-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Pac/iViBmplN1zfuGwSZzHoNL3z168b6v9FjVexn4ykQC9VgcI/I4HqwNFBUInQ2 M2XT6KlCCwge9rjilRFO6Q== 0001415889-08-000064.txt : 20090323 0001415889-08-000064.hdr.sgml : 20090323 20081006172927 ACCESSION NUMBER: 0001415889-08-000064 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 21 FILED AS OF DATE: 20081006 DATE AS OF CHANGE: 20090205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SkyPeople Fruit Juice, Inc CENTRAL INDEX KEY: 0001066923 STANDARD INDUSTRIAL CLASSIFICATION: CANNED, FROZEN & PRESERVED FRUIT, VEG & FOOD SPECIALTIES [2030] IRS NUMBER: 980222013 STATE OF INCORPORATION: FL FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-149896 FILM NUMBER: 081110593 BUSINESS ADDRESS: STREET 1: 3233 GRAND AVENUE STREET 2: .SUITE N-353 CITY: CHINO HILLS STATE: CA ZIP: 91709-1489 BUSINESS PHONE: 8668153951 MAIL ADDRESS: STREET 1: 3233 GRAND AVENUE STREET 2: .SUITE N-353 CITY: CHINO HILLS STATE: CA ZIP: 91709-1489 FORMER COMPANY: FORMER CONFORMED NAME: ENTECH ENVIRONMENTAL TECHNOLOGIES INC DATE OF NAME CHANGE: 20040323 FORMER COMPANY: FORMER CONFORMED NAME: CYBER PUBLIC RELATIONS INC DATE OF NAME CHANGE: 20010111 S-1/A 1 s1_amendment.htm S-1 AMENDMENT s1_amendment.htm

 
 
As filed with the Securities and Exchange Commission on October 6, 2008
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
PRE-EFFECTIVE AMENDMENT NO. 2 TO
 
FORM S-1
 
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
 
SKYPEOPLE FRUIT JUICE, INC.
 
(Exact name of registrant as specified in its charter)
 
Florida
(State or other jurisdiction of incorporation or organization)
 
2033
(Primary Standard Industrial Classification Code Number)
 
98-0222013
(I.R.S. Employer Identification Number)
 
16F, National Development Bank Tower,
Gaoxin 2nd Road, Xi’an, PRC 710075
011-86-29-88386415
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
 
Yongke Xue
16F, National Development Bank Tower, Gaoxin 2nd Road,
Xi’an, PRC 710075
011-86-29-88386415
(Name, address, including zip code, and telephone number, including area code, of agent for service)
 
Copies to:
Darren Ofsink, Esq.
GUZOV OFSINK LLC
600 Madison Avenue, 14th Floor,
New York, NY 10022
 
Approximate date of commencement of proposed sale to the public: From time to time after the Registration Statement has been declared effective.
 
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x
 
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

 
 
 

 
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
 
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
o
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
x
Smaller reporting company
 
The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall hereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.

 
 
 


 
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING ANY OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
 
SUBJECT TO COMPLETION, DATED OCTOBER __, 2008
 
PRELIMINARY PROSPECTUS
 
SKYPEOPLE FRUIT JUICE, INC.
 
2,833,333 Shares of Common Stock
 
(underlying Series B Preferred Stock)
 
7,000,000 Shares of Common Stock
 
(underlying warrants)
 
Offered by Selling Stockholders
 
This prospectus relates to the resale by the selling stockholders identified in this prospectus of up to 9,833,333 shares of our Common Stock, including (i) 2,833,333 shares issuable to them upon conversion of Series B Preferred Stock issued to them in a private placement completed on February 26, 2008 (the “Private Placement”) and (ii) 7,000,000 shares of Common Stock issuable to them upon exercise of warrants issued to them in the Private Placement. The warrants have an exercise price of $3.00 per share (subject to adjustment) and expire on February 24, 2013.
 
The selling stockholders may offer all or part of their shares for resale from time to time through public or private transactions, at either prevailing market prices or at privately negotiated prices. We will not receive any of the proceeds from the sale of the shares by the selling stockholders. To the extent the warrants are exercised for cash, if at all, we will receive the exercise price for those warrants. Under the terms of the warrants, cashless exercise is permitted in certain circumstances. We will not receive any proceeds from any cashless exercise of warrants. We will pay all of the registration expenses incurred in connection with this offering (estimated to be approximately $236,000), but the selling stockholders will pay all of the selling commissions, brokerage fees and related expenses.
 
We changed our name from Entech Environmental Technologies, Inc. to SkyPeople Fruit Juice, Inc. on May 23, 2008. Our Common Stock is quoted on the National Association of Securities Dealers Over-the-Counter Bulletin Board under the symbol “SPFJ.OB”. As of October 1, 2008, the last reported bid price for our Common Stock was $2.50 per share and the last reported asked price was $3.90 per share.
 
There is a limited market in our Common Stock. The shares are being offered by the selling stockholders in anticipation of the continued development of a secondary trading market in our Common Stock. We cannot give you any assurance that an active trading market in our Common Stock will develop, or if an active market does develop, that it will continue.
 
Investing in our Common Stock involves a high degree of risk. See “Risk Factors” beginning on page 17 for a discussion of certain risk factors that you should consider. You should read the entire prospectus before making an investment decision.
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
 
The date of this prospectus is _____________

 
-1-
 

TABLE OF CONTENTS
 
 
3
 
3
 
4
 
17
 
30
 
32
 
33
 
33
 
35
 
53
 
61
 
62
 
64
 
67
 
68
 
68
 
71
 
71
 
71
 
71
 
71
 
73
 
73
 
F-1

 
-2-
 

 
You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information other than that contained in this prospectus. The selling stockholders are offering to sell and seeking offers to buy shares of our Common Stock, including shares they acquire upon exercise of their warrants, only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of its delivery or of any sale of our Common Stock. This prospectus will be updated and, as updated, will be made available for delivery to the extent required by federal securities laws.
 
No person is authorized in connection with this prospectus to give any information or to make any representations about us, the selling stockholders, the securities offered hereby or any matter discussed in this prospectus, other than the information and representations contained in this prospectus. If any other information or representation is given or made, such information or representation may not be relied upon as having been authorized by us or any selling stockholder. This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy the securities in any circumstance under which the offer or solicitation is unlawful. Neither the delivery of this prospectus nor any distribution of securities in accordance with this prospectus shall, under any circumstances, imply that there has been no change in our affairs since the date of this prospectus. This prospectus will be updated and updated prospectuses will be made available for delivery to the extent required by the federal securities laws.
 
INFORMATION CONTAINED IN THIS PROSPECTUS
 
This prospectus contains some forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements involve risks and uncertainties. Forward-looking statements include statements regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategies, (c) anticipated trends in our industries, (d) our future financing plans and (e) our anticipated needs for working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plans,” “potential,” “projects,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend” or the negative of these words or other variations on these words or comparable terminology. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Plan of Operation” and “Business,” as well as in this prospectus generally. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, and financial results.
 
Any or all of our forward-looking statements in this report may turn out to be inaccurate. They can be affected by inaccurate assumptions we might make or by known or unknown risks or uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in this prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.
 
Currency
 
Unless otherwise noted, all currency figures in this filing are in U.S. dollars. References to “yuan” or “RMB” are to the Chinese yuan (also known as the Renminbi). According to xe.com, as of September 26, 2008, $1 = 6.84604 yuan.

 
-3-
 

 
 
This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our Common Stock. You should read the entire prospectus, including “Risk Factors” (beginning on page 17) and the consolidated financial statements (beginning on page F-1) and the related notes before making an investment decision. Except as otherwise specifically stated or unless the context otherwise requires, the terms “Company,” we,” “our” and “us” refer collectively to SkyPeople Fruit Juice, Inc. (“SkyPeople”),Pacific Industry Holding Group Co. Ltd. (“Pacific”), a wholly-owned subsidiary of SkyPeople organized under the laws of Vanuatu, and Shaanxi Tianren Organic Food Co., Ltd. (“Shaanxi Tianren”), a 99%-owned subsidiary of Pacific organized under the laws of the People’s Republic of China (the “PRC”). All share and per share information concerning our Common Stock reflects a 1-for -328.72898 reverse stock split which became effective on May 23, 2008.
 
The Company
 
Business Overview
 
In a series of transactions that closed on February 26, 2008, we acquired the business and substantially all of the assets of Shaanxi Tianren Organic Food Co., Ltd., a PRC company (“Shaanxi Tianren”). As a result of that acquisition, Pacific Industry Holding Group Co., Ltd. (“Pacific”) a Vanuatu corporation, became our wholly owned subsidiary. Pacific in turn owns 99% of the equity interest of Shaanxi Tianren.
 
Through Pacific and Shaanxi Tianren, we are engaged in the business of research and development, production and sale of special concentrated fruit juices, fast-frozen and freeze-dried fruits and vegetable and fruit juice drinks.
 
On May 23, 2008, we amended the Company’s Articles of Incorporation and changed our name to SkyPeople Fruit Juice, Inc. to better reflect our business. On May 23, 2008 a 1-for-328.72898 reverse stock split of our outstanding shares of Common Stock and a mandatory 1-for-22.006 conversion of Series A Preferred Stock into our Common Stock, which had been approved by written consent of the holders of a majority of the outstanding voting stock, also became effective.
 
Principal Products
 
Our principal products include concentrated apple juice, concentrated pear juice, concentrated kiwifruit puree, fruit juice drinks, fresh fruits and organic fresh fruits.
 
There are two general categories of fruit and vegetable juices available in the market. One is fresh juice that is canned directly after filtering and sterilization upon being squeezed out of fresh fruits or vegetables. The other general category is juice drinks made out of concentrated fruit and vegetable juices. Concentrated fruit and vegetable juices are produced through pressing, filtering, sterilization and evaporation of fresh fruits or vegetables. They are used as the base material or ingredient for products such as drinks, fruit jams and fruit wines, etc. Concentrated juices are not drinkable. Instead, they are used as a basic ingredient for manufacturing.
 
Corporate History
 
We were initially incorporated in 1998 in Florida as Cyber Public Relations, Inc. for the purpose of providing internet electronic commerce consulting services to small and medium sized businesses. While we were operating under the name Cyber Public Relations, Inc. we never had any material operations or revenues. On January 21, 2004, pursuant to a Capital Stock Exchange Agreement between the stockholders of Environmental Technologies, Inc., a Nevada corporation, the Environmental Technologies stockholders transferred all of their shares of the Environmental Technologies stock to us in exchange for 9,550,000 shares of our Common Stock.

 
-4-
 

As a result of the stock exchange discussed above, Environmental Technologies, Inc. became our wholly-owned subsidiary and the Environmental Technologies stockholders acquired approximately 97% of the issued and outstanding shares of our Common Stock. We changed the Company’s name from “Cyber Public Relations, Inc.” to “Entech Environmental Technologies, Inc.” Immediately following the exchange, Barron Partners LP (“Barron Partners”) acquired 2,000,000 shares of our Common Stock and warrants for the purchase of 7,150,000 shares of our Common Stock.  However, on September 30, 2004, Barron Partners agreed to the cancellation of all such warrants.
 
After our acquisition of Environmental Technologies, we operated, through our wholly owned subsidiary, H.B. Covey, Inc., a business providing construction and maintenance services to petroleum service stations in the southwestern part of the United States of America and installation services for consumer home products in Southern California.
 
During July 2007, we entered into a Stock Sale and Purchase Agreement to sell H.B. Covey, Inc. for an aggregate selling price of $100,000 in cash which we were to receive by September 30, 2007, and 1.8 million in shares of Company stock which the Company was to receive or cancel from the then CEO and CFO, Burr Northrop, by December 31, 2007. The sale of the business was for the book value of the property and equipment assets resulting in a gain of approximately $34,000. Under the terms of the sale, HB Covey, Inc. assumed certain liabilities.
 
We completed the sale during July 2007 and received the $100,000 in cash from Burr Northrop by September 30, 2007 consistent with the Sale and Purchase Agreement. As of September 30, 2007, the 1.8 million shares were not received or cancelled and the Company recorded a receivable for the fair value of these shares as of September 30, 2007 in the amount of $120,000. The Company received and cancelled the 1.8 million shares during the quarter ended December 31, 2007 consistent with the Sale and Purchase Agreement.
 
Organizational History of Pacific Industry Holding Co., Ltd.
 
Pacific was incorporated under the laws of the Republic of Vanuatu on November 30, 2006. Until the consummation of the Share Exchange discussed in the section “Share Exchange and Private Placement Financing” below, Winsun Limited owned 10% of the outstanding capital stock of Pacific, China Tianren Organic Food Holding Company Limited owned 10% of the outstanding capital stock of Pacific and Fancylight Limited owned 80% of the outstanding capital stock of Pacific.
 
Organizational History of Shaanxi Tianren
 
Shaanxi Tianren Organic Food Co., Ltd. (“Shaanxi Tianren”) was formed on August 8, 2001 under PRC law under the original name of Xi’an Zhonglv Ecology Science and Technology Industry Co., Ltd. On June 16, 2005, the name of Shaanxi Tianren was changed to its current name, Shaanxi Tianren Organic Food Co., Ltd. In December 2003, Shaanxi Tianren switched from its original business of researching, producing and distributing biodegradation starch resin aggregate to developing, producing and distributing concentrated fruit juices.
 
Currently, Shaanxi Tianren is engaged in the business of research and development, production and sales of special concentrated fruit juices, fast-frozen and freeze-dried fruits and vegetables and fruit juice drinks.
 
In September 2007, Pacific acquired 99% of Shaanxi Tianren’s shares. Shaanxi Tianren converted from a PRC domestic company to a foreign Joint Venture company (the “JV”) by obtaining the approval from PRC Ministry of Commerce.

 
-5-
 

Shaanxi Tianren’s current ownership structure is as follows:
 
Stockholder Name
Percentage
Pacific Industry Holding Group Co., Ltd.
99%
Yongke Xue
0.3%
Hongke Xue
0.3%
Xiaoqin Yan
0.2%
Yuan Cui
0.2%
 
Share Exchange and Private Placement Financing
 
Between February 22, 2008 and February 25, 2008, we entered into a series of transactions whereby we acquired 100% of the ownership interest in Pacific from the shareholders of Pacific in a share exchange transaction and raised $3,400,000 gross proceeds from certain accredited investors in a private placement transaction. These transactions, collectively hereinafter referred to as “Reverse Merger Transactions,” were consummated simultaneously on February 26, 2008 and as a result of the consummation of these transactions, Pacific is now a wholly-owned subsidiary of the Company.
 
Pacific’s only business is acting as a holding company for Shaanxi Tianren, in which Pacific holds a 99% ownership interest. Currently, Shaanxi Tianren is engaged in the business of research and development, production and sale of special concentrated fruit juices, fast-frozen and freeze-dried fruits and vegetables and fruit juice drinks.
 
The following sets forth the material agreements that the Company entered into in connection with the Reverse Merger Transactions and the material terms of these agreements:
 
Share Exchange Agreement
 
On February 22, 2008, the Company and Terrence Leong entered into a Share Exchange Agreement with Pacific and all of the shareholders of Pacific (the “Share Exchange Agreement”). Pursuant to the Share Exchange Agreement, the shareholders of Pacific agreed to exchange 100 ordinary shares of Pacific, representing a 100% ownership interest in Pacific, for 1,000,000 shares of a newly designated Series A Convertible Preferred Stock of the Company, par value $0.001 per share (the “Share Exchange” or the “Share Exchange Transaction”).
 
Stock Purchase Agreement
 
In connection with the Share Exchange Transaction, on February 25, 2008, the Company entered into a Series B Convertible Preferred Stock Purchase Agreement (the “Stock Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which the Company agreed to issue 2,833,333 shares of a newly designated Series B Convertible Preferred Stock of the Company, par value $0.001 per share (“Series B Stock”) and warrants to purchase 7,000,000 shares of the Company’s Common Stock (the “Warrants”) to the Investors, in exchange for a cash payment in the amount of $3,400,000 (the “Purchase Price”). (The Warrants first became exercisable after the consummation of a 1-for-328.72898 reverse split of our outstanding Common Stock described under “Covenants-Amendment of Articles of Incorporation” below, and the 7,000,000 shares issuable upon exercise of such Warrants were not adjusted as a result of such reverse split.) Under the Stock Purchase Agreement, the Company also agreed to deposit 2,000,000 shares of Series B Stock into an escrow account to be held by an escrow agent as make good shares in the event the Company’s consolidated pre-tax income and pre-tax income per share, on a fully-diluted basis, for the years ended December 31, 2007, 2008 or 2009, are less than certain pre-determined target numbers.

 
-6-
 

The Stock Purchase Agreement provides for the purchase by the Investors referred to below, who are also the selling stockholders, of the securities described below.
 
Name and Address
  
Amount of
Investment
  
Number of Shares of
Series B Preferred
Stock
  
Number of Shares of
Common Underlying
Series B Preferred
Stock *
  
Number of Shares of
Common Underlying
Warrants*
  
Barron Partners LP
  
$
3,300,000
    
2,750,000
    
2,750,000
    
6,794,118
  
Eos Holdings, LLC
  
$
100,000
    
83,333
    
83,333
    
205,882
  
Total
  
$
3,400,000
    
2,833,333
    
2,833,333
    
7,000,000
  
 
*Such number of shares gives effect to the 1-for-328.72898 reverse split of our outstanding Common Stock which became effective May 23, 2008.
 
Representations; Warranties; Indemnification: The Stock Purchase Agreement contains representations and warranties by us and the Investors which are customary for transactions of this type. The Stock Purchase Agreement also obligates us to indemnify the Investors for any losses arising out of any breach of the agreement or failure by us to perform with respect to the representations, warranties or covenants in the agreement.
 
Covenants: The Stock Purchase Agreement contains certain covenants on our part, including the following:
 
Preferred Stock: We may not issue any preferred stock or convertible debt for three years following February 26, 2008, the closing date of the Stock Purchase Agreement, for so long as the Investors shall continue to beneficially own 20% of the Series B Preferred Stock issued under the Stock Purchase Agreement.
 
Insider Selling: No person who is an officer, director or affiliate of the Company on February 26, 2008 or who becomes our officer or director subsequent to February 26, 2008, may sell any shares of our Common Stock in the public market prior to the earlier of thirty six (36) months from the date the registration statement is filed pursuant to the Registration Rights Agreement (as defined below) is deemed effective. Andrew Barron Worden, Managing Partner of Barron Partners, and the Investors are not subject to this covenant.
 
Use of Proceeds: We must use the proceeds of the financing for acquisitions, working capital and other general corporate purposes.
 
Debt: Our debt-to-EBITDA ratio, at any given date, cannot exceed 3.5:1 for the most recent 12-month period until the expiration of two (2) years from February 26, 2008.
 
Independent Directors: Prior to April 26, 2008, we were required to increase the size of our Board of Directors to five or seven and cause the appointment of such number of people to our Board of Directors so that upon such appointments a majority of our Board of Directors would be “independent directors,” as defined by the rules of the Nasdaq Stock Market. If we had breached this covenant, we would have been required to pay the Investors liquidated damages equal to fourteen percent (14%) of the Purchase Price (as defined in the Stock Purchase Agreement to be $3,400,000) per annum, payable monthly in cash as calculated based on the number of days that we are not in compliance with this covenant. On April 7, 2008, Xiaoqin Yan and Guolin Wang were appointed as directors. On April 25, 2008, Norman Ko and Robert B. Fields were appointed as directors and as of the date this prospectus our Board of Directors is comprised of five people, three of whom (Guolin Wang, Norman Ko and Robert Fields) are independent directors.

 
-7-
 

Independent Directors on Audit and Compensation Committees: We were required, prior to April 26, 2008, to appoint (i) an Audit Committee comprised solely of not less than three independent directors and (ii) a Compensation Committee comprised of not less than three directors, a majority of whom are independent directors. If we had breached this covenant, we would have been required to pay the Investors liquidated damages in an amount equal to fourteen percent (14%) of the Purchase Price per annum, payable monthly in cash as calculated based on the number of days that we are not in compliance with this covenant. On April 25, 2008, we established an Audit Committee and Compensation Committee of our Board of Directors. On such date Norman Ko, Robert Fields and Guolin Wang, each of whom is an independent director, were elected as the sole members of the Audit Committee and Norman Ko, Guolin Wang and Yongke Xue were elected as the sole members of the Compensation Committee.
 
Chief Financial Officer: We were required, prior to March 28, 2008, to hire a Chief Financial Officer who speaks and understands both English and Chinese and is familiar with United States Generally Accepted Accounting Principles (“U.S. GAAP”). If we had breached this covenant, we would have been required to pay the Investors liquidated damages in an amount equal to fourteen percent (14%) of the Purchase Price per annum, payable monthly in cash as calculated based on the number of days that we were not in compliance with this covenant. On March 18, 2008, Song Liu was appointed as our Chief Financial Officer. Effective April 14, 2008, Song Liu resigned from her position as Chief Financial Officer. On the same date, in replacement of Song Liu, the Board of Directors appointed Spring C. Liu as the Company’s Chief Financial Officer and principal financial and accounting officer.
 
Listing, Securities Exchange Act of 1934 and Rule 144: We are prohibited from taking any action to terminate or suspend our reporting and filing obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or the Securities Act of 1933, as amended (the “Securities Act”), except as permitted under the transaction documents for the Reverse Merger Transaction. We are required to take all action necessary to continue the quotation or listing of our Common Stock on the OTC Bulletin Board or other exchange or market on which the Common Stock is trading or may be traded in the future. If we breach this covenant, we are required to pay the Investors liquidated damages in an amount equal to fourteen percent (14%) of the Purchase Price per annum, payable monthly in cash as calculated based on the number of days that we are not in compliance with this covenant.
 
Liquidated Damages and Limitations: Our aggregated obligations to pay liquidated damages under the Stock Purchase Agreement, the Warrants and the Registration Rights Agreement which we entered into in connection with the Stock Purchase Agreement and which is summarized below shall not exceed eighteen percent (18%) of the total Purchase Price. If, pursuant to the Stock Purchase Agreement and the Registration Rights Agreement, we incur liquidated damages and are required to pay the Investors in cash and we fail to pay the Investors within fifteen (15) days following the end of the month when such cash liquidated damages become due, then, at the election of the Investors, we are required to deliver to each Investor shares of Series B Preferred Stock as liquidated damages pro rata based on the percentage that the number of Series B Preferred Stock beneficially owned by such Investor bears to the total number of Series B Preferred Stock outstanding at the time when the cash liquidated damages are due.
 
Employment and Consulting Contracts: Until February 26, 2011, and for so long as the Investors continue to beneficially own in the aggregate at least 20% of Series B Preferred Stock issued under the Stock Purchase Agreement, we must obtain approval from the majority of the independent directors of the Board of Directors that any awards other than salary are customary, appropriate and reasonable for any officer, director or consultant whose compensation is more than $100,000 per annum.
 
Price Adjustments: For so long as the Investors shall hold at least 20% of the Series B Preferred Stock issued (except for certain exempt issuances not to exceed 5% of the outstanding shares of our Common Stock for every two year period and certain other issuances which do not apply pursuant to the Certificate of Designations), if the Company closes on the sale or issuance of Common Stock at a sale price, or warrants, options, convertible debt or equity securities with an exercise or conversion price per share which is less than the Conversion Price (as defined in the Certificate of Designation) then in effect, the Conversion Price in effect from and after the date of such transaction shall be adjusted in accordance with the terms of the Certificate of Designations.

 
-8-
 

 
Retention of Investor Relations Firm: We were required to retain an investor relations firm prior to April 26, 2008. On April 21, 2008, we retained CCG Elite as our investor relations firm.
 
Agreements Regarding Huludao Wonder and YinKou Trusty Factory: Prior to March 26, 2008, we were required to cause Shaanxi Tianren, our indirect subsidiary in the PRC, to (i) extend the term of its current management and lease agreement with Huludao Wonder Factory (the “Huludao Wonder Agreement”) to twenty (20) years under the terms and conditions similar to those in the current management agreement, and (ii) enter into an agreement with YinKou Trusty Factory under the terms and conditions similar to those in the Huludao Wonder Agreement. On March 20, 2008, Shaanxi Tianren extended the terms of the Huludao Wonder Agreement and entered into an agreement with YinKou Trusty Factory under the terms and conditions similar to those in the Huludao Wonder Agreement. In addition, we are required to cause Shaanxi Tianren to make arrangements, including without limitation acquisition arrangements, with Huludao Wonder Factory and YinKou Trusty Factory so that after giving effect to such arrangements, the financial statements of Huludao Wonder Factory and YinKou Trusty Factory can be consolidated into the Company’s financial statements in accordance with the principles of U.S. GAAP. On June 10, 2008, we completed the acquisition of Huludao Wonder. 
 
Amendment of Articles of Incorporation: We were required to effect a 1-for-328.72898 reverse split of our outstanding Common Stock. In the event the reverse split was not effected prior to June 2, 2008, we would have been required to pay to the Investors, pro rata, as liquidated damages, an amount equal to one percent (1%) of the Purchase Price per month, payable monthly in cash as calculated based on the number of days that we are not in compliance with this covenant. On May 23, 2008, we completed a 1-for-328.72898 reverse stock split of Common Stock with a mandatory 1-for-22.006 conversion of Series A Stock into our Common Stock.
 
Right of First Refusal: Prior to February 26, 2011 and for so long as the Investors shall continue to beneficially own in the aggregate at least 20% of Series B Preferred Stock or the Common Stock issued thereunder, the Investors have the right to participate pro rata in any financing (other than certain exempt issuances and issuances of the Company’s securities in a firm underwritten IPO).
 
Delivery of up to 2,000,000 Additional Shares of Series B Preferred Stock from Escrow Based on Pre-Tax Income and Pre-Tax Income Per Share: We delivered to an escrow agent at the closing of the Stock Purchase Agreement 2,000,000 shares of Series B Preferred Stock (the “Make Good Escrow Stock”). If our consolidated “pre-tax income” for the year ended December 31, 2007 was less than RMB 67,400,000 (or the required pretax income per share), or our consolidated pre-tax income for the fiscal year ending December 31, 2008 is less than RMB 84,924,000 (or the corresponding required pre-tax income per share), or our consolidated pre-tax income for the fiscal year ending December 31, 2009 is less than RMB 107,004,240 (or the corresponding required pre-tax income per share), then the agreement provides that if the percentage shortfall (determined by dividing the amount of the shortfall by the applicable target number) for the fiscal year 2007 was greater than 50%, then the escrow agent would have been required to deliver to the Investors all of the Make Good Escrow Stock pro rata according to the Investors’ ownership percentages. (Each Investor’s ownership percentage is the ratio of such Investor’s initial purchase price to the total purchase paid under the Stock Purchase Agreement.) If the percentage shortfall for 2007 was less than fifty percent (50%), then an adjustment percentage (equal to percentage that the percentage shortfall bears to fifty percent (50%)) shall be determined and the escrow agent shall deliver to an Investor according to such Investor’s ownership percentage such number of shares of Series B Preferred Stock as is determined by multiplying the adjustment percentage by the Make Good Escrow Stock in escrow and the escrow agent shall retain the balance. If, after giving effect to the adjustment and delivery to the Investors as described in the foregoing, there are shares of Make Good Escrow Stock remaining, the same procedures shall apply based on our pre-tax income for our fiscal years 2008 and 2009. Our pre-tax income for the year ended December 31, 2007 was RMB 68,939,855. Therefore, there was no shortfall for such year and no Make Good Escrow Stock has been delivered to any Investor out of the escrow.

 
-9-
 

Subsequent Transactions: As long as any Investor holds any of the Series B Preferred Stock or Common Stock issuable upon conversion of the Series B Preferred Stock or exercise of warrants issued under the Stock Purchase Agreement, we are prohibited from effecting or entering into an agreement to effect any transaction involving a variable rate transaction or an MFN transaction. A “variable rate transaction” means a transaction in which we issue or sell any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to our business or the market for our Common Stock. An “MFN transaction” means a transaction in which we issue or sell any securities in a capital raising transaction (or series of related transactions) which grants an investor the right to receive additional shares based upon future transactions of the Company on terms more favorable than those granted to such investor in such offering. Investors are entitled to obtain injunctive relief against us to preclude any such issuance.
 
Registration Rights Agreement
 
In connection with the Stock Purchase Agreement, on February 26, 2008, the Company entered into a Registration Rights Agreement with the Investors party to the Stock Purchase Agreement (the “Registration Rights Agreement”), pursuant to which the Company agreed to prepare and file one or more registration statements to register for resale the shares of the Common Stock of the Company issuable upon conversion of the Series B Stock and upon exercise of the warrants issued to the Investors under the Stock Purchase Agreement, except for shares issued or issuable as liquidated damages. Under the terms of the Registration Rights Agreement we are required:
 
•
with respect to the initial registration statement, to prepare and file the initial registration statement prior to March 26, 2008; provided, however, that, if in the opinion of the counsel to the Company that the Company’s audited financials for the fiscal year 2007 are required to be included in the initial registration statement based on the applicable SEC rules, then such filing date shall be delayed to the earliest date when the Company’s audited financials for the fiscal year 2007 become available, but no later than March 30, 2008, and with respect to any subsequent registration statements, the later of (a) ninety (90) days after the Company receives a demand for registration of additional registrable securities or (b) thirty (30) days following the earliest practical date on which the Company is permitted by the SEC to file such additional registration statement related to the registrable securities (which is at least 180 days from the effective date of the initial registration statement);
 
•
with respect to the initial registration statement, to use our commercially reasonable best efforts to have that registration declared effective on the earlier of 150 days after the closing date (February 26, 2008); however, if the filing date is delayed because the Company’s audited financials for the fiscal year 2007 are required to be included in the initial registration statement based on the applicable SEC rules, then 120 days following the filing date; and
 
•
with respect to the initial registration statement or any subsequent registration statement, to use our commercially reasonable best efforts to have that registration declared effective ten (10) days following receipt of a no review or similar letter from the SEC or the third business day following the day we receive notice from the SEC that the SEC has determined that the registration statement is eligible to be declared effective without further comments by the SEC.
 
Under the Registration Rights Agreement, the Investors have also been granted demand registration rights which require us, for so long as no more than eighty percent (80%) of the Series B Preferred Stock and Common Stock issuable upon conversion of such Series B Preferred Stock and issuable upon exercise of the warrants issued under the Stock Purchase Agreement have been registered or sold, to use our commercially reasonable best efforts to file such registration statement under the Securities Act as promptly as practicable upon our receipt of the Investors’ demand to register their registrable securities and cause such registration statement to be declared effective. Under the agreement we are also required to notify each Investor promptly when any such registration statement has been declared effective.

 
-10-
 

Our failure to meet the timetables provided for in the Registration Rights Agreement have resulted in the imposition of liquidated damages, which are payable in cash to the Investors (pro rata based on the percentage of Series B Preferred Stock owned by the Investors at the time such liquidated damages shall have incurred) equal to fourteen percent (14%) of the Purchase Price per annum payable monthly based on the number of days such failure exists, which amount of liquidated damages, together with all liquidated damages that the Company may incur pursuant to the Registration Rights Agreement, the Warrant and the Stock Purchase Agreement, shall not exceed an aggregate of eighteen percent (18%) of the amount of the Purchase Price. In the event the SEC does not permit all of the registrable securities to be included in a Registration Statement because of its application of Rule 415, we will not incur any liquidated damages with respect to any registrable securities that we were not permitted to include on such registration statement and no liquidated damages will be payable for such failure with respect to any warrant shares. 
 
We initially filed with the SEC the registration statement of which this prospectus comprises a part on March 26, 2008, which date was before the filing date deadline of March 30, 2008 in the Registration Rights Agreement, because in the opinion of the counsel to the Company, the Company’s audited financials for the fiscal year 2007 were required to be included in the initial registration statement based on the applicable SEC rules. Therefore, we were required to have the registration statement declared effective by the SEC by July 24, 2008 (within 120 days after the initial filing date). The registration statement was declared effective by the SEC on ______________, 2008. Therefore, an aggregate of $_________ in liquidated damages is due to the Investors pursuant to the Registration Rights Agreement.
 
Make Good Escrow Agreement
 
In connection with the Stock Purchase Agreement, on February 26, 2008, we entered into a Make Good Escrow Agreement, with Tri-State Title & Escrow, LLC as the escrow agent, and the Investors (the “Make Good Escrow Agreement”), pursuant to which 2,000,000 shares of our Series B Preferred Stock were issued in the name of the escrow agent to be held by the escrow agent. These make good escrow shares do not have any voting rights. The delivery and release of these make good shares are subject to the terms of the Stock Purchase Agreement as described above and the Make Good Escrow Agreement.
 
The Series A Convertible Preferred Stock
 
In connection with the Share Exchange Transaction, we designated 1,000,000 shares of Series A Convertible Preferred Stock out of our total authorized number of 10,000,000 shares of Preferred Stock, par value $0.001 per share. The rights and preferences of the Series A Preferred Stock are set forth in the Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock which we filed with the Secretary of State of Florida on February 22, 2008. Effective May 23, 2008, we completed a 1-for-328.72898 reverse stock split of our Common Stock. Upon effectiveness of such reverse stock split, all the outstanding shares of Series A Preferred Stock were immediately and automatically converted into shares of Common Stock without any notice or action required by us or by the holders of Series A Preferred Stock or Common Stock (the “Mandatory Conversion”). In the Mandatory Conversion, each holder of Series A Preferred became entitled to receive twenty two and 62/10,000 (22.0062) shares of fully paid and non-assessable Common Stock for every one (1) share of Series A held (the “Conversion Rate”).
 
Series B Convertible Preferred Stock
 
In connection with the Share Exchange Transaction, we designated 7,000,000 shares of Series B Convertible Preferred Stock out of our total authorized number of 10,000,000 shares of Preferred Stock, par value $0.001 per share. The rights and preferences of the Series B Preferred Stock are set forth in the Certificate of Designations, Preferences and Rights of Series B Convertible Preferred Stock which we filed with the Secretary of State of Florida on February 22, 2008. The following is a summary of the rights and preferences:

 
-11-
 

 
No Dividends. No dividends were payable with respect to the Series A Preferred Stock and no dividends can be paid on our Common Stock while the Series B Preferred Stock is outstanding.
 
Voting Rights. The Series B Preferred Stock shall have no voting rights, except as required by Florida law. However, so long as any shares of Series B Preferred Stock are outstanding, we cannot, without the affirmative approval of the holders of 75% of the shares of the Series B Preferred Stock then outstanding,
 
(a) alter or change adversely the powers, preferences or rights given to the Series B Preferred Stock or alter or amend the Certificate of Designations of the Series B Preferred Stock;
 
(b) authorize or create any class of stock (other than Series A Preferred Stock) ranking as to dividends or distribution of assets upon a liquidation senior to or otherwise pari passu with the Series B Preferred Stock, or any series of preferred stock possessing greater voting rights or the right to convert at a more favorable price than the Series B Preferred Stock;
 
(c) amend our certificate of incorporation or other charter documents in breach of any of the provisions hereof; or
 
(d) increase the authorized number of shares of Series B Preferred Stock or the number of authorized shares of Preferred Stock.
 
Liquidation Preference. Upon liquidation, the holders are entitled to receive $1.20 per share (out of available assets) before any distribution or payment can be made to the holders of any junior securities.
 
Conversion at Option of Holder. Upon effectiveness of the Reverse Split, each share of Series B Preferred Stock became convertible at any time into one share of Common Stock at the option of the holder. If the conversion price (initially $1.20) is adjusted, the conversion ratio will likewise be adjusted and the new conversion ratio will be determined by multiplying the conversion ratio in effect by a fraction, the numerator of which is the conversion price in effect before the adjustment and the denominator of which is the new conversion price.
 
Automatic Conversion on Change of Control. In the event of a “change of control,” the shares of Series B Preferred Stock will be automatically converted into Common Stock. A “change in control” means a consolidation or merger of us with or into another company or entity in which we are not the surviving entity or the sale of all or substantially all of our assets to another company or entity are not controlled by our then existing stockholders in a transaction or series of transactions.
 
4.9% Beneficial Ownership Limitation. Except in certain circumstances, the right of the holder to convert the Series B Preferred Stock is subject to the 4.9% limitation, with the result we shall not effect any conversion of the Series B Preferred Stock, and the holder has no right to convert any portion of the Series B Preferred Stock to the extent that after giving effect to such conversion, the holder (together with the holder’s affiliates) would beneficially own in excess of 4.9% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion. Beneficial ownership is determined in accordance with Section 13(d) of the Exchange Act, and Regulation 13d-3 thereunder. The 4.9% limitation may not be waived or amended.
 
