670
            )Total
      other income (expense)
            
            
            116,840
            
            
            
            (92,670
            )Income
      Before Income Taxes and Minority Interest
            
            
            5,191,812
            
            
            
            2,657,752Provision
      for Income Taxes
            
            
            -
            
            
            
            -Minority
      Interest
            
            
            (553,476
            )
            
            
            (666,217
            )Net
      Income
            
            $
            4,638,336
            
            
            $
            1,991,535Other
      Comprehensive IncomeForeign
      Currency translation adjustment
            
            
            1,312,593
            
            
            
            445,934Comprehensive
      Income
            
            $
            5,950,929
            
            
            $
            2,437,469Net
      income per share  - basic and dilutedBasic
            
            $
            0.15
            
            
            $
            0.06Diluted
            
            $
            0.15
            
            
            $
            0.06Weighted
      average share outstanding - basic and diluted30,000,000
            
            
            
            32,080,00030,000,000
            
            
            
            32,080,000


See
accompanying notes to the Consolidated Financial Statements.






F-4




CHINA DASHENG BIOTECHNOLOGY
COMPANY


(FORMERLY NAMED AS MAX NUTRITION
INC.)  CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
 FOR THE YEARS
ENDED JUNE 30, 2008 AND 2007


Preferred
      Stock
            
            
            Common
      Stock
            
            
            Additional
            
            
            Statutory
            
            
            
            
            
            Accumulated
      Other
            
            
            Totalpar
      value $0.001
            
            
            par
      value $0.001 (previsously $0.1208)
            
            
            Paid-in
            
            
            Surplus
      reserve &
            
            
            Retained
            
            
            Comprehensive
            
            
            Shareholders'Shares
            
            
            
            
            
            Amount
            
            Shares
            
            
            Amount
            
            
            Capital
            
            
            Common
      welfare fund
            
            
            Earnings
            
            
            Income
            
            
            EquityBalance
      at JUNE 30, 2005
            
            
            -
            
            
            
            
            
            $
            -
            
            
            
            32,080,000
            
            
            $
            3,876,035
            
            
            $
            177,487
            
            
            $
            225,672
            
            
            $
            854,358
            
            
            $
            -
            
            
            $
            5,133,552Net
      Income
            
            
            -
            
            
            
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,499,832
            
            
            
            -
            
            
            
            1,499,832-Other
      Comprehensive income:
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -Foreign
      currency translation adjustment
            
            
            -
            
            
            
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            212,255
            
            
            
            212,255Appropriation
      to statutory reserves
            
            
            -
            
            
            
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            259,698
            
            
            
            (259,698
            )
            
            
            -
            
            
            
            -Appropriation
      to employee welfare funds
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (150,107
            )
            
            
            -
            
            
            
            (150,107
            )-
            
            
            
            -Balance
      at JUNE 30, 2006
            
            
            -
            
            
            
            
            
            
            $
            -
            
            
            
            32,080,000
            
            
            $
            3,876,035
            
            
            $
            177,487
            
            
            $
            485,370
            
            
            $
            1,944,385
            
            
            $
            212,255
            
            
            $
            6,695,532Net
      Income
            
            
            -
            
            
            
            
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,991,535
            
            
            
            -
            
            
            
            1,991,535-Other
      Comprehensive income:
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -Foreign
      currency translation adjustment
            
            
            -
            
            
            
            
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            445,934
            
            
            
            445,934-Appropriation
      to statutory reserves
            
            
            -
            
            
            
            
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            564,456
            
            
            
            (564,456
            )
            
            
            -
            
            
            
            -Balance
      at JUNE 30, 2007
            
            
            -
            
            
            
            
            
            
            $
            -
            
            
            
            32,080,000
            
            
            $
            3,876,035
            
            
            $
            177,487
            
            
            $
            1,049,826
            
            
            $
            3,371,464
            
            
            $
            658,189
            
            
            $
            9,133,001-Exchange
      of GDBS's capital for ASPI
            
            
            -
            
            
            
            
            
            
            
            -
            
            
            
            (32,080,000
            )
            
            
            (3,876,035
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (3,876,035
            )Issuance
      of ASPI common stock to investors upon reverse merger
            
            
            30,000,000
            
            
            
            30,000
            
            
            
            3,668,548
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            3,698,548Net
      Income
            
            
            -
            
            
            
            
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            4,638,336
            
            
            
            -
            
            
            
            4,638,336Other
      Comprehensive income:
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            -Foreign
      currency translation adjustment
            
            
            -
            
            
            
            
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            1,312,593
            
            
            
            1,312,593Appropriation
      to statutory reserves
            
            
            -
            
            
            
            
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            787,361
            
            
            
            -
            
            
            
            -
            
            
            
            787,361Balance
      at JUNE 30, 2008
            
            
            0
            
            
            
            
            
            
            $
            -
            
            
            
            30,000,000
            
            
            $
            30,000
            
            
            $
            3,846,035
            
            
            $
            1,837,187
            
            
            $
            8,009,800
            
            
            $
            1,970,782
            
            
            $
            15,693,804







See
accompanying notes to the Consolidated Financial Statements.




F-5




CHINA
DASHENG BIOTECHNOLOGY COMPANY


(FORMERLY
NAMED AS MAX NUTRITION INC.)
 CONSOLIDATED STATEMENTS OF CASH
FLOWS


FOR
THE YEARS ENDED JUNE 30,  2008 AND 2007


2008
            
            
            2007Cash
      Flows From Operating Activities:Net
      income
            
            $
            4,638,336
            
            
            $
            1,991,534Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Bad
      debt expenses
            
            
            62,869
            
            
            
            -Depreciation
      and amortiztion
            
            
            626,365
            
            
            
            522,134Minority
      interest in net income of consoldiated subsidiaries
            
            
            553,476
            
            
            
            666,217Changes
      in operating assets and liabilities:Accounts
      receivable
            
            
            (125,020
            )
            
            
            (438,356
            )Inventories
            
            
            271,554
            
            
            
            436,803Advance
      to suppliers
            
            
            (1,287,864
            )
            
            
            -Prepayments
      and other current assets
            
            
            320,234
            
            
            
            (1,509,370
            )Accounts
      payable
            
            
            (227,353
            )
            
            
            (120,500
            )Accrued
      expenses and other current liabilities
            
            
            (734,665
            )
            
            
            (1,155,607
            )Cash
      provided by operating activities
            
            
            4,097,932
            
            
            
            392,855Cash
      Flows From Investing Activities:Purchases
      of property, plant and equipment
            
            
            (30,683
            )
            
            
            (59,411
            )Investment
      in real-estate projects
            
            
            (5,102,710
            )
            
            
            -Cash
      dividend received from an real estate investment
            
            
            1,020,542
            
            
            
            -Cash
      received from note receivable
            
            
            195,624
            
            
            