Liquidated Damages for Failing to Timely Deliver Certificates: If we fail to deliver the appropriate stock certificates within three (3) trading days of the conversion date, we are required to pay the holder, in cash, liquidated damages the amount by which (x) the holder’s total purchase price (including brokerage commissions, if any) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that such holder was entitled to receive from the conversion at issue multiplied by (2) the price at which the sell order giving rise to such purchase obligation was executed.

 
-12-
 

 
Certain Adjustments
 
Stock Dividends and Stock Splits. Appropriate adjustments will be made to the conversion ratio in the event of a stock dividend, stock distribution, stock split or reverse stock split or reclassification with respect to the outstanding shares of Common Stock.
 
Price Adjustment; Full Ratchet. From and after February 26, 2008, and until such time as the investors hold less than 20% of the Series B Preferred Stock, except for certain exempt issuances not to exceed 5% of the outstanding shares of Common Stock for every two year period, certain issuances as to which price adjustment has already been made, in the event we issue Common Stock at a price, or issue warrants, options, convertible debt or equity securities with an exercise price per share or conversion price which is less than the conversion price then in effect, then the conversion price will be reduced, concurrently with such issue or sale, to such lower price.
 
Subsequent Transactions. For so long as any Investor holds any of the Series B Preferred Stock, we are prohibited from effecting or entering into an agreement to effect any transactions involving a “Variable Rate Transaction” or an “MFN Transaction.”
 
Subsequent Rights Offerings. At any time while the Series B Preferred Stock is outstanding, we are prohibited from issuing rights, options or warrants to holders of Common Stock entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the then applicable conversion price.
 
Pro Rata Distributions. If we distribute to the holders of Common Stock evidence of our indebtedness, assets, rights or warrants to subscribe for or purchase any security, then in each case the conversion price shall be determined by multiplying the conversion price by a fraction the numerator of which is the VWAP minus the then fair market value at such record date of the portion of the assets or evidence of indebtedness so distributed applicable to one outstanding share as determined by the Board of Directors in good faith and the denominator of which is the VWAP on the record date.
 
Fundamental Transaction. If we effect a merger, sell all or substantially all of our assets, any tender offer or exchange offer is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or we effect any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (each, a “fundamental transaction”), then on subsequent conversion of the Series A Preferred Stock, the holder has the right to receive, for each share of Common Stock that would have been issuable on such conversion absent such fundamental transaction, the same kind and amount of securities, cash or property as the holder would have been entitled to receive on the occurrence of the fundamental transaction as if the holder had been, immediately prior to such fundamental transaction, the holder of Common Stock.
 
The Warrants
 
The Warrants entitle the holders, upon the effectiveness of the Reverse Split, to purchase up to an aggregate of 7,000,000 shares of Common Stock at an exercise price of $3.00 per share, subject to adjustment. The Warrants expire in five years following their issuance.
 
Cashless Exercise. The holders may make a cashless exercise, but not until February 26, 2009 and only when the resale of the warrant shares by the holder is not covered by an effective registration statement.

 
-13-
 

 
Maximum Exercise; 4.9% Limitation. The holder is not permitted to exercise the warrant to the extent that on the date of exercise the exercise would result in beneficial ownership by the holder and its affiliates of more than 4.9% of the outstanding shares of Common Stock on such date. This provision may not be waived or amended (the “4.9% Limitation”).
 
Adjustment for Stock Splits, Stock Dividends, Recapitalizations, Etc. The exercise price of the warrants and the number of shares of Common Stock issuable on exercise of the warrants will be appropriately adjusted to reflect any stock dividend, stock split, stock distribution, combination of shares, reverse split, reclassification, recapitalization or other similar event affecting the number of outstanding shares.
 
Adjustment for Reorganization, Consolidation, Merger, Etc. If we merge or consolidate with or into any other person, or are a party to any other corporate reorganization, and we are not the continuing or surviving entity, then, in each case, the holder of the warrant (on exercise at any time after the consummation of such transaction) will be entitled to receive the stock and other securities and property (including cash) which the holder would have been entitled to receive if the holder had exercised the warrant immediately prior to the effectiveness of the transaction.
 
Sales of Common Stock at Less than the Exercise Price; Weighted Average Adjustment.  Subject to certain exceptions (including certain exempt issuances), if we sell or issue any Common Stock at a per share price, or warrants, options, convertible debt or equity securities with an exercise or conversion price per share, which is less than (i) $1.20, the Warrants’ exercise price will be adjusted concurrently with such issue or sale, to such lower price, or (ii) $2.00, but higher than $1.20 , the Warrants’ exercise price will be adjusted according to a weighted average formula as follows:
 
EP(1) = EP(1) x ((A+B) /(A+C))
 
EP(2) = the Warrant Exercise Price immediately after the adjustment;
 
For purposes of the foregoing formula:
 
EP(1) = Exercise Price immediately prior to the adjustment;
 
A = the total number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares, including the exercise or conversion of all options, warrants and other convertible securities.
 
B = the number of shares of Common Stock which the aggregate consideration received or receivable for the issuance of such additional shares would purchase at the Exercise Price immediately prior to the adjustment;
 
C = the number of such additional shares to be issued.
 
No exception from price adjustment for exempt issuances will be made if such exempt issuances exceed 5% of the outstanding shares of Common Stock for every two year period or if such exempt issuances are employee / consultant options only and exceed 7.5% of the outstanding shares of Common Stock for every two year period.
 
Mandatory Exercise. We have the right to require the outstanding Warrants on at least 35 days notice prior to the mandatory exercise date to exercise the Warrants, provided that (i) the market price of our Common Stock equals or exceeds $6.00 on each trading day in the 25 trading days period ending on the notice date, (ii) we have achieved our pre-tax income target for the 2007 fiscal year, (iii) the “Trading Volume” of our Common Stock equals or exceeds the 150,000 shares (which shall not be adjusted with Reverse Split) “Target Volume” on each trading day in the twenty five (25) trading days in the period ending on the notice date, and (iv) a registration statement covering the sale by the holder of the shares of Common Stock issuable upon exercise of the Warrant is current and effective for the 25 trading days prior to the notice date and our right to mandate exercise only applies with respect to the warrant shares included in such registration statement. In the event that our mandate exercise of the Warrants would result in a violation of the 4.9% Limitation, we will not have the right to mandate such exercise of the Warrants to the extent that the exercise of the Warrants would result in such a violation.

 
-14-
 

 
As a result of the above transactions, the Company ceased being a “shell company” as defined in Rule 12b-2 under the Exchange Act.
 
Our Corporate Structure
 
The Company’s current structure is set forth in the diagram below:
 
 
* Xi’an Qinmei Food Co., Ltd., an entity not affiliated with the Company, owns the other 8.85% of the equity interests in such company.
 
Executive Offices
 
Our principal executive offices are located at Room 1404 and Room 1403, A-4F Tongxinge, Xietong Building, Gaoxin 2nd Road, Hi-Tech Industrial Zone, Xi’an, Shaanxi Province, PRC 710065, and our telephone number is 011-86-29-88386415.
 
The Offering
 
Offering by Selling Stockholders
 
This prospectus relates to the resale by the selling stockholders identified in this prospectus of up to 9,833,333 shares of our Common Stock including (i) 2,833,333 shares issuable to them upon conversion of Series B Preferred Stock issued to them in a private placement completed on February 26, 2008 (the “Private Placement”) and (ii) 7,000,000 shares of Common Stock issuable to them upon exercise of Warrants issued to the Investors in the Private Placement. The Warrants have an exercise price of $3.00 per share (subject to adjustment) and expire on February 24, 2013. The Warrants became exercisable on May 23, 2008 following a 1-for-328.72898 reverse split of our outstanding Common Stock which became effective on that date.  The 7,000,000 shares issuable upon exercise of such Warrants and the initial exercise price of $3.00 thereof will not be adjusted as a result of such reverse split. The following table gives effect to the 1-for-328.72898 reverse split of our outstanding Common Stock.

 
-15-
 
 
 
Total shares of Common Stock outstanding prior to the Offering
   22,271,684
 
    
     
Common Stock offered by the Company
  
-
     
Total shares of Common Stock offered by the selling stockholders
  
9,833,333
     
Total shares of Common Stock to be outstanding after the Offering (assuming all Warrants have been exercised and all shares of Series B Preferred Stock have been converted)
  
32,720,164
     
Use of Proceeds
  
We will not receive any of the proceeds from the sales of the shares by the selling stockholders. To the extent the warrants are exercised for cash, if at all, we will receive the exercise price for those warrants. Under the terms of the warrants cashless exercise is permitted in certain circumstances. We will not receive any proceeds from any cashless exercise of the warrants. We intend to use any cash proceeds received from the exercise of warrants for working capital and other general corporate purposes. We cannot assure you that any of the warrants will ever be exercised for cash or at all.
     
Our OTC Bulletin Board Trading Symbol
  
SPFJ.OB
     
Risk Factors
  
See “Risk Factors” beginning on page 17 and other information included in this prospectus for a discussion of factors you should consider before deciding to invest in shares of our Common Stock.
 
Plan of Distribution
 
This offering is not being underwritten. The selling stockholders themselves directly, or through their agents, or through their brokers or dealers, may sell their shares from time to time, in: (i) privately negotiated transactions, or (ii) in one or more transactions, including block transactions, on the OTC Bulletin Board or on any stock exchange on which the shares may then be listed in the future pursuant to and in accordance with the applicable rules of such exchange. The selling price of the shares may be at market prices prevailing at the time of sale, at prices related to the prevailing market prices or at negotiated prices. To the extent required, the specific shares to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agent, broker or dealer and any applicable commission or discounts with respect to a particular offer will be described in an accompanying prospectus. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this prospectus. We will keep this prospectus current until the earlier to occur of: (y) all of the securities covered by the registration statement of which this prospectus is a part have been publicly sold, or (z) the time when all of the securities covered by that registration statement can be sold, without volume restrictions, pursuant to Rule 144.

 
-16-
 

 
We will pay all expenses of registration incurred in connection with this offering (estimated to be approximately $236,000), but the selling stockholders will pay all of the selling commissions, brokerage fees and related expenses. We have agreed to indemnify the selling stockholders against certain liabilities, including liabilities under the Securities Act.
 
The selling stockholders and any broker-dealers or agents that participate with the selling stockholders in the distribution of any of the shares may be deemed to be “underwriters” within the meaning of the Securities Act, and any commissions received by them and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
 
The selling stockholders may offer the Common Stock pursuant to this prospectus in varying amounts and transactions so long as this prospectus is then current under the rules of the SEC and we have not withdrawn the registration statement.
 
The offering of Common Stock may be through the facilities of the OTCBB or such other exchange where our Common Stock may then be traded. Brokerage commissions may be paid and discounts are allowed in connection with such sales. However, it is anticipated that the discounts allowed or commissions paid will be no more than the ordinary brokerage commissions paid on sales effected through brokers or dealers. To our knowledge, as of the date hereof, no one has made any arrangements with a broker or dealer concerning the offer or sale of the Common Stock.
 
 
An investment in our Common Stock involves a high degree of risk. You should carefully consider the risks described below and the other information contained in this prospectus before deciding to invest in our Common Stock.
 
If any of the following risks, or any other risks not described below because they are currently unknown to us or we currently deem such risks as immaterial, but they later become material, actually occurs, it is likely that our business, financial condition, and operating results could be seriously harmed. As a result, the trading price of our Common Stock could decline and you could lose part or all of your investment.
 
Risks Related to our Business
 
Our limited operating history may not serve as an adequate basis to judge our future prospects and results of operations and if we are not successful in addressing risks and difficulties that we may likely encounter, our business may be adversely affected. 
 
Shaanxi Tianren began its operations in 2001. Our limited operating history in the fruit juice industry may not provide a meaningful basis on which to evaluate our business. Although Shaanxi Tianren’s revenues have grown rapidly since its inception, we cannot assure that we will maintain our profitability or that we will not incur net losses in the future. We expect that our operating expenses will increase as we expand. Any significant failure to realize anticipated revenue growth could result in significant operating losses. We will continue to encounter risks and difficulties frequently experienced by companies at a similar stage of development, including potential failure to:
 
 
●
maintain our proprietary technology;
 
 
●
expand our product offerings and maintain the high quality of our products;
 
 
●
manage our expanding operations, including the integration of any future acquisitions;

 
-17-
 

 
 
●
obtain sufficient working capital to support our expansion and to fill customers’ orders in time;
 
 
●
maintain adequate control of our expenses;
 
 
●
implement our product development, marketing, sales, and acquisition strategies and adapt and modify them as needed;
 
 
●
anticipate and adapt to changing conditions in the fruit juice industry markets in which we operate as well as the impact of any changes in government regulation, mergers and acquisitions involving our competitors, technological developments and other significant competitive and market dynamics.
 
If we are not successful in addressing any or all of these risks, our business may be materially and adversely affected.
 
We may encounter substantial competition in our business and failure to compete effectively may adversely affect our ability to generate revenue.
 
We believe that existing and new competitors will continue to improve their products and to introduce new products with competitive price and performance characteristics. We expect that we will be required to continue to invest in product development and productivity improvements to compete effectively in our markets. Our competitors could develop a more efficient product or undertake more aggressive and costly marketing campaigns than ours, which may adversely affect our marketing strategies and could have a material adverse effect on our business, results of operations and financial condition.
 
Our major competitors may be better able to successfully endure downturns in our industry. In periods of reduced demand for our products, we can either choose to maintain market share by reducing our selling prices to meet competition or maintain selling prices, which would likely sacrifice market share. Sales and overall profitability would be reduced in either case. In addition, we cannot assure that additional competitors will not enter our existing markets, or that we will be able to compete successfully against existing or new competition.
 
Our inability to fund capital expenditure requirements may adversely affect our growth and profitability.
 
Our continued growth is dependent upon our ability to raise capital from outside sources. Our ability to obtain financing will depend upon a number of factors, including:
 
 
●
our financial condition and results of operations,
 
 
●
the condition of the PRC economy and the environmental protection product industry in the PRC, and
 
 
●
conditions in relevant financial markets
 
If we are unable to obtain financing, as needed, on a timely basis and on acceptable terms, our financial position, competitive position, growth and profitability may be adversely affected.
 
We may not be able to effectively control and manage our growth and a failure to do so could adversely affect our operations and financial condition.

 
-18-
 

 
Our sales revenues have increased from approximately $7,027,889 for the fiscal year ended December 31, 2005 to approximately $17,427,204 for the fiscal year ended December 31, 2006, and have increased to $29,361,941 for the fiscal year ended December 31, 2007. Our sales revenues for the six months ended June 30, 2008 were $16,096,551, an increase of approximately 84.5% over our sales revenues of $8,722,912 for the same period of 2007. If our business and markets continue to grow and develop, it will be necessary for us to finance and manage expansion in an orderly fashion. In addition, we may face challenges in managing expanding product offerings and in integrating acquired businesses with our own. These eventualities will increase demands on our existing management, workforce and facilities. Failure to satisfy these kinds of increased demands could interrupt or adversely affect our operations and cause production backlogs, longer product development time frames and administrative inefficiencies.
 
We depend on a concentration of customers, the loss of one or more of which could materially adversely affect our operations and revenues.
 
Our revenue is dependent, in large part, on significant orders from a limited number of customers. Sales to our five largest customers accounted for approximately 29%, 57% and 40% of our net sales during the years ended December 31, 2007, 2006 and 2005, respectively. We believe that revenue derived from current and future large customers will continue to represent a significant portion of our total revenue. Our inability to continue to secure and maintain a sufficient number of large customers would have a material adverse effect on our business, operating results and financial condition. Moreover, our success will depend in part upon our ability to obtain orders from new customers, as well as the financial condition and success of our customers and general economic conditions.
 
Any significant fluctuation in the price of our raw materials may have a material adverse effect on the manufacturing cost of our products.
 
The prices of fresh fruits, our principal raw materials, are subject to market conditions and generally we do not, and do not expect to, have long-term contracts with our suppliers for those items. While these raw materials are generally available and we have not experienced severe raw material shortages in the past, in 2007 the prices of apples, kiwifruits and pears temporarily significantly increased because of a poor climate, which caused a sharp decrease in fruit output. We cannot assure you that the necessary raw materials will continue to be available to us at prices currently in effect or acceptable to us. The prices for these raw materials have varied significantly and may vary significantly in the future. Numerous factors, most of which are beyond our control, influence prices of our raw material. These factors include general economic conditions, geographic conditions, climate condition, transportation delays and other uncertainties.
 
We may not be able to adjust our product prices, especially in the short-term, to recover cost increases in these raw materials. Our future profitability may be adversely affected to the extent we are unable to pass on higher raw material costs to our customers.
 
There are risks that the sales price of our products will change, which will affect our profits.
 
According to financial analysis of Shaanxi Tianren, the operating income of Shaanxi Tianren is very sensitive to the sales price of concentrated fruit juice. If the sales price of concentrated fruit juice changes, it will directly influence the continuity and stability of our gains.
 
The factors influencing the sales price of concentrated fruit juice include the supply price of fresh fruit, supply and demand of our products in international and domestic markets and competition in the fruit juice industry.
 
We may engage in future acquisitions that could dilute the ownership interests of our stockholders, cause us to incur debt and require us to assume contingent liabilities.

 
-19-
 

 
As part of our business strategy, we review acquisition and strategic investment prospects that we believe would complement our current product offerings, augment our market coverage or enhance our technological capabilities, or otherwise offer growth opportunities. From time to time we review investments in new businesses and we expect to make investments in, and to acquire, businesses, products, or technologies in the future. In the event of any future acquisitions, we could:
 
 
●
issue equity securities which would dilute current stockholders’ percentage ownership;
 
 
●
incur substantial debt;
 
 
●
assume contingent liabilities; or
     
 
●
expend significant cash.
 
These actions could have a material adverse effect on our operating results or the price of our Common Stock. Moreover, even if we do obtain benefits in the form of increased sales and earnings, there may be a lag between the time when the expenses associated with an acquisition are incurred and the time when we recognize such benefits. Acquisitions and investment activities also entail numerous risks, including:
 
 
●
difficulties in the assimilation of acquired operations, technologies and/or products;
 
 
●
unanticipated costs associated with the acquisition or investment transaction;
 
 
●
the diversion of management’s attention from other business concerns;
 
 
●
adverse effects on existing business relationships with suppliers and customers;
 
 
●
risks associated with entering markets in which we have no or limited prior experience;
 
 
●
the potential loss of key employees of acquired organizations;
 
 
●
accounting issues that arise in connection with the acquisition or investment;
 
 
●
challenges in retaining customers of acquired businesses; and
 
 
●
substantial charges for the amortization of certain purchased intangible assets, deferred stock compensation or similar items.
 
We cannot ensure that we will be able to successfully integrate any businesses, products, technologies, or personnel that we might acquire in the future, and our failure to do so could have a material adverse effect on our business, operating results and financial condition.
 
We may not be able to prevent others from unauthorized use of our patents, which could harm our business and competitive position.
 
Our success depends, in part, on our ability to protect our proprietary technologies. We own two patents in the PRC covering our fruit process technology. The process of seeking patent protection can be lengthy and expensive and we cannot assure you that our existing or future issued patents will be sufficient to provide us with meaningful protection or commercial advantages.

 
-20-
 

 
We also cannot assure that our current or potential competitors do not have, and will not obtain, patents that will prevent, limit or interfere with our ability to make, use or sell our products in either the PRC or other countries.
 
The implementation and enforcement of PRC intellectual property laws historically have not been vigorous or consistent, primarily because of ambiguities in the PRC laws and a relative lack of developed enforcement mechanisms. Accordingly, intellectual property rights and confidentiality protections in the PRC are not as effective as in the United States and other countries. Policing the unauthorized use of proprietary technology is difficult and expensive, and we might need to resort to litigation to enforce or defend patents issued to us or to determine the enforceability, scope and validity of our proprietary rights or those of others. Such litigation will require significant expenditures of cash and management efforts and could harm our business, financial condition and results of operations. An adverse determination in any such litigation will impair our intellectual property rights and may harm our business, competitive position, business prospects and reputation.
 
We may need additional capital to fund our future operations and, if it is not available when needed, we may need to reduce our planned development and marketing efforts, which may reduce our sales revenues.
 
We believe that our existing working capital and cash available from operations will enable us to meet our working capital requirements for at least the next 12 months. However, if cash from future operations is insufficient, or if cash is used for acquisitions or other currently unanticipated uses, we may need additional capital. The development and marketing of new products and the expansion of distribution channels and associated support personnel requires a significant commitment of resources. In addition, if the markets for our products develop more slowly than anticipated, or if we fail to establish significant market share and achieve sufficient net revenues, we may continue to consume significant amounts of capital. As a result, we could be required to raise additional capital. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities could result in dilution of the shares held by existing stockholders. If additional funds are raised through the issuance of debt securities, such securities may provide the holders certain rights, preferences, and privileges senior to those of common stockholders, and the terms of such debt could impose restrictions on our operations. We cannot assure that additional capital, if required, will be available on acceptable terms, or at all. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned product development and marketing efforts, which could harm our business, financial condition and operating results.
 
We may not have adequate internal accounting controls. While we have certain internal procedures in our budgeting, forecasting and in the management and allocation of funds, our internal controls may not be adequate.
 
We are constantly striving to improve our internal accounting controls. We hope to develop an adequate internal accounting control to budget, forecast, manage and allocate our funds and account for them. There is no guarantee that such improvements will be adequate or successful or that such improvements will be carried out on a timely basis. The PRC historically has not adopted a Western style of management and financial reporting concepts and practices, as in modern banking, computer and other control systems. We may have difficulty in hiring and retaining a sufficient number of qualified employees to work in the PRC. As a result of these factors, we may experience difficulty in establishing accounting and financial controls, collecting financial data, budgeting, managing our funds and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards. Therefore, we may, in turn, experience difficulties in implementing and maintaining adequate internal controls as will be required under Section 404 of the Sarbanes Oxley Act of 2002 and complying with other U.S. securities laws.

 
-21-
 

Our internal controls over financial reporting may not be effective, and our independent auditors may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business. 
 
Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require annual assessment of our internal control over financial reporting, and attestation of this assessment by the Company’s independent registered public accountants. The SEC extended the compliance dates for “non-accelerated filers,” as defined by the SEC. During 2008 we changed our fiscal year end from September 30 to December 31 and in accordance with SEC rules, we filed a transition report for the period from October 1, 2007 to December 31, 2007. The transition report was on Form 10-Q and contained unaudited financial statements as permitted under such rules. Accordingly, we believe that the annual assessment of our internal controls requirement will first apply to our Annual Report on Form 10-K for the fiscal year ending September 30, 2008 and the attestation requirement of management’s assessment by our independent registered public accountants will first apply to our Annual Report on Form 10-K for the fiscal year ending December 31, 2009. The standards that must be met for management to assess the internal control over financial reporting as effective are new and complex, and require significant documentation, testing and possible remediation to meet the detailed standards. We have not yet evaluated our internal controls over financial reporting in order to allow management to report on, and our independent auditors to attest to, our internal controls over financial reporting, as will be required by Section 404 of the Sarbanes-Oxley Act of 2002 and the rules and regulations of the SEC. We have never performed the system and process evaluation and testing required in an effort to comply with the management assessment and auditor certification requirements of Section 404, which will initially apply to us as of December 31, 2009. Our lack of familiarity with Section 404 may unduly divert management’s time and resources in executing the business plan. If, in the future, management identifies one or more material weaknesses, or our external auditors are unable to attest that our management’s report is fairly stated or to express an opinion on the effectiveness of our internal controls, this could result in a loss of investor confidence in our financial reports, have an adverse effect on our stock price and/or subject us to sanctions or investigation by regulatory authorities.
 
We may have inadvertently violated Section 402 of the Sarbanes-Oxley Act of 2002 and Section 13(k) of the Exchange Act of 1934 as a result of advances we made to a company controlled by our Chairman of the Board and Chief Executive Officer and a director of one of our subsidiaries, as well as a distribution which one of our subsidiaries erroneously paid to such persons; as a result, we may be subject to civil and criminal sanctions which if imposed, could have a material adverse effect upon us.
 
On February 22, 2008 we consummated the Share Exchange Agreement (see “Prospectus Summary – Share Exchange and Private Placement Financing” and “Prospectus Summary – Share Exchange Agreement”) pursuant to which we acquired Pacific, a Vanuatu corporation which in turn owns 99% of the equity interests in Shaanxi Tianren. At such time Shaanxi Hede Investment Management Co., Ltd. (“Hede”), a PRC company of which Yongke Xue, the Chairman of the Board, Chief Executive Officer and a director of the Company, and Xiaoqin Yan, a director of the Company, own 80% and 20%, respectively, of the equity interests, was indebted to Shaanxi Tianren on account of previous loans made by Shaanxi Tianren to Hede, including advances aggregating RMB 31,544,043 (approximately $4,318,381 based on the exchange rate as of December 31, 2007) made during the period from June 6, 2007 to December 29, 2007 which were used by Hede to pay a portion of the purchase price for Hede’s acquisition of Huludao Wonder (a company which Shaanxi Tianren and Hede contemplated would be sold at Hede’s cost to the Company after a one year holding period).  In January 2008, Shaanxi Tianren paid rental expense of RMB 11,038 (approximately $1,574 based on the exchange rate as of March 31, 2008) to the landlord of Hede’s office space on behalf of Hede. In May 2008, Shaanxi Tianren assumed Hede’s obligation of RMB 18,000,000 (approximately $2,624,251 based on the exchange rate of June 30, 2008) for the balance of the purchase price for Huludao Wonder.
 
On June 10, 2008 Hede sold Huludao Wonder to Shaanxi Tianren for a total price of RMB 48,250,000 (the same price which Hede paid for Huludao Wonder). As of May 31, 2008, Shaanxi Tianren had a related party receivable of RMB 48,929,272 from Hede, which was credited against the purchase price (so that Shaanxi Tianren did not pay any cash to Hede for the purchase) and the remaining balance of the loans and advances of RMB 679,272 (approximately $99,032 based on the exchange rate as of May 31, 2008) to Hede was repaid to the Company on June 11, 2008.

 
-22-
 

 
Notwithstanding Hede’s repayment in full of loans made by Shaanxi Tianren to Hede, the existence of indebtedness of Hede to Shaanxi Tianren at the time the Company acquired Shaanxi Tianren and the continuation of such indebtedness thereafter until it was fully repaid in June 2008 may constitute a violation of Section 13(k) of the Exchange Act (Section 402(a) of the Sarbanes-Oxley Act of 2002). Section 13(k) provides that it is unlawful for a company, such as the Company, which has class of securities registered under Section 12(g) of the Exchange Act, to directly or indirectly, including through any subsidiary, to extend or maintain credit in the form of a personal loan to or for any director or executive officer of the company.
 
In addition, in May 2008 Pacific erroneously paid $4,916,617 to its former shareholders, including Xiaoqing Yan and Yongke Xue, as the result of a dividend declaration by Pacific in February 2008. Because the recipients of the money were no longer shareholders of Pacific, the transaction has been treated for accounting purposes as an interest free loan. In June 2008, the directors and other related parties returned the monies they received. Although, the money has been repaid to the Company in full, the receipt by Xiaoqing Yan and Yongke Xue of the erroneous dividend may also be deemed to be a violation of Section 13(k) of the Exchange Act.
 
Issuers violating Section 13(k) of the Exchange Act may be subject to civil sanctions, including injunctive remedies and monetary penalties, as well as criminal sanctions. The imposition of any of such sanctions on the Company may have a material adverse effect on our financial position, results of operations or cash flows.
 
The Company has not concluded that either the advances made to Hede by Shaanxi Tianren or the receipt of money by two of the Company’s directors as a result of an erroneously paid dividend were personal loans within the meaning of Section 13(k) of the Exchange Act or that any violations of the Exchange Act have occurred relating to such matters. The Company also has not received any notice that the matters discussed herein are under investigation by any governmental authority or that any proceeding relating to such matters has been initiated by any person.
 
Partially in response to the matters set forth herein, in September 2008, our Board of Directors adopted a policy regarding approval of related party transactions. Under the policy, any related party transaction, in which the aggregate amount involved is expected to exceed $50,000, must be approved by the Audit Committee and no director shall participate in any discussion or approval of a transaction which would be considered to be a related party transaction in which such person is interested.  See "Certain Relationships and Related Transactions - Review, Approval or Ratification of Transactions with Related Persons."
 
The release from escrow of Make Good Escrow Stock due to our failure to achieve certain financial targets in 2008 or 2009 would dilute the equity interests of existing stockholders.
 
As more particularly described in “Prospectus Summary-The Company-Stock Purchase Agreement-Delivery of up to 2,000,000 Additional Shares of Series B Preferred Stock from Escrow Based on Pre-Tax Income and Pre-Tax Income Per Share” on page 9 of this Prospectus, if our consolidated pre-tax income for the fiscal year ending December 31, 2008 is less than RMB 84,924,000 or our consolidated pre-tax income for the fiscal year ending December 31, 2009 is less than RMB 107,004,240, then, depending on the amount of the shortfall from such targets, some or all of the 2,000,000 shares of our Series B Stock we have placed in escrow (“Make Good Escrow Stock”) may be transferred to the Investors who purchased Series B Stock from us in the financing transaction which closed in February 2008. If we achieve our income targets in 2008 and 2009, none of such shares shall be transferred to the Investors and such shares will be cancelled. The transfer to Investors of some or all of the Make Good Escrow Stock and the subsequent conversion of such shares into common stock would increase the number of outstanding shares of our common stock and dilute the equity interests of existing stockholders. Whether or not shares of Series B Stock which are transferred to Investors are converted into common stock, the transfer of some or all of Make Good Escrow Stock to the Investors could depress the market price of our common stock.
 
We do not have key man insurance on our Chairman and CEO, on whom we rely for the management of our business; the loss of the services of our Chairman or CEO could have a material adverse effect on our business.

 
-23-
 

 
We depend, to a large extent, on the abilities and participation of our current management team, but have a particular reliance upon Mr. Hongke Xue, Shaanxi Tianren’s Chairman of the Board and CEO, and Mr. Yongke Xue, the Company’s Chairman of the Board and CEO. The loss of the services of Mr. Hongke Xue or Mr. Yongke Xue, for any reason, may have a material adverse effect on our business and prospects. We cannot assure you that their services will continue to be available to us, or that we will be able to find a suitable replacement for either of them. We do not carry key man life insurance for any key personnel.
 
We may not be able to hire and retain qualified personnel to support our growth and if we are unable to retain or hire such personnel in the future, our ability to improve our products and implement our business objectives could be adversely affected.
 
If one or more of our senior executives or other key personnel are unable or unwilling to continue in their present positions, we may not be able to replace them easily or at all, and our business may be disrupted and our financial condition and results of operations may be materially and adversely affected. Competition for senior management and senior technology personnel is intense, the pool of qualified candidates is very limited, and we may not be able to retain the services of our senior executives or senior technology personnel, or attract and retain high-quality senior executives or senior technology personnel in the future. Such failure could materially and adversely affect our future growth and financial condition.
 
We do not presently maintain product liability insurance, and our property and equipment insurance does not cover the full value of our property and equipment, which leaves us with exposure in the event of loss or damage to our properties or claims filed against us.
 
We currently do not carry any product liability or other similar insurance. Unlike the United States and other countries, product liability claims and lawsuits are extremely rare in the PRC. However, we cannot assure that we would not face liability in the event of the failure of any of our products. We cannot assure that, especially as the PRC’s domestic consumer economy and industrial economy continues to expand, product liability exposures and litigation will not become more commonplace in the PRC, or that we will not face product liability exposure or actual liability as we expand our sales into international markets, like the United States, where product liability claims are more prevalent.
 
Except for automobile insurance, we do not have other insurance such as business liability or disruption insurance coverage for our operations in the PRC.
 
We may be adversely affected by changes in the international fruit juice market because of our dependence on the international market.
 
In 2007, over 69% of the Company’s concentrated fruit juice was exported directly or indirectly. Because of our reliance on international markets, changes of foreign politics, law, economy and demands in international markets will have big influence on the operation of Shaanxi Tianren.
 
Shaanxi Tianren’s operating income is very sensitive to the sales price of concentrated fruit juice. A change in international demands will directly influence the sales price.
 
If there is large gap between the export price and the domestic price of concentrated fruit juice and China exports in large scale, anti-dumping actions might apply to Chinese concentrated fruit juice. As the majority of concentrated fruit juice of Shaanxi Tianren is for exports, there is a potential risk for us to be effected by any anti-dumping action.
 
Risks Related to Doing Business in the PRC
 
We face the risk that changes in the policies of the PRC government could have a significant impact upon the business we may be able to conduct in the PRC and the profitability of such business.

 
-24-
 

 
The PRC’s economy is in transition from a planned economy to a market oriented economy subject to five-year and annual plans adopted by the government that set national economic development goals. Policies of the PRC government can have significant effects on economic conditions in China. The PRC government has confirmed that economic development will follow the model of a market economy, such as the United States. Under this direction, we believe that the PRC will continue to strengthen its economic and trading relationships with foreign countries and business development in the PRC will follow market forces. While we believe that this trend will continue, we cannot assure you that this will be the case. Our interests may be adversely affected by changes in policies by the PRC government, including:
 
 
●
changes in laws, regulations or their interpretation;
 
 
●
confiscatory taxation;
 
 
●
restrictions on currency conversion, imports or sources of supplies;
 
 
●
expropriation or nationalization of private enterprises.
 
Although the PRC government has been pursuing economic reform policies for more than two decades, we cannot assure you that the government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting the PRC’s political, economic and social life.
 
The PRC laws and regulations governing our current business operations are sometimes vague and uncertain. Any changes in such PRC laws and regulations may harm our business.
 
There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including but not limited to the laws and regulations governing our business, and the enforcement and performance of our arrangements with customers in the event of the imposition of statutory liens, death, bankruptcy and criminal proceedings. We, and any future subsidiaries, are considered foreign persons or foreign funded enterprises under PRC laws, and as a result, we are required to comply with PRC laws and regulations. These laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness of newly enacted laws, regulations or amendments may be delayed, resulting in detrimental reliance by foreign investors. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business.
 
Inflation in the PRC could negatively affect our profitability and growth.
 
While the PRC economy has experienced rapid growth, such growth has been uneven among various sectors of the economy and in different geographical areas of the country. Rapid economic growth could lead to growth in the money supply and rising inflation. If prices for our products rise at a rate that is insufficient to compensate for the rise in the costs of supplies, it may harm our profitability.
 
In order to control inflation in the past, the PRC government has imposed controls on bank credit, limits on loans for fixed assets and restrictions on state bank lending. Such an austere policy can lead to a slowing of economic growth. In October 2004, the People’s Bank of China, the PRC’s central bank, raised interest rates for the first time in nearly a decade and indicated in a statement that the measure was prompted by inflationary concerns in the Chinese economy. Repeated rises in interest rates by the central bank would likely slow economic activity in China which could, in turn, materially increase our costs and also reduce demand for our products.
 
Shaanxi Tianren is subject to restrictions on paying dividends and making other payments to us. We might be unable to pay dividends to investors.

 
-25-
 

We are a holding company incorporated in the State of Florida and do not have any assets or conduct any business operations other than our investments in our subsidiaries and affiliates, Pacific and Shaanxi Tianren. As a result of our holding company structure, we rely entirely on dividend payments from Shaanxi Tianren, our subsidiary in China. PRC regulations currently permit payment of dividends only out of accumulated profits, as determined in accordance with PRC accounting standards and regulations. Our subsidiary in the PRC also is required to set aside a portion of its after-tax profits according to PRC accounting standards and regulations to fund certain reserve funds. The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. We may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency. Furthermore, if Shaanxi Tianren incurs debt on its own in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments. If we or Pacific are unable to receive all of the revenues from Shaanxi Tianren’s operations, we may be unable to pay dividends on our Common Stock.
 
Governmental control of currency conversion may affect the value of your investments.
 
The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of the PRC. Renminbi is currently not a freely convertible currency. Shortages in the availability of foreign currency may restrict our ability to remit sufficient foreign currency to pay dividends, or otherwise satisfy foreign currency dominated obligations. Under existing PRC foreign exchange regulations, payments of current accounting items, including profit distributions, interest payments and expenditures from the transaction, can be made in foreign currencies without prior approval from the PRC State Administration of Foreign Exchange by complying with certain procedural requirements. However, approval from appropriate governmental authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of bank loans denominated in foreign currencies.
 
The PRC government may also in the future restrict access to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay certain of our expenses as they come due.
 
The fluctuation of the Renminbi may harm your investments.
 
The value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of the RMB may materially and adversely affect our cash flows, revenues and financial condition. For example, to the extent that we need to convert U.S. dollars we receive from an offering of our securities into RMB for our operations, appreciation of the RMB against the U.S. dollar would diminish the value of the proceeds of the offering and this could harm our business, financial condition and results of operations. Conversely, if we decide to convert our RMB into U.S. dollars for the purpose of making payments for dividends on our Common Stock or for other business purposes and the U.S. dollar appreciates against the RMB, the U.S. dollar equivalent of the RMB we convert would be reduced. In addition, the depreciation of significant U.S. dollar denominated assets could result in a charge to our income statement and a reduction in the value of these assets.
 
On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the RMB to the U.S. dollar. Under the new policy, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. This change in policy has resulted in significant appreciation of the RMB against the U.S. dollar. There remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant appreciation of the RMB against the U.S. dollar.
 
PRC regulations relating to the establishment of offshore special purpose companies by PRC residents, if applied to us, may subject the PRC resident shareholders of us or our parent company to personal liability and limit our ability to acquire PRC companies or to inject capital into our PRC subsidiary, limit our PRC subsidiary’s ability to distribute profits to us or otherwise materially adversely affect us.

 
-26-
 

 
In October 2005, the PRC State Administration of Foreign Exchange (“SAFE”) issued a public notice, the Notice on Relevant Issues in the Foreign Exchange Control over Financing and Return Investment Through Special Purpose Companies by Residents Inside China (the “SAFE Notice”), which requires PRC residents, including both legal persons and natural persons, to register with the competent local SAFE branch before establishing or controlling any company outside of China, referred to as an “offshore special purpose company,” for the purpose of overseas equity financing involving onshore assets or equity interests held by them. In addition, any PRC resident that is the shareholder of an offshore special purpose company is required to amend its SAFE registration with the local SAFE branch with respect to that offshore special purpose company in connection with any increase or decrease of capital, transfer of shares, merger, division, equity investment or creation of any security interest over any assets located in China. Moreover, if the offshore special purpose company was established and owned the onshore assets or equity interests before the implementation date of the SAFE notice, a retroactive SAFE registration is required to have been completed before March 31, 2006. If any PRC shareholder of any offshore special purpose company fails to make the required SAFE registration and amendment, the PRC subsidiaries of that offshore special purpose company may be prohibited from distributing their profits and the proceeds from any reduction in capital, share transfer or liquidation to the offshore special purpose company. Moreover, failure to comply with the SAFE registration and amendment requirements described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions. After the SAFE notice, an implementation rules on the SAFE notice was issued on May 29, 2007 which provides for implementation guidance and supplements the procedures as provided in the SAFE notice. For an offshore special purpose company which was established and owned onshore assets or equity interests before the implementation date of the SAFE notice, a retroactive SAFE registration requirement is required.
 
Due to lack of official interpretation, some of the terms and provisions of the SAFE Notice and its implementation rules remain unclear, and the implementation of the SAFE Notice by central SAFE and local SAFE branches has been inconsistent since its adoption. Based on the advice of our PRC counsel, Global Law Offices, located in Beijing, and after consultation with relevant SAFE officials, we believe that the PRC resident shareholders of our parent company were required to complete their respective SAFE registrations pursuant to the SAFE Notice.
 
Moreover, because of uncertainty over how the SAFE Notice will be interpreted and implemented, and how or whether the SAFE Notice and implementation rules will apply to us, we cannot predict how SAFE will affect our business operations or future strategies. For example, our present and prospective PRC subsidiaries’ ability to conduct foreign exchange activities, such as the remittance of dividends and foreign currency-denominated borrowings, may be subject to compliance with the SAFE Notice by our or our parent company’s PRC resident shareholders. In addition, such PRC residents may not always be able to complete registration procedures required by the SAFE Notice. We also have little control over either our present or prospective direct or indirect shareholders or the outcome of such registration procedures. A failure by our or our parent company’s PRC resident shareholders or future PRC resident shareholders to comply with the SAFE Notice, if SAFE requires it, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our subsidiary’s ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects.
 
Any recurrence of severe acute respiratory syndrome, or SARS, or another widespread public health problem, could adversely affect our operations.
 
A renewed outbreak of SARS or another widespread public health problem in the PRC, where all of our revenue is derived, could have an adverse effect on our operations. Our operations may be impacted by a number of health-related factors, including quarantines or closures of some of our offices that would adversely disrupt our operations.
 
Any of the foregoing events or other unforeseen consequences of public health problems could adversely affect our operations.

 
-27-
 

Because our principal assets are located outside of the United States, it may be difficult for you to use the United States Federal securities laws to enforce your rights against us and our officers and some directors in the United States or to enforce judgments of United States courts against us or them in the PRC.
 
All of our present officers and directors (except directors Norman Ko, Robert B. Fields and CFO and Corporate Secretary Spring Liu, who are residents of the United States) reside outside of the United States. In addition, our operating subsidiary, Shaanxi Tianren, is located in the PRC and substantially all of its assets are located outside of the United States. It may therefore be difficult for investors in the United States to enforce their legal rights based on the civil liability provisions of the United States Federal securities laws against us in the courts of either the United States or the PRC and, even if civil judgments are obtained in courts of the United States, to enforce such judgments in the PRC courts. Further, it is unclear if extradition treaties now in effect between the United States and the PRC would permit effective enforcement against us or our officers and directors of criminal penalties, under the United States Federal securities laws or otherwise.
 
The relative lack of public company experience of our management team may put us at a competitive disadvantage. 
 
Our management team lacks public company experience, which could impair our ability to comply with legal and regulatory requirements such as those imposed by the Sarbanes-Oxley Act of 2002. Aside from CFO Spring Liu, the individuals who now constitute our senior management have never had responsibility for managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our senior management may not be able to implement programs and policies in an effective and timely manner that adequately respond to such increased legal, regulatory compliance and reporting requirements. Our failure to comply with all applicable requirements could lead to the imposition of fines and penalties and distract our management from attending to the growth of our business.
 
Risks Related to Our Common Stock.
 
Our officers, directors and their relatives control us through their positions and stock ownership and their interests may differ from other stockholders.
 
Hongke Xue, the brother of one of our directors and our CEO, Yongke Xue, is the voting trustee for the benefit of Fancylight Limited. Fancylight Limited owns 17,604,938 shares of Common Stock, which carries 17,604,938 votes upon all matters submitted for a vote of stockholders. As a result, our officers and directors and their relatives may be able to control the outcome of stockholder votes on various matters, including the election of directors and extraordinary corporate transactions, including business combinations. The interests of our directors and officers may differ from other stockholders. Furthermore, the current ratios of ownership of our Common Stock reduce the public float and liquidity of our Common Stock which can, in turn, affect the market price of our Common Stock.
 
Our current ownership structure may affect the market price of our Common Stock
 
Hongke Xue, the brother of one of our directors and our CEO, Yongke Xue, is the voting trustee for the benefit of Fancylight Limited. Fancylight Limited owns 17,604,938 shares of Common Stock, which is approximately 79% of our outstanding Common Stock as of September 12, 2008. The substantial ownership of our Common Stock by one stockholder reduces the public float and liquidity of our Common Stock. The limited public float of our Common Stock may adversely affect the market price of our Common Stock.
 
We are not likely to pay cash dividends in the foreseeable future.
 
We currently intend to retain any future earnings for use in the operation and expansion of our business. We do not expect to pay any cash dividends in the foreseeable future but will review this policy as circumstances dictate. Should we decide in the future to do so, as a holding company, our ability to pay dividends and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiary. In addition, our operating subsidiary, Shaanxi Tianren, from time to time, may be subject to restrictions on its ability to make distributions to us, including restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions.

 
-28-
 

Our Common Stock is thinly traded, so you may be unable to sell at or near asking prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares. 
 
Currently our Common Stock is quoted in the OTC Bulletin Board market and the trading volume we will develop may be limited by the fact that many major institutional investment funds, including mutual funds, as well as individual investors follow a policy of not investing in Bulletin Board stocks and certain major brokerage firms restrict their brokers from recommending Bulletin Board stocks because they are considered speculative, volatile and thinly traded. The OTC Bulletin Board market is an inter-dealer market much less regulated than the major exchanges and our Common Stock is subject to abuses, volatility and shorting. Thus there is currently no broadly followed and established trading market for our Common Stock. An established trading market may never develop or be maintained. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders. Absence of an active trading market reduces the liquidity of the shares traded there.
 
The trading volume of our Common Stock has been and may continue to be limited and sporadic. As a result of such trading activity, the quoted price for our Common Stock on the OTC Bulletin Board may not necessarily be a reliable indicator of its fair market value. Further, if we cease to be quoted, holders would find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our Common Stock and as a result, the market value of our Common Stock likely would decline.
 
Our Common Stock is currently subject to the “penny stock” rules which require delivery of a schedule explaining the penny stock market and the associated risks before any sale.
 
Our Common Stock is currently subject to regulations prescribed by the SEC relating to “penny stocks.” The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price (as defined in such regulations) of less than $5.00 per share, subject to certain exceptions. These regulations impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 and individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 (individually) or $300,000 (jointly with their spouse)). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of these securities and have received the purchaser’s prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the “penny stock” rules may restrict the ability of broker-dealers to sell the Common Stock and may affect the ability of investors to sell their Common Stock in the secondary market.
 
Our Common Stock is illiquid and subject to price volatility unrelated to our operations.
 
The market price of our Common Stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our Common Stock, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or us. In addition, the stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our Common Stock.

 
-29-
 

 
A large number of shares will be eligible for future sale and may depress our stock price.
 
This is an offering of 9,833,333 shares of our Common Stock by the selling stockholders, all of which (assuming the effectiveness of the registration statement of which this prospectus is a part) are freely tradable. Sales of substantial amounts of Common Stock, or a perception that such sales could occur, and the existence of warrants to purchase shares of Common Stock at prices that may be below the then current market price of the Common Stock, could adversely affect the market price of our Common Stock and could impair our ability to raise capital through the sale of our equity securities.
 
We are authorized to issue “blank check” preferred stock, which, if issued without stockholders approval, may adversely affect the rights of holders of our Common Stock.
 
We are authorized to issue 10,000,000 shares of preferred stock. Our Board of Directors is authorized under our Articles of Incorporation to provide for the issuance of shares of preferred stock by resolution, and by filing a certificate of designations under Florida law, to fix the designation, powers, preferences and rights of the shares of each such series of preferred stock and the qualifications, limitations or restrictions thereof without any further vote or action by the stockholders. Accordingly, our Board of Directors has designated 7,000,000 shares of Series B Convertible Preferred Stock (of which 5,448,480 shares of Series B Preferred Convertible Stock are issued or outstanding). Any shares of preferred stock that are issued are likely to have priority over our Common Stock with respect to dividend or liquidation rights. In the event of issuance, the preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control, which could have the effect of discouraging bids for the Company and thereby prevent stockholders from receiving the maximum value for their shares. We have no present intention to issue any shares of our preferred stock in order to discourage or delay a change of control or for any other reason. However, there can be no assurance that preferred stock will not be issued at some time in the future.
 
We are responsible for the indemnification of our officers and directors.
 
Our Bylaws provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against costs and expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. Consequently, we may be required to expend substantial funds to satisfy these indemnity obligations.
 
 
This prospectus relates to the offer and sale of our Common Stock by the selling stockholders identified in the table below. Each of the selling stockholders acquired Series B Preferred Stock and warrants to purchase our Common Stock as an Investor in our private placement transaction completed on February 26, 2008. The Common Stock offered hereby is issuable to the selling stockholders upon conversion of such Series B Preferred Stock and exercise of such warrants. All of the selling stockholders are “accredited investors” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act.
 
The table set forth below lists the names of the selling stockholders as well as the number of shares of Common Stock underlying the securities acquired by the selling stockholder in the February 26, 2008 private placement and its assignees in connection with the private placement, all of which are being registered. Neither of the selling stockholders is a broker-dealer or an affiliate of a broker-dealer. Barron Partners LP, one of the selling stockholders, beneficially owns approximately 31.3% of our Common Stock and has engaged in certain transactions with the Company since 2004 which are described in the section of this prospectus entitled “Certain Relationships and Related Transactions” on page 65 of this Prospectus. Neither of the selling stockholders has or has had within the past three years, any position, office, or other material relationship with the Company or any of its predecessors or affiliates.

 
-30-
 

Each selling stockholder is offering for sale all of the shares it will acquire upon conversion of the Series B Preferred Stock and exercise of the warrants acquired in the February 26, 2008 private placement.
 
Each selling stockholder may offer for sale all or part of the shares from time to time. The table below assumes that the selling stockholders will sell all of the shares offered for sale. A selling stockholder is under no obligation, however, to sell any shares immediately pursuant to this prospectus, nor is a selling stockholder obligated to sell all or any portion of its shares at any time.
 
Name of Selling Stockholder
  
Total Number And
Percentage of Shares of
Common Stock Beneficially
Owned Prior to the Offering
(1) (2)
  
Maximum
Number of
Shares to be
Sold (4)
  
Total Number And
Percentage of Shares
Beneficially Owned After the
Offering (2)(3)
Barron Partners LP
  
10,159,265
(4)
  
31.3
%
  
9,544,118
    
615,147
    
2.7
%
                               
EOS Holdings, LLC
  
289,215
(5)
  
1.3
%
  
289,215
    
—
    
0
%
 
(1)           As of September 30, 2008, we had outstanding 22,271,684 shares of Common Stock. Under applicable SEC rules, a person is deemed to beneficially own securities which he has the right to acquire within 60 days through the exercise of any option or warrant or through the conversion of another security, and also is deemed to be the “beneficial owner” of a security with regard to which he directly or indirectly, has or shares (a) voting power (which includes the power to vote or direct the voting of the security), or (b) investment power (which includes the power to dispose, or direct the disposition, of the security), in each case irrespective of the person’s economic interest in the security. We have assumed that each selling stockholder beneficially owns all shares of Common Stock issuable upon exercise of warrants and conversion of Series B Preferred Stock held by such selling stockholder. Each selling stockholder has the sole investment and voting power with respect to all shares of Common Stock shown as beneficially owned by such selling stockholder.
 
(2)           Subject to footnote (1), in determining the percent of Common Stock beneficially owned by a selling stockholder on September 30, 2008, (a) the numerator is the number of shares of Common Stock beneficially owned by such selling stockholder, including shares the beneficial ownership of which may be acquired, within 60 days through the exercise of the warrants, if any, held by that selling stockholder, and (b) the denominator is the sum of (i) the 22,271,684 shares of Common Stock deemed outstanding on June 27, 2008, and (ii) the aggregate number of shares of Common Stock that may be acquired by such selling stockholder within 60 days upon the conversion of convertible securities and the exercise of the warrants held by the selling stockholder.
 
(3)           Assumes the sale of all shares offered by the selling stockholders.
 
(4)           Consists of 6,794,118 shares of Common Stock issuable upon exercise of currently exercisable warrants and 3,365,147 shares of Common Stock issuable upon conversion of Series B Preferred Stock. Andrew Worden, Chairman and CEO of Barron Partners LP, has power to vote or to dispose of the securities offered for resale by Barron Partners LP.
 
(5)           Consists of 205,882 shares of Common Stock issuable upon exercise of currently exercisable warrants and 83,333 shares of Common Stock issuable upon conversion of Series B Preferred Stock. Jon Carnes, the President of EOS Holdings, LLC, has power to vote or to dispose of the securities offered for resale by EOS Holdings, LLC.

 
-31-
 

 
The selling stockholders and any of their pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on any stock exchange, market or trading facility on which the shares are traded or quoted or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares:
 
 
•
ordinary brokerage transactions and transactions in which the broker-dealer solicits investors;
 
 
•
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
 
 
•
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
 
 
•
an exchange distribution in accordance with the rules of the applicable exchange;
 
 
•
privately negotiated transactions;
 
 
•
to cover short sales made after the date that the registration statement of which this prospectus is a part is declared effective by the SEC;
 
 
•
broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;
 
 
•
a combination of any such methods of sale; and
 
 
•
any other method permitted pursuant to applicable law.
 
The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.
 
Broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.
 
The selling stockholders may from time to time pledge or grant a security interest in some or all of the shares of Common Stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of Common Stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.
 
    Upon the Company being notified in writing by a selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of Common Stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such selling stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such shares of Common Stock were sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) whether or not such broker-dealer(s) conducted any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction. In addition, upon the Company being notified in writing by a selling stockholder that a donee or pledgee intends to sell more than 500 shares of Common Stock, a supplement to this prospectus will be filed if then required in accordance with applicable securities law.

 
-32-
 

 
The Selling Stockholders also may transfer the shares of Common Stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
 
The selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of the securities will be paid by the selling stockholder and/or the purchasers. Each selling stockholder has represented and warranted to the Company that it acquired the securities subject to this registration statement in the ordinary course of such selling stockholder’s business and, at the time of its purchase of such securities, such selling stockholder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.
 
The Company has advised each selling stockholder that it may not use shares registered on the registration statement of which this prospectus forms a part to cover short sales of Common Stock made prior to the date on which that registration statement shall have been declared effective by the SEC. If a selling stockholder uses this prospectus for any sale of Common Stock, it will be subject to the prospectus delivery requirements of the Securities Act. The selling stockholders will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such selling stockholders in connection with re-sales of their respective shares under that registration statement.
 
The Company is required to pay all fees and expenses incident to the registration of the shares, but the Company will not receive any proceeds from the sale of the Common Stock. The Company has agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
 
 
The Company will not receive any of the proceeds from the sales of the shares by the selling stockholders. To the extent the warrants are exercised for cash, if at all, the Company will receive the exercise price for those warrants. Under the terms of the warrants, cashless exercise is permitted in certain circumstances. The Company intends to use any proceeds received from the exercise of warrants for working capital and other general corporate purposes. The Company cannot assure that any of the warrants will ever be exercised for cash or at all. If all of these outstanding warrants are exercised for cash, the Company would receive aggregate gross proceeds of approximately $21,000,000.
 
 
Market Information
 
Our Common Stock is quoted on the OTC Bulletin Board under the symbol “ SPFJ.OB.”
 
The below quotations reflect inter-dealer prices, without mark-up, mark-down or commission, and may not represent actual transactions.

 
-33-
 


Year ended 12/31/06
  
High
  
Low
  
First quarter
  
$
29.59
  
$
16.44
  
Second quarter
  
$
26.30
  
$
6.57
  
Third quarter
  
$
13.15
  
$
13.15
  
Fourth quarter
  
$
16.44
  
$
6.57
  
 

Year ended 12/31/07
  
High
  
Low
  
First quarter
  
$
13.15
  
$
3.29
  
Second quarter
  
$
19.72
  
$
3.29
  
Third quarter
  
$
23.01
  
$
9.86
  
Fourth quarter
  
$
9.86
  
$
8.22
  

Year ending 12/31/08
  
High
  
Low
  
First quarter
  
$
9.86
  
$
2.47
  
Second quarter
  
$
6.58
  
$
3.29
  
Third quarter
  
$
5.90
  
$
2.65
  
 
At September 30, 2008, there were 22,271,684 shares of our Common Stock outstanding. Our shares of Common Stock are held by approximately 92 stockholders of record. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of Common Stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies.
 
Dividends
 
We have not declared or paid any cash dividends on our Common Stock during our last two fiscal years. On February 4, 2008, before the reverse merge transaction, the Board of Directors of Xi’an Tianren declared a cash dividend of $2,899,855 to its former shareholders. Since Shaanxi Tianren holds a 91.15% interest in Xi’an Tianren, $2,643,218 was payable to Shaanxi Tianren and $256,637 was payable to its minority interest holders. On the same date, the Board of Directors of Shaanxi Tianren declared a cash dividend of $4,966,280 to its shareholders. Since Pacific holds a 99% interest in Shaanxi Tianren, $4,916,617 was payable to Pacific and $49,663 was payable to its minority interest holders. The inter-company dividend was eliminated in the consolidated statement. The dividend payable to minority interest holders was $306,300.
 
The payment of dividends is at the discretion of the Board of Directors and is contingent on the Company’s revenues and earnings, capital requirements, financial condition and the ability of our operating subsidiary, Shaanxi Tianren, to obtain approval to send monies out of the PRC. We currently intend to retain all earnings, if any, for use in business operations. Accordingly, we do not anticipate declaring any dividends in the near future.
 
The PRC’s national currency, the yuan, is not a freely convertible currency. Please refer to the risk factors “Governmental control of currency conversion may affect the value of your investment,” “The fluctuation of the Renminbi may harm your investment;” and “PRC regulations relating to the establishment of offshore special purpose companies by PRC residents, if applied to us, may subject the PRC resident shareholders of us or our parent company to personal liability and limit our ability to acquire PRC companies or to inject capital into our PRC subsidiary, limit our PRC subsidiary’s ability to distribute profits to us or otherwise materially adversely affect us.”
 
Securities Authorized for Issuance Under Equity Compensation Plans
 
None

 
-34-
 

 
Penny Stock Regulations
 
The SEC has adopted regulations that generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share. The market price of our Common Stock has been below $5.00 per share and we are subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000, or $300,000 together with their spouse).
 
For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the “penny stock” rules may restrict the ability of broker-dealers to sell the Common Stock and may affect the ability of investors to sell their Common Stock in the secondary market.
 
 
The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes of Shaanxi Tianren appearing elsewhere in this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Actual results may differ materially from those anticipated in these forward-looking statements.
 
Overview
 
We are engaged in the business of research and development, production and sales of special concentrated fruit juices, fast-frozen and freeze-dried fruits and vegetables and fruit juice drinks through our indirect subsidiary, Shaanxi Tianren, in the PRC. Shaanxi Tianren is wholly owned by Pacific. Previously, we were a shell company with no significant business operations. As a result of the consummation of the reverse merger transactions that are the subject of this report, on February 26, 2008 we ceased to be a shell company and became an indirect holding company for Shaanxi Tianren through Pacific. Pacific acquired a 99% ownership interest in Shaanxi Tianren in September 2007 through a reorganization between entities under common control. Because Shaanxi Tianren’s operations are the only significant operations of the Company and its affiliates, the business and financial results of Pacific reflect those of Shaanxi Tianren. As a result, this discussion and analysis focuses on the business results of Shaanxi Tianren, comparing its results in the six-month period ended June 30, 2008 with its results in the corresponding period of 2007, and its full-year 2007 results with those of 2006.

 
-35-
 

Below is our corporate structure:
 
 
 
* Xi’an Qinmei Food Co., Ltd., an entity which is not affiliated with the Company, owns the other 8.85% of the equity interests in such company.
 
There are two general categories of fruit and vegetable juices available in the market. One is fresh juice that is canned directly after filtering and sterilization upon being squeezed out of fresh fruits or vegetables. The other general category is juice drinks made out of concentrated fruit and vegetable juice. Concentrated fruit and vegetable juices are produced through pressing, filtering, sterilization and evaporation of fresh fruits or vegetables. They are used as the base material or ingredient for products such as drinks, fruit jam and fruit wine, etc. Concentrated juices are not drinkable. Instead, they are used as a basic ingredient for manufacturing juice drinks and as an additive to fruit wine and fruit jam, cosmetics and medicines.
 
For Shaanxi Tianren, the period between each August through February or March is our squeeze season when fresh fruits are available in the market and concentrated fruit juices are produced out of fresh fruits.  In 2008 we started our squeezing season in July with the early initiation of machine maintenance. We produce and sell both concentrated fruit juices and juice drinks. Compared to juice drinks, our concentrated juice products generally can achieve a higher gross margin that that of juice drinks. Therefore, our core products are concentrated apple, pear and kiwifruit juices and our production has strategically been focused on concentrated juice products. We also produce juice drinks and other derivative products, especially when we are not in squeeze season. Our wide range of product offerings and our ability to shift focus among products based on supply and demand in the market and seasonal factors help us to diversify our operational risks and supplement our revenue generation.
 
Our main products include concentrated apple juice, concentrated pear juice, concentrated kiwifruit puree, fruit juice drinks, fresh fruits and organic fresh fruits. Our raw materials mainly consist of apple, pear and kiwifruits, which we procure in the PRC market and the cost of which typically represents over 65% of our overall production cost. We source our pear and kiwifruit supply mainly from our home province, Shaanxi Province, which is known for its pear and kiwifruit production. Our kiwifruit processing facilities are located in Zhouzhi County, Shaanxi Province, where 70% of the country’s kiwifruits are grown. We source our apple supply mainly from Liaoning Province, where our newly acquired subsidiary, Huludao Wonder Fruit Co., Ltd. (“Huludao Wonder”) is located. Because of the seasonal nature in the growing and harvesting of fruits and vegetables, our business is seasonal and can be greatly affected by weather. In the squeeze season of 2007, the main production areas of apples and pears in China suffered from poor weather, which caused a lower yield in the apple and pear crop. As a result, our cost of raw materials was higher in 2007.
 
To take advantage of economies of scale and to enhance our production efficiency, each of our manufacturing facilities has a focus on juice products centering around one particular fruit according to the proximity of such manufacturing to the supply center of that fruit. All concentrated juice products are manufactured using the same type of production line with slight variations in processing methods. Since June 2007, after we leased the production facilities of Huludao Wonder, we have been operating our pear juice products business out of our Jingyang Branch Office. Our business involving apple juice products is operated out of the newly acquired facilities of Huludao Wonder, and our business involving kiwifruit products is run out of Xi’an Tianren Modern Organic Agriculture Co., Ltd. (“Xi’an Tianren”), in which we have held a 91.15% ownership interest since May 2006.

 
-36-
 

The table below shows the breakdown of our main products for the periods indicated and the responsible production facilities:
 
       
Fiscal year 2007
  
Fiscal Year 2006
  
Fiscal Year 2005
  
Products
  
Responsible Production Facility
  
Revenue ($)
  
% of Total Revenue
  
Revenue (%)
  
% of Total Revenue
  
Revenue ($)
  
% of Total Revenue
  
Concentrated Apple Juice
  
Huludao Wonder/Jingyang Branch Office, Liaoning Province/Shaanxi Province
    
7,186,847
    
24.48
%
  
2,119,655
    
12.16
%
  
4,466,050
    
63.55
  %
                                           
Concentrated Pear Juice
  
Jingyang Branch Office, Shaanxi Province
    
11,184,212
    
38.09
%
  
4,983,145
    
28.59
%
  
2,561,839
    
36.45
%
                                           
Kiwifruit Virgin Puree
  
Xi’an Tianren, Shaanxi Province
    
590,912
    
2.01
  
%
  
1,665,754
    
9.57
%
  
—
    
—
 
                                           
Concentrated Kiwi Fruit Juice
  
Xi’an Tianren, Shaanxi Province
    
5,277,961
    
17.98
  
%
  
2,090,336
    
11.99
%
  
—
    
—
 
                                           
Others:
  
All of the above
    
5,122,009
    
17.44
  
%
  
6,568,314
    
37.69
%
  
—
    
—
 
                                           
Total
        
29,361,941
    
100
%
  
17,427,204
    
100
%
  
7,027,889
    
100
%
 
On May 27, 2006, Shaanxi Tianren purchased 91.15% of Xi’an Tianren’s ownership interest for a purchase price in the amount of RMB 36,460,000 (or approximately US $4,573,221). The acquisition was accounted for using the purchase method, and the financial statements of Shaanxi Tianren and Xi’an Tianren have been consolidated on the purchase date and forward. During the two month period immediately after we acquired Xi’an Tianren in May 2006, we temporarily suspended production at the Xi’an Tianren facility to engage in extensive technological and facility upgrades as well as personnel training. We resumed production thereafter. Therefore, for fiscal year 2006, Xi’an Tianren generated revenues only for the period between August and December.
 
On June 2, 2007, Shaanxi Tianren entered into a lease agreement with Shaanxi Hede Investment Management Co., Ltd., pursuant to which Shaanxi Tianren, for a term of one year and for a monthly lease payment of RMB 300,000, leased all the assets and operating facilities of Huludao Wonder, which was wholly-owned by Shaanxi Hede. This lease arrangement resulted in the combination of Huludao Wonder’s operating results with those of Shaanxi Tianren on the date of the lease and forward. Due to a delay in the processing of Huludao Wonder’s export permit, we did not book any sales of apple juice products until November 2007, even though we continued producing apple juice products and started receiving orders in July 2007. On June 10, 2008, we completed the acquisition of Huludao Wonder.
 
Besides concentrated juice products, we generated other revenue in the amount of $6,568,314 from sales of pear juice, apple juice, kiwifruit seeds, organic kiwifruit and fresh kiwifruit for the fiscal year ended December 31, 2006, and $5,122,009 from sales of kiwifruit, kiwifruit juice, mulberry juice, and apple spice for the fiscal year ended December 31, 2007.

 
-37-
 

The supply of our raw material fruits has traditionally been fragmented as we generally purchase directly from farmers. In addition, because the prices of raw material fruits change from season to season based on the output of the farms, we do not have long-term supply agreements with our suppliers. To secure our fruit supply and lower transportation costs, our processing facilities are strategically located near the various centers of fruit supply.
 
Shaanxi Tianren is permitted by the relevant governmental authorities to directly export our products. More than 70% of our products are exported either through distributors with good credit or to end-users directly. Our distributors are generally domestic export companies. Although we generally renew our distribution agreements with our distributors on a yearly basis, we maintain a long-term relationship with our distributors. Our main export markets are the U.S., Europe, Russia, and the Middle East.
 
Six-month Periods ended June 30, 2008 and June 30, 2007
 
Results of Operations and Business Outlook
 
Revenue
 
The following table presents our consolidated revenue for our main products for the six months ended June 30, 2008 and 2007, respectively.
 
   
Six Months Ended June 30,
  
   
2008
  
2007
  
% Change
  
Concentrated apple juice and apple aroma
  
$
4,286,059
  
$
—
    
N/A
  
Concentrated pear juice
    
6,117,688
    
4,579,297
    
33.6
%
Concentrated kiwifruit juice and kiwifruit puree
    
2,397,152
    
1,294,622
    
85.2
%
Kiwifruit seeds
    
547,890
    
—
    
N/A
  
Fresh kiwifruit
    
—
    
426,132
    
N/A
  
Fruit beverage
    
2,747,762
    
2,422,861
    
13.4
%
Total
  
$
16,096,551
  
$
8,722,912
    
84.5
%
 
Revenue for the six months ended June 30, 2008 were $16,096,551, an increase of $7,373,639, or 84.5%, when compared to the same period of the prior year. This increase was primarily due to Shaanxi Tianren’s consolidation of Huludao Wonder’s operating results beginning June 1, 2007. In June 2007, Shaanxi Tianren entered into a lease agreement with Hede pursuant to which Shaanxi Tianren, for a term of one year and for a monthly lease payment of RMB 300,000, leased all the assets and operating facilities of Huludao Wonder, which is wholly owned by Hede. This lease arrangement resulted in the combination of Huludao Wonder’s operating results with those of Shaanxi Tianren. Huludao Wonder specializes in the production of clear apple juice. It is located in Liaoning Province in China, which accounts for approximately one-third of the fresh apple production in China and produces a majority of the apples exported from China. There are more than 120 different species of apples grown in Liaoning Province. In the six months ended June 30, 2008, Huludao Wonder generated revenue of $4,286,059 from the sale of apple related products. Sales from pear related products soared in the six months ended June 30, 2008 as a result of increased consumer demand in both China and internationally. Sales from kiwifruit related products increased by $1,224,288 as a result of continued sales of concentrated kiwifruit juice and puree and kiwifruit seeds in the first two quarters of fiscal year 2008. There was no revenue generated from the sale of concentrated kiwifruit juice and puree and kiwifruit seeds in the second quarter of fiscal year 2007.
 
 

 
-38-
 
Gross Margin
 
The following table presents gross margin by our main products as a percentage of related revenue for the six months ended June 30, 2008 and 2007, respectively:
 
   
Six Months Ended June 30,
  
Gross profit margin
  
2008
  
2007
  
% Change
  
Concentrated apple juice and apple aroma
  
$
905,891
  
$
—
    
—
  
Concentrated pear juice
    
1,676,437
    
1,739,643
    
(3.6%
)
Concentrated kiwifruit juice and kiwifruit puree
    
669,597
    
711,435
    
(5.9%
)
Kiwifruit seeds
    
547,890
    
—
    
—
  
Fresh fruits
    
—
    
311,898
    
—
  
Fruit beverage
    
976,400
    
689,251
    
41.7
%
Consolidated
  
$
4,776,215
  
$
3,452,227
    
38.4
%

               
% Change
  
Gross profit margin in %
                    
Concentrated apple juice and apple aroma
    
21.1
%
  
—
    
—
  
Concentrated pear juice
    
27.4
%
  
38.0
%
  
(27.9%
)
Concentrated kiwifruit juice and kiwifruit puree
    
27.9
%
  
55.0
%
  
(49.2%
)
Kiwifruit seeds
    
100.0
%
  
—
    
—
  
Fresh fruits
    
—
    
73.2
%
  
—
  
Fruit beverage
    
35.5
%
  
28.4
%
  
24.9
%
Consolidated
    
29.7
%
  
39.6
%
  
(25.0%
)

 
-39-
 

 
Gross margin as a percentage of revenue decreased by 25.0% for the six months ended June 30, 2008, from 39.6% to 29.7%, compared to the same period of fiscal 2007. In terms of dollar amount, gross margin in the six months ended June 30, 2008 was $4,766,215, an increase of $1,323,988, or 38.4%, compared to $3,452,227 for the same period of fiscal 2007.
 
 
The decrease in gross profit margin as a percentage of revenue for the six months ended June 30, 2008 was primarily due to a decrease in gross margin in the sales of concentrated apple and pear juice. In the first two quarters, the general price of raw apples and pears increased due to a reduced available supply of fresh apples and pears, while the prices we received for our apple and pear related products remained constant with the same period of fiscal 2007, which resulted in a lower gross margin for our products in fiscal 2008. During the fruit squeezing season in 2007 and early 2008, the main production areas of apple, pear and kiwifruits in China suffered from bad weather, resulting in output reduction. In the first two quarters of 2008, we also saw a decrease in the average selling price of apple juice compared with the fourth quarter of 2007, which we believe was due to strong competition in the apple juice market. Factories are unwilling to pay high prices on raw fruit when they are not making a profit on their products, and farmers adjust their prices downward accordingly. Therefore, according to our past experience, when there is a decrease in the average selling price of apple and pear related products, the general price of fresh apples and pears usually decreases accordingly. Because the selling price of the juice and the purchase price of fruit juice move together, we believe the fluctuation in the average selling price of apple and pear related products has a minor impact on our gross margin.
 
 
In the six months ended June 30, 2008, the general price of raw kiwifruit increased as a result of a reduced available supply of fresh kiwifruits, while the prices we received for our kiwifruit related products, such as our beverage series, remained constant. This in turn decreased our margin in kiwifruit rated products. During the fruit squeezing season in 2007 and early 2008, the main production areas of apple, pear and kiwifruits in China suffered from bad weather, resulting in the output reduction. We believe that our gross margin on kiwifruit related products may increase if the supply of fresh kiwifruit increases in the future.
 
 
The gross profit margin of our fruit beverages increased by 24.9% for the six months ended June 30, 2008 as compared to the same period in 2007. This increase was primarily due to the change in our product mix. We sold more concentrated fruit beverages, which have a higher margin, in the first two quarters of 2008, as the result of a change in demand in the Chinese market. As the middle class of China grows, we believe the demand for higher quality, higher margin products will also increase.
 
 
Operating Expenses
 
The following table presents the amounts of our operating expenses and the percentage that our operating expenses comprise of net revenues for the six months ended June 30, 2008 and 2007, respectively:
 
   
Six Months Ended June30,
  
   
2008
(Unaudited)
  
2007
(Unaudited)
  
%
Change
  
General and administrative
  
$
731,135
  
$
252,416
  
 
189.7
%
Selling expenses
    
496,645
    
239,211
    
107.6
%
Total operating expenses
  
$
1,227,780
  
$
491,627
  
 
149.7
%
                     
As a percentage of net revenue for such year
                    
General and administrative
    
4.5
%
  
2.9
%
  
57.0
%
Selling expenses
    
3.1
%
  
2.7
%
  
12.5
%
Total operating expenses
    
7.6
%
  
5.6
%
  
35.3
%

 
-40-
 

Our operating expenses consist of general and administrative and selling expenses. The 149.7% increase in operating expenses in the six months ended June 30, 2008 as compared to the same period in 2007 was substantially attributable to the consolidation of Huludao Wonder’s operating results with those of Shaanxi Tianren after June 1, 2007.
 