            (92,380
            )Cash
      used in investing activities
            
            
            (3,917,227
            )
            
            
            (151,791
            )Cash
      Flows From Financing Activities:Repayment
      of loans payable
            
            
            (1,103,521
            )
            
            
            (262,743
            )Proceeds
      from long-term debt
            
            
            -
            
            
            
            446,663Repayment
      of long-term debt
            
            
            -
            
            
            
            (601,682
            )Amounts
      received from (paid to) related parties
            
            
            176,505
            
            
            
            (576,413
            )Cash
      used in financing activities
            
            
            (927,016
            )
            
            
            (994,175
            )Effect
      of exchange rate changes on cash and cash equivalents
            
            
            991,145
            
            
            
            167,865Increase
      (decrease) in cash and cash equivalents
            
            
            244,834
            
            
            
            (585,246
            )Cash
      and Cash Equivalents - Beginning of the year
            
            
            1,316,569
            
            
            
            1,901,815Cash
      and Cash Equivalents - Ending of the year
            
            $
            1,561,403
            
            
            $
            1,316,569Supplemental
      disclosures of cash flow information:Interest
      paid
            
            $
            41,760
            
            
            $
            92,670Income
      Taxes paid
            
            $
            -
            
            
            $
            -


See
accompanying notes to the Consolidated Financial Statements.
  F-6


CHINA
DASHENG BIOTECHNOLOGY COMPANY


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007








Note
1. ORGANIZATION AND DESCRIPTION OF BUSINESS




China
Dasheng Biotechnology Company (“Dasheng” or the “Company”) was incorporated in
the state of Nevada on January 12, 2007, under the original name of Max
Nutrition Inc, as a holding vehicle for selling the nutritional
supplements.




On
January 29, 2008, Pursuant to an Agreement and Plan of Reorganization, American
Spring Pharmaceutical, Inc., a Delaware corporation (“ASPI”) purchased an
aggregate of 7,700,000 shares of the 10,000,000 issued and outstanding shares of
Max Nutrition common stock for $183,000 and ASPI’s transfer of 100% of the
issued and outstanding shares of Gansu Dasheng Biology Science and Technology
Stock Co., Ltd. (“Dasheng”) to Max Nutrition in exchange for 20,000,000 shares
of the common stock of Max Uutrition. Upon completion of the transaction, ASPI
distributed 27,700,000 shares of Max Nutrition common stock it received from Max
Nutrition and the Max Nutrition’ previous principal stockholder to Dasheng’s
shareholders, pro rata. At the effective time of the merger, the total number of
shares of Max Nutrition acquired and number of shares of Max Nutrition Common
Stock issued to the shareholders of Dasheng pursuant to the agreement,
representd approximately 92.33% of the outstanding shares of Max Nutrition’s
common stock after giving effect to Max Nutrition’s acquisition of Dasheng. As a
result of the ownership interests of the former shareholders of Dasheng, for
financial statement reporting purposes, the merger between the Company and
Dasheng has been treated as a reverse acquisition with Dasheng deemed as the
accounting acquirer and the Max Nitrition deemed the accounting acquiree in
accordance with Statement of Financial Accounting Standards No. 141 “Business
Combinations” (“SFAS No. 141”). The reverse merger is deemed as a
recapitaliation of Dasheng and the net assets of Dasheng (the accounting
acquirer) are carried forward to the Company (the legal acquirer and the
reporting entity) at their historical carrying value before the combination. The
assets and liabilities of Dasheng are recorded at historical cost.






Gansu
Dasheng Biology Science and Technology Stock Co., Ltd. was incorporated on
October 16, 2002, in the City of Lanzhou, Gansu Province, People’s Republic of
China (“PRC”). Dasheng operates within the biological products and agents
market. This space includes organic fertilizers, non-chemical agents, and
biological agents based additives.






On March
6, 2008, the Company changed its name to China Dasheng Biotechnology
Company.







The
Company derived its revenues from the sale of products in the biological
products and agents market. All revenues generated are from sales to customers
in China. The Compay has two majority-owned subsidiearies in China. It has 80%
interest in Hainan Lüshen
Biology Technology Co., Ltd. (“Lüshen”)located in HaiKou, Hainan
Province, China.Lüshen engages in
developing, manufacturing and marketing artificial microorganisms (“AM”),
high-efficiency microorganism (“HM”) based biological bacterium blends, and
biological preservatives. The Company also hasa 60% interest in Yangling Elemiss Foods Co.,
Ltd.  (“Elemiss”)located in City of Yangling, Shaanxi Province,
China. Elemiss engages in developing, manufacturing and marketing artificial
microorganism (“AM”) based biological bacterium blends, and Bulgarian
lactobacillus live stock feed additives.





F-7





CHINA
DASHENG BIOTECHNOLOGY COMPANY


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007








Note
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




Basis
of presentation and consolidation




The
accompanying consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States of
America.




The
consolidated financial statements include the financial statements of ASPI, and
its wholly owned subsidiary, and its majority-owned subsidiaries, Lüshen
and  Elemiss. All significant inter-company transactions and balances
among the Company and its subsidiary are eliminated upon
consolidation.







Use
of estimates





In
preparing the financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the dates of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting year. Significant estimates, required by management, include the
recoverability of long-lived assets and the valuation of
inventories.  Actual results could differ from those
estimates.







Reclassifications




Certain
previously reported amounts have been reclassified to conform to classifications
adopted in the year ended June 30, 2008.




Cash
and cash equivalents





For
purposes of the statement of cash flow, the Company considers all highly liquid
investments with an original maturity of three months or less to be cash
equivalents.





Accounts
receivable





Accounts
receivables consist primarily of receivables resulting from sales of products.
The Company establishes provisions for doubtful accounts receivable based on
management’s estimates of amounts that it believes are unlikely to be
collected.  Collectability of receivables is reviewed and the
allowance for doubtful accounts is adjusted at least quarterly, based on aging
of specific accounts and other available information about the associated
customers. The allowance for uncollectible amounts for the years ended June 30,
2008 and 2007 was $16,303 and $243,398, respectively.






F-8






CHINA
DASHENG BIOTECHNOLOGY COMPANY


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


Inventory





The
Company values inventories, consisting of finished goods, work in process and
raw materials, at the lower of cost or market. Cost is determined on the
weighted average cost method. Cost of work in process and finished goods
comprises direct labor, and raw materials.





Investment
in real estate ventures





The
Company had two joint ventures for real estate projects in China to develop
commercial and residential real estate in China. The Company’s ownership
interests in the two ventures are 17.5% and 16.5%, respectively. As a result,
the Company accounts for these two ventures based on cost method of
accounting.