 
General and administrative expenses increased by 189.7% to $731,135 for the six months ended June 30, 2008, from $252,416 for the same period of fiscal 2007. Huludao Wonder had a large amount of general and administrative expenses which contributed to the substantial increase of the Company’s operating expenses as a result of the operating combination. The depreciation and amortization expense of Shaanxi Tianren, which was a non-cash expense, also increased by approximately $366,869 in the six months ended June 30, 2008 as compared to the same period of 2007 due to an increase in fixed assets. The other contributing factor was a hike in payroll and related expenses in Shaanxi Tianren to handle the rise in sales volume. Additionally, legal and audit expenses increased by approximately $188,416 in the six months ended June 30, 2008 as compared to the same period of the prior year, which was primarily associated with the Company becoming a public company. These increases were partially offset by a bad debt recovery from other receivables of $298,334. Management believes that our operating expenses will continue to increase in the future compared to previous years due to the expansion of our business.
 
 
The 107.6% increase in selling expense for the six months ended June 30, 2008, as compared to the same period of 2007 was mainly due to an increase in freight and transportation expenses as a result of the increase in sales.
 
 
Income from Operations
 
In the six months ended June 30, 2008, income from operations increased by $587,835, or 19.9%, to $3,548,435 from $2,960,600 for the corresponding period in 2007. As a percentage of revenue, income from operations was approximately 22.0% for the six months ended June 30, 2008, a decrease of 35.0% as compared to 33.9% for the corresponding period in 2007. The decrease in the percentage of revenue was due to a decrease in gross margin and an increase in operating expenses, as previously discussed.
 
 
Interest Expense
 
Interest expense was $445,103 for the six months ended June 30, 2008, an increase of $445,103 as compared with the same period of 2007, primarily due to an increase in term loan facilities in 2008 to support expansion plans and potential business opportunities. In the first two quarters of 2008, the Company entered into six short term loan agreements with local banks in China. As of June 30, 2008, the balance of these short-term loans totaled RMB 50,000,000 ($7,289,586), with interest rates ranging from 6.57% to 9.83% per annum and maturity dates ranging from April 2008 to June 2008.
 
 
Other Income
 
Other income increased by $76,223 to $33,946 for the six months ended June 30, 2008 from other expenses of $42,277 for the same period of 2007, primarily due to rental income of $39,998, which consisted mainly of rental income from Shaanxi Tianren’s refrigeration facilities, which were rented to outside vendors.
 
 
Income Tax
 
Our provision for income taxes was $311,198 for the six months ended June 30, 2008, compared $456,983 for the corresponding period in 2007. The increase in tax provision for the first two quarters of 2008 was primarily due to an increase in income generated from Xi’an Tianren. The tax rate of Xi’an Tianren was 25%, effective beginning January 2008.
 
 
We adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”) on July 1, 2007, which required no material adjustment to our liabilities for unrecognized income tax benefits since its adoption.
 

 
-41-
 

Minority Interest
 
As of June 30, 2008, Shaanxi Tianren held a 91.15% interest in Xi’an Tianren and Pacific held a 99% percent interest in Shaanxi Tianren. Minority interest in net income of subsidiaries was $182,783 for the six months ended June 30, 2008, an increase of $93,059, compared to a minority interest in the net income of $89,724 for the corresponding period of 2007. The increase in the minority interest was mainly attributable to the increase in the net income generated from Shaanxi Tianren, which was primarily due to an increase in sales, as previously discussed.
 
 
Net Income
 
Net income was $2,715,040 for the six months ended June 30, 2008, an increase of $335,925, or 14.1%, compared to the corresponding period of 2007. Such increase was primarily due to an increase in revenue and an increase in operating expenses as previously discussed.
 
 
Financial Condition
 
During the six months ended June 30, 2008, total assets increased $413,380 or 0.9%, from $46,610,128 at December 31, 2007 to $47,023,508 at June 30, 2008. The majority of the increase was in cash, prepaid expenses, property, plant and equipment, construction in progress and other assets, but these increases were offset by decreases in accounts receivable, inventory, and related party receivables.
 
 
For the six months ended June 30, 2008, cash and cash equivalents increased $5,047,084, or 123.3%, to $9,141,322, as compared to $4,094,238 for the fiscal year ended December 31, 2007. The increase in cash was mainly due to proceeds of $3,115,072 received from certain accredited investors in a private placement transaction on February 26, 2008 and an increase of $7,373,639 in net revenue in the six months ended June 30, 2008.
 
 
At June 30, 2008, the accounts receivable balance decreased by $4,332,242 from the balance at December 31, 2007 due primarily to an improvement in accounts receivable collections in the second quarter of fiscal 2008. The accounts receivable turnover was 79 days for the six months ended June 30, 2008, compared with 88 days for fiscal year 2007. The decrease in the accounts receivable turnover was due primarily to improvement in collections in Shaanxi Tianren.
 
 
Our inventory as of June 30, 2008 was $1,801,539, reflecting a decrease of $2,658,610 or 59.6% compared to inventory at December 31, 2007. Inventory consists of raw materials, packaging materials and finished products. The decrease in inventory was mainly from the increase in sales in kiwifruit related products in the second quarter of 2008 which were mainly produced in 2007 and January 2008. As the second quarter is our non-squeezing season for kiwifruit related products, there was no production in Xi’an Tianren during such quarter.
 
 
Prepaid expenses and other current assets at June 30, 2008 were $1,473,440, an increase of $1,371,812 from those balances at December 31, 2007. The increase in prepaid expenses was primarily due to an increase of $971,728 in prepaid raw material of fresh fruits. Our squeezing season is from August through February or March of the next year. To ensure that we have enough fresh fruits for our production needs, we usually pay 30% to 50% of the estimated purchase amount to suppliers before the start of squeezing season.
 

 
-42-
 

Property, plant and equipment increased by $451,806 from $17,564,147 at December 31, 2007 to $18,015,953 at June 30, 2008. Construction in progress was $2,599,466 at June 30, 2008. Total capital expenditures were approximately $2,702,172 in the six months ended June 30, 2008. During 2008, Shaanxi Tianren commenced construction on the expansion of its research and development center. This project covers an area of 2,000 square meters and will encompass additional space required for the research and development laboratories. The expansion is currently in progress on the existing site of the factory in Jingyang County, Shaanxi Province. Related to this project, we have capitalized, as construction in progress, $1,166,334 during the six months ended June 30, 2008. This research and development center is expected to be completed by June 30, 2009. The Company also started a technology innovation and expansion project over its original industrial waste water processing facility located in the factory of Jingyang County in Shaanxi Province. This 600 square meter industrial waste water processing facility will increase the capacity of waste water processing and recycling from the current 100 cubic meters per day to 300 cubic meters per day. We capitalized $801,854 as construction in progress during the six months ended June 30, 2008. This project is expected to be operational by the end of the third quarter of fiscal 2009. In addition, Xi’an Tianren began construction on an industrial waste water processing facility in the factory of Zhouzhi County in Shaanxi Province. Xi’an Tianren previously leased a waste water processing facility with an annual fee of approximately $11,600. This 1,118 square meter industrial waste water processing facility remains on schedule and once completed will process 1,200 cubic meters of waste water per day, which will meet the increasing production demand of Xi’an Tianren and will improve the use of recycled waste water. We have capitalized $631,278 as construction in progress during the six months ended June 30, 2008. This project is expected to be operational by the end of the third quarter of fiscal 2009.
 
Depreciation and amortization were $931,617 for the six months ended June 30, 2008, compared with $450,965 for the same period of 2007. The increase in depreciation expenses was due mainly to an increase in property, plant and equipment acquired after June 30, 2007.
 
The related party receivables of $4,970,427 as of December 31, 2007 were fully collected as of June 30, 2008. The related party receivables as of December 31, 2007 consisted primarily of two interest-free loans in the aggregate amount of approximately RMB 27,000,000 (approximately $3,017,889 based on the exchange rate as of June 30, 2008) that we advanced to Hede in June and July 2007 for Hede to acquire Huludao Wonder. On June 10, 2008, Shaanxi Tianren completed the acquisition of Huludao Wonder for a total purchase price of RMB 48,250,000, or approximately $6,807,472, based on the average exchange rate for the six months ended June 30, 2008. The outstanding amount of the loan at the time of the acquisition was deducted from the purchase price.
 
Other assets were $2,657,930 at June 30, 2008, an increase of $2,586,112 from the balance at December 31, 2007. The increase in other assets was primarily due to a down payment of $2,116,313 for the acquisition of Yingkou Trusty Fruits Co., Ltd. (“Yingkou”). On June 1, 2008, Shaanxi Tianren entered into a memorandum agreement with Xi’an Dehao Investment Consultation Co. Ltd. (“Dehao”). Under the terms of the agreement, Dehao agreed to transfer 100% of the ownership interest of Yingkou to Shaanxi Tianren. Shaanxi Tianren is required to make a down payment of RMB 15,000,000, or approximately $2,116,313, to Dehao as a deposit for the purchase. The acquisition is targeted to be completed in the fourth quarter of fiscal 2008 after the third party market value evaluation. In addition, we made a down payment of $364,479 to a construction company for the remolding service that they will provide for our newly leased office in Shaanxi Tianren.
 
Liquidity and Capital Resources
 
Our working capital has historically been generated from the operating cash flow, advances from our customers and loans from bank facilities.
 
Net cash provided by operating activities increased by $6,114,240 to $8,427,406 for the six months ended June 30, 2008 from $2,313,166 in the same period of 2007. The increase in net cash provided by operating activities was primarily due to (i) an increase of $335,925 in net income from $2,379,115 to $2,715,040 during the six months ended June 30, 2008 as compared to the same period of the prior year, (ii) an increase of $573,711 of adjusting non-cash items, and (iii) an increase of $8,078,081 in cash inflow from change in accounts receivables, inventory and tax payables. Primarily offsetting the increase in cash provided by operating activities was a cash outflow from change in prepaid expenses and accounts payable of $2,975,692.
 
Net cash used in investing activities increased by $6,534,418 to $6,867,975 for the six months ended June 30, 2008 from $333,557 for the same period of fiscal 2007. The increase in cash used in investing activities was mainly due to $2,116,313 in deposits paid to Dehao for the acquisition of Yingkou, an increase of $6,799,284 in loans advanced to related parties, an increase of $364,479 in prepayment for the lease improvement and an increase of $2,665,902 in the capital expenditures in cash as previously discussed. Offsetting this increase in cash used in investing activities was an increase of $5,411,560 in the repayment of loans from related parties.
 
Net cash provided by financing activities in the first two quarters of 2008 was $3,112,501, representing an increase of $4,581,775 compared to the net cash used in financing activities of $1,469,274 during the same period of 2007. The increase was mainly due to stock sales proceeds of $3,115,072 received from certain accredited investors in a private placement transaction on February 26, 2008.
 
       As of June 30, 2008, we had a long-term loan balance of RMB 15,000,000, ($2,186,876 based on the exchange rate of June 30, 2008), at the lending bank’s floating prime rate. The loan has a term of five years from the date of the loan. RMB 10,000,000 ($1,157,917) of principal is due on July 10, 2009 and the balance of RMB 5,000,000 ($728,959) of principal is due on September 20, 2009.
 
As of June 30, 2008, we had several short-term loans outstanding. The balance of these loans totaled RMB 50,000,000 ($7,289,586), with interest rates ranging from 6.57% to 9.83% per annum. These loans mature from September 2008 to June 2009.  The proceeds of these short-term loans are used as working capital in the Company’s ordinary course of business.
 
Under our Preferred Stock Purchase Agreement with Barron Partners, for a period of three years from the closing date of the agreement (February 26, 2008), so long as Barron Partners shall continue to beneficially own 20% of the Series B Preferred Stock issued thereunder, we may not issue any preferred stock or any convertible debt, except for preferred stock issued to Barron Partners.
-43-
 
Further, under the Preferred Stock Purchase Agreement with Barron Partners, until February 26, 2010, at all times our debt-to-EBITDA ratio shall not exceed 3.5:1 for the most recent 12-month period.
 
The Company plans to acquire Yingkou in the fourth quarter of fiscal year 2008. The Company also plans to expand its current operations in the next two years. Planned expenditures for land and equipment are approximately $36 million for the period from July 2008 to June 2009, and $10 million for the last two quarters of fiscal year 2009.The Company needs to purchase land to expand its current operations. Much of its planned expenditures in the period from July 2008 to June 2009 represent the purchase price of land and construction expenses of $10 million.
 
We believe that we currently have sufficient cash on hand, combined with anticipated cash receipts, to fund our business for at least the next 12 months.
 
For our long term planned expenditures for equipment and land we will likely need to seek additional debt or equity financing. We believe that any such financing could come in the form of debt or the issuance of our common stock in a private placement or public offering.  However, there are no assurances that such financing would be available or available on terms acceptable to us. To the extent that we require additional financing in the future and are unable to obtain such additional financing, we may not be able to fully implement our growth strategy.
 
Fiscal Years Ended December 31, 2007 and December 31, 2006
 
Results of Operations and Business Outlook
 
As the following table shows, Shaanxi Tianren’s revenue, gross profit, and income from operations for fiscal year 2007 rose substantially as compared to fiscal year 2006. These increases were due in large part to the combination of Huludao Wonder’s operating results on and after June 2007 with those of Shaanxi Tianren. In addition, in 2007, Xi’an Tianren continued normal production and sales of its kiwifruit beverage products throughout the non-squeeze season, while in June and July of 2006, due to the transition of Xi’an Tianren as a result of our acquisition of it in May 2006, its production and sales were temporarily suspended for technological and facility upgrades and personnel training. These factors contributed to the substantial increase of our net sales and income from operations for fiscal year 2007 as compared to fiscal 2006.
 
   
Twelve Months Ended December 31,
  
   
2007
  
2006
  
Change
  
Revenue
     $
29,361,941
     $
17,427,204
    
68.48
%
Cost of Goods Sold
     $
18,467,045
     $
10,105,327
    
82.75
%
Gross Profit
     $
10,894,896
     $
7,321,877
    
48.80
%
Gross Margin
    
37.11
%
  
42.01
%
  
-11.68
%
Operating Expenses
     $
1,876,456
     $
1,069,970
    
75.37
%
Income from Operations
     $
9,018,440
     $
6,251,907
    
44.25
%
Net Income
     $
7,956,403
     $
3,845,270
    
97.55
%
 
Revenue
 
Revenue for fiscal 2007 was $29,361,941, an increase of $11,934,737, or 68.48%, compared to $17,427,204 for fiscal 2006. The increase was primarily due to Shaanxi Tianren’s consolidation of Huludao Wonder’s operating results since June 1, 2007 and forward. In June 2007, Shaanxi Tianren entered into a lease agreement with Hede, pursuant to which Shaanxi Tianren, for a term of one year and for a monthly lease payment of RMB 300,000, leased all the assets and operating facilities of Huludao Wonder, which is wholly owned by Hede. This lease arrangement resulted in the combination of Huludao Wonder’s operating results with those of Shaanxi Tianren. In addition, Xi’an Tianren increased its production of kiwifruit beverages in fiscal 2007. The kiwifruit beverage is produced by the further processing of kiwifruit juice puree. Generally, we do not produce or sell fruit juice puree or fruit juice during the non-squeeze season between March or April and July. However, during part of the non-squeeze season in 2007, between January and June, Xi’an Tianren continued to produce kiwifruit juice from existing kiwifruit juice puree and to sell kiwifruit juice during this period. As a result, we saw an increase in net sales of kiwifruit juice for fiscal year 2007. A general price increase for fruit juices in 2007 as compared to those in 2006 also contributed to the increase of net sales in fiscal 2007.
 
Overall Gross Margin
 
Overall gross margin, as a percentage of revenue, dropped by 11.67%, from 42.01% for fiscal 2006 to 37.11% for fiscal 2007. The lower margin was due primarily to an increase in general price for fruits. In the squeeze season of 2007, the main production areas of apples in China suffered from poor weather, which caused a lower yield in the apple crop. As a result, our cost of raw materials was higher in 2007. In terms of dollar amount, gross margin for fiscal 2007 was $10,894,896, an increase of $3,573,019, or 48.80%, compared to $7,321,877 for fiscal 2006, as the result of better sales performances, as previously discussed.
 

 
-44-
 

Operating Expenses
 
Operating expenses for the years ended December 31, 2007 and 2006 were as follows:
   
Twelve Months Ended December 31,
  
   
2007
  
2006
  
General and administrative
  
$
1,189,637
  
$
405,253
  
Selling expense
    
686,819
    
664,717
  
Total
  
$
1,876,456
  
$
1,069,970
  
 
Our operating expenses increased 75.37% to $1,876,456 for the fiscal year ended December 31, 2007 from $1,069,970 for fiscal year 2006. Our operating expenses consist of general and administrative and selling expenses. The increase in our operating expenses was substantially attributable to the 193.55% increase in our general and administrative expenses to $1,189,637 for fiscal year 2007 as compared to $405,253 for fiscal year 2006. The increase was primarily due to the consolidation of Huludao Wonder’s operating results with those of Shaanxi Tianren since June 1, 2007 and forward. Huludao Wonder had a large amount of general and administrative expenses, which attributed to the substantial increase of Shaanxi Tianren’s operating expenses as a result of such combination. The other contributing factor was a hike in payroll and related expenses in Shaanxi Tianren to handle the rise in sales volume. Selling expenses increased by $22,102, or 3.33%, to $686,819 for fiscal year 2007, from $664,717 for fiscal 2006, mainly due to an increase in freight and transportation expenses as a result of the increase in sales.
 
Income from Operations
 
Income from operations increased 44.25% to $9,018,440 for fiscal year 2007, from $6,251,907 for fiscal year 2006. As a percentage of revenue, income from operations was approximately 30.71% for fiscal year 2007, a decrease of 14.39% as compared to 35.87% for fiscal year 2006. The decrease in the percentage of revenue was due to a decrease in gross margin and an increase in operating expenses, as previously discussed.
 
Interest Expense
 
Interest expense increased by $338,370 for fiscal year 2007, from $62,147 to $400,517, primarily due to new term loan facilities of $9,446,103 taken up in fiscal 2007 to support expansion plans and potential business opportunities.
 
Income Tax
 
Our income tax provision decreased by $926,515, or 45.51%, from $2,035,675 in fiscal 2006 to $1,109,160 in fiscal 2007. The decrease was due to Shaanxi Tianren’s new preferential tax treatment effective as of January 2007. Shaanxi Tianren was awarded the status of a nationally recognized High and New Technology Enterprise in December 2006, which entitled Shaanxi Tianren to tax-free treatment for two years starting from 2007, and thereafter reduced income taxes at 50% of its regular income tax rate then effective from 2009 to 2010. In December 2007, the tax rate of Xi’an Tianren was reduced from 33% to 25%, effective beginning January 2008.
 
Minority Interest
 
As of December 31, 2007, Shaanxi Tianren held a 91.15% interest in Xi’an Tianren, and Pacific held a 99% interest in Shaanxi Tianren. The minority interest for fiscal 2007, in the net income of subsidiaries, was $360,501, an increase of $116,937 compared to the minority interest of $243,564 for fiscal 2006. The increase in the minority interest was attributable to the improvement in the net income generated from Shaanxi Tianren.
 
Net Income
 
Net income for fiscal year 2007 was $7,596,403, an increase of $3,751,133, or 97.55%, compared to $3,845,270 in fiscal year 2006. Such increase was primarily due to an increase in revenue, as previously discussed.

 
-45-
 

 
Financial Condition
 
During fiscal year 2007, total assets increased by $25,188,080 from $21,422,048 at December 31, 2006 to $46,610,128 at December 31, 2007. The increase was primarily in cash, accounts receivable, inventory, property, plant and equipment, land usage rights and related party receivables.
 
 
Cash and cash equivalents reached $4,094,238 as of December 31, 2007, an increase of 91.75%, from $2,135,173 as of December 31, 2006. The increase in cash was mainly the result of higher revenue generated in fiscal year 2007.
 
 
Accounts receivable at December 31, 2007 were $9,153,687, an increase of $4,002,053, or 77.69%, compared to $5,151,634 at December 31, 2006. In 2007 we required advance payment of 100% of the purchase price on 11% of our sales and we generally delivered the products one to two months after payment. As our sales in 2007 increased by 68.5% compared to 2006, our accounts receivable also increased. The turnover of accounts receivables was 89 days for fiscal 2007, a decrease of 25 days or 21.93%, compared to 114 days for fiscal 2006. The decrease in turnover days of accounts receivable was primarily due to improvement in collection efforts on the part of the staff in Shaanxi Tianren.
 
 
Our inventory reached $4,460,149 as of December 31, 2007 from $765,711 at the beginning of the year, representing an increase of 482.48%. Inventory consists of raw materials, merchandise on hand, low-value consumables and packaging materials and finished products. Our inventory as of December 31, 2007 consisted largely of concentrated apple juice produced by Huludao Wonder. As discussed above, we started operating Huludao Wonder in June 2007 pursuant to a lease and management arrangement with Hede. However, Huludao Wonder did not book any sales until November 2007 due to the delay in obtaining an export permit. As such, we accrued a large amount of inventory, which contributed to the 482.48% increase.
 
 
Related party receivables increased to $4,970,427 as of December 31, 2007 from $419,523 as of December 31, 2006, representing an increase of 1,084.78%. The related party receivables as of December 31, 2007 consisted primarily of two interest-free loans in the aggregate amount of approximately RMB 27,000,000 (or approximately $3,696,301) that we advanced to Hede in June and July 2007 for Hede to acquire Huludao Wonder, a factory that produces apple juice products. The total purchase price of Huludao Wonder by Hede was RMB 48,250,000 (or approximately $6,605,427). Hede was 80% owned by Mr. Yongke Xue, our Chief Executive Officer and director, and 20% owned by Ms. Xiaoqin Yan, a director of Shaanxi Tianren. Prior to Hede’s acquisition of Huludao Wonder, Huludao Wonder was identified by Shaanxi Tianren as a potential acquisition target whose product offering and manufacturing capacity complemented the business of Shaanxi Tianren. As part of Shaanxi Tianren’s strategic plan, it is intended that Shaanxi Tianren will acquire Huludao Wonder from Hede at cost after operating Huludao Wonder under a one-year lease and management arrangement entered into by the parties in June 2007. The principal amount of one such loan was RMB 7,000,000 (or approximately $958,300), which matured on June 5, 2008. The principal amount of the second loan was RMB 20,000,000 (or approximately $2,738,001), which matured on July 1, 2008.
 
On May 31, 2008, Shaanxi Tianren entered into a Stock Transfer Agreement with Hede. Under the terms of the Stock Transfer Agreement, Hede agreed to transfer all its stock ownership of Huludao Wonder to Shaanxi Tianren for a total price of RMB 48,250,000 (approximately $6,952,450 based on the exchange rate as of May 31, 2008) which was the same purchase price which Hede paid for the acquisition of Huludo Wonder in June 2007. The outstanding loan balance and cash advances to Hede were offset by the purchase price when the sale was closed on June 10, 2008. The loan made to Hede in excess of the sales price of RMB 48,250,000 was returned to the Company in the same month. Please refer to the section titled “Certain Relationships and Related Party Transactions” of this prospectus for more information about these related party transactions.
 

 
-46-
 

Property, plant and equipment at December 31, 2007 were $17,564,147, an increase of $7,482,172, or 74.21%, compared to $10,081,975 at December 31, 2006. The increase was mainly due to the consolidation of the financial condition of Huludao Wonder with that of Shaanxi Tianren in fiscal year 2007. The property, plant and equipment of Huludao Wonder was $7,077,737 as of December 31, 2007.
 
Total liabilities at December 31, 2007 were $12,982,306, an increase of $8,573,302, or 194.45%, compared to $4,409,004 at December 31, 2006. The increase in liabilities was mainly due to the increase in accounts payable, notes payable and advances from customers.
 
Advances from customers were $708,291 as of December 31, 2007, while we did not have any advances from customers at the beginning of the year. In 2007 we required advance payment of 100% of the purchase price on 9% of our sales and we generally delivered the products one to two months after payment. In 2006, our sales were largely generated from sales to a few domestic export companies who historically acted as our distributors and with whom we have long-term relationships. We usually do not require advance payments from such distributors.
 
As of December 31, 2007, we had loans in the principal amount of $1,889,220 from China Construction Bank, and $6,571,203 from China Commercial Bank, Suizhong, branch. We intend to use these loans to support our expansion plans and potential business opportunities.
 
Liquidity and Capital Resources
 
Our working capital has historically been generated from the operating cash flow, advances from our customers and loans from bank facilities.
 
Net cash provided by operating activities during fiscal 2007 was $6,153,078, an increase of $4,035,484 as compared to $2,117,594 in fiscal 2006. Higher levels of cash flows were primarily due to the swing in net income from $3,845,270 in fiscal year 2006 to $7,596,403 in fiscal year 2007.
 
Net cash used in investing activities decreased by $718,788 to $4,361,882 for fiscal 2007 from $5,080,670 for fiscal 2006. The fluctuation of net cash used in investing activities was primarily caused by our acquisition in 2006 and the prices we paid for such acquisition. During 2006, we paid $4,213,662 in cash for the acquisition of Xi’an Tianren. Offsetting the decrease in cash used in investing activities was an increase of $4,172,412 in loan advances to related parties.
 
Net cash used in financing activities in fiscal year 2007 was $50,854, reflecting an increase of $4,504,526 compared to the net cash provided by financing activities of $4,453,672 in fiscal year 2006. The increase was due mainly to the decrease in capital contributions from stockholders in 2007. In 2006, our shareholders made a capital contribution in the amount of approximately $6,271,558. However, there was no such contribution in fiscal 2007. In fiscal 2007, we also paid off an outstanding loan of $1,865,649 to our related parties, as compared to $28,524 in loan advances from related parties in 2006. The increase in net cash used in financing activities was offset by an increase of $2,946,247 in proceeds from bank loans and a decrease of $714,958 in dividend payments.
 
       As of December 31, 2007, we had a long-term loan balance of RMB15,000,000, ($2,053,501 based on the exchange rate as of December 31, 2007), on a RMB15,000,000 loan, which was bearing interest at the lending bank’s floating prime rate. The loan has a term of five years from the date of the loan. RMB 10,000,000 ($1,369,000) of principal is due on July 10, 2009 and the balance of RMB 5,000,000 ($684,501) of principal of the loan is due on September 20, 2009.
 
As of December 31, 2007, we had several short-term loans outstanding which we intended to pay back within a year. The balance of these loans totaled RMB 46,800,000 ($6,406,922). The interest rates on these short-term loans range from 6.57% to 9.477% per annum. These loans were due from January 2008 to September 2008.

 
-47-
 

The proceeds of these short-term loans were used as working capital in the Company’s ordinary course of business.
 
We did not have any contractual limitation on our ability to raise capital with any bank or investor as of December 31, 2007.
 
The Company planned to acquire Yingkou Trusty Fruits Co., Ltd. (“Yingkou”) in the fourth quarter of fiscal year 2008. The Company also planned to expand its current operations in the next two years. The planned capital expenditures are approximately $5 million for fiscal 2008 and $41 million for fiscal year 2009.  We believe that as of December 31, 2007 we had sufficient cash on hand, combined with anticipated cash receipts, to fund our business for at least the next 12 months.
 
In order to fund our capital expenditure we will likely need to seek additional debt or equity financing. We believe any such financing could come in the form of additional corporate debt or straight equity issuance of our registered shares through a private investment in public equity investor. However, there are no assurances that such financing would be available or available on terms acceptable to us. To the extent that we require additional financing in the future and are unable to obtain such additional financing, we may not be able to fully implement our growth strategy.
 
Critical Accounting Policies
 
Management’s discussion and analysis of its financial condition and results of operations is based upon SkyPeople Fruit Juice, Inc. (“SkyPeople) consolidated financial statements, which have been prepared in accordance with U.S. GAAP. SkyPeople’s financial statements reflect the selection and application of accounting policies, which require management to make significant estimates and judgments. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Pacific believes that the following reflects the more critical accounting policies that currently affect SkyPeople’s financial condition and results of operations.
 
SkyPeople Fruit Juice, Inc. (“SkyPeople” or the “Company”), formerly Entech Environment Technology, Inc. (“Entech”), was formed in June 1998 under the laws of the State of Florida. From July 2007 until February 26, 2008, our operations consisted solely of identifying and completing a business combination with an operating company and compliance with our reporting obligations under federal securities laws.
 
Between February 22, 2008 and February 25, 2008, we entered into a series of transactions whereby we acquired 100% of the ownership interest in Pacific Industry Holding Group Co., Ltd. (“Pacific”) from a share exchange transaction and raised $3,400,000 gross proceeds from certain accredited investors in a private placement transaction. As a result of the consummation of these transactions, Pacific is now a wholly owned subsidiary of the Company.
 
Pacific was incorporated under the laws of the Republic of Vanuatu on November 30, 2006. Pacific’s only business is acting as a holding company for Shaanxi Tianren Organic Food Co., Ltd. (“Shaanxi Tianren”), a company organized under the laws of the People’s Republic of China (“PRC”), in which Pacific holds a 99% ownership interest.
 
This share exchange transaction resulted in Pacific obtaining a majority voting and control interest in the Company. Generally accepted accounting principles require that the company whose stockholders retain the majority controlling interest in a combined business be treated as the acquirer for accounting purposes, resulting in a reverse acquisition with Pacific as the accounting acquirer and SkyPeople as the acquired party. Accordingly, the share exchange transaction has been accounted for as a recapitalization of the Company. The equity sections of the accompanying financial statements have been restated to reflect the recapitalization of the Company due to the reverse acquisition as of the first day of the first period presented. All references to Common Stock of Pacific Common Stock have been restated to reflect the equivalent numbers of SkyPeople equivalent shares.

 
-48-
 

On May 23, 2008, we amended the Company’s Articles of Incorporation and changed its name to SkyPeople Fruit Juice, Inc. to better reflect our business. The 1-for- 328.72898 reverse stock split of the outstanding shares of Common Stock and a mandatory 1-for-22.006 conversion of Series A Preferred Stock, which had been approved by written consent of the holders of a majority of the outstanding voting stock, also became effective on May 23, 2008.
 
Shaanxi Tianren was incorporated on August 8, 2001 in the People’s Republic of China (“PRC”) and is located in Xi’an High-Tech Industrial Development Zone. The Company is principally engaged in developing, manufacturing and selling mostly concentrated pear and apple juices, juice concentrate, fruit beverages, agricultural products and packing supplies in the PRC.

Xi’an Tianren Modern Organic Company, Ltd. (“Xi’an Tianren”), formerly known as “Xi’an Jiaoda Qinmei Modern Food Company Ltd.”, was incorporated on December 22, 2002 in the PRC. The Company is principally engaged in developing, manufacturing and selling mostly concentrated kiwifruit and peach juices and fruit supplies in the PRC.

 On May 27, 2006, Shaanxi Tianren purchased 91.15% of Xi’an Tianren for RMB 36,460,000 (U.S. $4,573,221). The acquisition was accounted for using the purchase method and the financial statement was consolidated on the purchase date and forward.

On June 2, 2007, Shaanxi Tianren entered into a lease agreement with Shaanxi Hede Investment Management Co., Ltd., pursuant to which Shaanxi Tianren, for a term of one year and for a monthly lease payment of RMB 300,000, leased all the assets and operating facilities of Huludao Wonder, which is wholly-owned by Hede. This lease arrangement resulted in the combination of Huludao Wonder’s operating results with those of Shaanxi Tianren on the date of the lease and forward. On June 10, 2008, we completed the acquisition of Huludao Wonder.
 
Consolidation
 
The consolidated financial statements include the accounts of Shaanxi Tianren, Xi’an Tianren, Huludao Wonder and Pacific. All material inter-company accounts and transactions have been eliminated in consolidation.
 
The consolidated financial statements are prepared in accordance with U.S. GAAP. This basis differs from that used in the statutory accounts of Shaanxi Tianren, Xi’an Tianren and Huludao Wonder, which were prepared in accordance with the accounting principles and relevant financial regulations applicable to enterprises in the PRC. All necessary adjustments have been made to present the financial statements in accordance with U.S. GAAP.
 
Cash and Cash Equivalents
 
For purposes of the statements of cash flows, cash and cash equivalents include cash on hand and demand deposits held by banks. Deposits held in financial institutions in the PRC are not insured by any government entity or agency.
 
Accounting for the Impairment of Long-Lived Assets
 
The long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technological or other industrial changes. Determination of recoverability of assets to be held and used is by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets.
 
If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the reporting periods, there was no impairment loss.

 
-49-
 

Accumulated Other Comprehensive Income
 
Accumulated other comprehensive income represents foreign currency translation adjustments.
 
Accounts Receivable
 
Accounts receivable and other receivables are recognized and carried at the original invoice amount less an allowance for any uncollectible amount. Allowance is made when collection of the full amount is no longer probable. Management reviews and adjusts this allowance periodically based on historical experience, the current economic climate as well as its evaluation of the collectability of outstanding accounts. Receivable amounts outstanding more than 6 months are allowed for. The Company evaluates the credit risks of its customers utilizing historical data and estimates of future performance.
 
Inventory
 
Inventory consists primarily of raw materials and packaging (which include ingredients and supplies) and finished goods (which include finished juice in our bottling and canning operations). Inventories are valued at the lower of cost or market. We determine cost on the basis of the average cost or first-in, first-out methods.
 
Revenue Recognition
 
We recognize revenue upon meeting the recognition requirements of Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition.” Revenue from sales of the Company’s products is recognized upon shipment or delivery to its distributors or end users, depending upon the terms of the sales order, provided that persuasive evidence of a sales arrangement exists, title and risk of loss have transferred to the customer, the sales amount is fixed and determinable and collection of the revenue is reasonably assured. More than 70% of our products are exported either through distributors or to end users. Of this amount, 80% of the revenue is exported through distributors. Our general sales agreement requires the distributors to pay us after we deliver the products to them, which is not contingent on resale to end customers. Our credit terms for distributors with good credit history are from 30 days to 90 days. For new customers, we usually require 100% advance payment for direct export sales. Customer advances are recorded as unearned revenue, which is a current liability. Our payment terms with distributors are not determined by the distributor’s resale to the end customer. According to our past collection history, the bad debt rate of our accounts receivables is very low and because of our strict quality standards during the production, storage and transportation process we have experienced no returns based on the quality of our products. Since we have no history of returned products, no provision has been made for returnable goods. We are not required to rebate or credit a portion of the original fee if we subsequently reduce the price of our product and the distributor still has right with respect to that product.
 
Estimates
 
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. The significant areas requiring the use of management estimates include the provisions for doubtful accounts receivable, useful life of fixed assets and valuation of deferred taxes. Although these estimates are based on management’s knowledge of current events and actions management may undertake in the future, actual results may ultimately differ from those estimates.
 
Property, Plant and Equipment
 
Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the useful lives of the assets. Major renewals and betterments are capitalized and depreciated; maintenance and repairs that do not extend the life of the respective assets are charged to expense as incurred. Upon disposal of assets, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in income. Depreciation related to property and equipment used in production is reported in cost of sales. Property and equipment are depreciated over their estimated useful lives as follows:
 

 
-50-
 


Buildings
20-30 years
Machinery and equipment
10 years
Furniture and office equipment
5 years
Motor vehicles
5 years
 
Foreign Currency and Comprehensive Income
 
The accompanying financial statements are presented in U.S. dollars. The functional currency is the renminbi (“RMB”) of the PRC. The financial statements are translated into U.S. dollars from RMB at year-end exchange rates for assets and liabilities, and weighted average exchange rates for revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.
 
On July 21, 2005, the PRC changed its foreign currency exchange policy from a fixed RMB/USD exchange rate into a flexible rate under the control of the PRC’s government. We use the closing rate method in currency translation of the financial statements of the Company.
 
RMB is not freely convertible into the currency of other nations. All such exchange transactions must take place through authorized institutions. There is no guarantee the RMB amounts could have been, or could be, converted into U.S. dollars at rates used in translation.
 
Taxes
 
Income tax expense is based on reported income before income taxes. Deferred income taxes reflect the effect of temporary differences between assets and liabilities that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. In accordance with Statement of Financial Accounting Standards (“SFAS”) No.109, “Accounting for Income Taxes,” these deferred taxes are measured by applying currently enacted tax laws.
 
The Company has implemented SFAS No.109 “Accounting for Income Taxes” which provides for a liability approach to accounting for income taxes. Deferred income taxes result from the effect of transactions that are recognized in different periods for financial and tax reporting purposes. The Company has recorded no deferred tax assets or liabilities as of December 31, 2007, since nearly all differences in tax basis and financial statement carrying values are permanent differences.