Property,
plant and equipment





Property,
plant and equipment are recorded at cost. Expenditures for major additions and
betterments are capitalized. Maintenance and repairs are charged to operations
as incurred. Depreciation of property, plant and equipment is computed by the
straight-line method (after taking into account their respective estimated
residual values) over the assets estimated useful lives ranging from three (3)
years to 30 years. Leasehold improvements, if any, are amortized on a
straight-line basis over the lease period or the


estimated
useful life, whichever is shorter. Upon sale or retirement of property, plant
and equipment, the related cost and accumulated depreciation are removed from
the accounts and any gain or loss is reflected in operations.





Land
use rights





Land use
rights represent the cost to obtain the right to use land in China. Land use
rights are carried at cost and amortized on a straight-line basis over the lives
of the rights, ranging from 17 to 50 years.





Patent
and purchased formulae





The
Company has adopted the guidelines as set out in Statement of Financial
Accounting Standards No. 142 “Goodwill and Other Intangible Assets” (“SFAS No.
142”) for the patent and purchased formulae. Under the requirements as set out
in SFAS No. 142, the Company amortizes the costs of acquired patent and formulae
over their remaining legal lives or
the term of the contract, whichever is shorter. All internally developed process
costs incurred to the point when a patent application is to be filed are
expensed as incurred and classified as research and development costs. Patent
application costs, generally legal costs, thereafter incurred, are capitalized
pending disposition of the individual patent application, and are subsequently
either amortized based on the initial patent life granted, generally 15 to 20
years for domestic patents and 5 to 20 years for foreign patents, or expensed if
the patent application is rejected. The costs of defending and maintaining
patents are expensed as incurred. Upon becoming fully amortized, the related
cost and accumulated amortization are removed from the accounts.







F-9




CHINA
DASHENG BIOTECHNOLOGY COMPANY


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007






Advance
to suppliers




Advance
to suppliers represent the payments made and recorded in advance for goods and
services received. The Company makes advances to raw materials purchased from
certain vendors.




Impairment
of long-lived assets




Long-lived
assets, which include property, plant and equipment and intangible assets, are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.





Recoverability
of long-lived assets to be held and used is measured by a comparison of the
carrying amount of an asset to the estimated undiscounted future cash flows
expected to be generated by the asset.  If the carrying amount of an
asset exceeds its estimated undiscounted future cash flows, an impairment charge
is recognized by the amount by which the carrying amount of the asset exceeds
the fair value of the assets.  Fair value is generally determined
using the asset’s expected future discounted cash flows or market value, if
readily determinable. No impairment loss is recorded for the year ended June 30,
2008 and 2007.





Income
taxes





The
Company accounts for income tax under the provisions of SFAS No.109 "Accounting
for Income Taxes", which requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of the events that have
been included in the financial statements or tax returns.  Deferred
income taxes are recognized for all significant temporary differences between
tax and financial statements bases of assets and
liabilities.  Valuation allowances are established against net
deferred tax assets when it is more likely than not that some portion or all of
the deferred tax asset will not be realized.  There are no deferred
tax amounts as at June 30, 2008 and 2007.




Revenue
recognition




The
Company utilizes the accrual method of accounting.  In accordance with
the provisions of Staff Accounting Bulletin (“SAB”) 104, sales revenue is
recognized when products are shipped and payments of the customers and
collection are reasonably assured.  Payments received before all of
the relevant criteria for revenue recognition are satisfied are recorded as
unearned revenue.





The
Company follows the guidance of the Securities and Exchange Commission’s Staff
Accounting Bulletin 104 (“SAB No.104”) for revenue recognition. The Company
records revenue when persuasive evidence of an arrangement exists, product
delivery has occurred and the title and risk of loss transfer to the buyer, the
sales price to the customer is fixed or determinable, and collectability is
reasonably assured. For sale of additive for livestock feed and crop
cultivation,the Company
derives the majority of its revenue from sales contracts with customers with
revenues being generated upon the shipment of goods. Persuasive evidence of an
arrangement is demonstrated via invoice, product delivery is evidenced by
warehouse shipping log as well as a signed bill of lading from the trucking or
rail company and title transfers upon shipment, based on either free on board
(“FOB”) factory or destination terms; the sales price to the customer is fixed
upon acceptance of the purchase order and there is no separate sales rebate,
discount, or volume incentive. When the Company recognizes revenue, no
provisions are made for returns because, historically, there have been very few
sales returns and adjustments that have impacted the ultimate collection of
revenues.









F-10




CHINA
DASHENG BIOTECHNOLOGY COMPANY


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007




Earnings
per share





The
Company computes earnings per share (“EPS’) in accordance with Statement of
Financial Accounting Standards No. 128, “Earnings per Share” ("FAS No. 128”),
and SEC Staff Accounting Bulletin No. 98 (“SAB 98”).  SFAS
No. 128 requires companies with complex capital structures to present basic
and diluted EPS.  Basic EPS is measured as net income divided by the
weighted average common shares outstanding for the period.  Diluted EPS is
similar to basic EPS but presents the dilutive effect on a per share basis of
potential common shares (e.g., convertible securities, options and warrants) as
if they had been converted at the beginning of the periods presented, or
issuance date, if later.  Potential common shares that have an
anti-dilutive effect (i.e., those that increase income per share or decrease
loss per share) are excluded from the calculation of diluted EPS. There are
30,000,000 and 32,080,000 shares of common stock equivalent available in the
computation of dilute earnings per share at June 30, 2008 and 2007
respectively.





Concentration
of credit risk





Financial
instruments that potentially subject the Company to concentration of credit risk
consist primarily of accounts receivable and other receivables.  The
Company does not require collateral or other security to support these
receivables.  The Company conducts periodic reviews of its clients'
financial condition and customer payment practices to minimize collection risk
on accounts receivable.





Risks
and uncertainties





The
operations of the Company are located in the PRC. Accordingly, the Company's
business, financial condition, and results of operations may be influenced by
the political, economic, and legal environments in the PRC, as well as by the
general state of the PRC economy.





The
Company’s operations in the PRC are subject to special considerations and
significant risks not typically associated with companies in North America and
Western Europe. These include risks associated with, among others, the
political, economic and legal environment and foreign currency exchange. The
Company’s results may be adversely affected by changes in the political and
social conditions in the PRC, and by changes in governmental policies with
respect to laws and regulations, anti-inflationary measures, currency
conversion, remittances abroad, and rates and methods of taxation, among other
things.






F-11




CHINA
DASHENG BIOTECHNOLOGY COMPANY


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007




Fair
value of financial instruments





The
carrying amounts of certain financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable, accrued expenses, notes
payable and other loans payable approximate fair value due to the short-term
nature of these items.




Foreign
currency translation




The
Company’s functional currency is the Renminbi (“RMB”). For financial reporting
purposes, RMB has been translated into United States dollars ("USD") as the
reporting currency. Assets and liabilities are translated at the exchange rate
in effect at the balance sheet date. Revenues and expenses are translated at the
average rate of exchange prevailing during the reporting period. Translation
adjustments arising from the use of different exchange rates from period to
period are included as a component of stockholders' equity as "Accumulated other
comprehensive income". Gains and losses resulting from foreign currency
translations are included in accumulated other comprehensive
income.  There is no significant fluctuation in exchange rate for the
conversion of RMB to USD after the balance sheet date.




Segment
reporting




The
Company follows Statement of Financial Accounting Standards No. 131 “Disclosures
about Segments of an Enterprise and Related Information” (“SFAS No. 131”). SFAS
No. 131 requires that a company report financial and descriptive information
about its reportable operating segments. Operating segments are components of an
enterprise for which separate financial information is available and is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance. The Company identifies its
reportable segments by reviewing the nature of products sold, nature of the
production processes, type and class of customer, methods to distribute product
and nature of regulatory environment. The Company principally operates in one
reportable segment: Agriculture related additives for livestock feed and crop
cultivation.





Commitments
and contingencies


Liabilities
for loss contingencies arising from claims, assessments, litigation, fines and
penalties and other sources are recorded when it is probable that a liability
has been incurred and the amount of the assessment can be reasonably
estimated.






F-12




CHINA
DASHENG BIOTECHNOLOGY COMPANY


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007


Recent
accounting pronouncements






In July
2006, the FASB issued FASB Interpretation (“FIN”) No. 48, “Accounting for
Uncertainty in Income Taxes,” which prescribes a comprehensive model for how a
company should recognize, measure, present and disclose in its financial
statements uncertain tax positions that the company has taken or expects to take
on a tax return (including a decision whether to file or not to file a return in
a particular jurisdiction). The accounting provisions of FIN No. 48 are
effective for fiscal years beginning after December 15, 2006. The adoption of
this Interpretation did not have a material impact on the Company’s financial
position and results of operations.




In
September 2006, the SEC issued SAB No. 108, which provides guidance on the
process of quantifying financial statement misstatements. In SAB No. 108, the
SEC staff establishes an approach that requires quantification of financial
statements errors, under both the iron-curtain and the roll-over methods, based
on the effects of the error on each of The Company’s financial statements and
the related financial statement disclosures. SAB No. 108 is generally effective
for annual financial statements in the first fiscal year ending after November
15, 2006. The transition provisions of SAB No. 108 permits existing public
companies to record the cumulative effect in the first year ending after
November 15, 2006 by recording correcting adjustments to the carrying values of
assets and liabilities as of the beginning of that year with the offsetting
adjustment recorded to the opening balance of retained earnings. The adoption of
SAB No. 108 did not have a material effect on the Company’s financial position
or results of operations.




In
September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements”. SFAS No.
157 defines fair values, establishes a framework for measuring fair value, and
expands disclosures about fair value measurements.  This Statement
shall be effective for financial statements issued for fiscal years beginning
after November 25, 2007, and interim periods within those fiscal years. Earlier
application is encouraged provided that the reporting entity has not yet issued
financial statements for that fiscal year, including financial statements for an
interim period within that fiscal year.  The Company is currently
evaluating the impact of adopting SFAS No. 157 on its financial position and
results of operations.




In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of FASB Statement No.
115.  SFAS No. 159 permits entities to choose to measure many
financial instruments and certain other items at fair value that are not
currently required to be measured at fair value.   Unrealized
gains and losses on items for which the fair value option has been selected are
reported in earnings.  SFAS No. 159 also establishes presentation and
disclosure requirements designed to facilitate comparisons between entities that
choose different measurement attributes for similar types of assets and
liabilities.  SFAS No. 159 is effective for fiscal years beginning
after November 15, 2007.  The Company has not yet determined the
impact, if any, on its financial statements.






F-13




CHINA
DASHENG BIOTECHNOLOGY COMPANY


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007




In
December 2007, the FASB issued SFAS No 141 (Revised 2007), Business Combinations
(“SFAS No. 141(R)”) to significantly change the accounting for business
combinations.  Under SFAS No. 141(R), an acquiring entity will be
required to recognize all the assets acquired and liabilities assumed in a
transaction at the acquisition date fair value with limited exceptions and will
change the accounting treatment for certain specific items,
including:




●   acquisition
costs will generally be expensed as incurred;




●   noncontrolling
interests will be valued at fair value at the date of acquisition;
and




●   liabilities
related to contingent consideration will be recorded at fair value at the date
of acquisition and subsequently remeasured each subsequent reporting
period




SFAS No.
141(R) is effective for fiscal years beginning after December 15,
2008.   The Company will adopt SFAS No. 141(R) on January 1,
2009, and the Company has not yet determined the impact, if any, on its
financial statements.




In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements – An Amendment of ARB No. 51, to establish new
accounting and reporting standards for the noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary.  SFAS No. 160
requires the recognition of a noncontrolling interest (minority interest) as
equity in the consolidated financial statements and separate from the parent’s
equity.  The amount of net income attributable to the noncontrolling
interest will be included in consolidated net income on the face of the income
statement.  SFAS No. 160 clarifies that changes in a parent’s
ownership interest in a subsidiary that do not result in deconsolidation are
equity transactions if the parent retains its controlling financial
interest.  In addition, SFAS No. 160 requires that a parent recognize
a gain or loss in net income when a subsidiary is
deconsolidated.  SFAS No. 160 also includes expanded disclosure
requirements regarding the interests of the parent and its noncontrolling
interest.  SFAS No. 160 is effective for fiscal years beginning after
December 15, 2008.  The Company will adopt SFAS No. 160 on January 1,
2009, and the Company has not yet determined the impact, if any, on its
financial statements.




Note
3. INVENTORY





The
inventory consists of the following:








Balance
      as ofJune
      30, 2008
            
            
            
            June
      30, 2007Raw
      materials
            
            $
            218,985
            
            
            
            $
            592,207Packing
      materials
            
            
            14,461
            
            
            
            
            -Work-in-process
            
            
            246,695
            
            
            
            
            32,003Finished
      goods
            
            
            81,742
            
            
            
            
            209,226Total
            
            $
            561,883
            
            
            
            $
            833,436








No
allowance for inventory was made for the years ended June 30, 2008 and
2007.







F-14






CHINA
DASHENG BIOTECHNOLOGY COMPANY


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007





Note
4.  RELATED PARTY TRANSACTIONS





The
detail of related party transactions is as follows:




(i)
Operating lease from a related party





On
December 1, 2006, Lüshen entered into a non-cancellable operating lease for its
manufacturing facility in Hainan Province from Dasheng Industries Co., Ltd., an
affiliate of the Company, expiring November 30, 2026. Lüshen prepaid the total
lease obligation of RMB3.0 million (equivalent to $437,375 and $394,115 at June
30, 2008 and 2007 respectively) upon signing the lease, which approximates the
present fair market value of the lease.