 
-51-
 

Restrictions on Transfer of Assets Out of the PRC
 
Dividend payments by Shaanxi Tianren and its subsidiaries are limited by certain statutory regulations in the PRC. No dividends may be paid by Shaanxi Tianren without first receiving prior approval from the Foreign Currency Exchange Management Bureau. Dividend payments are restricted to 85% of profits, after tax.
 
Minority Interest in Subsidiary
 
Minority interest represents the minority stockholders’ proportionate share of 1% of the equity of Shaanxi Tianren and 8.85% of the equity of Xi’an Tianren.
 
Accounting Treatment of the February 26, 2008 Private Placement
 
The Company has issued shares and put them into escrow to protect the investor group from a decline in value should the Company not meet certain income targets. If the Company fails to achieve the income targets, the Make Good Escrow Shares will be released to the investors. Since the investors have no relationship to the Company other than as Investors, no compensation cost will be recognized. If the Company achieves the income targets, the Make Good Escrow Shares will be canceled, resulting in no income or expense recognition. During the time the Make Good Escrow Shares are outstanding they will be accounted for as contingently issuable shares in determining the EPS denominator in accordance with SFAS 128.
 
Liquidated damages potentially payable by the Company under the Stock Purchase Agreement and the Registration Rights Agreement will be accounted for in accordance with FSP EITF 00-19-2. Estimated damages at the time of closing will be recorded as a liability and deducted from additional paid-in capital as costs of issuance. Estimated damages determined later pursuant to the criteria for SFAS 5 will be recorded as a liability and deducted from operating income.

 
-52-
 

 
Overview of the Business
 
Products
 
Shaanxi Tianren, with its subsidiaries and branches, is engaged in the business of research and development, production and sales of special concentrated fruit juice, fast-frozen and freeze-dried fruits and vegetables and fruit juice drinks.
 
Certain information concerning our operations since January 1, 2005 is set forth in the following table:
 
Unit: USD
 
Period
  
Operating Revenue
  
Cost of Sales
  
Operating Profit
  
                     
Calendar Year 2007
    
29,361,941
    
18,467,045
    
9,018,440
  
                     
Calendar Year 2006
    
17,427,204
    
10,105,327
    
6,251,907
  
                     
Calendar Year 2005
    
7,027,889
    
4,471,432
    
1,619,163
  
 
There are two general categories of fruit and vegetable juices available in the market. One is fresh juice that is canned directly after filtering and sterilization upon being squeezed out of fresh fruits or vegetables. The other general category is juice drinks made out of concentrated fruits and vegetable juices. Concentrated fruit and vegetable juices are produced through pressing, filtering, sterilization and evaporation of fresh fruits or vegetables. It is used as the base material or ingredient for products such as drinks, fruit jams and fruit wines, etc. Concentrated juices are not drinkable. Instead, they are used as a basic ingredient for manufacturing juice drinks and as an additive to fruit wine and fruit jam, cosmetics and medicines.
 
For Shaanxi Tianren, the period between each August through February or March is our squeeze season when fresh fruits are available in the market and concentrated fruit juices are produced out of fresh fruits. We produce and sell both concentrated fruit juices and juice drinks. Compared to juice drinks, sales of our concentrated juice products generally result in a higher gross margin, averaging above 50%, while the gross margin for juice drinks is slightly above 20%. Therefore, our core products are concentrated apple, pear and kiwifruit juices and our production has strategically been focused on concentrated juice products. We also produce juice drinks and other derivative products, especially when we are not in squeeze season. Our wide range of product offerings and our ability to shift focus among products based on supply and demand in the market and seasonal factors help us to diversify our operational risks and supplement our revenue generation.
 
Our main products include concentrated apple juice, concentrated pear juice, concentrated kiwifruit puree, fruit juice drinks, fresh fruits and organic fresh fruits.
 
Shaanxi Tianren is also engaged in the research and development, production and sales of concentrated vegetable juice, fruit sugar, fruit pectin, fast-frozen and freeze-dried fruit and vegetable, dehydrated fruit and vegetable, fruit and vegetable juice drinks, fruit vinegar and organic food; storing and sales of fresh fruit products and vegetable; deep processing and technological research of organic agricultural and fruit industry.
 
At present, the raw material processing capability of Shaanxi Tianren is 70 tons/hour and our annual yield of all kinds of concentrated fruit juice is 50,000 tons.

 
-53-
 

 
Certain information concerning our sales of various products since January 1, 2005 is set forth in the following table:
 
   
2007
  
2006
  
2005
  
Products
  
Amount (tons)
  
Proportion
  
Amount (tons)
  
Proportion
  
Amount (tons)
  
Proportion
  
Apple Clear Juice
    
7,186,847
    
24.48
%
  
2,119,655
    
12.16
%
  
4,466,050
    
63.55
%
Pear Clear Juice
    
11,184,212
    
38.09
%
  
4,983,145
    
28.59
%
  
2,561,839
    
36.45
%
Kiwifruit Virgin Puree
    
590,912
    
2.01
%
  
1,665,754
    
9.57
%
  
—
      
%
Concentrated Kiwifruit Puree
    
5,277,961
    
17.98
%
  
2,090,336
    
11.99
%
  
—
      
%
Others
    
5,122,009
    
17.44
%
  
6,568,314
    
37.69
%
  
—
      
%
Total
    
29,361,941
    
100
%
  
17,427,204
    
100
%
  
7,027,889
    
100
%
 
Organizational Structure
 
The following table contains certain information concerning companies owned directly or indirectly by Shaanxi Tianren as of June 27, 2008.
 
No.
  
Company Name
  
Incorporated
  
Main Business
  
Stockholders
                 
1
  
Xi’an Tianren
  
12/23/2002
  
kiwifruit juice production and sales
  
Shaanxi Tianren 91.15%;
       
Xi’an Qin Mei Food Co., Ltd. 8.85%
                 
2
  
Jingyang subsidiary
  
9/26/2006
  
concentrated pear juice process and sales
  
Shaanxi Tianren 100%
                 
3
  
Zhouzhi subsidiary
  
5/6/ 2003
  
kiwi juice production and sales
  
Xi’an Tianren100%
                 
4
  
Huludao Wonder subsidiary
  
06/10/ 2007
  
concentrated apple juice process and sales
  
Shaanxi Tianren100%
 
Seasonality
 
Our business experiences mild seasonal effects as sales of our products are generally higher during the squeezing season from August through February or March of the following year. Sales of our products during the months from March through July generally tend to be lower due to a shortage of raw material of fresh fruits and a lower level of production activity. As a result, our results of operations for the third quarter and fourth quarter are generally stronger than those for our first quarter and second quarter. However, we are trying to diversify our products and prolong our squeezing season. There are also sales from inventory during the non-squeezing season. In 2008, we started our squeezing season in July with the early initiation of machine maintenance.
 
Industry and Principal Markets
 
Global Market
 
The fruit and vegetable juice processing industry is an emerging industry that came into being at the end of the 19th century. Due to the natural and healthy quality of fruit and vegetable juice drinks in recent years the consumption of such products has continued to grow and sales of pure fruit and vegetable juice and fruit and vegetable juice drinks have increased rapidly.

 
-54-
 

In 2006, according to Chengdu Lan Xin Information & Tech Co., as published on its TJKX.com website, global sales of fruit juice and nectars were more than 37 billion liters, an increase of approximately 7 billion over sales in 2000. According to China Chamber of Commerce for Import & Export of Foodstuffs, as published on its Chinajuice.org website, in 2010 the global sales of fruit juice and vegetable juice will reach 53 billion litters. North America and Europe are the main markets for fruit juice, where the sales of fruit juice account for approximately 60% of total beverage consumption.
 
According to the data publicized by the United States Department of Agriculture, in the marketing season (July to June for northern hemisphere countries) of 2006/2007, world apple juice production was approximately 1.5 million metric tons.
 
The countries with the current largest demand for concentrated apple juice include the United States, EU members, Japan and Russia.
 
 
1.
The United States is the largest concentrated apple juice consuming country in the world, and the physical volume of trade of concentrated apple juice in the United States accounted for about 35% of the world’s total in 2006. The market in the United States is the biggest potential market for the enterprises of China. Concentrated apple juice from China accounted for approximately 47.7% of total consumption of concentrated apple juice in the United States in 2005.
     
 
2.
The European market is another important market for concentrated apple juice. In 2005, 39% of concentrated apple juice consumed in the European market was from China.
 
The processing and export of concentrated apple juice, concentrated pear juice and concentrated kiwifruit puree are now the major operational fields of the Chinese concentrated fruit and vegetable juice industry.
 
China Market
 
China is a country with a large population, but the consumption of fruit juice is relatively very low, with annual per capita consumption of no more than 1 kilogram, which only accounts for 10% of total world consumption. If calculated based on annual world consumption rates, China’s market capacity for fruit juice beverages would be 9.1 million tons, indicating that there is a great potential market for the marketing of fruit juice beverages in China.
 
In China, the output of fruit juice and drinks nationwide was approximately 4,816,824 tons in 2004, an increase of 27.95% compared with that in 2003, and output increased by 29.17 % to 6,000,000 tons in 2005. From January to October 2006, output was approximately 7,196,692 tons, an increase of 27.96% compared with that of the first 10 months of 2005.
 
Shaanxi Tianren is located in Shaanxi Province. In 2006, the export volume of concentrated apple juice by Shaanxi Province was 2,910,000 tons with a value of $212 million, accounting for 44.9% and 46.3% of the total export volume and value, respectively, of concentrated apple juice from all of the PRC. At present, the output, output value and export volume of concentrated juice of Shaanxi Province all rank first among other provinces and cities in China.
 
Marketing
 
Only those Chinese companies, such as Shaanxi Tianren, which maintain certain standards set up by the PRC government, have been granted a certificate which gives them the right to directly sell their products to foreign customers. The certificate is issued by the Commercial Department of China.  More than 70 percent of our products are directly and indirectly exported. One export channel is via distributors with good credit, and the other is the direct sale to end-users. In its main export markets (the U.S., Europe and Middle East), Shaanxi Tianren has stable distributors and end-users.
 
Shaanxi Tianren uses the following marketing methods: directly marketing with foreign businesses via our sales department; attendance at various international farm and sideline products sales exhibitions, at which we contact clients from abroad to sell to them directly; and sales made through our trade websites.
 
Sales of fruit juice products are mainly made in Chinese markets. Most of the products are sold through provincial level, city level and county level agents. The Company also sells directly to hotels, supermarkets and similar outlets.
 
Our sales team is divided into teams focusing on the sale of concentrated fruit juice and its derivative products and teams focusing on the sale of fruit juice products.
 
Our international trade department, which has 13 marketing personnel, is responsible for our sales of concentrated fruit juice and its derivative products.
 
Our sale of fruit juice is conducted by a team of 28 personnel employed by our subsidiary, Xi’an Tianren.
 
Our target markets of kiwifruit pulp, kiwifruit concentrated pulp and kiwifruit concentrated juice are mainly in Europe, Southeast Asia, South Korea, Japan, the Middle East, mainland China and Taiwan. Our main target markets are concentrated in mainland China, Taiwan and the Middle East. Export volume to other markets is small.
 
Our target markets of concentrated apple juice and pear juice are in North America (especially in the U.S.), Europe and the Middle East.
 
 
1.
North American market
 
The U.S. market is a highly mature market with demand for concentrated apple juice, and its demand increases year by year. Since prices in the North American market are higher than in the European market, the U.S. market is always preferred by manufacturers producing concentrated apple juice. Shaanxi Tianren started to export to North America in 2004. We have increased our export volume to the U.S. year by year since then and the North American market has become one of our biggest target markets.
 
-55-
 
2.
European market
 
The European market has stable customer groups, complete requirements for product quality standards and authoritative organizations for concentrated fruit juice. In Europe, concentrated apple juice is used for producing beverages and fruit wines.
 
The European market has always been our main target market since Shaanxi Tianren incorporated. More than half of our products are exported to Europe.
 
Raw Materials and Suppliers
 
Our raw materials include:
 
 
•
Various fresh fruits, the main raw materials for the processing of fruit juice, which are mainly provided by local peasants;
 
 
•
Packing barrels, pectic enzyme and amylase, etc. and auxiliary power fuels and sources such as coal, electricity and water.
 
We purchase raw materials at local markets and by fruit growers delivering directly to our plants. The supply of our raw materials is highly fragmented. Because the prices of raw fruits change frequently, processing enterprises of concentrated fruit juice generally do not enter into fruit and vegetable purchasing agreements with providers.
 
Fresh fruits are the fundamental raw materials needed for the production of our products and the purchase price of fresh fruits represents over 65% of the production cost of Shaanxi Tianren. The adequate and continuous supply of fresh fruits constitutes a necessary condition for the current and future continuous expansion of Shaanxi Tianren. Shaanxi Tianren implements a plant plus farmer raw material purchasing pattern, whereby the plant assigns its purchasing staff to build purchasing centers in the areas rich in raw material resources so as to shorten the distance and provide convenience for farmers to directly deliver the raw material fruits to the plant. The quantity of the raw material fruits needed by us for production depends on the yield of farmers, and the ability of our purchasing staff to organize farmers for supply.
 
After years of development and strategic deployment in the raw material production areas, Shaanxi Tianren’s processing bases are relatively near to the regional centers of our raw material suppliers. Shaanxi Tianren has established a relatively mature purchasing pattern that can cope with the yield and price changes of our raw materials.
 
The source fruits used by Shaanxi Tianren are kiwifruit, pears and apples.
 
Shaanxi Province is a large agricultural and fruit producing province with sufficient resources for our raw material needs. The main original production areas in the province for kiwifruit are Zhouzhi County and Mei County where the production of kiwifruit is about 600 thousand tons annually. This can completely meet our production requirements. Shaanxi is also the main pear producing province with adequate pear supply and high pear quality. The pear supply can completely meet our production requirements.
 
One of our factories is located in Liaoning Province, where high acid apples are plentiful. The high acid apple production in Liaoning Province can meet our production needs.
 
The following sets forth certain information concerning our purchases of fresh fruits since January 1, 2005:
 
Year
    
Fruit
    
Quantity (ton)
    
Average Price
(USD/ton)
    
Amount (USD)
Paid by Us
  
     
apple
    
46,199.773
    
40.53
    
1,872,439.92
  
2005
    
pear
    
32,049.834
    
26.7
    
855,651.14
  
     
kiwifruit
    
—
    
—
    
—
  
     
apple
    
18,273.146
    
42.06
    
768,640.07
  
2006
    
pear
    
85,404.389
    
25.2
    
2,151,818.80
  
     
kiwifruit
    
33,116.177
    
50.24
    
1,663,806.67
  
     
apple
    
57,304.20
    
124.97
    
7,161,513.36
  
2007
    
pear
    
120,662.51
    
40.58
    
4,896,849.49
  
     
kiwifruit
    
18,205.98
    
121.89
    
2,219,098.59
  
 
The supply of packing barrels, pectic enzyme and amylase, etc. is available through many suppliers. Tianren is not dependent on any supplier or group of suppliers. Our largest packing barrel supplier is Shaanxi Haomai Drum Co., Ltd., which accounted for 13% of our total purchases in 2006 and 5% of our total purchases in 2007. Another larger supplier is Xi’an Changlong Drum Co., Ltd., which accounted for 13% of our total purchases in 2006 and 2% in 2007.
 
 
 
-56-
 
Customers

 
The following table sets forth certain information concerning sales of our products since January 1, 2005 to our top five customers:
 
Year
  
Revenues (USD)
  
Percentage in Total
Revenues
  
2005
    
2,827,320
    
40.23
%
               
2006
    
9,933,506
    
57.00
%
               
2007
    
8,390,223
    
28.58
%

   
2007
  
2006
  
2005
  
   
Sum
(USD)
  
% of
Total
Revenue
  
Sum
(USD)
  
% of
Total
Revenue
  
Sum
(USD)
  
% of
Total
Revenue
  
Export Packers Co., Ltd.
    
2,606,396
    
8.88
%
  
—
    
—
    
—
    
—
  
Shaanxi Jiedong Trade Co., Ltd.
    
1,637,502
    
5.58
%
  
2,788,353
    
16
%
  
—
    
—
  
Dalian Jack Foods Trading Co., Ltd.
    
1,449,948
    
4.94
%
  
—
    
—
    
—
        
Golden Dragon Trading Gmbh
    
1,357,294
    
4.62
%
  
—
    
—
    
—
    
—
  
Yunan Export & Import Co., Ltd.
    
1,339,083
    
4.56
%
  
2,091,264
    
12
%
  
—
    
—
  
Shaanxi Zhongdian Export & Import Co., Ltd.
    
—
    
—
    
2,439,809
    
14
%
  
—
    
—
  
Ruifeng Company
    
—
    
—
    
—
    
—
    
  702,787
    
  10
  %
Shaanxi Xiguan Machinery Co., Ltd.
    
1,394,176
    
8
%
  
—
    
—
              
Tonglian International
    
—
    
—
    
1,219,904
    
7
%
  
—
    
—
  
Tongchan Lvse Beverage
    
—
    
—
    
—
    
—
    
666,244
    
9.48
  %
Xi’anyang Dingjian Company
    
—
    
—
    
—
    
—
    
553,095
    
7.87
  %
Tianwei Beverage Company
    
—
    
—
    
—
    
—
    
570,665
    
8.12
  %
Shaanxi Menglv Food Co., Ltd.
    
—
    
—
    
—
    
—
    
334,528
    
4.76
  %
Total
    
8,390,223
    
28.58
%
  
9,933,506
    
57
%
  
2,827,321
    
40.23
  %
Sales Revenue
    
29,361,941
    
—
    
17,427,204
    
—
    
7,027,889
    
—
  
 
During the normal course of business, we extend unsecured credit to our customers. Our credit terms for customers with good credit history are from 30 days to 90 days. For new customers, we usually require 100% advance payment for direct export sales. Our terms with our customers generally do not include length and supply requirements.

 
-57-
 

 
Competition
 
We believe that Shaanxi Tianren’s major competitors in the industry include the following companies:
 
Competitor
  
Market Share
     
Sdic Zhonglu Fruit Juice Co., Ltd.
  
Apple 17%
     
Yantainorth Andre (Group) Juice Co., Ltd.
  
Apple 18%
     
Shaanxi Hengxing Fruit Juice
  
Apple 22%
     
Shaanxi Haisheng Juice Holdings Co., Ltd.
  
Apple 25%
 
We believe that our advantages lie in our technology relating to the production of concentrated fruit juice of small breeds, including mulberry juice, kiwifruit juice and other types of juice with limited raw material and output. We can produce concentrated apple juice with 4%--8% acidity at relatively low cost. As all our factories are located near the production area of the raw material of fresh fruits, we believe that our transportation and storage costs are relatively lower than many of our competitors. At the same time, we believe we are a leader in the production of concentrated clear pear juice and can produce the highest quality products of concentrated clear pear juice in China.
 
Competitive Advantages
 
We believe that we have the following eight competitive advantages:
 
(1)
Raw Materials Control and Resources Advantages
 
China has the largest planting area of apples and kiwifruit in the world, and Shaanxi Province has the largest planting area of apples and kiwifruit in China. Shaanxi’s yield of kiwifruit accounts for about 50% of the total output of China. The yields of pomegranates, pears, strawberries, peaches and cherries are also very high in Shaanxi. Tianren has its own planting base of kiwifruit raw-material fruits, so it can carry out quality control at the source of production. Also, Shaanxi Tianren’s cost of product is relatively low. Our two concentrated apple juice bases in Liaoning Province are located in the largest production area of high acidity apples in China.
 
(2)
Advantages of Equipment and Technology
 
Our key equipment for each production factory has been purchased by us from top-ranking foreign equipment manufacturers such as Flottweg of Germany, ELPO of Italy, Belducci of Italy and Schmitt of Germany. The high performance of such processing equipment ensures the quality of product and the effectiveness of our cost control procedures.
 
Shaanxi Tianren has combined the new pressing technologies of “complete enzymolysis” and “several times enzymolysises and digestions” self-developed with advanced technologies such as “membrane filtration,” “resin absorption” and low-temperature reverse osmosis membrane concentration.
 
(3)            Processing Scale and Integration Advantages

 
-58-
 

At present, the raw material processing capability of Shaanxi Tianren is 70 tons/hour and our annual yield of all kinds of concentrated fruit juice is 50,000 tons. We use more than 110 machines in our production of fruit juice, including equipment for storage, mixing of ingredients, emulsification, fermentation, filtration, sterilization, concentration, CIP washing, liquid transmission, water softening and treatment, and other procedures. We operate 3 production lines for the processing of fruit juice. We also have 3 sewage disposal facilities conforming to the state discharge standards.
 
(4)            Advantages of Product Diversity and the Market Consumption Trend
 
Our products include concentrated pear juice, concentrated clear pear juice, concentrated kiwifruit fruit puree, fruit juice drinks and organic fresh fruit. Our diversified product lines help us compete in international markets and reduce risk. Due to their nutrition advantages and unique image and taste, the consumption of small breed fruits and their processed products are on the rise in the world.
 
(5)            Quality Advantages
 
Shaanxi Tianren pays much attention to the quality of its products. In order to accelerate the conversion to all-process control for the quality management, Shaanxi Tianren has established a quality security system, implementing Hazard Analysis Critical Control Point (“HACCP”) control and enacting and improving each administrative system strictly pursuant to the requirements of ISO9001. Shaanxi Tianren has earned ISO9001, HACCP and KOSHER certificates.
 
(6)            Advantages of Operation Team
 
Shaanxi Tianren has a business administration and technology developing team which is professional, highly educated and young, but with extensive experience in the industry and business management. Also, we have established a good relationship with several scientific research institutes, having more than 10 expert consultants.
 
(7)            Advantages of Developing Strategy of Enterprise
 
We plan to become a leading enterprise in the high-end modern special concentrated fruit juice, fast-frozen and freeze-dried fruit and vegetable industries. Our development strategy is to become the leader in the fruit juice drinks industry with large-scale production and to become a leading producer of high-end modern organic foods.
 
(8)            Policy Advantages
 
The PRC government’s agricultural industrialization policy supports our business. Shaanxi Tianren was awarded by the China Food Association as the National Excellent Leading Food Enterprise in the Food Industry of Year 2005 - 2006, and was recognized as the Hi-tech Enterprise in 2006. Xi’an Tianren, our subsidiary, was recognized by the municipal government of Xi’an as the First Agricultural Industrialization Operation Key Leading Enterprise. Shaanxi Tianren was awarded the status of a nationally recognized High and New Technology Enterprise in December 2006, which entitled Shaanxi Tianren to tax-free treatment for two years starting from 2007, and thereafter reduced income taxes at 50% of its regular income tax rate then effective from 2009 to 2010.
 
Intellectual Property
 
1.Patents
 
 
A.
Title: Device for breaking up and separating fruit peel
 
Patent Number: ZL200620078461.1
 
Date of Filing: Feb. 27, 2006 (Duration of the Patent: Ten Years)
 
Patent Grant Date: Apr. 11, 2007
 
Granting Unit: the State Intellectual Property Office of the People’s Republic of China
 
Summary: This utility model discloses a device for breaking up and separating fruit peel, comprising of a body case, a feed port and a discharge port located on and under the body case, respectively. This utility model breaks up fruit and then squeezes the pulp out of the fruit peel by round rollers, thereby separating pulp from the fruit peel. The traditional devices used by our competitors can break the black seeds of the kiwifruit, affect the purity of the resulting fruit juice and lower the amount of juice produced. We believe that our utility model improves the purity and quality of the fruit juice. In addition, the by-product of black seeds removed from the kiwifruit without breakage can be sold, which increases our gross margin for kiwifruit related products. This technique is unique to Shaanxi Tianren.
 
 
B.
Title: Device for removing the filth on fruit peel and fruit hair
 
Patent Number: ZL200620078461.1
 
Date of Filing: Feb. 27, 2006 (Duration of the Patent: Ten Years)
 
Date of Issuing Granted: Apr. 11, 2007
 
Granting Unit: the State Intellectual Property Office of the People’s Republic of China
 
-59-
Summary: This utility model discloses a device for removing material and fruit hair from the peel of kiwifruits. It also enables us to adjust our machines to the hardness and size of fresh kiwifruits. We believe that this utility model improves the purity and quality of our fruit juice.
 
We believe that our patented processes described above give us a competitive advantage resulting from the improved purity and quality of our products.
 
2. Trademark
 
Shaanxi Tianren registered the trademark of HEDETANG with the Trademark Bureau of the State Administration for Industry and Commerce on Nov. 4, 2005 in the following categories: Category 29, Category 30, Category 31, Category 32 and Category 5. The trademark expires on November 3, 2015 and can be extended upon expiration. Shaanxi Tianren has authorized all its subsidiaries to use this registered trademark for free on the related products.
 
The specific scope of application of the trademark is as follows:
 
Category 29: meat, fish, poultry and venison, meat juice, pickled, dried or cooked fruits and vegetables, jelly, jam, confect, eggs, milk and dairy products, edible oil and grease.
 
Category 30: coffee, tea, cocoa, sugar, rice, edible starch, sago, coffee substitutes, flour and cereal products, bread, pastry and candy, ice food, honey, syrup, compressed yeast, yeast powder, salt, mustard, vinegar, sauce (condiment), spice, drinking ice.
 
Category 31: agricultural, horticultural and forestry products and grains not included in other categories, live animals, fresh fruits and vegetables, seeds, natural plants and flowers, foodstuffs for animals, malt.
 
Category 32: beers, mineral and aerated waters and other non-alcoholic drinks, fruit drinks and fruit juices, syrups and other preparations for making beverages.
 
Category 5: pharmaceutical and veterinary preparations, sanitary preparations for medical purposes, dietetic substances adapted for medical use, food for babies, plasters, materials for dressings, material for stopping teeth, dental wax, disinfectants, preparations for destroying vermin, fungicides and herbicides.
 
Costs of Environmental Compliance
 
Shaanxi Tianren is subject to PRC regulations regarding sewage disposition. Under the regulations issued by P.R.C. State Environmental Protection Administration (the “SEPA”), discharged sewage must meet the following standards: PH between 6-9 mg/L, Chemical Oxygen Demand under 100 mg/L, Ammonia Nitrogen under 15 mg/L, Biochemical Oxygen Demand under 20 mg/L and Suspended Solids under 70 mg/L.
 
To satisfy the SEPA standards, in 2006 Shaanxi Tianren invested an aggregate of $1,342,067 to build 2 sewage disposal projects as well as obtain a series of monitors to control water quality, including a Chemical Oxygen Demand on-line analyzer, an Ultrasonic Open-channel Flow meter, a PH meter and Portable Dissolve Oxygen Meters. Shaanxi Tianren believes that it is in compliance with the SEPA standards.
 
Employees
 
As of June 27, 2008, Shaanxi Tianren had 369 full-time employees and 95 part-time employees. Of that amount, 47 are in administration, 22 in finance, 41 in research and development, 290 in production and 64 in marketing and sales.
 
Research and Development
 
Shaanxi Tianren has established an R & D institution with nearly 40 R&D personnel. Shaanxi Tianren also from time to time retains external experts and research institutions.
 
We believe that through continuous investment in research and development, our product quality is always among the leaders in the industry and our market share continues to increase. Our total R & D investment was about $1,027,350 over the past four years.
 
The following table discloses the amounts of our technology development investment over the past four years.
 
2004
2005
2006
2007
Total
$70,079
$126,391
$358,575
$472,305
$1,027,350
 
Shaanxi Tianren currently owns 5 special production technologies, including technologies relating to the production of kiwifruit pulp, kiwifruit concentrated pulp, concentrated apple juice, concentrated pear juice and concentrated mulberry juice. Shaanxi Tianren has also developed new production processes for fruit juice products such as kiwifruit juice, guava juice and strawberry juice. Our whole new pulp and juice production technology and process consist of methods for membrane filtration, resin decolonization, hair removal, seed removal and grinding pulp into juice. The Flow-Through Capacitor (“FTC”) membrane reverse osmosis concentration and composite biological enzymolysis technology is for clarification of pulp juice. We believe that these are leading technologies for our industry.
 
New Products Under Development
 
We are conducting research on producing kiwifruit vinegar using submerged fermentation technology. Submerged fermentation technology can help to preserve kiwifruit polysaccharides and other nutrients to the greatest extent in the process of producing kiwifruit vinegar.

 
-60-
 

Manufacturing Process
 
Our automated production line and strict quality control system ensures consistent high quality.
 
The following summarizes the production process for concentrated fruit and vegetable juice.
 
 
At present, our raw material processing capability is 70 tons/hour and our annual yield of all kinds of concentrated fruit juice is 50,000 tons.
 
Inventory
 
Due to the characteristics of seasonal production, we have many finished products and semi-finished products at the end of each year, which have a significant impact on the calculation of our inventory turnover rate. Inventories are stated at the lower of cost, determined on a weighted average basis, and net realizable value. Work-in-progress and finished goods are comprised of direct material, direct labor and an attributable portion of manufacturing overhead. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose of finished products.
 
Government Regulation
 
Our products and services are subject to regulation by governmental agencies in the PRC and Shaanxi Province. Business and company registrations, along with the products, are certified on a regular basis and must be in compliance with the laws and regulations of the PRC and provincial and local governments and industry agencies, which are controlled and monitored through the issuance of licenses. Our licenses include an operating license which enables us to sell packaged food such as concentrated fruit and vegetable juice, fruit sugar, fruit pectin, fast-frozen and freeze-dried fruits and vegetables, dehydrated fruits and vegetables, fruit and vegetable juice drinks, fruit vinegar and organic food. The registration No. is 610100400000601.
 
 
Principal Office and Manufacturing Facilities
 
Our principal executive offices are located at 16F, National Development Bank Tower, No.2 Gaoxin 1st Road, Hi-Tech Industrial Zone, Xi’an, Shaanxi Province, PRC 710065, and our telephone number is 011-86-29-88386415. The area of our office is approximately 1,400 square meters. We lease such offices from Zhonghai Trust Co., Ltd. under a lease dated June 23, 2008, for a one-year term commencing July 1, 2008 at a total annual rental of $110,219.

 
-61-
 

We also own three factories through our subsidiaries. One is a factory located at Sanqu Town, Jingyang County, Xianyang City, Shaanxi Province. The factory occupies an aggregate of approximately 34,476.04 square meters of land and contains a manufacturing facility. Another factory is located at Siqun Village, Mazhao Town, Zhouzhi County, Xi’an City, Shaanxi Province. That factory occupies an aggregate of approximately 57,934.83 square meters of land and contains a manufacturing facility. The third factory is located at Hujia Village, Gaotai Town, Suizhong County, Huludao, Liaoning Province.  The factory occupies an aggregate of approximately 86,325 square meters of land, factory buildings and machinery.
 
There is no private ownership of land in China. All land ownership is held by the government of the PRC, its agencies and collectives. Land use rights can be transferred upon approval by the land administrative authorities of the PRC (State Land Administration Bureau) upon payment of the required land transfer fee. We own the land use rights for the 34,476.04 square meters of land at Sanqu Town, which have a term of 49 years from 2007, and the 57,934.83 square meters of land at Siqun Village, which have a term of 41 years from 2007.
 
 
 
As of September 30, 2008, the only class of outstanding voting securities of the Company was the Company’s Common Stock, par value $.01 per share. The Company also has a class of Series B Convertible Preferred Stock, par value $.001 per share (“Series B Stock”), but the holders of such class do not have the right to vote in the election of directors and are thus not considered voting securities.
 
The following table sets forth certain information as of September 30, 2008 with respect to the beneficial ownership of our Common Stock by (i) any person or group owning more than 5% of each class of voting securities, (ii) each director, (iii) each executive officer named in the Summary Compensation Table in the section entitled “Executive Compensation” below and (iv) all executive officers and directors as a group. The number of outstanding shares of Common Stock and the number of shares of Common Stock used in calculating the percentage of Common Stock beneficially owned has been adjusted to give effect to (a) a 1-for-328.72898 reverse split of our outstanding Common Stock which became effective May 23, 2008 and (b) the automatic conversion of the 1,000,000 outstanding shares of Series A Convertible Preferred Stock, par value $.001 per share (“Series A Stock”)into an aggregate of 22,006,172 shares of Common Stock which occurred simultaneously with the consummation of the reverse stock split.

 
-62-
 

In determining the percentage of Common Stock beneficially owned by a person on September 30, 2008, we divided (a) the number of shares of Common Stock beneficially owned by such person, by (b) the sum of the total number of shares of Common Stock deemed outstanding on September 26, 2008, plus the number of shares of Common Stock beneficially owned by such person which were not outstanding, but which could be acquired by the person within 60 days after September 26, 2008 upon the exercise of warrants or the conversion of convertible securities.
 
Title of Class
  
Name and Address of Beneficial
Owners (1) (2)
  
Amount and Nature of
Beneficial Ownership
  
Percent of Class
  
Common Stock
  
Hongke Xue (3)
  
17,604,938
  
79.1
%
Common Stock
  
Lin Bai (4)
  
2,200,617
  
9.9
%
Common Stock
  
Sixiao An (5)
  
2,200,617
  
9.9
%
Common Stock
  
Yongke Xue
  
—
  
—
  
Common Stock
  
Spring Liu
  
—
  
—
  
Common Stock
  
Xiaoqin Yan
  
—
  
—
  
Common Stock
  
Guolin Wang
  
—
  
—
  
Common Stock
  
Robert B. Fields
  
—
  
—
  
Common Stock
  
Norman Ko
  
—
  
—
  
Common Stock
  
Barron Partners LP
730 Fifth Avenue, 9th Floor
New York, New York 10019
  
10,159,265
(6)
31.3
%
Common Stock
  
Joseph Emas (7)
1224 Washington Avenue
Miami Beach, Florida 33139
  
5,113
  
*
  
Common Stock
  
All officers and directors as a group
(six persons)
  
—
  
-
  
 
        *           Less than 1%
 
 
 
(1)
Pursuant to Rule 13d-3 under the Exchange Act, a person has beneficial ownership of any securities as to which such person, directly or indirectly, through any contract, arrangement, undertaking, relationship or otherwise has or shares voting power and/or investment power or as to which such person has the right to acquire such voting and/or investment power within 60 days.
 
 
(2)
Unless otherwise stated, each beneficial owner has sole power to vote and dispose of the shares and the address of such person is c/o the Company, at 16F, National Development Bank Tower, Gaoxin 2nd Road, Hi-Tech Industrial Zone, Xi’an, Shaanxi Province, PRC 710075.
 
 
(3)
Consists of 17,604,938 shares owned of record by Fancylight Limited, a British Virgin Islands company (“Fancylight”). Fancylight and Hongke Xue have entered into a Call Option Agreement pursuant to which Mr. Xue has the right to acquire all of such shares. Fancylight and Mr. Xue have also entered a Voting Trust Agreement, dated as of February 25, 2008 under which Mr. Xue has been appointed as voting trustee under a voting trust created with respect to all of such shares. Therefore, Mr. Xue may be deemed to be the sole beneficial owner of such shares.

 
-63-
 

 
 
(4)
Consists of 2,200,617 shares owned by China Shaanxi Tianren Organic Food Holding Company Limited, as attorney-in-fact for certain persons. China Shaanxi Tianren Organic Food Holding Company Limited (“Organic”) is a British Virgin Islands company. Organic and Lin Bai have entered into a Voting Trust and Escrow Agreement dated as of February 25, 2008 pursuant to which Lin Bai has been appointed as voting trustee under a voting trust created with respect to all of such shares. Therefore, Lin Bai may be deemed to be the sole beneficial owner of such shares.
 
 
(5)
Consists of 2,200,617shares owned by Winsun Limited, as attorney-in-fact for certain persons. Winsun Limited (“Winsun”) is a British Virgin Islands company. Winsun and Sixiao An have entered into a Voting Trust and Escrow Agreement dated as of February 25, 2008 pursuant to which Sixiao An has been appointed as voting trustee under a voting trust created with respect to all of such shares. Therefore, Sixiao An may be deemed to be the sole beneficial owner of such shares.
 
 
(6)
Consists of (a) 6,794,118 shares of Common Stock issuable upon exercise of warrants and (b) an aggregate of 3,365,147 shares of Common Stock issuable upon conversion of Series B Stock. The warrants held by Barron Partners LP became exercisable upon the effectiveness of a 1-for-328.72898 reverse stock split of the Company’s Common Stock on May 23, 2008, and the number of shares for which the warrants are exercisable and the exercise price of the warrants were not adjusted for such reverse stock split.
 
 
(7)
Consists of 5,000 shares of Common Stock issuable upon exercise of warrants which were issued on May 23, 2008. Joseph I. Emas is a principal of Joseph I. Emas Law Offices, which is the record owner of 113 shares of Common Stock. He was a director of the Company from February 22, 2008 until he resigned on April 7, 2008.
 