(ii) Due
from related parties







Balance
      as ofJune
      30, 2008
            
            
            
            June
      30, 2007Shareholders/officers
            
            $
            1,580,820
            
            
            
            $
            1,757,325Total
            
            $
            1,580,820
            
            
            
            $
            1,757,325











The
advances to shareholders/officers bear no interest and have no formal repayment
terms. However, the company expects to collect the outstanding
balance within one year.









F-15




CHINA
DASHENG BIOTECHNOLOGY COMPANY


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007





NOTE
5 – REAL ESTATE








(i)
Dasheng Garden Development Project





On March
19, 2005, the Company signed a joint venture property development ("JV")
agreement with an unrelated developer (the "Developer"). Under the agreement,
the Company was required to (1) contribute RMB14 million (equivalent to
$1,924,002 at date of signing) in cash as the investment into the project, (2)
assist the Developer in the project planning and (3) assist the Developer in
applying for and obtaining relevant approvals.  The Developer was required
to contribute RMB71million (equivalent to $8,578,505 at date of signing) in cash
into the project.




Upon
completion of Phase I, representing approximately 50% of the Company owned land
use rights in the City of Lanzhou, the Company will receive RMB7 million
(equivalent to $845,768 at date of signing) from the JV and will retain the
ownership of all the commercial retail units on the first floor and the basement
which will be sold as a parking lot, and the Developer will obtain all remaining
units.




Upon
completion of Phase II, (which concerns the development of the remaining 50% of
the land use rights, the Company and the Developer will be entitled to 29% and
71% of the net profits, respectively.




The
Company ownership percentage in the real estate venture is 16.5%.





On June
30, 2005 the Company transferred the land use right associated with Phase I
valued at RMB2,929,686 (equivalent to $353,976 at date of transfer) less
accumulated amortization of RMB459,142 (equivalent to $55,475 at date of
transfer) from the land use right account and reclassified the net amount to
investment in real estate ventures, with no further amortization of the land use
right to be taken.





On
December 31, 2007, the Company received cash from Dasheng Garden Development of
RMB7,000,000 (equivalent to US$1,020,542), which was accounted for as a
reduction of the investment in real estate investment (return of
capital).




(ii)
Changlin Real Estate Development project





On May
31, 2008, the Company contributed RMB35m (equivalent to US$5,102,710) to set up
a joint venture of Changlin Real Estate Development Co., Ltd. The joint venture
intends to develop residential real estate in an old manufacturing site in
Lanzhou within 2 years. The Company's share of the joint venture project is
17.5%.







F-16




CHINA
DASHENG BIOTECHNOLOGY COMPANY


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007







Note
6. PROPERTY, PLANT AND EQUIPMENT, NET





The
detail of property, plant and equipment is as follows:







Balance
      as ofJune
      30, 2008
            
            
            
            June
      30, 2007Buildings
      and improvements
            
            $
            1,594,550
            
            
            
            $
            1,436,833Machinery
      and equipments
            
            
            1,278,136
            
            
            
            
            1,125,183Transportation
      equipments
            
            
            258,194
            
            
            
            
            232,656Office
      equipments
            
            
            62,729
            
            
            
            
            56,525Sub-total
            
            
            3,193,609
            
            
            
            
            2,851,197Less:
      Accumulated Depreciation
            
            
            (1,574,780
            )
            
            
            
            (1,120,758
            )Total
            
            $
            1,618,829
            
            
            
            $
            1,730,439





Depreciation
expense for the years ended June 30, 2008 and 2007 was $491,401 and $378,833,
respectively.





Note
7.   LAND USE RIGHTS








All land
in the People’s Republic of China is government owned and cannot be sold to any
individual or company. Instead, the government grants the user a “Land use
right” (the “Right”) to use the land.





On August
17, 2006, Elemiss entered into an agreement with and obtained a certificate of a
land use right from the Chinese government, whereby Elemiss acquired for RMB
703,200 (equivalent to $88,247 at date of acquisition) the right to use certain
land until August 16, 2056. The purchase price is being amortized over the term
of the right, which is 50 years.





Net land
use right at June 30, 2008 and 2007 were as follows:







Balance
      as ofJune
      30, 2008
            
            
            
            June
      30, 2007Land
      use right
            
            $
            1,883,298
            
            
            
            $
            1,819,380Less:
      Accumulated amortization
            
            
            (351,743
            )
            
            
            
            (373,321
            )Total
            
            $
            1,531,555
            
            
            
            $
            1,446,059







Amortization
expense for the years ended June 30, 2008 and 2007 was $70,510 and $65,296,
respectively. Amortization expense for the next five years is approximately
$70,510 per year.







F-17




CHINA
DASHENG BIOTECHNOLOGY COMPANY


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007













Note
8.  PATENT AND PURCHASED FORMULAE





At June
30, 2008 and 2007, patent and purchased formulae at cost, less accumulated
amortization consisted of the following:










Balance
      as ofJune
      30, 2008
            
            
            
            June
      30, 2007Patent
      & purchased formulae
            
            $
            -
            
            
            
            $
            403,171Less:
      Accumulated amortization
            
            
            -
            
            
            
            
            (338,717
            )Total
            
            $
            -
            
            
            
            $
            64,454





Amortization
expense for the years ended June 30, 2008 and 2007 was $64,454 and $74,756,
respectively.





Note
9.  NOTES RECEIVABLE





As of
June 30, 2008 and 2007,  the Company had notes receivable due from
Weiye Forestry Ecosystem and Development Co., Ltd (“Weiye
Forestry”).  On May 24, 2007, the Company sold its forestry
development rights at RMB10, 439,340 (equivalent to US$ 1,364,174  at
date of signing) to Weiye Forestry for 5 installments from 5/23/2008 to
5/23/2012.  According to this agreement, the Company would collect
RMB2,000,000 annually , with the remaining RMB439,340 collected at the last
year.  Weiye Forestry was a related party at the time the transaction
occurred. The CEO of one of the Company’s affiliates was the owner of Weiye.
During the year ended June 30, 2008, this person was no longer an CEO of the
affiliated company. As a result, Weiye is no longer a related
party.




As this
sale of forestry development right payment term is five years and there is no
specified interest rate, the Company used discounted rate of 8.5%, which
approximate  five year China bank loan rate, to calculate present
value of the future payments.