 
Transactions with Related Persons
 
During the year ended 2006, the Company made sales aggregating $109,910 to Xi’an Qinmei Food Co., Ltd., an entity which is an 8.85% shareholder of Xi’an Tianren. The Company also purchased an automobile from Yongke Xue, the Chief Executive Officer and Chairman of the Company, for a purchase price of $30,008. The sales were made at the same prices and on other terms no less favorable to the Company than it could obtain in arms length transactions.
 
Yongke Xue, the Chairman of the Board, and Chief Executive Officer of the Company, owns 80% of the equity interest of Shaanxi Hede Investment Management Co., Ltd. (“Hede”), a PRC company. Xiaoqin Yan, a director of Shaanxi Tianren, owns the remaining 20% of Hede.
 
On May 31, 2007, Huludao Wonder was acquired by Hede at the fair market price of RMB 48,250,000, which was based on a third party valuation. At the time Hede acquired Huludao Wonder, both Hede and Shaanxi Tianren intended that Huludao Wonder would be sold to Shaanxi Tianren after a one year holding period. The management of Shaanxi Tianren wanted an affiliate to run Huludao Wonder first to make sure there were no issues before it was conveyed to Shaanxi Tianren. Shaanxi Tianren participated significantly in the design of this purchase transaction, and the purchase price was agreed to by the Board of Shaanxi Tianren. The purchase agreement under which Hede acquired Huludao Wonder required that installments of the purchase price be paid as follows: RMB 10,000,000 on June 10, 2007; RMB 20,000,000 before September 2007; and RMB 18,250,000 before March 31, 2008. Immediately following the acquisition, Hede leased to Shaanxi Tianren all of the assets and facilities of Huludao Wonder under a Lease Agreement dated June 2, 2007 between Hede and Shaanxi Tianren (the “Huludao Lease”). The Huludao Lease was for a term of one year from July 1, 2007 to June 30, 2008. The monthly rent under the Huludao Lease was RMB 300,000 (approximately $42,367). Upon execution of the lease, Shaanxi Tianren paid Hede RMB 1.8 million, representing the first 6 months rent, and a refundable security deposit of RMB 1.2 million.
 
On June 5, 2007 Shaanxi Tianren loaned to Hede RMB 7 million (approximately $958,300 based on the exchange rate as of December 31, 2007) pursuant to a Loan Agreement entered into by the parties on June 5, 2007. The entire principal of the loan was due on June 5, 2008. The proceeds of such loan (as well an aggregate of RMB 3,000,000 received as a prepayment of rent and a security deposit on the Huludao Lease) were used by Hede to pay a portion of the purchase price for its acquisition of Huludao Wonder.
 
On August 1, 2007 Shaanxi Tianren loaned to Hede RMB 20 million (approximately $2,738,001 based on the exchange rate as of December 31, 2007) pursuant to a Loan Agreement entered into by the parties on such date. The loan was due on August 1, 2008. The loan agreement provides that no interest shall accrue on the outstanding amount of the loan, but if Hede does not pay the outstanding loan when due, then it shall be required to pay in addition to the principal of the loan liquidated damages at the rate of 2% of the loan amount per day. Before August 27, 2007, the total amount of RMB 20 million in cash was transferred to Hede.
 
In December 2007, Shaanxi Tianren made additional advances aggregating RMB 4,544,043 (approximately $622,080 based on the exchange rate as of December 31, 2007) to Hede. These advances were unsecured and bore no interest. The advances also had no fixed payment terms. The proceeds from these advances were transferred to the shareholders of Huludao Wonder directly on behalf of Hede for the purchase price of Huludao Wonder.
 
In January 2008, Shaanxi Tianren paid rental expense of RMB 11,038 (approximately $1,609 based on the exchange rate as of June 30, 2008) to the landlord of Hede’s office space on behalf of Hede.
 
-64-
In May 2008, Shaanxi Tianren paid to Hede an aggregate amount of RMB 1,500,000 (approximately $218,688 based on the exchange rate as of June 30, 2008) of rent for the period from January to May 2008 pursuant to the Huludao Lease.  In the same month, Shaanxi Tianren assumed Hede’s obligation of RMB 18,000,000 (approximately $2,624,251 based on the exchange rate of June 30, 2008) for the balance of the purchase price for Huludao Wonder.
 
On May 31, 2008, Shaanxi Tianren entered into a Stock Transfer Agreement with Hede. Under the terms of the Stock Transfer Agreement, Hede agreed to transfer all its stock ownership of Huludao Wonder to Shaanxi Tianren for a total price of RMB 48,250,000 (approximately $7,034,451 based on the exchange rate as of June 30, 2008). The sale was closed on June 10, 2008. As of May 31, 2008, Shaanxi Tianren had a related party receivable of RMB 48,929,272 from Hede, which was credited against the purchase price (so that Shaanxi Tianren did not pay any cash to Hede for the purchase) and the remaining balance of the loans and advances of RMB 679,272 (approximately $99,032 based on the exchange rate of June 30, 2008) to Hede was repaid to the Company on June 11, 2008.
 
On February 26, 2008, simultaneously with the consummation of the Share Exchange Agreement and Stock Purchase Agreement described herein, pursuant to an oral agreement with the Company and Barron Partners, the Company issued an aggregate of 615,147 shares of Series B Preferred Stock to Barron in exchange for the cancellation of (a) all indebtedness of the Company to Barron Partners under certain outstanding convertible promissory notes issued to Barron Partners during the period from September 30, 2004 to February 2008 to evidence working capital loans made by Barron Partners to the Company and (b) all liquidated damages payable to Barron Partners (including all amounts as well as any amounts which would become payable in the future as a result of continuing failures) as a result of the failure of the Company to have registered under the Securities Act for resale by Barron Partners the Common Stock of the Company issuable upon conversion of such convertible promissory notes under various registration rights agreements between the Company and Barron Partners entered into in connection with the foregoing loans.  The oral agreement was approved by the written consent of the then sole director of the Company in February 2008.
 
As of the date of this prospectus, Barron Partners beneficially owns 10,159,265 shares of the Company’s Common Stock (approximately 31.3% of the Common Stock) and is a selling stockholder herein.
 
The total amount of principal and accrued interest under all convertible promissory notes which were cancelled aggregated approximately $1,735,286 and the total amount of accrued liquidated damages which were cancelled aggregated approximately $3,320,132. All of the convertible promissory notes bore interest at the rate of 8% per annum and were convertible into shares of Common Stock at a conversion rate of one share of Common Stock for every $8.21822 of principal converted. The registration rights agreements provided for liquidated damages to accrue at the rate of 36% per annum of the note principal in the event that the registration statements to register the underlying shares were not declared effective by the required deadline.
 
The number of shares of Series B Stock which were issued to Barron Partners pursuant to the agreement was determined by dividing the aggregate indebtedness cancelled ($5,055,418) by $8.1822 per share (which was the rate at which one share of Common Stock was issuable for principal under the convertible promissory notes). In lieu of issuing Common Stock, the Company and Barron Partners agreed that Barron Partners would be issued Series B Stock (which upon consummation of the Reverse Split became convertible into Common Stock on a share for share basis).
 
The issuance of the Series B Preferred Stock was accomplished in reliance upon Section 4 (2) of the Securities Act. The Company is not obligated to register the resale of the 615,147 shares of Common Stock which are issuable upon conversion of the Series B Preferred Stock and the resale of such shares is not covered by this prospectus.
 
On February 4, 2008, before the Share Exchange Transaction, the Board of Directors of Xi’an Tianren declared a cash dividend of $2,899,855 to its former shareholders. Since Shaanxi Tianren holds a 91.15% interest in Xi’an Tianren, $2,643,218 was paid to Shaanxi Tianren and $256,637 was paid to its minority interest holders. On the same date, the Board of Directors of Shaanxi Tianren declared a cash dividend of $4,966,280 to its shareholders. Since Pacific holds a 99% interest in Shaanxi Tianren, $4,916,617 was paid to Pacific and $49,663 was paid to its minority interest holders. The inter-company dividend was eliminated in the consolidated statement. The dividend paid to minority interest holders was $306,300.
 
In May 2008, Pacific erroneously paid $4,916,617 to its former shareholders as the result of a dividend declaration in February 2008. The monies were then returned to the Company in June 2008. Because the recipients of the money were directors of the Company and the erroneous dividend payment has been treated as a loan for accounting purposes, the Company may have inadvertently violated Section 13(k) of the Exchange Act in connection with such erroneous dividend payment.
 
Review, Approval or Ratification of Transactions with Related Persons
 
    On September 30, 2008 the Board of Directors of the Company approved a Statement of Policies and Procedures with Respect to Related Party Transactions (the “Policy Statement”) under which the Audit Committee shall review the material facts of all Interested Transactions that require the Committee’s approval and either approve or disapprove of the entry of the Company into the Interested Transaction, subject to certain exceptions. If advance approval by the Audit Committee of an Interested Transaction is not feasible, then the Interested Transaction shall be considered and, if the Audit Committee determines it to be appropriate, ratified at the Committee’s next regularly scheduled meeting. In determining whether to approve or ratify an Interested Transaction, the Audit Committee will take into account, among other factors it deems appropriate, whether the Interested Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the Related Person’s interest in the transaction.

    No director shall participate in any discussion or approval of an Interested Transaction for which he or she is a Related Party, except that the director shall provide all material information concerning the Interested Transaction to the Committee.

    If an Interested Transaction will be ongoing, the Audit Committee may establish guidelines for the Company’s management to follow in its ongoing dealings with the Related Party. Thereafter, the Audit Committee, on at least an annual basis, shall review and assess ongoing relationships with the Related Party to see that they are in compliance with the Audit Committee’s guidelines and that the Interested Transaction remains appropriate.

    For purposes of the Policy Statement, an “Interested Transaction” is any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which (1) the aggregate amount involved will or may be expected to exceed $50,000 in any calendar year, (2) the Company is a participant, and (3) any Related Party has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10 percent beneficial owner of another entity).
-65-

    A “Related Party” is any (a) person who is or was (since the beginning of the last fiscal year for which the Company has filed a Form 10-K and proxy statement, even if he or she does not presently serve in that role) an executive officer, director or nominee for election as a director, (b) greater than 5 percent beneficial owner of the Company’s common stock, or (c) immediate family member of any of the foregoing. Immediate family member includes a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law and anyone residing in such person’s home (other than a tenant or employee).
 
Each of the following Interested Transactions shall be deemed to be pre-approved by the Audit Committee, even if the aggregate amount involved will exceed $50,000.

1.
  
Employment of executive officers. Any employment by the Company of an executive officer of the Company if:
 
 
a.
  
the related compensation is required to be reported in the Company’s proxy statement under Item 402 of the SEC’s compensation disclosure requirements (generally applicable to “named executive officers”); or
       
 
b.
  
the executive officer is not an immediate family member of another executive officer or director of the Company, the related compensation would be reported in the Company’s proxy statement under Item 402 of the SEC’s compensation disclosure requirements if the executive officer was a “named executive officer”, and the Company’s Compensation Committee approved (or recommended that the Board approve) such compensation.

2.
  
Director compensation. Any compensation paid to a director if the compensation is required to be reported in the Company’s proxy statement under Item 402 of the SEC’s compensation disclosure requirements.
3.
  
Certain transactions with other companies. Any transaction with another company at which a Related Person’s only relationship is as an employee (other than an executive officer),
 
   
director or beneficial owner of less than 10% of that company’s shares, if the aggregate amount involved does not exceed 2 percent of that company’s total annual revenues.
     
4.
  
Certain Company charitable contributions. Any charitable contribution, grant or endowment by the Company to a charitable organization, foundation or university at which a Related Person’s only relationship is as an employee (other than an executive officer) or a director, if the aggregate amount involved does not exceed the lesser of $50,000, or 2 percent of the charitable organization’s total annual receipts.
     
5.
  
Transactions where all shareholders receive proportional benefits. Any transaction where the Related Person’s interest arises solely from the ownership of the Company’s common stock and all holders of the Company’s common stock received the same benefit on a pro rata basis (e.g. dividends).
     
6.
  
Transactions involving competitive bids. Any transaction involving a Related Party where the rates or charges involved are determined by competitive bids.
     
7.
  
Regulated transactions. Any transaction with a Related Party involving the rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority.
     
8.
  
Certain banking-related services. Any transaction with a Related Party involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture, or similar services.


 
-66-


 
The following table sets forth as of June 27, 2008 the names, positions and ages of our current executive officers and directors. Our directors serve until the next annual meeting of shareholders or until their successors are elected and qualify. Our officers are elected by the Board of Directors and their terms of office are, except to the extent governed by an employment contract, at the discretion of the Board of Directors.
 
Name of Current Director
Age
Position(s) with the Company
Yongke Xue
42
Director, Chief Executive Officer
Spring Liu
35
Chief Financial Officer, Secretary
Xiaoqin Yan
30
Director
Guolin Wang
45
Director
Robert B. Fields
70
Director
Norman Ko
44
Director

 
Yongke Xue. Mr. Xue has been serving as our director since February 26, 2008 upon consummation of the transactions under the Agreement. Mr. Xue has served as the Director at Shaanxi Tianren Organic Food Co., Ltd. (“Shaanxi Tianren”) since December 2005. Mr. Xue served as the general manager of Shaanxi Hede Investment Management Co., Ltd. from December 2005 to June 2007. Prior to that, he served as the business director of the investment banking division of Hualong Securities Co., Ltd. from April 2001 to December 2005. He also acted as the Vice General Manager of Shaanxi Huaye Foods Co., Ltd. from July 1998 to March 2001. From July 1989 to June 1998, he worked at the Northwestern Materials Bureau of the PLA General Logistics Department. Mr. Xue graduated from Xi’an Jiaotong University with an MBA in 2000. Mr. Xue graduated from National University of Defense Technology in July of 1989 and he majored in Metal Material & Heat Treatment and received a Bachelor’s Degree.
 
Spring Liu. Ms. Liu has been serving as our CFO since April 14, 2008 and our Secretary since April 25, 2008. Ms. Liu passed all sections of the Uniform Certified Public Accountants Examination in California in March of 2006. Ms. Liu earned a Bachelor of Arts in English degree from the Xi’an Foreign Languages University, China in 1996, and a Bachelor of Science Degree in Accounting, California in 2004. Prior to her appointment as Chief Financial Officer, Ms. Spring Liu served at Trio-Tech International from February 2003 to April May 2008 in the following positions: Accountant, Accounting Manager, Financial Reporting Manager, Assistant Corporate Secretary and Corporate Secretary. Her most recent position with Trio-Tech International was Corporate Secretary and Financial Reporting Manager. Ms. Spring Liu is experienced in corporate management and SEC reporting. In addition, she is familiar with the compliance of the U.S. GAAP standards to foreign subsidiaries’ accounting records, and is proficient in adopting strong internal control methods according to the requirements of the Sarbanes-Oxley Act of 2002.
 
Xiaoqin Yan. Ms. Yan has been serving as our director since April 7, 2008. Ms. Yan is the Director of Shaanxi Tianren and has been with the Company since January 2006. From June 2005 to December 2005 Ms. Yan was not employed. From March 2004 to June 2005, Ms. Yan held the position of Manager of Human Resources of Express Worldwide Ltd. Ms. Yan served as the Manager of Logistics of Tianjin Dingyuan International Foods Co., Ltd. from October 1999 to March 2004. Ms. Yan graduated from the Air Force University of Engineering and majored in Computer Technology. In July of 2006 she graduated from PLA Military School and received a Bachelor’s Degree in Business Management.
 
Guolin Wang. Mr. Wang has been serving as our director since April 7, 2008. Mr. Wang has served as the Director of Shaanxi Tianren since October 2005. Since 1996 he has been a professor at the Finance Department of the Management School and the Economics and Finance School of Xi’an Jiaotong University. He previously served as the Director and Chairman of Xi’an Changtian Environmental Protection Engineering Co., Ltd. from February 2006 to June 2007. Mr. Wang acted as the head of the Management School Graduate Office and Chinese-Singapore Management Doctor Center Office of Xi’an Jiaotong University from 1988 to 1996. Mr. Wang graduated from Xi’an Jiaotong University in July 1983. He majored in Electronics & Telecommunication and attained a Bachelor’s Degree in Science. In July 1983, he attained a Master’s Degree and majored in Management Science and Engineering. Then, he graduated from the University’s School of Economics & Finance in 2006. He majored in Management Science and Engineering and received a Doctor’s Degree.
 
Robert B. Fields. Mr. Fields has been serving as our director since April 25, 2008. Mr. Fields has been a Chairman and Executive Advisor of Actforex, Inc., a global management service provider, since 2001. Mr. Fields currently serves on several boards including: Reality Gap, Inc., Dorado Exploration, Inc., ActForex, Inc., Liberty Star Uranium & Metals Corp. (LBSU.OB) and Statmon Technologies, Inc.(STCA.OB)
 
Norman Ko. Mr. Ko has been serving as our director and Chairman of the Audit Committee since April 25, 2008. Mr. Ko has been a Partner of Smith Mandel & Associates, LLP (“Smith Mandel”), a certified public accountants firm in Los Angeles, since July 2007. He was an Assurance Manager of Smith Mandel for more than five years before he was appointed as a Partner of that company. Mr. Ko earned a Master of Business Administration from the University of San Francisco in 1989, and a Bachelor of Science Degree from York University, Canada in 1987. He is a member of the American Institute of Certified Public Accountants and a member of the California Society of Certified Public Accountants.
 
Committees of the Board of Directors
 
On April 25, 2008, the Company established an Audit Committee and Compensation Committee of its Board of Directors. Norman Ko, Robert B. Fields and director Guolin Wang were elected as members of the Audit Committee and Norman Ko was elected as the Chairman of the Audit Committee. Norman Ko, director Guolin Wang and Chief Executive Yongke Xue were elected as members of the Compensation Committee.
 
The Company believes that Guolin Wang, Norman Ko and Robert B. Fields are independent directors within the meaning of such term as defined in Section 803 of the American Stock Exchange Company Guide.
-67-
 
 
Compensation of Directors
 
The Company’s directors did not receive compensation for their service on the Board of Directors for the fiscal years ended December 31, 2006 and 2007.
 
Each of our independent directors will be paid an annual fee of $25,000, which includes each board meeting or committee meeting attended. We will also reimburse our directors for actual, reasonable and customary expenses incurred in connection with the performance of their duties as board members. The Chairman of our Audit Committee, which shall be served by an “audit committee financial expert” as defined in Item 407(d) of Regulation S-K, will also be paid an annual fee of $25,000, which includes each audit committee meeting attended.
 
Compensation of Officers
 
The Company’s executive officers do not receive any compensation for serving as executive officer of the Company or Pacific, but, except for the Chief Executive Officer, are compensated by and through Shaanxi Tianren. The Company’s Chief Executive Officer, Yongke Xue, has not received any compensation from the Company or any of its subsidiaries for his services to the Company and its subsidiaries in the past two years. The following table sets forth information concerning cash and non-cash compensation paid by Shaanxi Tianren to the Company’s Chief Executive Officer for each of the two fiscal years ended December 31, 2007 and December 31, 2006. No executive officer of the Company, Pacific or Shaanxi Tianren received compensation in excess of $100,000 for either of those two years.
 
Name and
Principal
Position
  
Year
Ended
  
Salary ($)
  
Bonus ($)
  
Stock Awards
  
Option Awards
  
Non-Equity Incentive Plan Compensation ($)
  
Non-Qualified Deferred Compensation Earnings ($)
  
All Other Compensation ($)
  
Total ($)
  
Yongke Xue
  
12/31/2006
  
$
0.00
  
—
  
—
  
—
  
—
  
—
  
—
  
$
0.00
  
CEO
  
12/31/2007
  
$
0.00
  
—
  
—
  
—
  
—
  
—
  
—
  
$
0.00
  
 
Option and Warrant Grants in Last Fiscal Year
 
No options or warrants were granted in the Company’s last fiscal year (2007) and no options or warrants are held by the Company’s Executive Officers.
 
Aggregate Option and Warrant Exercises in the Last Fiscal Year and Fiscal Year-End Option and Warrant Values
 
The Company’s Executive Officers own no options or warrants of the Company.


 
Authorized Capital Stock. Our authorized capital stock consists of: (i) 100,000,000 shares of Common Stock, and (ii) 10,000,000 shares of Preferred Stock of which 1,000,000 shares of Series A Stock and 7,000,000 shares of Series B Stock have been designated.
 
The following is a summary of the material terms of our capital stock. This summary is subject to and is qualified in its entirety by the Company’s Amended and Restated Articles of Incorporation, Certificates of Designation of the Series B Stock, By-laws and the applicable provisions of Florida law.
 
Common Stock
 
Holders of shares of Common Stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Except if a greater plurality is required by the express requirements of law or the Company’s Articles of Incorporation, the affirmative vote of a majority of the shares of voting stock represented at a meeting of stockholders at which there shall be a quorum present shall be required to authorize all matters to be voted upon by the stockholders of the Company. According to our charter documents, holders of our Common Stock do not have preemptive rights, and are not entitled to cumulative voting rights. There are no conversion or redemption rights or sinking funds provided for our stockholders. Shares of Common Stock share ratably in dividends, if any, as may be declared from time to time by the Board of Directors in its discretion from funds legally available for distribution as dividends. In the event of a liquidation, dissolution or winding up of the Company, the holders of Common Stock are entitled to share pro rata all assets remaining after payment in full of all liabilities. All of the outstanding shares of Common Stock are fully paid and non-assessable.
-68-
 
Series B Stock
 
In connection with the Share Exchange, we designated 7,000,000 shares of Series B Stock out of our total authorized number of 10,000,000 shares of Preferred Stock, par value $0.001 per share. The rights and preferences of the Series B Preferred Stock are set forth in the Certificate of Designations, Preferences and Rights of Series B Convertible Preferred Stock, which we filed with the Secretary of State of Florida on February 22, 2008. The following is a summary of the rights and preferences:
 
Voting Rights. The Series B Stock shall have no voting rights, except as required by Florida law. However, so long as any shares of Series B Stock are outstanding, we cannot, without the affirmative approval of the holders of 75% of the shares of the Series B Stock then outstanding:
 
(a) alter or change adversely the powers, preferences or rights given to the Series B Stock or alter or amend the Certificate of Designations of the Series B Stock;
 
(b) authorize or create any class of stock (other than Series A Stock) ranking as to dividends or distribution of assets upon a liquidation senior to or otherwise pari passu with the Series B Stock, or any series of preferred stock possessing greater voting rights or the right to convert at a more favorable price than the Series B Stock;
 
(c) amend our certificate of incorporation or other charter documents in breach of any of the provisions hereof;
 
(d) increase the authorized number of shares of Series B Stock or the number of authorized shares of Preferred Stock.
 
Liquidation Preference. On liquidation the holders are entitled to receive $1.20 per share (out of available assets) before any distribution or payment can be made to the holders of any junior securities.

Conversion at Option of Holder. Upon effectiveness of the Reverse Split on May 23, 2008, each share of Series B Stock is convertible at any time into one share of Common Stock at the option of the holder. If the conversion price (initially $1.20) is adjusted, the conversion ratio will likewise be adjusted and the new conversion ratio will be determined by multiplying the conversion ratio in effect by a fraction, the numerator of which is the conversion price in effect before the adjustment and the denominator of which is the new conversion price.
 
Automatic Conversion on Change of Control. In the event of a “change of control,” the shares of Series B Stock will be automatically converted into Common Stock. A “change in control” means a consolidation or merger of the Company with or into another company or entity in which we are not the surviving entity or the sale of all or substantially all of our assets to another company or entity not controlled by our then existing stockholders in a transaction or series of transactions.
 
4.9% Beneficial Ownership Limitation. Except in certain circumstances, the right of the holder to convert the Series B Stock is subject to the 4.9% limitation, with the result we shall not effect any conversion of the Series B Stock, and the holder has no right to convert any portion of the Series Stock, to the extent that after giving effect to such conversion, the holder (together with the holder’s affiliates) would beneficially own in excess of 4.9% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion. Beneficial ownership is determined in accordance with Section 13(d) of the Exchange Act, and Regulation 13d-3 thereunder. The 4.9% limitation may not be waived or amended.
 
Liquidated Damages for Failing to Timely Deliver Certificates. If we fail to deliver the appropriate stock certificates within three trading days of the conversion date, we are required to pay the holder, in cash, liquidated damages the amount by which (x) the holder’s total purchase price (including brokerage commissions, if any) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that such holder was entitled to receive from the conversion at issue, multiplied by (2) the price at which the sell order giving rise to such purchase obligation was executed.
 
-69-
Certain Adjustments
 
Stock Dividends and Stock Splits. Appropriate adjustments will be made to the conversion ratio in the event of a stock dividend, stock distribution, stock split or reverse stock split or reclassification with respect to the outstanding shares of Common Stock.
 
Price Adjustment; Full Ratchet. From and after February 26, 2008 and until such time as the investors hold less than 20% of the Series B Stock, except for certain exempt issuances not to exceed 5% of the outstanding shares of Common Stock for every two year period, certain issuances as to which price adjustment has already been made, in the event we issue Common Stock at a price, or issue warrants, options, convertible debt or equity securities with an exercise price per share or conversion price which is less than the conversion price then in effect, then the conversion price will be reduced, concurrently with such issue or sale, to such lower price.
 
Subsequent Transactions. For so long as any investor holds any of the Series B Stock, we are prohibited from effecting or entering into an agreement to effect any transactions involving a “Variable Rate Transaction” or an “MFN Transaction.”
 
Subsequent Rights Offerings. We are prohibited from, at any time while the Series B Stock is outstanding, issuing rights, options or warrants to holders of Common Stock entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the then applicable conversion price.
 
Pro Rata Distributions. If we distribute to the holders of Common Stock evidences of its indebtedness, assets, rights or warrants to subscribe for or purchase any security, then in each case the conversion price shall be determined by multiplying the conversion price by a fraction the numerator of which is the VWAP minus the then fair market value at such record date of the portion of the assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith and the denominator of which is the VWAP on the record date.

Fundamental Transaction. If we effect a merger, sell all or substantially all of our assets, any tender offer or exchange offer is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or we effect any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (each, a “fundamental transaction”), then on subsequent conversion of the Series B Preferred Stock, the holder has the right to receive, for each share of Common Stock that would have been issuable on such conversion absent such fundamental transaction, the same kind and amount of securities, cash or property as the holder would have been entitled to receive on the occurrence of the fundamental transaction as if the holder had been, immediately prior to such fundamental transaction, the holder of Common Stock.
 
Undesignated Preferred Stock
 
    Our Board of Directors is authorized under our Amended and Restated Articles of Incorporation to provide for the issuance of 10,000,000 shares of preferred stock. The preferred stock may be issued from time to time in one or more series. The Board of Directors has designated 7,000,000 of such shares as Series B Preferred Stock, the terms of which are summarized above. The Board of Directors has also designated 1,000,000 of such shares as Series A Preferred Stock. No shares of Series A Stock are outstanding as of September 30, 2008.  An aggregate of 2,000,000 additional shares of authorized preferred stock may still be designated by the Company’s Board of Directors by filing a certificate of designations under Florida law, to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof without any further vote or action by the stockholders. Any shares of preferred stock so issued are likely to have priority over our Common Stock with respect to dividend or liquidation rights.
 
The issuance of shares of preferred stock, or the issuance of rights to purchase such shares, could be used to discourage an unsolicited acquisition proposal. For instance, the issuance of a series of preferred stock might impede a business combination by including class voting rights that would enable the holder to block such a transaction, or facilitate a business combination by including voting rights that would provide a required percentage vote of the stockholders. In addition, under certain circumstances, the issuance of preferred stock could adversely affect the voting power of the holders of the Common Stock. Although the Board of Directors is required to make any determination to issue such stock based on its judgment as to the best interests of our stockholders, the Board of Directors could act in a manner that would discourage an acquisition attempt or other transaction that some, or a majority, of the stockholders might believe to be in their best interests or in which stockholders might receive a premium for their stock over the then market price of such stock. The Board of Directors does not at present intend to seek stockholder approval prior to any issuance of currently authorized preferred stock, unless otherwise required by law.
 
Transfer Agent and Registrar
 
The registrar and transfer agent for the Company’s capital stock is Holladay Stock Transfer, 2939 North 67th Place, Scottsdale, Arizona 85251 and its main telephone number is 480-481-3940.
-70-
 
 
Our counsel, Guzov Ofsink, LLC, located at 600 Madison Avenue, 14th Floor, New York, New York 10022, is passing upon the validity of the issuance of the Common Stock that we are offering under this prospectus.
 
 
Child, Van Wagoner & Bradshaw, PLLC, independent public accountants located at 5296 South Commerce Drive, Suite 300, Salt Lake City, Utah 84107, have audited the financial statements of the Company included in this registration statement to the extent and for the periods set forth in the reports. We have relied upon such reports, given upon the authority of Child, Van Wagoner & Bradshaw, PLLC as experts in accounting and auditing.


 
No “expert” or “counsel” as defined by Item 509 of Regulation S-K promulgated pursuant to the Securities Act, whose services were used in the preparation of this Form S-1, was hired on a contingent basis or will receive a direct or indirect interest in the Company, nor was any of them a promoter, underwriter, voting trustee, director, officer or employee of the Company.
 
FOR SECURITIES ACT LIABILITIES
 
Our Bylaws provide that we will indemnify our directors and officers from liabilities incurred by them in connection with actions, suits or proceedings in which they are involved by reason of their acting as our directors and officers.
 
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
 
 
Dismissal of Tarvaran Askelson & Company, LLP and Appointment of Child, Van Wagoner & Bradshaw, PLLC
 
The Company elected to terminate its engagement of Tarvaran Askelson & Company, LLP (“Tarvaran”) as the independent registered public accounting firm responsible for auditing the Company’s financial statements. The termination, which was effective as of March 5, 2008, was approved by the Company’s Board of Directors.
 
Tarvaran’s report on the Company’s financial statements as of September 30, 2007 and year then ended did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope, or accounting principles with the exception that Tarvaran’s audit report contained an explanatory note which raised substantial doubt as to the ability of the Company to continue as a going concern. During the two most recent fiscal years and any subsequent interim period prior to the termination of Tarvaran, the Company did not have any disagreements with Tarvaran 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 Tarvaran, would have caused it to make reference to the subject matter of the disagreements in connection with its report.
-71-
 
During the two most recent fiscal years and any subsequent interim period prior to the termination of Tarvaran, Tarvaran did not advise the Company of any of the following:
 
(a) that the internal controls necessary for the Company to develop reliable financial statements did not exist;
 
(b) that information had come to Tarvaran’s attention that had led it to no longer be able to rely on management’s representations or that had made it unwilling to be associated with the financial statements prepared by management;
 
(c) that Tarvaran needed to expand significantly the scope of its audit, or that information had come to Tarvaran’s attention that if further investigated may: (i) materially impact the fairness or reliability of either a previously issued audit report or the underlying financial statements, or the financial statements issued or to be issued covering the fiscal period(s) subsequent to the date of the most recent financial statements covered by an audit report (including information that would have prevented it from rendering an unqualified audit report on those financial statements), or (ii) cause it to be unwilling to rely on management’s representations or be associated with the Company’s financial statements.

      The Company has engaged Child, Van Wagoner & Bradshaw, PLLC (“Child, Van Wagoner”) to serve as the independent registered public accounting firm responsible for auditing the Company’s financial statements. The engagement, which was effective as of March 5, 2008, was approved by the Company’s Board of Directors.
 
The Company consulted with Child, Van Wagoner in connection with (a) the Company’s acquisition of all of the capital stock of Pacific Industry Holding Group Co., Ltd. (“Pacific”) on February 26, 2008 pursuant to a Share Exchange Agreement, dated February 22, 2008 between the Company, Pacific and the shareholders of Pacific, and (b) the filing by the Company on March 3, 2008 of a Current Report on Form 8-K to report the acquisition and related matters, which Current Report contained financial statements of Pacific (A) as of December 31, 2007 and 2006 and for the years then ended, audited by Child, Van Wagoner and containing their report thereon and (B) as of March 31, 2008 and the three months ended March 31, 2008 and March 31, 2007.
 
Except as set forth in the immediately preceding paragraph, neither the Company nor anyone on behalf of the Company consulted Child, Van Wagoner during the two most recent fiscal years and any subsequent interim period prior to engaging Child, Van Wagoner, regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report was provided to the Company nor oral advice was provided that the Company concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement (as defined in paragraph (a)(1)(iv) and the related instructions of Item 304 of Regulation S-K) or reportable event (as described in paragraph (a)(1)(v) of Item 304 of Regulation S-K).
 
Dismissal of Mendoza Berger & Company LLP and Appointment of Tarvaran Askelson & Company LLP
 
On May 15, 2007 the Company elected to terminate its engagement of Mendoza Berger & Company LLP as the independent registered public accounting firm responsible for auditing the Company’s financial statements. The termination was approved by the Company’s Board of Directors.
 
Mendoza Berger & Company LLP’s report on the Company’s financial statements for the two years ended September 30, 2006 and 2005 did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope, or accounting principles with the exception that Mendoza Berger & Company LLP’s Audit Reports contained an explanatory note which raised substantial doubt as to the ability of the Company to continue as a going concern. During the Company’s two fiscal years ended September 30, 2006 and 2005 and the subsequent interim period ended December 31, 2006 which preceded the termination of Mendoza Berger & Company LLP, the Company did not have any disagreements with Mendoza Berger & Company LLP 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 Mendoza Berger & Company LLP, would have caused it to make reference to the subject matter of the disagreements in connection with its report.
 
During the Company’s two fiscal years ended September 30, 2006 and 2005 and the subsequent interim period ended December 31, 2006 which preceded the termination of Mendoza Berger & Company LLP, other than as is set forth herein, Mendoza Berger & Company LLP did not advise the Company of any of the following:
 
(A) That the internal controls necessary for the Company to develop reliable financial statements did not exist;
 
(B) That information had come to Mendoza Berger & Company LLP.’s attention that had led it to no longer be able to rely on management’s representations, or that had made it unwilling to be associated with the financial statements prepared by management;

 
-72-
 

(C) (1) That Mendoza Berger & Company LLP needed to expand significantly the scope of its audit, or that information had come to Mendoza Berger & Company LLP’s attention that if further investigated may: (i) materially impact the fairness or reliability of either a previously issued audit report or the underlying financial statements, or the financial statements issued or to be issued covering the fiscal period(s) subsequent to the date of the most recent financial statements covered by an audit report (including information that would have prevented it from rendering an unqualified audit report on those financial statements), or (ii) cause it to be unwilling to rely on management’s representations or be associated with the Company’s financial statements, and (2) due to Mendoza Berger & Company LLP’s resignation (due to audit scope limitations or otherwise) or dismissal, or for any other reason, the accountant did not so expand the scope of its audit or conduct such further investigation; or
 
(D) (1) That information has come to Mendoza Berger & Company LLP’s attention that it had concluded materially impacted the fairness or reliability of either: (i) a previously issued audit report or the underlying financial statements, or (ii) the financial statements issued or to be issued covering the fiscal period subsequent to the date of the most recent financial statements covered by an audit report (including information that, unless resolved to Mendoza Berger & Company LLP’s satisfaction, would prevent it from rendering an unqualified audit report on those financial statements, except as indicated above), and (2) the issue has not been resolved to Mendoza Berger & Company LLP’s satisfaction prior to its termination.
 
On May 15, 2007 the Company engaged Tarvaran Askelson & Company, LLP to serve as the independent registered public accounting firm responsible for auditing the Company’s financial statements for the fiscal year ending September 30, 2007. The engagement was approved by the Company’s Board of Directors.
 
Neither the Company nor anyone on behalf of the Company consulted Tarvaran Askelson & Company, LLP during the two prior fiscal years and any subsequent interim period prior to engaging Tarvaran Askelson & Company, LLP, regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report was provided to the Company nor oral advice was provided that the Company concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement (as defined in paragraph (a)(1)(iv) and the related instructions of Item 304 of Regulation S-K) or reportable event (as described in paragraph (a)(1)(v) of Item 304 of Regulation S-K).
 
 
The Company’s unaudited financial statements for the six months ended June 30, 2008 and 2007, the notes thereto, the Company’s audited financial statements for the years ended December 31, 2007 and 2006, together with the reports of the independent certified public accounting firms thereon are presented beginning at page F-1.
 
 
We have filed with the U.S. Securities and Exchange Commission, 100 F Street, NE, Washington, D.C. 20549, a registration statement on Form S-1 under the Securities Act for the Common Stock offered by this prospectus. We have not included in this prospectus all the information contained in the registration statement and you should refer to the registration statement and its exhibits for further information.
 
The registration statement and other information may be read and copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a web site (HTTP://WWW.SEC.GOV) that contains the registration statements, reports, proxy and information statements and other information regarding registrants that file electronically with the SEC such as us.
 
You may also read and copy any reports, statements or other information that we have filed with the SEC at the addresses indicated above and you may also access them electronically at the web site set forth above. These SEC filings are also available to the public from commercial document retrieval services.

 
-73-
 


 
 
       
Page
         
1.
Unaudited Consolidated Financial Statements of the Company for the Periods ended June 30, 2008 and 2007
  
F-2
         
 
I
  
F-2
         
 
ii.
  
F-3
         
 
iii
  
F-4
         
 
iv
  
F-5
         
2.
  
F-22
         
 
i.
  
F-22
         
 
ii
  
F-20
         
 
iii
  
F-24
         
 
iv.
  
F-25
         
 
v
  
F-26
         
 
vi.
  
F-27

 
F-1
 
 

SKYPEOPLE FRUIT JUICE, INC. AND SUBSIDIARIES
 
 
   
June 30,
2008
 (Unaudited)
  
December 31,
2007
  
ASSETS
              
CURRENT ASSETS
              
Cash and equivalents
  
$
9,141,322
  
$
4,094,238
  
Accounts receivable, net
    
4,821,445
    
9,153,687
  
Other receivables
    
46,449
    
55,737
  
Inventories, net
    
1,801,539
    
4,460,149
  
Prepaid expenses and other current assets
    
1,473,440
    
101,628
  
Total current assets
    
17,284,195
    
17,865,439
  
               
RELATED PARTY RECEIVABLE
    
—
    
4,970,427
  
PROPERTY, PLANT AND EQUIPMENT, Net
    
20,615,419
    
17,564,147
  
LAND USAGE RIGHTS (Note 10)
    
6,465,964
    
6,138,297
  
OTHER ASSETS
    
2,657,930
    
71,818
  
TOTAL ASSETS
  
$
47,023,508
  
$
46,610,128
  
LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES
              
Accounts payable
  
$
1,025,163
  
$
2,997,740
  
Accrued expenses
    
337,693
    
339,818
  
Related party payable
    
—
    
143,366
  
Income tax payable
    
185,287
    
114,909
  
Other payable
    
486,258
    
217,759
  
Advances from customers
    
883,706
    
708,291
  
Short-term notes payable
    
7,289,586
    
6,406,922
  
Total current liabilities
    
10,207,693
    
10, 928,805
  
               
NOTE PAYABLE, net of current portion
    
2,186,876
    
2,053,501
  
TOTAL LIABILITIES
  
$
12,394,569
  
$
12,982,306
  
MINORITY INTEREST
    
948,847
    
1,073,364
  
MINORITY INTEREST-Variable Interest Entity (Note 7)
    
—
    
6,308,591
  
STOCKHOLDERS’ EQUITY
              
Preferred stock, $0.001 par value; 10,000,000 shares authorized
              
3,448,480 Series B preferred shares issued and outstanding
    
3,448
        
Common Stock, $0.01 par value; 100,000,000 shares authorized
              
22,271,684, and 22,006,173 shares issued and outstanding,
    
222,717
    
220,062
  
Additional paid-in capital
    
13,791,724
    
10,682,755
  
Accumulated retained earnings
    
15,173,672
    
12,458,632
  
Accumulated other comprehensive income
    
4,487,531
    
2,884,418
  
Total stockholders’ equity
    
33,679,092
    
26,245,867
  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  
$
47,023,508
  
$
46,610,128
  
 
See accompanying notes to condensed consolidated financial statements

 
 
F-2
 

SKYPEOPLE FRUIT JUICE, INC. AND SUBSIDIARIES
UNAUDITED
   
Six Months Ended
  
   
June 30,
2008
  
June 30,
2007
  
   
(Unaudited)
  
(Unaudited)
  
Revenue
  
$
16,096,551
  
$
8,722,912
  
Cost of Sales
    
11,320,336
    
5,270,685
  
Gross Profit
    
4,776,215
    
3,452,227
  
Operating Expenses
              
 General and administrative
    
731,135
    
252,416
  
 Selling expenses
    
496,645
    
239,211
  
 Total operating expenses
    
1,227,780
    
491,627
  
Income from Operations
    
3,548,435
    
2,960,600
  
Other Income (Expense)
              
 Interest expense
              
Interest expense
    
(445,103
)
  
—
  
 Interest income
    
22,965
    
7,499
  
 Subsidy income
    
48,778
    
—
  
 Other income (expense)
    
33,946
    
(42,277
)
 Total other income (expense)
    
(339,414
)
  
(34,778
)
               
Income Before Income Taxes
    
3,209,021
    
2,925,822
  
               
Income Tax Provision
    
311,198
    
456,983
  
               
Income Before Minority Interest
    
2,897,823
    
2,468,839
  
               
Minority interest
    
182,783
    
89,724
  
               
Net Income
  
$
2,715,040
  
$
2,379,115
  
Earnings Per Share:
              
Basic earnings per share
  
$
0.10
  
$
0.11
  
Diluted earnings per share
  
$
0.10
  
$
0.11
  
Weighted Average Shares Outstanding:
              
Basic
    
22,188,529
    
22,006,173
  
Diluted
    
28,310,157
    
22,006,173
  
Comprehensive Income:
              
Net income
  
$
2,715,040
  
$
2,379,115
  
Foreign currency translation adjustment
    
1,603,113
    
402,294
  
Comprehensive Income
  
$
4,318,153
  
$
2,781,409
  
 
See accompanying notes to condensed consolidated financial statements

 
 
F-3
 

SKYPEOPLE FRUIT JUICE, INC. AND SUBSIDIARIES
 
 
   
June 30,
2008
  
June 30,
2007
  
   
(Unaudited)
  
(Unaudited)
  
Cash Flow from Operating Activities
              
Net income
  
$
2,715,040
  
$
2,379,115
  
Adjustments to reconcile net income to net cash flow provided by operating activities
              
Depreciation and amortization
    
931,617
    
450,965
  
Minority interest
    
182,783
    
89,724
  
Changes in operating assets and liabilities, net of acquisition effects
              
 Accounts receivable
    
4,767,805
    
663,311
  
 Other receivables
    
11,829
    
(125,485
)
 Prepaid expenses and other current assets
    
(1,345,081
)
  
(70,235
)
 Inventories
    
2,853,165
    
481,049
  
 Accounts payable
    
(2,097,350
)
  
(396,504
)
 Accrued expenses
    
(22,342
)
  
8,584
  
 Advances from customers
    
125,235
    
287,902
  
 Other payables
    
243,820
    
85,326
  
 Taxes payable
    
60,885
    
(1,540,586
)
Net cash provided by operating activities
    
8,427,406
    
2,313,166
  
Cash Flow from Investing Activities
              
Prepayment for lease improvement
    
(364,479
)
  
—
  
Deposits to purchase target company
    
(2,116,313
)
  
—
  
Loan repayment from related parties
    
5,411,560
    
—
  
Loan advanced to related parties
    
(7,096,571
)
  
(36,270
)
Additions to property, plant and equipment
    
(2,702,172
)
  
(297,287
)
Net cash used in investing activities
    
(6,867,975
)
  
(333,557
)
Cash Flow from Financing Activities
              
Proceeds from stock issuance
    
3,115,072
    
—
  
Proceeds from bank loans
    
11,004,825
    
—
  
Repayment of bank loans
    
(10,553,345
)
  
—
  
Dividend paid to minority interest
    
(306,300
)
  
—
  
Repayments of related party loan
    
(147,751
)
  
(1,469,274
)
Net cash provided by (used in) financing activities
    
3,112,501
    
(1,469,274
)
Effect of Changes in Exchange Rate
    
375,152
    
54,764
  
NET INCREASE IN CASH
    
5,047,084
    
565,099
  
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
4,094,238
    
2,135,173
  
CASH AND CASH EQUIVALENTS, END OF PERIOD
  
$
9,141,322
  
$
2,700,272
  
Supplementary Information of Cash Flows
              
Cash paid for interest
  
$
377,717
  
$
—
  
Cash paid for income tax
  
$
858,047
  
$
1,664,694
  
Purchase of Huludao Wonder, offset by related party receivables
  
$
6,807,472
  
$
—
  
See accompanying notes to condensed consolidated financial statements
F-4
SKYPEOPLE FRUIT JUICE, INC.
 
1.           CORPORATE INFORMATION
 
SkyPeople Fruit Juice, Inc.
 
SkyPeople Fruit Juice, Inc. (“SkyPeople” or the “Company”), formerly Entech Environment Technology, Inc. (“Entech”), was formed in June 1998 under the laws of the State of Florida. From July 2007 until February 26, 2008, our operations consisted solely of identifying and completing a business combination with an operating company and compliance with our reporting obligations under federal securities laws.
 
Between February 22, 2008 and February 25, 2008, we entered into a series of transactions whereby we acquired 100% of the ownership interest in Pacific Industry Holding Group Co., Ltd. (“Pacific”) from a share exchange transaction and raised $3,400,000 gross proceeds from certain accredited investors in a private placement transaction. As a result of the consummation of these transactions, Pacific is now a wholly owned subsidiary of the Company.
 
Pacific was incorporated under the laws of the Republic of Vanuatu on November 30, 2006. Pacific’s only business is acting as a holding company for Shaanxi Tianren Organic Food Co., Ltd. (“Shaanxi Tianren”), a company organized under the laws of the People’s Republic of China (“PRC”), in which Pacific holds a 99% ownership interest.
 
This share exchange transaction resulted in Pacific obtaining a majority voting and control interest in the Company. Generally accepted accounting principles require that the company whose stockholders retain the majority controlling interest in a combined business be treated as the acquirer for accounting purposes, resulting in a reverse acquisition with Pacific as the accounting acquirer and SkyPeople as the acquired party. Accordingly, the share exchange transaction has been accounted for as a recapitalization of the Company. The equity sections of the accompanying financial statements have been restated to reflect the recapitalization of the Company due to the reverse acquisition as of the first day of the first period presented. All references to Common Stock of Pacific Common Stock have been restated to reflect the equivalent numbers of SkyPeople equivalent shares.
 
On May 23, 2008, we amended the Company’s Articles of Incorporation and changed its name to SkyPeople Fruit Juice,
 
Inc. to better reflect our business. The 1-for- 328.72898 reverse stock split of the outstanding shares of Common Stock and a mandatory 1-for-22.006 conversion of Series A Preferred Stock, which had been approved by written consent of the holders of a majority of the outstanding voting stock also became effective on May 23, 2008.
 
Shaanxi Tianren Organic Food Co., Ltd.
 
Shaanxi Tianren was formed on August 8, 2001 under PRC law. Currently, Shaanxi Tianren is engaged in the business of research and development, production and sales of special concentrated fruit juices, fast-frozen and freeze-dried fruits and vegetables and fruit juice drinks.
 
On May 27, 2006, Shaanxi Tianren purchased 91.15% of Xi’an Tianren’s ownership interest for a purchase price in the amount of RMB 36,460,000 (or approximately US$4,573,221). The acquisition was accounted for using the purchase method, and the financial statements of Shaanxi Tianren and Xi’an Tianren have been consolidated on the purchase date and forward.
 
On June 10, 2008, Shaanxi Tianren completed the acquisition of Huludao Wonder Fruit Co., Ltd. (“Huludao Wonder”) for a total purchase price of RMB 48,250,000, or approximately U.S. $6,807,472. The payment was made through the offset of related party receivables from Shaanxi Hede Investment Management Co., Ltd. (“Hede”). Before the acquisition, Huludao Wonder had been a variable interest entity of Shaanxi Tianren for accounting purposes according to FASB Interpretation No. 46: Consolidation of Variable Interest Entities, an interpretation of ARB 51 (“FIN 46”), since June 1, 2007, and the financial statements of Shaanxi Tianren and Huludao Wonder have been consolidated as of June 1, 2007 and forward.

 
 
F-5
 

 
The Company’s current structure is set forth in the diagram below:
 
 
*Xi’an Qinmei Food Co., Ltd., an entity which is not affiliated with the Company, owns the other 8.85% of the equity interests in such company.
 
2.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Financial Statements
 
The accompanying unaudited interim condensed consolidated financial statements for SkyPeople have been prepared in accordance with generally accepted accounting principles accepted in the United States of America (“GAAP”) for interim financial information and do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. All significant inter-company balances have been eliminated in consolidation.
 
In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Due to the seasonal nature of our business and other factors, interim results are not necessarily indicative of the results that may be expected for the entire fiscal year.
 
Certain prior year balances on the Balance Sheet have been reclassified to conform to the current presentation. The reclassification had no impact on net income for the three months ended March 31, 2008 and 2007.
 
Consolidation
 
The accompanying condensed consolidated financial statements include the accounts of SkyPeople, Pacific, Shaanxi Tianren, Xi’an Tianren and the newly acquired Huludao Wonder. All material inter-company accounts and transactions have been eliminated in consolidation.
 
The pooling method (entity under common control) is applied to the consolidation of Pacific with Shaanxi Tianren and Shaanxi Tianren with Huludao Wonder. The reverse merger accounting is applied to the consolidation of SkyPeople with Pacific.

 
 
F-6
 

Cash and Cash Equivalents
 
For purposes of the statements of cash flows, cash and cash equivalents include cash on hand and demand deposits held by banks. Deposits held in financial institutions in the PRC are not insured by any government entity or agency.
 
Accounting for the Impairment of Long-Lived Assets
 
The long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technological or other industrial changes. The determination of recoverability of assets to be held and used is made by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets.
 
If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell. During the reporting periods there was no impairment loss.
 
Earnings Per Share
 
Basic earnings per Common Stock (“EPS”) are calculated by dividing net income available to common stockholders by the weighted average number of Common Stock outstanding during the period. Our Series B Convertible Preferred Stock is a participating security. Consequently, the two-class method of income allocation is used in determining net income available to common stockholders.
 
Diluted EPS is calculated by using the treasury stock method, assuming conversion of all potentially dilutive securities, such as stock options and warrants. Under this method, (i) exercise of options and warrants is assumed at the beginning of the period and shares of Common Stock are assumed to be issued, (ii) the proceeds from exercise are assumed to be used to purchase Common Stock at the average market price during the period, and (iii) the incremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) are included in the denominator of the diluted EPS computation. The numerators and denominators used in the computations of basic and diluted EPS are presented in the following table:
 
   
Six Months Ended
  
   
June 30,
2008
  
June 30,
2007
  
NUMERATOR FOR BASIC AND DILUTED EPS
              
Net income (numerator for Diluted EPS)
  
$
2,715,040
  
$
2,379,115
  
Net income allocated to Preferred Stock
    
(533,777
)
  
—
  
Net income to common stockholders (Basic)
  
$
2,181,263
  
$
2,379,115
  
               
DENOMINATOR FOR BASIC AND DILUTED EPS
              
 Common Stock outstanding
    
22,188,529
    
22,006,173
  
               
DENOMINATOR FOR BASIC EPS
              
Add: Weighted average preferred as if converted
    
3,745,468
    
—
  
Add: Weighted average stock warrants outstanding
    
2,376,160
    
—
  
               
DENOMINATOR FOR DILUTED EPS
    
28,310,157
    
22,006,173
  
               
EPS – Basic
  
$
0.10
  
$
0.11
  
EPS – Diluted
  
$
0.10
  
$
0.11
  

 
 
F-7
 

Shipping and Handling Costs
 
Shipping and handling amounts billed to customers in related sales transactions are included in sales revenues. The shipping and handling expenses of $408,095 and $223,116 for the six months ended June 30, 2008 and 2007, respectively, are reported in the Consolidated Statement of Income as a component of selling expenses.
 
Accumulated Other Comprehensive Income
 
Accumulated other comprehensive income represents foreign currency translation adjustments.
 
Accounts Receivable
 
During the normal course of business, we extend unsecured credit to our customers. Accounts receivable and other receivables are recognized and carried at the original invoice amount less an allowance for any uncollectible amount. Allowance is made when collection of the full amount is no longer probable. Management reviews and adjusts this allowance periodically based on historical experience, the current economic climate, as well as its evaluation of the collectability of outstanding accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. We did not provide any allowance for doubtful accounts as of June 30, 2008. The Company evaluates the credit risks of its customers utilizing historical data and estimates of future performance.
 
Inventories
 
Inventories consist primarily of raw materials and packaging (which include ingredients and supplies) and finished goods (which includes finished juice in our bottling and canning operations.) Inventories are valued at the lower of cost or market. We determine cost on the basis of the average cost or first-in, first-out methods.
 
Revenue Recognition
 
We recognize revenue upon meeting the recognition requirements of Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition.” Revenue from sales of the Company’s products is recognized upon shipment or delivery to its distributors or end users, depending upon the terms of the sales order, provided that persuasive evidence of a sales arrangement exists, title and risk of loss have transferred to the customer, the sales amount is fixed and determinable and collection of the revenue is reasonably assured. More than 70% of our products are exported either through distributors or to end users. Of this amount, 80% of the revenue is exported through distributors. Our general sales agreement requires the distributors to pay us after we deliver the products to them, which is not contingent on resale to end customers. Our credit terms for distributors with good credit history is from 30 days to 90 days. For new customers, we usually require 100% advance payment for direct export sales. Customer advances are recorded as unearned revenue, which is a current liability. Our payment terms with distributors are not determined by the distributor’s resale to the end customer. According to our past collection history, the bad debt rate of our accounts receivables is very low. The problem of quality is not an issue during production, storage and transportation due to our implementing strict standards throughout the entire process. The Company has no history of returned products. Accordingly, no provision has been made for returnable goods. We do not offer price reduction. We are not required to rebate or credit a portion of the original fee if we subsequently reduce the price of our product and the distributor still has right with respect to that product.

 
 
F-8
 

Estimates
 
The preparation of financial statements in conformity with United States’ Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. . The significant areas requiring the use of management estimates include the provisions for doubtful accounts receivable, useful life of fixed assets and valuation of deferred taxes. Although these estimates are based on management’s knowledge of current events and actions management may undertake in the future, actual results may ultimately differ from those estimates.
 
Property, Plant and Equipment
 
Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the useful lives of the assets. Major renewals and betterments are capitalized and depreciated; maintenance and repairs that do not extend the life of the respective assets are charged to expense as incurred. Upon disposal of assets, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in income. Depreciation related to property and equipment used in production is reported in cost of sales. Property and equipment are depreciated over their estimated useful lives as follows:
 
Buildings
20-30 years
Machinery and equipment
10 years
Furniture and office equipment
5 years
Motor vehicles
5 years 

   
June 30,
2008
  
December 31,
2007
  
Machinery and equipment
  
$
14,422,973
  
$
13,672,861
  
Furniture and office equipment
    
215,871
    
200,266
  
Motor vehicles
    
206,492
    
193,899
  
Buildings
    
7,249,028
    
6,489,513
  
Construction in progress
    
2,599,466
    
—
  
Subtotal
    
24,693,830
    
20,556,539
  
Less: accumulated depreciation
    
(4,078,411
)
  
(2,992,392
)
Net property and equipment
  
$
20,615,419
  
$
17,564,147
  
 
Depreciation expense included in general and administration expenses for the six months ended June 30, 2008 and 2007 was $170,829 and $30,098, respectively. Depreciation expense included in cost of sales for the period ended June 30, 2008 and 2007 was $692,062 and $384,841, respectively.
 
Long-term assets of the Company are reviewed annually to assess whether the carrying value has become impaired according to the guidelines established in Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. No impairment of assets was recorded in the periods reported.
 
Foreign Currency and Comprehensive Income
 
The accompanying financial statements are presented in U.S. dollars. The functional currency is the renminbi (“RMB”) of the PRC. The financial statements are translated into U.S. dollars from RMB at year-end exchange rates for assets and liabilities, and weighted average exchange rates for revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.

 
 
F-9
 

On July 21, 2005, the PRC changed its foreign currency exchange policy from a fixed RMB/USD exchange rate into a flexible rate under the control of the PRC’s government. We use the closing rate method in currency translation of the financial statements of the Company.
 
RMB is not freely convertible into the currency of other nations. All such exchange transactions must take place through authorized institutions. There is no guarantee the RMB amounts could have been, or could be, converted into U.S. dollars at rates used in translation.
 
Taxes
 
Income tax expense is based on reported income before income taxes. Deferred income taxes reflect the effect of temporary differences between assets and liabilities that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. In accordance with Statement of Financial Accounting Standards (“SFAS”) No.109, Accounting for Income Taxes, these deferred taxes are measured by applying currently enacted tax laws.
 
The Company has implemented SFAS No.109, Accounting for Income Taxes, which provides for a liability approach to accounting for income taxes. Deferred income taxes result from the effect of transactions that are recognized in different periods for financial and tax reporting purposes. The Company has recorded no deferred tax assets or liabilities as of March 31, 2008, since nearly all differences in tax basis and financial statement carrying values are permanent differences.
 
Restrictions on Transfer of Assets Out of the PRC
 
Dividend payments by Shaanxi Tianren and its subsidiaries are limited by certain statutory regulations in the PRC. No dividends may be paid by Shaanxi Tianren without first receiving prior approval from the Foreign Currency Exchange Management Bureau. Dividend payments are restricted to 85% of profits, after tax.
 
Minority Interest in Subsidiary
 
Minority interest represents the minority stockholders’ proportionate share of 1% of the equity of Shaanxi Tianren and 8.85% of the equity of Xi’an Tianren.
 
FIN 46R requires the primary beneficiary of the variable interest entity to consolidate its financial results with the variable interest entity. SkyPeople has evaluated its relationship with Huludao Wonder and has concluded that Huludao Wonder is a variable interest entity for accounting purposes.
 
On June 10, 2008, the Company completed the acquisition of Huludao Wonder for a total purchase price of RMB 48,250,000 or approximately U.S. $6,807,472. As a result, Huludao Wonder became a 100% owned subsidiary.
 
Accounting Treatment of the February 26, 2008 Private Placement
 
The shares held in escrow as Make Good Escrow Shares will not be accounted for on our books until such shares are released from escrow pursuant to the terms of the Make Good Escrow Agreement. During the time such Make Good Escrow Shares are held in escrow, they will be accounted for as contingently issuable shares in determining the diluted EPS denominator in accordance with SFAS 128.
 
Liquidated damages potentially payable by the Company under the Stock Purchase Agreement and the Registration Rights Agreement will be accounted for in accordance with Financial Accounting Standard Board Staff Position EITF 00-19-2. Estimated damages at the time of closing will be recorded as a liability and deducted from additional paid-in capital as costs of issuance. Estimated damages determined later pursuant to the criteria for SFAS 5 will be recorded as a liability and deducted from operating income.

 
 
F-10
 

Research and Development
 
Shaanxi Tianren has established a research and development institution with nearly 30 research and development personnel as of June 30, 2008. Shaanxi Tianren also from time to time retains external experts and research institutions. The research and development expenses were $23,625 and $39,142 for the six months ended June 30, 2008 and June 30, 2007, respectively.
 
New Accounting Pronouncements
 
In March 2008, The Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities. The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company does not expect that the adoption of SFAS No. 161 will have a material impact on its consolidated results of operations or financial position.
 
In February 2008, FASB issued Staff Position No. FAS 157-2, which provides for a one-year deferral of the effective date of SFAS No. 157, Fair Value Measurements, for non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company is evaluating the impact of this standard as it relates to the Company’s financial position and results of operations.
 
In December 2007, the SEC published Staff Accounting Bulletin (“SAB”) No. 110, which amends SAB No. 107 by extending the usage of a “simplified” method, as discussed in SAB No. 107, in developing an estimate of expected term of “plain vanilla” share options in accordance with SFAS No. 123 (revised 2004), Share-Based Payment. In particular, the SEC indicated in SAB 107 that it will accept a company’s election to use the simplified method, regardless of whether the company has sufficient information to make more refined estimates of expected term. The Company does not expect that the adoption of this EITF will have a material impact on its consolidated results of operations or financial position.
 
In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations, (“SFAS No. 141(R)”), and SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (“SFAS No. 160”). These new standards are the U.S. GAAP outcome of a joint project with the International Accounting Standards Board (“IASB”). SFAS No. 141(R) and SFAS No. 160 introduce significant changes in the accounting for and reporting of business acquisitions and noncontrolling interests in a subsidiary. SFAS No. 141(R) and SFAS No. 160 continue the movement toward the greater use of fair values in financial reporting and increased transparency through expanded disclosures. SFAS No. 141(R) changes how business acquisitions are accounted for and will impact financial statements at the acquisition date and in subsequent periods. SFAS No. 160 requires noncontrolling interests (previously referred to as minority interests) to be reported as a component of equity, which changes the accounting for transactions with noncontrolling interest holders. SFAS No. 141(R) and SFAS No. 160 are effective for our fiscal 2009. The Company has not completed its evaluation of the potential impact, if any, of the adoption of SFAS No. 141(R) and SFAS No. 160 on its consolidated financial position, results of operations and cash flows.
 
3.           SHARE EXCHANGE AND PRIVATE PLACEMENT FINANCING
 
Between February 22, 2008 and February 25, 2008, we entered into a series of transactions whereby we acquired 100% of the ownership interest in Pacific from the shareholders of Pacific in a share exchange transaction and raised $3,400,000 gross proceeds from certain accredited investors in a private placement transaction. These transactions, collectively hereinafter referred to as “Reverse Merger Transactions,” were consummated simultaneously on February 26, 2008, and as a result of the consummation of these transactions Pacific is now a wholly owned subsidiary of the Company.

 
 
F-11
 

 
The following sets forth the material agreements that the Company entered into in connection with the Reverse Merger Transactions and the material terms of these agreements:
 
Share Exchange Agreement
 
On February 22, 2008, the Company and Terrence Leong, the Company’s then Chief Executive Officer, entered into a Share Exchange Agreement with Pacific and all of the shareholders of Pacific (the “Share Exchange Agreement”). Pursuant to the Share Exchange Agreement, the shareholders of Pacific agreed to exchange 100 ordinary shares of Pacific, representing a 100% ownership interest in Pacific, for 1,000,000 shares of a newly designated Series A Convertible Preferred Stock of the Company, par value $0.001 per share (the “Share Exchange” or the “Share Exchange Transaction”).
 
Stock Purchase Agreement
 
In connection with the Share Exchange Transaction, on February 26, 2008, the Company entered into a Series B Convertible Preferred Stock Purchase Agreement (the “Stock Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which the Company agreed to issue 2,833,333 shares of Series B Convertible Preferred Stock of the Company, par value $0.001 per share (“Series B Stock”) and warrants to purchase 7,000,000 shares of the Company’s Common Stock (the “Warrants”) to the investors, in exchange for a cash payment in the amount of $3,400,000. Under the Stock Purchase Agreement, the Company also deposited 2,000,000 shares of the Series B Stock into an escrow account held by an escrow agent as Make Good Shares in the event the Company’s consolidated pre-tax income and pre-tax income per share, on a fully-diluted basis, for the years ended December 31, 2007, 2008 or 2009 are less than certain pre-determined target numbers.
 
On May 23, 2008, we amended the Company’s Articles of Incorporation and changed its name to SkyPeople Fruit Juice, Inc. to better reflect our business. A 1-for- 328.72898 reverse stock split of the outstanding shares of Common Stock and a mandatory 1-for-22.006 conversion of Series A Preferred Stock, which had been approved by written consent of the holders of a majority of the outstanding voting stock, also became effective on May 23, 2008.
 
4.           CONVERTIBLE PREFERRED STOCK
 
The Series A Convertible Preferred Stock
 
In connection with the Share Exchange Transaction, we designated 1,000,000 shares of Series A Convertible Preferred Stock out of our total authorized number of 10,000,000 shares of Preferred Stock, par value $0.001 per share. Upon effectiveness of the 1-for-328.72898 reverse stock split of the outstanding shares of Common Stock on May 23, 2008, all the outstanding shares of Series A Preferred Stock were immediately and automatically converted into shares of Common Stock without any notice or action required by us or by the holders of Series A Preferred Stock or Common Stock (the “Mandatory Conversion”). In the Mandatory Conversion, each holder of Series A Preferred Stock received twenty two and 62/10,000 (22.0062) shares of fully paid and non-assessable Common Stock for every one (1) share of Series A held (the “Conversion Rate”).
 
Series B Convertible Preferred Stock
 
In connection with the Share Exchange Transaction, we designated 7,000,000 shares of Series B Convertible Preferred Stock out of our total authorized number of 10,000,000 shares of Preferred Stock, par value $0.001 per share. The Series B Convertible Preferred Stock is a participating security. No dividends are payable with respect to the Series B Preferred Stock and no dividends can be paid on our Common Stock while the Series B Preferred Stock is outstanding. Upon liquidation the holders are entitled to receive $1.20 per share (out of available assets) before any distribution or payment can be made to the holders of any junior securities.

 
 
F-12
 

 
Upon effectiveness of the Reverse Split, each share of Series B Preferred Stock is convertible at any time into one share of Common Stock at the option of the holder. If the conversion price (initially $1.20) is adjusted, the conversion ratio will likewise be adjusted and the new conversion ratio will be determined by multiplying the conversion ratio in effect by a fraction, the numerator of which is the conversion price in effect before the adjustment and the denominator of which is the new conversion price.
 
5.           WARRANTS
 
In connection with the Share Exchange Transaction, on February 26, 2008, the Company entered into a Series B Convertible Preferred Stock Purchase Agreement (the “Stock Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which the Company agreed to issue 2,833,333 shares of a newly designated Series B Convertible Preferred Stock of the Company, par value $0.001 per share (“Series B Stock”) and warrants to purchase 7,000,000 shares of the Company’s Common Stock (the “Warrants”) to the Investors, in exchange for a cash payment in the amount of $3,400,000.
 
The Warrants became exercisable after the consummation of a 1-for-328.72898 reverse split of our outstanding Common Stock, which was effective on May 23, 2008, and the 7,000,000 shares issuable upon exercise of such Warrants were not adjusted as a result of such reverse split.
 
6.           NOTE PURCHASE AGREEMENT
 
On February 26, 2008, the Company issued to Barron Partners an aggregate of 615,147 shares of Series B Stock in exchange for the cancellation of all principal and accrued interest aggregating approximately $5,055,418 on certain promissory notes of the Company held by Barron.
 
On February 22, 2008, the Company issued to Grover Moss an aggregate of 59,060 shares of Common Stock (post split) in exchange for the conversion of principal aggregating $398,000.
 
7.           ACCQUISITION OF A BUSINESS
 
On June 10, 2008, the Company completed the acquisition of Huludao Wonder for a total purchase price of RMB 48,250,000 or approximately U.S. $6,807,472. The payment was made through the offset of related party receivables from Shaanxi Hede Investment Management Co. Ltd. (“Hede”). Before the acquisition, Huludao Wonder was classified as a variable entity of Shaanxi Tianren according to FASB Interpretation No. 46: Consolidation of Variable Interest Entities (“V.I.E.”), an interpretation of ARB 51 (“FIN 46”), since June 2, 2007. FIN 46R requires the primary beneficiary of the variable interest entity to consolidate its financial results with the variable interest entity. The Company had evaluated its relationship with Huludao and had concluded that Huludao Wonder was a variable interest entity for accounting purposes.
 
Yongke Xue, the Chairman of the Board and Chief Executive Officer of the Company, owns 80% of the equity interest of Hede, and Xiaoqin Yan, a director of Shaanxi Tianren, owns the remaining 20% of Hede. Hede leased to Shaanxi Tianren all of the assets and facilities of Huludao Wonder under a Lease Agreement dated June 2, 2007 between Hede and Shaanxi Tianren. The lease was for a term of one year from July 1, 2007 to June 30, 2008. The monthly rent under the lease is RMB 300,000 (approximately $42,326). In 2007, Shaanxi Tianren loaned to Hede an aggregate of RMB 27 million (approximately $3,809,363) interest-free loan pursuant to a Loan Agreement entered into by the parties on June 5, 2007. The loan was made to enable Hede to purchase Huludao Wonder. The loan was due on August 1, 2008. On the date of the purchase, the outstanding loan was deducted from the purchase price according to the Loan Agreement.

 
 
F-13
 

 
The contractual agreement with Hede was in effect on June 1, 2007. As a result of the contractual arrangements, Shaanxi Tianren became the primary beneficiary of Huludao Wonder. Accordingly, Shaanxi Tianren adopted the provisions of FIN 46R and consolidated the financial results of Huludao Wonder from June 1, 2007.
 
The Company accounted for the purchase as a reorganization of entities under common control to consolidate Huludao Wonder with the assets and liabilities recorded at their carrying values on the books of Hede.. The book value of the acquired net assets of Huludao Wonder was RMB 48,250,000 (approximately $6,807,472).
 
The following table summarizes the fair value of Huludao Wonder’s assets and liabilities as of June 1, 2007 (based on the exchange rate of June 1, 2007): 
 
ASSETS
        
 Cash
  
$
7,567
  
 Accounts receivable, net
    
2,387,711
  
 Other receivables
    
29,244
  
 Inventory
    
57,948
  
 Fixed assets
    
6,934,219
  
 Intangible asset
    
3,262,566
  
 Other assets
    
27,486
  
TOTAL ASSETS
  
$
12,706,741
  
         
LIABILITIES
        
 Accounts payable
  
$
20,642
  
 Other payables
    
101,603
  
 Loans payable
    
6,275,905
  
TOTAL LIABILITIES
  
$
6,398,150
  
         
 NET ASSETS
  
$
6,308,591
  
 
Pro Forma Financial Information
 
The unaudited pro forma financial information presented below summarizes the combined operating results of the Company and Huludao Wonder for the three months and six months ended June 30, 2007, respectively, as if the acquisition had occurred on January 1, 2007.
 
The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the acquisition taken place on January 1, 2007. The unaudited pro forma combined statements of operations combine the historical results of the Company and the historical results of the acquired entity for the periods described above.

 
 
F-14
 

 
PRO FORMA STATEMENT OF OPERATIONS
 
 
FOR THE THREE MONTHS ENDED JUNE 30, 2007
 
   
Historical Information of the Company (1)
  
Historical Information of the Acquired Entity (2)
  
Pro Forma Adjustments (3)
  
Pro Forma
  
   
(Unaudited)
  
(Unaudited)
      
(Unaudited)
  
                           
Revenue
  
$
3,485,726
  
$
397,461
  
$
—
  
$
3,883,187
  
                           
Net income (loss)
  
$
898,884
  
$
(181,326
)
$
(17,317
)
$
700,241
  
                           
Basic earnings per share
  
$
0.04
              
$
0.03
  
Diluted earnings per share
  
$
0.04
              
$
0.03
  
                           
Basic weighted average common shares outstanding
    
22,006,173
                
22,006,173
  
Diluted weighted average common shares outstanding
                          
     
22,006,173
                
22,006,173
  
 
PRO FORMA STATEMENT OF OPERATIONS
 
 
FOR THE SIX MONTHS ENDED JUNE 30, 2007
 
   
Historical Information of the Company (1)
  
Historical Information of the Acquired Entity (2)
  
Pro Forma Adjustments (3)
  
Pro Forma
  
   
(Unaudited)
  
(Unaudited)
      
(Unaudited)
  
                           
Revenue
  
$
8,722,912
  
$
1,776,294
  
$
—
  
$
10,499,206
  
                           
Net income (loss)
  
$
2,379,115
  
$
(271,374
)
$
(34,453
)
$
2,073,288
  
                           
Basic earnings per share
  
$
0.11
              
$
0.09
  
Diluted earnings per share
  
$
0.11
              
$
0.09
  
                           
Basic weighted average common shares outstanding
    
22,006,173
                
22,006,173
  
Diluted weighted average common shares outstanding
                          
     
22,006,173
                
22,006,173
  
 
Note: The currency exchange rate is based on the average exchange rate of the related period.

 
 
F-15
 


 
1.
The historical operating results of the Company were based on the Company’s unaudited financial statements for the three and six months ended June 30, 2007, respectively.
 
2.
The three and six months historical information of Huludao Wonder was derived from the books and the records of Huludao Wonder for the three and six months ended June 30, 2007, respectively.
 
3.
Pro forma adjustment was based on the assumption that the fair value of the fixed assets and intangible assets were amortized over the life of the assets, assuming the acquisition took place on January 1, 2007.