F-18




CHINA
DASHENG BIOTECHNOLOGY COMPANY


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007







Note
10.  PREPAYMENTS





As of
June 30, 2008 and 2007, long-term prepayments consisted of the
followings:





Balance
      as ofJune
      30, 2008
            
            
            
            June
      30, 2007Consultings
      fees
            
            $
            538,850
            
            
            
            $Prepaid
      rent expense
            
            
            406,394
            
            
            
            
            537,638Advertisement
            
            
            200,464Other
            
            
            4,374Total
            
            $
            1,150,082
            
            
            
            $
            537,638





As of
June 30, 2008 and 2007, prepayments and other current assets consisted of the
followings:







Balance
      as ofJune
      30, 2008
            
            
            
            June
      30, 2007Receivable
      from real estate investment
            
            $
            -
            
            
            
            $
            919,601Prepayments
      for raw materials
            
            
            -
            
            
            
            
            457,325Other
      receivables
            
            
            35,675
            
            
            
            
            511,029Total
            
            $
            35,675
            
            
            
            $
            1,887,955











Note
11.  ACCRUED EXPENSES AND OTHER PAYABLES





As of
June 30, 2008 and 2007, accrued expenses and other payables consisted of the
following:










Balance
      as ofJune
      30, 2008
            
            
            
            June
      30, 2007Accrued
      expenses
            
            $
            477,512
            
            
            
            $
            513,837Customer
      deposits
            
            
            -
            
            
            
            
            349,286Other
      payables and accruals
            
            
            331,951
            
            
            
            
            469,241Staff
      & workers' welfare and bonus fund
            
            
            -
            
            
            
            
            211,764Total
            
            $
            809,463
            
            
            
            $
            1,544,128










F-19




CHINA
DASHENG BIOTECHNOLOGY COMPANY


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007










Note
12.  LONG-TERM PAYABLE-LAND USE RIGHTS





In April
2001, Lüshen obtained a land use right from the Chinese government, for
RMB10,008,364 (equivalent to $1,200,381 at the date of acquisition). The term of
the lang use right is through  May 18, 2031. The purchase price is
being amortized over the term of the right. The payment of the original purchase
price was deferred and due on or before June 24, 2011 (See Note 7). The
long-term payable bears no interest.





NOTE
13 – INCOME TAXES





The
Company is governed by the Income Tax Law of the People’s Republic of China
concerning foreign invested companies, which, until January 2008, generally
subject to tax at a statutory rate of 33% (30% state income tax plus 3% local
income tax) on income reported in the statutory financial statements after
appropriate tax adjustments.








Substantially
all of the Company’s taxable income and related tax expense are from PRC
sources. Dasheng, Lüshen and Elemiss file separate income tax returns under the
Income Tax Law of the People’s Republic of China concerning Foreign Investment
Enterprises and Foreign Enterprises and local income tax laws (the “PRC Income
Tax Law”). In accordance with the relevant income tax laws, the profits of the
Company derived from agribusiness are fully exempted from income taxes and the
profits of the Company derived from real estate investment are subject to income
taxes. As of June 30, 2008 and 2007, the Company derived all of its revenues and
profits from its agriculture business.








On March
16, 2007, the National People’s Congress of China approved the Corporate Income
Tax Law of the People’s Republic of China (the “New CIT Law”), which is
effective from January 1, 2008. Under the new law, the corporate income tax rate
applicable to all Companies, including both domestic and foreign-invested
companies, will be 25%, replacing the current applicable tax rate of
33%.  However, tax concession granted to eligible companies prior to
the new CIT laws will be grand fathered in.





The
Company has been formally approved by the local tax bureau for the favorable tax
benefit enjoyed by the foreign invested company, which allows two-year tax
exemption from income tax from January 1, 2007 through December 31, 2008,
and  three-year 50% tax reduction from January 1, 2009 to December 31,
2011.   As a result of this tax reduction benefit, the Company is
still subject to income tax exemption for the year ended June 30,
2008.







F-20




CHINA
DASHENG BIOTECHNOLOGY COMPANY


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


FOR
THE YEARS ENDED JUNE 30, 2008 AND 2007







Note
14.  FOREIGN OPERATION





(i)
Operations





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





(ii)
Profit Appropriation & Statutory Reserves





Under the
laws of the PRC, net income after taxation can only be distributed as dividends
after appropriation has been made for the following: (i) cumulative prior years’
losses, if any; (ii) allocations to the "Statutory Surplus Reserve" of at least
10% of net income after tax, as determined under PRC accounting rules and
regulations, until the fund amounts to 50% of the Company’s registered capital;
(iii) Allocations to any discretionary surplus reserve, if approved by
stockholders.





The
statutory reserves represent restricted retained earnings and is
non-distributable other than during liquidation and can be used to fund previous
years’ losses, if any, and may be utilized for business expansion or converted
into share capital by issuing new shares to existing shareholders in proportion
to their shareholding or by increasing the par value of the shares currently
held by them, provided that the remaining reserve balance after such issue is
not less than 25% of the registered capital.





As of
June 30, 2008 and 2007, the Company established and segregated in retained
earnings an aggregate amount for the Statutory Surplus Reserve of $1,837, 187
and $1,049,826 respectively.





Note
15. COMMITMENTS AND CONTINGENCIES





As at
June 30, 2008 and 2007, there were no contingencies for the
Company.





Note
16.  CONCENTRATIONS
AND CREDIT RISK




Financial
instruments that potentially subject the Company to significant concentration of
credit risk consist primarily of cash and cash equivalents.  As of
June 30, 2008 and 2007, substantially all of the Company’s cash and cash
equivalents were held by major financial institutions located in the PRC, none
of which are insured. However, the Company has not experienced losses on these
accounts and management believes that the Company is not exposed to significant
risks on such accounts







F-21






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




On August 4, 2008, China Dasheng Biotechnology Company, formerly
named Max Nutrition, Inc. dismissed its independent registered public accounting
firm, Li & Company, PC (“Li”). The reports of Li on the financial
statements of the Registrant as of October 31, 2007 and for the fiscal year
ended October 31, 2007 did not contain an adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principles other than an explanatory paragraph as to a going
concern.





The
decision to change the independent registered public accounting firm was
recommended and approved by the sole member of the board. During the Company’s
most recent fiscal year and the subsequent periods through August 4, 2008, there
were no disagreements with Li 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 Li, would have caused it
to make reference thereto in its reports on the financial statements for such
years. None of the reportable events described under Item 304(a)(1)(iv) and (v),
respectively, of Regulation S-K occurred within the period from January 29, 2008
through August 4, 2008, the date of Li’s dismissal.




ITEM
8A.  CONTROLS AND PROCEDURES




Evaluation
of Disclosure Controls and Procedures




An
evaluation was performed under the supervision and with the participation of our
management, including our principal executive officer and principal financial
officer, of the effectiveness of our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934) as of the end of the period covered by this Annual Report on Form 10-K.
Based on that evaluation, our management, including our principal executive
officer and principal financial officer, concluded that our disclosure controls
and procedures are effective to ensure that information required to be disclosed
by us in reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission rules and forms and such information is
accumulated and communicated to our management, including our principal
executive officer and principal financial officer, to allow timely decisions
regarding required disclosure.




Management’s Annual Report on Internal Control over Financial
Reporting




The
Company’s management is responsible for establishing and maintaining adequate
internal control over financial reporting (as such term is defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act). The Company’s internal control
over financial reporting is designed to provide reasonable assurance regarding
the reliability of its financial reporting and the preparation of published
financial statements in accordance with generally accepted accounting
principles.




However,
because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or the degree
of compliance with policies may deteriorate.




Management
conducted its evaluation of the effectiveness of its internal control over
financial reporting based on the framework in “Internal Control-Integrated
Framework” issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”) as of June 30, 2008.


Management’s
Report





Management’s
assessment is that the Company’s internal controls over financial reporting were
not effective as of June 30, 2008.  In the course of making our
assessment of the effectiveness of internal controls over financial reporting,
we identified some material weaknesses in our internal control over
financial reporting. We lack sufficient personnel with the appropriate
level of knowledge, experience and training in the application of accounting
operations of our company. This weakness causes us to not fully identify and
resolve accounting and disclosure issues that could lead to a failure to perform
timely internal control and reviews.





Management
is currently reviewing its staffing and systems in order to remedy the
weaknesses identified in this assessment.  However, because of the above
condition, management’s assessment is that the Company’s internal controls over
financial reporting were not effective as of June 30, 2008.




This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the Company’s registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Company to provide only management’s report
in this Annual Report on Form 10-K.




Based on
this evaluation, management concluded that the Company should engage an
independent expert in relation to this issue in fiscal year 2009.








29






Changes
in Internal Controls over Financial Reporting




There
have been no significant changes in the Company’s internal control over
financial reporting during the Company’s most recent fiscal quarter that has
materially affected, or is reasonably likely to affect, the Company’s internal
control over financial reporting.




ITEM
8B. OTHER INFORMATION




None.




PART III




ITEM 9.     DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERANCE; COMPLIANCE WITH SECTION
16(a) OF THE EXCHANGE ACT




Directors,
Executive Officers and Key Employees and Advisors




The
following is a summary of the business experience of our officers and
director:





Qi Jinjun, Chairman and CEO,
aged 41, is an entrepreneur with nearly 20 years of experience in agrotech
research and agribusiness management.  Mr.Qi started his career as a
technician at the Agrotech Extension Station in Pengyuan County, Gansu Province
in 1988. In 1994, he founded Gansu Xingshun Trade Co., Ltd., which four years
later acquired the then state-owned Lanzhou Anning Food Factory to form the
predecessor of the Company. Mr. Qi was instrumental in the development and
commercialization of the Company’s key products, AM/HM-based biological
bacterial blends and Bulgarian lactobacillus live stock feed additive. He is the
author of 18 papers on agricultural technologies. Among his other engagements,
Mr. Qi is a Vice Chairman of the Gansu Chapter of the All China Youth
Federation, a deputy to the Gansu Provincial People’s Political Consultative
Conference, a Vice Chairman of the Gansu Private Technological Enterprises
Association. Mr. Qi has a bachelor’s degree in Agricultural Sciences from Gansu
Agricultural University, and a master’s degree in management from Lanzhou
University. He is currently pursuing a joint EMBA degree by Tsinghua University
in Beijing, China, and the Australian National University in Canberra,
Australia.




Gao Jingbo has served as
Vice President in charge of investor relations since March
2008.  Prior to joining the Company, Mr. Gao served as general
manager of American Golden Bridge Group, a consulting company which
assisted China-based companies in accessing US capital markets
from 2006 to 2007. Mr. Gao received his Master's degree in communication
and information management from NJIT, New Jersey in 1999.




The
following is a summary of the business experience of the officers of Gansu
Biology Science and Technology Stock Co., Ltd ("GSDS"), our wholly owned
subsidiary:




Zhang Sidong has been employed
since April 2004, as CEO of the Company. Mr. Zhang is responsible for
GSDS’s  product manufacture operations. Prior to working with the company,
Mr. Zhang has been engaged as the general manager of Lanzhou Yuyuan
Nano Material Co., Ltd. His responsibilities included oversight of day to day
operations from 2001 to 2003. Mr. Zhang has obtained a Bachelor's degree 
in Finance from Lanzhou University in 1991.




Shao Yongyaohas been employed
as Vice President in charge of market development as of September
2001. Prior to joing GSDS, Mr Shao has served as sales manager for
Gansu Mechanical Company. Mr. Shao was awarded a Bachelor's degree from
Lanzhou Polytechnic University in 1987. In 2003, Mr. Shao was awarded a
Master's of Business degree at New Zealand University.




Yang Zhongrenhas
been employed as Vice President of Finance since July 2008. Prior to
joining GSDS, Mr. Yang served on the senior management level of a
number of both private-owned and state-owned enterprises, including Beijing
Xilan Company, Gansu Xilan Zhuhai Real Estate, and Ministry of Gansu Qingyang
Construction. In 1988, Mr. Yang obtained a Bachelor's degree from
Xi’an University of Architecture and Technology.




Wang Hongsheng has been
employed by GSDS since 2006 in vaious finance related positions. Since
April 2008, Mr. Wang has served as the CFO of GSDS. Mr. Wang obtained
his Bachelor degree from Lanzhou University in 1999, and pass the CPA test
thereafter. Prior to working for the company, Mr. Wang has been worked as the
head of financial department at Lanzhou Wanzhong Communication Company from 2001
to 2006.




Pu Xuhas served as the Chief
Scientist of GSDS since 2001. He also serves as a professor and doctoral
advisor of the Life Science Institution at Lanzhou University. Mr.
Pu was awarded a Master's degree from the China Agricultural
University in 1979. Mr. Pu has also been awarded Gansu provincial and Lanzhou
City Science Progress Award due to his development of the AM/HM bacteria
additives.




Board
Structure and Composition; Committees




Our board
of directors currently consists of only Mr. Qi. We currently do not
maintain any committees.





Code
of Business Conduct and Ethics




Our board
of directors has adopted a code of business conduct and ethics applicable to our
directors, executive officers, including our chief financial officer and other
of our senior financial officers, and employees.






30




ITEM 10. EXECUTIVE COMPENSATION




Board
Compensation




As of the date of this report, Mr. JinJun Qi is
the sole member of our board of directors. Mr. Qi does not receive compensation
for this role.





Executive
Compensation




The table
below lists the compensation received by Mr. Qi, the Company’s sole
executive officer, and the principal executive officer of Gansu Biology Science
and Technology Stock Co., Ltd. for the periods indicated. No other officer has
received compensation in excess of $100,000 for these years.





gm
            
            
            Annual
      CompensationName
      and Principal Position
            Year
            
            Salary(USD)
            
            Bonus
            
            Other
      Annual
              CompensationJinjun
      Qi, Chief Executive Officer
            2008
            
            $
            4,000
            
            —
            
            
            —2007
            
            $
            4,000
            
            —
            
            
            —







Equity
Compensation Plans and Awards




We do not
have any equity compensation plans. We have not granted any stock options or
other equity awards since our inception.




ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS




The
following table sets forth certain information regarding the beneficial
ownership of the Company's common stock as of January 29, 2008 by (i) each of
our Directors, (ii) each of our Executive Officers, (iii) each person who is
known by us to own beneficially more than 5% of the common stock; (iv) all
Directors and Officers as a group; and all persons receiving shares in
connection with the Closing.






Number
      of
            
            Percentage
      ofName
      and Address (1)
            
            Shares
            
            ClassJinjun
      Qi
            
            
            11,520,000
            
            38.40
            %Dasheng
      Trading Co. Ltd. (2)
            
            
            6,504,000
            
            21.68
            %Zhang
      Leshan
            
            
            3,000,000
            
            10.00
            %Warner
      Technology & Investment Corp.
              18
      Kimberly Court
              East
      Hanover, NJ 07936
            
            
            400,000
            
            1.33
            %Xiaojin
      Wang
            
            
            1,200,000
            
            4.00
            %All
      officers and directors as a group (1) one person. (2)
            
            
            18,024,000
            
            60.08
            %





(1)
            Unless
      otherwise indicated, the address of all shareholders is c/o GDBS, Bldg B,
      17th Floor, Century Plaza, Qingyang Rd., Lanzhou, Dansu Province,
      PRC.(2)
            c/o
      American Union Securities 100 Wall St. 15th Floor New York, NY
      10005.





There are
no family relationships among the former shareholders of ASPI, except that Dr.
Huakang Zhou is the chairman of the board and a majority shareholder of Warner
Technology & Investment Corp. Xiaojin Wang is the wife of Dr. Huakang
Zhou.





These
shares were issued in reliance on the exemption afforded by section 4(2) of the
Securities Act of 1933, as amended, as a transaction by an issuer not involving
any public offering. Each of the recipients of stock has executed a letter
evidencing his investment intent. The share certificates will bear an
appropriate restrictive legend and stop transfer instructions will be maintained
with the Company’s transfer agent.





After the
Closing the Company has 30,000,000 shares of common stock
outstanding.






31






ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND
DIRECTOR INDEPENDENCE





(i)
Operating lease from a related party





On
December 1, 2006, Lüshen entered into a non-cancellable operating lease for its
manufacturing facility in Hainan Province from Dasheng Industries Co., Ltd., an
affiliate of the Company, expiring November 30, 2026. Lüshen prepaid the total
lease obligation of RMB3.0 million (equivalent to $437,375 and $394,115 at June
30, 2008 and 2007 respectively) upon signing the lease, which approximates the
present fair market value of the lease.





(ii) Due
from related parties







Balance
      as ofJune
      30, 2008
            
            
            
            June
      30, 2007Shareholders/officers
            
            $
            1,580,820
            
            
            
            $
            1,757,325Total
            
            $
            1,580,820
            
            
            
            $
            1,757,325











The
advances to shareholders/officers bear no interest and have no formal repayment
terms. However, the company expects to collect the outstanding
balance within one year.





ITEM 13. EXHIBITS







Number
            
            Exhibit
            
            Location3.1
            
            Certificate
      of Incorporation
            
            Incorporated
      by reference as Exhibit 3.1 to Form SB-2 filed March 15,
    20073.2
            
            Amended
      Certificate of Incorporation
            
            Filed
      within3.3
            
            Bylaws
            
            Incorporated
      by reference as Exhibit 3.2 to Form SB-2 filed March 15,
    200710.1
            
            Agreement
      and Plan of Reorganization, dated as of January 29, 2008, by and among the
      Company, Nicholas Stone and American Spring Pharmaceutical,
      Inc.,
            Incorporated
      by reference to Exhibit 10.1 to Form 8-K filed on January 30,
      200814.1
            
            Code
      of Ethics
            
            Filed
      within16.1
            
            Letter
      dated August 7, 2008 from Li & Company to the United States Securities
      and Exchange Commission
            Incorporated
      by reference to Exhibit 16.1 to Form 8-K filed on August 7,
      200821.1
            
            List
      of subsidiaries
            
            Filed
      within31.1
            
            Certification
      of CEO and CFO pursuant to Rule 13a-14(a)/15(d)-14(a).
            
            Filed
      within32.1
            
            Certification
      of CEO and CFO pursuant to Section 1350.
            
            Filed
      within






32




ITEM
14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES







On August
4, 2008, the Company dismissed its independent registered public accounting
firm, Li & Company, PC (“Li”). The reports of Li on the financial
statements of the Company as of October 31, 2007 and for the fiscal year
ended October 31, 2007 did not contain an adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principles other than an explanatory paragraph as to a going
concern. The decision to change the independent registered public accounting
firm was recommended and approved by the sole member of the Company’s board.
During the Company’s most recent fiscal year and the subsequent periods through
August 4, 2008, there were no disagreements with Li 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 Li, would
have caused it to make reference thereto in its reports on the financial
statements for such years. None of the reportable events described under Item
304(a)(1)(iv) and (v), respectively, of Regulation S-K occurred within the
period from January 29, 2008 through August 4, 2008, the date of Li’s
dismissal.





Set forth
below is a summary of the fees we paid our principal auditor for professional
services rendered for the years ended June 30, 2008 and 2007. All of the audit
fees were approved by the board of directors acting as the company's audit
committee.




Audit
Fees




The
aggregate fees billed for professional services rendered Malone & Bailey, PC
for the audit of our annual financial statements and review of financial
statements for the fiscal year ended June 30, 2008
was  $75,000.




Audit-Related
Fees




Malone
& Bailey, PC did not render any audit-related services to us for the fiscal
year ended June 30, 2008. Li & Company, did not render any audit-related
services to us for the fiscal year ended June 30, 2007.





Tax
Fees




Malone
& Bailey, PC did not render any tax services to us for the fiscal year ended
June 30, 2008. Li & Company, PC did not render any tax services to us for
the fiscal year ended June 30, 2007.








All
Other Fees




Malone
& Bailey, PC did not render any other services to us for the fiscal year
ended June 30, 2008. Li & Company, PC did not render any other services to
us for the fiscal year ended June 30, 2007.







33


SIGNATURES




In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized, on October 14, 2008.






CHINA
      DASHENG BIOTECHNOLOGY COMPANYBy:
              /s/ Jinjun QiMr. Jinjun
      QiChairman
      of the Board and Chief Executive Officer and Chief Financial Officer
      (Principal Executive Officer and Principal Financial and Accounting
      Officer )





In
accordance the Exchange Act, this report has been signed below by the following
persons on behalf of the registrant and in the capacities indicated
on October 14, 2008.




By:
              /s/ JinJun QiJinJun
      QiChairman
      of the Board and Chief Executive Officer and Chief Financial Officer (Principal
      Executive Officer and Principal Financial and Accounting Officer
      )