 
 
F-16
 

 
8.           INVENTORIES
 
Inventories consisted of the following:
 
   
June 30,
  
December 31,
  
   
2008
  
2007
  
Raw materials and packaging
  
$
628,300
  
$
255,936
  
               
Finished goods
    
1,173,239
    
4,204,213
  
Inventories
  
$
1,801,539
  
$
4,460,149
  
 
9.           INCOME TAX
 
Prior to 2007, the Company was subject to a 33% income tax rate by the PRC. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of FIN 48. Shaanxi Tianren was awarded the status of a nationally recognized High and New Technology Enterprise in December 2006, which entitled Shaanxi Tianren to tax-free treatment for two years starting from 2007 and thereafter reduced income taxes at 50% of its regular income tax rate then effective from 2009 to 2010. In December 2007, the tax rate of Xi’an Tianren was reduced from 33% to 25%, effective beginning January 2008.
 
The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of FIN 48. The income tax expense was $311,198 for the six months ended June 30, 2008, and was $456,983 for the six months ended June 30, 2007. The Company had recorded no deferred tax assets or liabilities as of June 30, 2008 and 2007, since nearly all differences in tax basis and financial statement carrying values are permanent differences.
 
     
Six Months Ended June 30,
  
Income Tax Expenses
  
2008
  
2007
  
Current
  
$
311,198
  
$
456,983
  
Deferred
    
—
    
—
  
Total
  
$
311,198
  
$
456,983
  
 
10.           LAND USAGE RIGHTS
 
According to the laws of the PRC, the government owns all of the land in the PRC. Companies or individuals are authorized to possess and use the land only through land use rights granted by the PRC government. Accordingly, the Company paid in advance for land use rights. Prepaid land use rights are being amortized and recorded as lease expenses using the straight-line method over the use terms of the lease which is 20 to 50 years. The land usage rights as of June 30, 2008 were $6,465,964 and were $6,138,297 as of December 31, 2007. The amortization expense was $68,726 and $36,026 for the six months ended June 30, 2008 and 2007, respectively.
 
11.           AMOUNTS DUE FROM (TO) RELATED PARTIES
 
As of June 30, 2008, the Company had no outstanding loans to related entities with common owners and directors. During the six months ended June 30, 2008, Pacific erroneously paid $4,916,617 to its former shareholders, the Company’s director Xiaoqing Yan and its CEO, Yongke Xue as the result of a dividend declaration by Pacific in February 2008 (See Note 14). Because the recipients of the money were no longer shareholders of Pacific, the transaction has been treated for accounting purposes as an interest free loan. In June 2008, the directors and other related parties returned the monies they received (along with amounts loaned to related parties prior to January 1, 2008) in cash in the amount of $5,411,560.

 
 
F-17
 

 
During the six months ended June 30, 2008, the related party loan and advances to Hede of RMB 48,929,272 were credited against the purchase price that the Company paid for Huludao on June 10, 2008. The Company also paid off approximately $147,751 of its loans payable to related parties in the six months ended June 30, 2008. The indebtedness of the Company to related entities with common owners and directors as of December 31, 2007 totaled $4,970,427 as follows. The loans are unsecured and bear no interest. These loans have no fixed payment terms.
 
Name of Related Party to Whom Loans were Given
  
December 31, 2007
  
Relation
  
Mr. Andu Liu
  
$
22,177
    
Former shareholder of Shaanxi Tianren
  
Mr. Ke Lu
  
$
7,734
    
Manager of Shaanxi Tianren
  
Shaanxi Hede Investment Management Co., Ltd.
  
$
4,490,173
    
Former shareholder of Shaanxi Tianren
  
Xi’an Hede Investment Consultation Company Limited
  
$
101,286
    
The Managing Director of Xi’an Hede is one of the family members of Shaanxi Tianren
  
Shaanxi Xirui Group Co., Ltd
  
$
198,216
    
Shareholder of Xi’an Tianren
  
Yingkou Trusty Fruits Co., Ltd. (“Yingkou”)
  
$
77,212
    
Hede is a shareholder of Yingkou
  
Shaanxi Fruits Processing Co., Ltd.
  
$
73,629
    
Former Shaanxi Tianren
  
Total
  
$
4,970,427
        
 
As of December 31, 2007, the indebtedness of the Company to its shareholders and related entities with common owners and directors was $143,366 as follows:
 
Name of Related Party from Whom Loans were Received
  
December 31, 2007
  
Relation
  
Mr. Guang Li
  
$
(137
)
  
Director of Shaanxi Tianren
  
Mr. Yongke Xue
  
$
(32,308
)
  
Former shareholder of Shaanxi Tianren
  
Ms. Yuan Cui
  
$
(62,387
)
  
Former shareholder of Shaanxi Tianren
  
Mr. Hongke Xue
  
$
(48,397
)
  
President of Shaanxi Tianren
  
Ms. Xiaoqin Yan
  
$
(137
)
  
Former shareholder of Shaanxi Tianren
  
Total
  
$
(143,366
)
      
 
12.           COMMON STOCK
 
As of June 30, 2008, the Company had 22,271,684 shares of Common Stock issued and outstanding and 3,448,480 shares of Series B Preferred Stock issued and outstanding. (2,000,000 shares of the Series B Preferred Stock deposited in the escrow account are not included.), Assuming all five year warrants to purchase 7,000,000 shares of Common Stock with an exercise price of $3.00 per share are exercised and all shares of Series B Preferred Stock are converted, the total number of shares of Common Stock to be issued and outstanding will be 32,720,164.
 
In the first quarter of 2008, the Company issued 31,941 shares of Common Stock as part of the settlement with its prior Chief Executive Officer, Burr D. Northrop, 37,098 shares of Common Stock to Walker Street Associates and its prior director, Joseph I. Emas, respectively, for the professional services that they provided, and 59,060 shares of Common Stock to Grover Moss for the conversion of principal under the obligation of $398,000 with the Company.
 
On February 26, 2008, the Company issued to Barron Partners an aggregate of 615,147 shares of Series B Stock in exchange for the cancellation of all principal and accrued interest aggregating approximately $5,055,418 on certain promissory notes of the Company held by Barron. The shares issued to Barron Partners were not affected by the 1-for-328.72898 reverse split of our outstanding Common Stock which was effective on May 23, 2008.

 
 
F-18
 

 
In connection with the Share Exchange Transaction in February, the Company designated 1,000,000 shares of Series A Convertible Preferred Stock out of its total authorized number of 10,000,000 shares of Preferred Stock, par value $0.001 per share. In the Mandatory Conversion, each holder of Series A Preferred Stock was entitled to receive twenty two and 62/10,000 (22.0062) shares of fully paid and non-assessable Common Stock for every one (1) share of Series A held. The Company also agreed to issue 2,833,333 shares of a newly designated Series B Convertible Preferred Stock of the Company, par value $0.001 per share and warrants to purchase 7,000,000 shares of the Company’s Common Stock. Upon effectiveness of the Reverse Split on May 23, 2008, all the outstanding shares of Series A Preferred Stock was immediately and automatically converted into 22,006,173 shares of Common Stock. Each share of Series B Preferred Stock will be convertible at any time into one share of Common Stock at the option of the holder. The Warrants are exercisable after the Reverse Split. The 2,833,333 shares of Series B Convertible Preferred Stock and 7,000,000 shares issuable upon exercise of such Warrants were not adjusted as a result of the Reverse Split.
 
13.           NOTE PAYABLE
 
As of June 30, 2008, we had a long-term loan balance of RMB 15,000,000 (U.S $2,186,876 based on the exchange rate of June 30, 2008), at the lending bank’s floating prime rate. The loan has a term of five years from the date of draw down. The principal of RMB 10,000,000 ($1,157,917) is due on July 10, 2009, and the balance of RMB 5,000,000 ($728,959) is due on September 20, 2009.
 
In the six months ended June 30, 2008, the Company paid off RMB 78,000,000, or approximately $11,004,825 of short term loan payable, and entered six new short term loan agreements with some local banks in China. As of June 30, 2008, the balance of these short-term loans totaled RMB 50,000,000 (U.S. $7,289,586), with an interest rate ranging from 6.57% to 9.83% per annum. These loans are due anywhere from September 2008 to June 2009.
 
14.           DIVIDEND PAYMENT
 
On February 4, 2008, before the Share Exchange Transaction, the Board of Directors of Xi’an Tianren declared a cash dividend of $2,899,855 to its former shareholders. Since Shaanxi Tianren holds a 91.15% interest in Xi’an Tianren, $2,643,218 was paid to Shaanxi Tianren and $256,637 was paid to its minority interest holders. On the same date, the Board of Directors of Shaanxi Tianren declared a cash dividend of $4,966,280 to its shareholders. Since Pacific holds a 99% interest in Shaanxi Tianren, $4,916,617 was paid to Pacific and $49,663 was paid to its minority interest holders. The inter-company dividend was eliminated in the consolidated statement. The dividend paid to minority interest holders was $306,300.
 
In May 2008, Pacific erroneously paid $4,916,617 to its former shareholders as the result of a dividend declaration in February 2008. The monies were then returned to the Company in June 2008 (See Note 11).
 
15.           RELATED PARTY TRANSACTIONS
 
Yongke Xue, the Chairman of the Board, and Chief Executive Officer of the Company, owns 80% of the equity interest of Shaanxi Hede Investment Management Co., Ltd. (“Hede”), a PRC company. Xiaoqin Yan, a director of Shaanxi Tianren, owns the remaining 20% of Hede.
 
On May 31, 2007, Huludao Wonder was acquired by Hede at the fair market price of RMB 48,250,000, which was based on a third party valuation. At the time Hede acquired Huludao Wonder, both Hede and Shaanxi Tianren intended that Huludao Wonder would be sold to Shaanxi Tianren after a one year holding period. The management of Shaanxi Tianren wanted an affiliate to run Huludao Wonder first to make sure there were no issues before it was conveyed to Shaanxi Tianren. Shaanxi Tianren participated significantly in the design of this purchase transaction, and the purchase price was agreed upon by the Board of Shaanxi Tianren. The purchase agreement under which Hede acquired Huludao Wonder required that installments of the purchase price be paid as follows: RMB 10,000,000 on June 10, 2007; RMB 20,000,000 before September 2007; and RMB 18,250,000 before March 31, 2008. Immediately following the acquisition, Hede leased to Shaanxi Tianren all of the assets and facilities of Huludao Wonder under a Lease Agreement dated June 2, 2007 between Hede and Shaanxi Tianren. The lease is for a term of one year from July 1, 2007 to June 30, 2008. The monthly rent under the lease was RMB 300,000 (approximately $42,367). Upon execution of the lease, Hede was paid RMB 1.8 million, representing the first 6 months rent, and a refundable security deposit of RMB 1.2 million.

 
 
F-19
 

       In January 2008, Shaanxi Tianren paid rental expense of RMB 11,038 (approximately $1,609 based on the exchange rate as of June 30, 2008) to the landlord of Hede’s office space on behalf of Hede.
 
In May 2008, Shaanxi Tianren paid to Hede an aggregate amount of RMB 1,500,000 (approximately $218,688 based on the exchange rate as of June 30, 2008) of rent for the period from January to May 2008 pursuant to the Huludao Wonder Lease. In the same month, Shaanxi Tianren assumed Hede’s obligation of RMB 18,000,000 (approximately $2,624,251 based on the exchange rate of June 30, 2008) for the balance of the purchase price for Huludao Wonder).
 
On May 31, 2008, Shaanxi Tianren entered into a Stock Transfer Agreement with Hede. Under the terms of the Stock Transfer Agreement, Hede agreed to transfer all its stock ownership of Huludao Wonder to Shaanxi Tianren for a total price of RMB 48,250,000 (approximately $7,034,451 based on the exchange rate as of June 30, 2008). The sale was closed on June 10, 2008. As of May 31,2008, Shaanxi Tianren had a related party receivable of RMB 48,928,272 from Hede, which was credited against the purchase price (so that Shaanxi Tianren did not pay any cash to Hede for the purchase) and the remaining balance of the loans and advances of RMB 679,272 (approximately $99,032 based on the exchange rate of June 30, 2008) to Hede was repaid to the Company on June 11, 2008.
 
On February 26, 2008, simultaneously with the consummation of the Share Exchange Agreement and Stock Purchase Agreement described herein, pursuant to an oral agreement with the Company and Barron Partners, the Company issued an aggregate of 615,147 shares of Series B Preferred Stock to Barron in exchange for the cancellation of (a) all indebtedness of the Company to Barron Partners under certain outstanding convertible promissory notes issued to Barron Partners during the period from September 30, 2004 to February 2008 to evidence loans made by Barron Partners to the Company for the needs of working capitals in the ordinary course of business and (b) all liquidated damages payable to Barron Partners (including all amounts as well as any amounts which would become payable in the future as a result of continuing failures) as a result of the failure of the Company to have registered under the Securities Act for resale by Barron Partners the Common Stock of the Company issuable upon conversion of such convertible promissory notes under various registration rights agreements between the Company and Barron Partners entered into in connection with the foregoing loans.
 
As of the date of this prospectus, Barron Partners beneficially owns 10,159,265 shares of the Company’s Common Stock (approximately 31.3% of the Common Stock) and is a selling stockholder herein. The oral agreement with Barron Partners was approved by the Chief Executive Officer of the Company.
 
The total amount of principal and accrued interest under all convertible promissory notes which were cancelled aggregated approximately $1,735,286 and the total amount of accrued liquidated damages which were cancelled aggregated approximately $3,320,132. All of the convertible promissory notes bore interest at the rate of 8% per annum and were convertible into shares of Common Stock at a conversion rate of one share of Common Stock for every $8.21822 of principal converted. The registration rights agreements provided for liquidated damages to accrue at the rate of 36% per annum of the note principal in the event that the registration statements to register the underlying shares were not declared effective by the required deadline.

 
 
F-20
 

 
The number of shares of Series B Stock that were issued to Barron Partners pursuant to the agreement was determined by dividing the aggregate indebtedness cancelled ($5,055,418) by $8.1822 per share (which was the rate at which one share of Common Stock was issuable for principal under the convertible promissory notes). In lieu of issuing Common Stock, the Company and Barron Partners agreed that Barron Partners would be issued Series B Stock (which upon consummation of the Reverse Split became convertible into Common Stock on a share for share basis).
 
The issuance of the Series B Preferred Stock was accomplished in reliance upon Section 4 (2) of the Securities Act.
 
The Company is not obligated to register the resale of the 615,147 shares of Common Stock that are issuable upon conversion of the Series B Preferred Stock, and the resale of such shares is not covered by this prospectus.
 
16.           NEW LEASE AGREEMENT
 
On June 23, 2008, Shaanxi Tianren entered into a lease agreement for China office space. The lease has a term of one year, with a commencement date of July 1, 2008 and covers approximately 1,400 total rentable square meters. The annual rent is approximately $106,662. Our new address is 16F, National Development Bank Tower, No.2 Gaoxin 1st Road, Hi-Tech Industrial Zone, Xi’an, Shaanxi Province, PRC 710075. Our phone number is 011-86-29-88377001.
 
17.           DEPOSITS TO PURCHASE TARGET COMPANY
 
On June 1, 2008, Shaanxi Tianren entered into a memorandum agreement with Xi’an Dehao Investment Consultation Co. Ltd. (“Dehao”). Under the term of the agreement, Dehao agreed to transfer 100% of the ownership interest of Yingkou Trusty Fruits Co., Ltd. (“Yingkou”) to Shaanxi Tianren. Shaanxi Tianren is required to make a refundable down payment of RMB 15,000,000, or approximately $2,116,313, to Dehao as a deposit for the purchase. The acquisition is targeted to be complete at the end of August 2008 after the third party market value evaluation.

 
 
F-21
 

 
 
 
To the Board of Directors
 
SkyPeople Fruit Juice, Inc.
 
We have audited the consolidated balance sheets of SkyPeople Fruit Juice, Inc. (the Company) as of December 31, 2007 and 2006, and the related consolidated statements of operations and comprehensive income, changes in stockholders’ equity, and cash flows for the years ended December 31, 2007 and 2006. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 SkyPeople Fruit Juice, Inc. as of December 31, 2007 and 2006, and the results of its operations and its cash flows for the years ended December 31, 2007 and 2006, in conformity with accounting principles generally accepted in the United States of America.
 
/s/ Child, Van Wagoner & Bradshaw, PLLC
 
Child, Van Wagoner & Bradshaw, PLLC
 
Salt Lake City, Utah
 
May 15, 2008
F-22
 
SKYPEOPLE FRUIT JUICE, INC.
 
 
   
December 31,
  
December 31,
  
ASSETS
  
2007
  
2006
  
           
CURRENT ASSETS
              
Cash and equivalents
  
$
4,094,238
  
$
2,135,173
  
Accounts receivable, net of allowance for doubtful accounts of $0 and $423
    
9,153,687
    
5,151,634
  
Other receivables
    
55,737
    
22,429
  
Inventories, net
    
4,460,149
    
765,711
  
Prepaid expenses and other current assets
    
101,628
    
173,943
  
Total current assets
    
17,865,439
    
8,248,890
  
               
RELATED PARTY RECEIVABLE
    
4,970,427
    
419,523
  
PROPERTY, PLANT AND EQUIPMENT, Net
    
17,564,147
    
10,081,975
  
LAND USAGE RIGHTS (Note 4)
    
6,138,297
    
2,671,660
  
OTHER ASSETS
    
71,818
    
—
  
TOTAL ASSETS
  
$
46,610,128
  
$
21,422,048
  
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
              
               
CURRENT LIABILITIES
              
Accounts payable
  
$
2,997,740
  
$
631,019
  
Accrued expenses
    
339,818
    
200,647
  
Related party payable
    
143,366
    
1,950,892
  
VAT Tax payable (Note 8)
    
114,909
    
1,583,884
  
Other payable
    
217,759
    
42,562
  
Advances from customers
    
708,291
    
—
  
Current portion of notes payable
    
6,406,922
    
—
  
Total current liabilities
    
10,928,805
    
4,409,004
  
               
NOTE PAYABLE, net of current portion
    
2,053,501
        
MINORITY INTEREST
    
1,073,364
    
712,863
  
MINORITY INTEREST-Variable Interest Entity (V.I.E.)
    
6,308,591
        
STOCKHOLDERS’ EQUITY
              
Common Stock, $0.01 par value; 100,000,000 shares authorized 22,006,173 shares issued and outstanding
    
220,062
    
220,062
  
Additional paid in capital
    
10,682,755
    
10,682,755
  
Retained earnings
    
12,458,632
    
4,862,229
  
Accumulated other comprehensive income
    
2,884,418
    
535,135
  
Total stockholders’ equity
    
26,245,867
    
16,300,181
  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  
$
46,610,128
  
$
21,422,048 
  
 
See accompanying notes to consolidated financial statements
 
F-23
 
SKYPEOPLE FRUIT JUICE, INC.
 
 
 
   
For the Year Ended December 31,
  
   
2007
  
2006
  
Revenue
  
$
29,361,941
  
$
17,427,204
  
Cost of Sales
    
18,467,045
    
10,105,327
  
Gross Margin
    
10,894,896
    
7,321,877
  
               
Operating Expenses
              
 General and administrative expenses
    
1,189,637
    
405,253
  
 Selling expenses
    
686,819
    
664,717
  
 Total operating expenses
    
1,876,456
    
1,069,970
  
               
Income from Operations
    
9,018,440
    
6,251,907
  
               
Other Income (Expenses)
              
 Interest Income
    
18,295
    
14,365
  
 Subsidy Income
    
500,468
    
—
  
 Other Income (expenses)
    
(70,622
)
  
(79,616
)
 Interest expense
    
(400,517
)
  
(62,147
)
 Total other income (expense)
    
47,624
    
(127,398
)
Income Before Income Tax
    
9,066,064
    
6,124,509
  
Income Tax Provision
    
1,109,160
    
2,035,675
  
Income Before Minority Interest
    
7,956,904
    
4,088,834
  
               
Minority interest
    
360,501
    
243,564
  
               
Net Income
  
$
7,596,403
  
$
3,845,270
  
               
Earnings Per Share:
              
Basic earnings per share
  
$
0.35
  
$
0.17
  
Diluted earnings per share
  
$
0.35
  
$
0.17
  
               
Weighted Average Shares Outstanding
              
Basic
    
22,006,173
    
22,006,173
  
Diluted
    
22,006.173
    
22,006,173
  
               
Comprehensive Income
              
Net income
  
$
7,596,403
  
$
3,845,270
  
Foreign currency translation adjustment
    
2,349,283
    
394,668
  
Comprehensive Income
  
$
9,945,686
  
$
4,239,938
  
 
See accompanying notes to consolidated financial statements
 
F-24
 
SKYPEOPLE FRUIT JUICE, INC.
 
 
 
     
Common
Stock
Shares
  
Common
Stock
  
Additional
Paid in
Capital
  
Retained
Earnings
  
Other
Comprehensive
Income
  
Total
  
Balance December 31, 2005
    
22,006,173
  
$
220,062
  
$
4,400,164
  
$
1,016,959
  
$
140,467
  
$
5,777,652
  
Net income
    
—
    
—
    
6,282,591
    
3,845,270
    
—
    
10,127,861
  
                                       
Foreign currency translation adjustment
    
—
    
—
    
—
    
—
    
394,668
    
394,668
  
                                       
                                       
Balance December 31, 2006
    
22,006,173
  
$
220,062
  
$
10,682,755
  
$
4,862,229
  
$
535,135
  
$
16,300,181
  
Net income
    
—
    
—
    
—
    
7,596,403
    
—
    
7,596,403
  
Foreign currency translation adjustment
    
—
    
—
    
—
    
—
  
$
2,349,283
  
$
2,349,283
  
                                       
Balance December 31, 2007
    
22,006,173
  
$
220,062
  
$
10,682,755
  
$
12,458,632
  
$
2,884,418
  
$
26,245,867
  
See accompanying notes to consolidated financial statements
 
F-25
SKYPEOPLE FRUIT JUICE, INC.
 
 
   
December 31
2007
  
December 31
2006
  
Cash Flow from Operating Activities
              
Net income
  
$
7,596,403
  
$
3,845,270
  
Adjustments to reconcile net income to
              
net cash flow provided by operating activities
              
Depreciation and amortization
    
1,454,746
    
1,540,474
  
Minority interest
    
360,501
    
243,564
  
Changes in operating assets and liabilities
              
Accounts receivable
    
(1,101,307
)
  
(3,617,366
)
Other receivables
    
(1,369
)
  
(11,693
)
Advance to suppliers
    
(164,389
)
  
18,970
  
Inventories
    
(3,439,851
)
  
600,876
  
Accounts payable
    
2,100,393
    
(1,736,923
)
Other payables
    
63,282
    
11,788
  
Accrued expenses
    
120,387
    
63,320
  
Taxes payable or receivable
    
(1,516,106
)
  
1,243,543
  
Advances from customers
    
680,388
    
(84,229
)
Net cash provided by operating activities
    
6,153,078
    
2,117,594
  
Cash flows from investing activities:
              
Purchase of Xi’an Tianren, net of cash acquired
    
—
    
(4,213,662
)
Cash from consolidation of variable interest entity
    
7,611
    
—
  
Additions to property, plant and equipment
    
(53,328
)
  
(723,255
)
Loan advanced to related parties
    
(4,316,165
)
  
(143,753
)
Net cash used in investing activities
    
(4,361,882
)
  
(5,080,670
)
Cash Flow from Financing Activities
              
Capital contribution from stockholders
    
—
    
6,271,558
  
Repayment of short-term loan
    
—
    
(1,131,452
)
Proceeds from short-term loans
    
1,814,795
    
—
  
Prepayments of related party loan
    
(1,865,649
)
  
—
  
Advanced from related party
    
—
    
28,524
  
Payment of dividends
    
—
    
(714,958
)
Net cash provided by (used in) financing activities
    
(50,854
)
  
4,453,672
  
Effect of Changes in Exchange Rate
    
218,723
    
51,132
  
NET INCREASE IN CASH
    
1,959,065
    
1,541,728
  
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
2,135,173
    
593,445
  
CASH AND CASH EQUIVALENTS, END OF YEAR
  
$
4,094,238
  
$
2,135,173
  
Supplemental disclosures of cash flow information:
              
Cash paid for interest
  
$
400,517
  
$
62,147
  
Cash paid for income taxes
  
$
2,018,534
  
$
791,020
  
 
See accompanying notes to consolidated financial statement
 
F-26
SKYPEOPLE FRUIT JUICE, INC.
 
 
1.           CORPORATE INFORMATION
 
SkyPeople Fruit Juice, Inc., (“SkyPeople” or the “Company”), formerly Entech Environmental Technologies, Inc. (“Entech”), was formed in June 1998 under the laws of the State of Florida. From July 2007 until February 26, 2008, our operations consisted solely of identifying and completing a business combination with an operating company and compliance with our reporting obligations under federal securities laws.
 
Between February 22, 2008 and February 25, 2008, we entered into a series of transactions whereby we acquired 100% of the ownership interest in Pacific Industry Holding Group Co., Ltd. (“Pacific”) from a share exchange transaction and raised $3,400,000 gross proceeds from certain accredited investors in a private placement transaction. As a result of the consummation of these transactions, Pacific is now a wholly owned subsidiary of the Company.
 
Pacific was incorporated under the laws of the Republic of Vanuatu on November 30, 2006. Pacific’s only business is acting as a holding company for Shaanxi Tianren Organic Food Co., Ltd. (“Shaanxi Tianren”), a company organized under the laws of the People’s Republic of China (“PRC”), in which Pacific holds a 99% ownership interest.
 
This share exchange transaction resulted in Pacific obtaining a majority voting and control interest in the Company. Generally accepted accounting principles require that the company whose stockholders retain the majority controlling interest in a combined business be treated as the acquirer for accounting purposes, resulting in a reverse acquisition with Pacific as the accounting acquirer and SkyPeople as the acquired party. Accordingly, the share exchange transaction has been accounted for as a recapitalization of the Company. The equity section of the accompanying financial statements have been restated to reflect the recapitalization of the Company due to the reverse acquisition as of the first day of the first period presented. All references to Common Stock of Pacific Common Stock have been restated to reflect the equivalent numbers of SkyPeople equivalent shares.
 
Shaanxi Tianren was incorporated on August 8, 2001 in the People’s Republic of China (“PRC”) located in Xi’an High-Tech Industrial Development Zone. The Company is principally engaged in developing, manufacturing and selling mostly concentrated pear and apple juice, juice-vinegar concentrate, beverage, agricultural products and packing supplies in the People’s Republic of China.
 
Xi’an Tianren Modern Organic Company, Ltd. (“Xi’an Tianren”), former name Xi’an Jiaoda Qinmei Modern Food Company Ltd., was incorporated on December 22, 2002 in the People’s Republic of China (“PRC”). The Company is principally engaged in developing, manufacturing and selling mostly concentrated kiwifruit and peach juice and organic agricultural fruit supplies in the People’s Republic of China.
 
On May 27, 2006, Shaanxi Tianren purchased 91.15% of Xi’an Tianren’s ownership interest for a purchase price in the amount of RMB 36,460,000 (or approximately US $4,573,221). The acquisition was accounted for using the purchase method, and the financial statements of Shaanxi Tianren and Xi’an Tianren have been consolidated on the purchase date and forward.
 
2.            SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Financial Statements
 
The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). This basis differs from that used in the statutory accounts of our subsidiaries in China, which were prepared in accordance with the accounting principles and relevant financial regulations applicable to enterprises in the PRC. All necessary adjustments have been made to present the financial statements in accordance with U.S. GAAP.

 
 
F-27
 

 
Consolidation
 
The accompanying condensed consolidated financial statements include the accounts of Pacific, Shaanxi Tianren, Xi’an Tianren, and its variable interest entity, namely Huludao Wonder Fruit Co., Ltd. (“Huludao Wonder”) under the common control of Shaanxi Hede Investment Management Co., Ltd. (“Hede”). All material inter-company accounts and transactions have been eliminated in consolidation.
 
On January 17, 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46: Consolidation of Variable Interest Entities (“V.I.E.”), an interpretation of ARB 51 (“FIN 46”), which was superseded by a revised interpretation (“FIN 46R”). FIN 46R requires the primary beneficiary of the variable interest entity to consolidate its financial results with the variable interest entity. The primary beneficiary of a variable interest entity is the party that absorbs a majority of the entity’s expected losses, receives a majority of its expected residual returns, or both. The Company has evaluated our relationship with Huludao Wonder and has concluded that Huludao Wonder is a variable interest entity for accounting purposes.
 
Yongke Xue, the Chairman of the Board and Chief Executive Officer of the Company, owns 80% of the equity interest of Hede, and Xiaoqin Yan, a director of Shaanxi Tianren, owns the remaining 20% of Hede. Hede leases to Shaanxi Tianren all of the assets and facilities of Huludao Wonder under a Lease Agreement dated June 2, 2007 between Hede and Shaanxi Tianren. The lease is for a term of one year from July 1, 2007 to June 30, 2008. The monthly rent under the lease is RMB 300,000 (approximately $41,070 according to the exchange rate as of December 31, 2007). In 2007, Shaanxi Tianren loaned to Hede an aggregate of RMB 27 million (approximately $3,696,301) interest-free loan pursuant to a Loan Agreement entered into by the parties on June 5, 2007. The loan was made to enable Hede to purchase the Huludao Wonder. The loan is due on August 1, 2008.
 
The contractual agreement with Hede was in effect on June 1, 2007. As a result of the contractual arrangements, Shaanxi Tianren become the primary beneficiary of Huludao Wonder. Accordingly, the Company adopted the provisions of FIN 46R and consolidated the financial results of Huludao Wonder from June 1, 2007.
 
The Company accounted for the purchase as a reorganization of entities under common control to consolidate Huludao Wonder with the assets and liabilities recorded at their carrying values on the books of Hede.  The book value of the consolidated net assets of Huludao Wonder was RMB 48,250,000 (approximately $6,308,591 based on the exchange rate of June 1, 2007).

 
 
F-28
 

 
The following table summarizes the book value of Huludao Wonder’s assets and liabilities as of June 1, 2007:
 
ASSETS
        
 Cash
  
$
7,567
  
 Accounts receivable, net
    
2,387,711
  
 Other receivables
    
29,244
  
 Inventory
    
57,948
  
 Fixed assets
    
6,934,219
  
 Intangible asset
    
3,262,566
  
 Other assets
    
27,486
  
TOTAL ASSETS
  
$
12,706,741
  
         
LIABILITIES
        
 Accounts payable
  
$
20,642
  
 Other payables
    
101,603
  
 Loans payable
    
6,275,905
  
TOTAL LIABILITIES
  
$
6,398,150
  
         
 NET ASSETS (Minority Interest-V.I.E.)
  
$
6,308,591
  
 
Economic and Political Risks
 
The Company faces a number of risks and challenges as a result of having primary operations and marketing in the PRC. Changing political climates in the PRC could have a significant effect on the Company’s business.
 
Control by Principal Stockholders
 
The directors, executive officers and their affiliates or related parties own, beneficially and in the aggregate, the majority of the voting power of the outstanding shares of the Common Stock of the Company. Accordingly, the directors, executive officers and their affiliates, if they voted their shares uniformly, would have the ability to control the approval of most corporate actions, including increasing the authorized capital stock of the Company and the dissolution, merger or sale of the Company’s assets.
 
Cash and Cash Equivalents
 
For purposes of the statements of cash flows, cash and cash equivalents include cash on hand and demand deposits held by banks. Deposits held in financial institutions in the PRC are not insured by any government entity or agency
 
Accounting for the Impairment of Long-Lived Assets
 
The long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technological or other industrial changes. The determination of recoverability of assets to be held and used is made by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets.

 
 
F-29
 

SKYPEOPLE FRUIT JUICE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell. During the reporting periods there was no impairment loss.
 
Earnings Per Share
 
Basic earnings per Common Stock (“EPS”) are calculated by dividing net income available to common stockholders by the weighted average number of Common Stock outstanding during the period. Our Series A Convertible Preferred Stock is a participating security. Consequently, the two-class method of income allocation is used in determining net income available to common stockholders.
 
Diluted EPS is calculated by using the treasury stock method, assuming conversion of all potentially dilutive securities, such as stock options and warrants. Under this method, (i) exercise of options and warrants is assumed at the beginning of the period and shares of Common Stock are assumed to be issued, (ii) the proceeds from exercise are assumed to be used to purchase Common Stock at the average market price during the period, and (iii) the incremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) are included in the denominator of the diluted EPS computation. The numerators and denominators used in the computations of basic and diluted EPS are presented in the following table.
 
   
Year ended December 31,
  
   
2007
  
2006
  
               
NUMERATOR FOR BASIC AND DILUTED EPS
              
Net income (numerator for Diluted EPS)
  
$
7,596,403
  
$
3,845,270
  
Net income allocated to Preferred Stock
    
—
    
—
  
Net income to common stockholders (Basic)
  
$
7,596,403
  
$
3,845,270
  
               
DENOMINATORS FOR BASIC AND DILUTED EPS
              
Common Stock outstanding
    
22,006,173
    
22,006,173
  
               
DENOMINATOR FOR BASIC EPS
              
Add: Weighted average preferred as if converted
    
—
    
—
  
               
DENOMINATOR FOR DILUTED EPS
    
22,006,173
    
22,006,173
  
               
EPS – Basic
  
$
0.35
  
$
0.17
  
EPS – Diluted
  
$
0.35
  
$
0.17
  
               
 
Shipping and Handling Costs
 
Shipping and handling amounts billed to customers in related sales transactions are included in sales revenues. The shipping and handling expenses of $625,416 and $491,519 for 2007 and 2006, respectively, are reported in the Consolidated Statement of Income as a component of selling expenses.
 
Accumulated Other Comprehensive Income
 
Accumulated other comprehensive income represents foreign currency translation adjustments.

 
 
F-30
 

SKYPEOPLE FRUIT JUICE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
Trade Accounts Receivable
 
During the normal course of business, we extend unsecured credit to our customers. Accounts receivable and other receivables are recognized and carried at the original invoice amount less an allowance for any uncollectible amount. Allowance is made when collection of the full amount is no longer probable. Management reviews and adjusts this allowance periodically based on historical experience, the current economic climate, as well as its evaluation of the collectability of outstanding accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Based on the information available to management, the Company believed that its allowance for doubtful accounts was adequate as of December 31, 2007. The Company evaluates the credit risks of its customers utilizing historical data and estimates of future performance.
 
Inventories
 
Inventories consist primarily of raw materials and packaging (which include ingredients and supplies) and finished goods (which includes finished juice in our bottling and canning operations). Inventories are valued at the lower of cost or market. We determine cost on the basis of the average cost or first-in, first-out methods.
 
Inventories consisted of:
 
   
December 31,
2007
  
December 31,
2006
  
Raw materials and packaging
  
$
255,936
  
$
438,414
  
Finished goods
    
4,204,213
    
327,297
  
Inventories
  
$
4,460,149
  
$
765,711
  
 
Intangible Assets
 
The Company adopted the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”), effective January 1, 2002. Under SFAS 142, goodwill and indefinite lived intangible assets are not amortized, but are reviewed annually for impairment, or more frequently, if indications of possible impairment exist. The Company has no indefinite lived intangible assets.
 
Revenue Recognition
 
We recognize revenue upon meeting the recognition requirements of Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition.” Revenue from sales of the Company’s products is recognized upon shipment or delivery to its distributors or end users, depending upon the terms of the sales order, provided that persuasive evidence of a sales arrangement exists, title and risk of loss have transferred to the customer, the sales amount is fixed and determinable and collection of the revenue is reasonably assured. More than 70% of our products are exported either through distributors or to end users. Of this amount, 80% of the revenue is exported through distributors. Our general sales agreement requires the distributors to pay us after we deliver the products to them, which is not contingent on resale to end customers. Our credit terms for distributors with good credit history is from 30 days to 90 days. For new customers, we usually require 100% advance payment for direct export sales. Customer advances are recorded as unearned revenue, which is a current liability. Our payment terms with distributors are not determined by the distributor’s resale to the end customer. According to our past collection history, the bad debt rate of our accounts receivables is very low. The problem of quality hardly occurred during production, storage and transportation due to our maintaining strict standards during the entire process. The Company has no history of returned products. Accordingly, no provision has been made for returnable goods. We are not required to rebate or credit a portion of the original fee if we subsequently reduce the price of our product and the distributor still has right with respect to that product.

 
 
F-31
 

SKYPEOPLE FRUIT JUICE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
Advertising and Promotional Expense
 
Advertising and promotional costs are expensed as incurred. The Company incurred $12,945, and $5,431 in advertising and promotional costs for the years ended December 31, 2007 and 2006, respectively.
 
Estimates
 
The preparation of financial statements in conformity with United States’ Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. The significant areas requiring the use of management estimates include the provisions for doubtful accounts receivable, useful life of fixed assets and valuation of deferred taxes. Although these estimates are based on management’s knowledge of current events and actions management may undertake in the future, actual results may ultimately differ from those estimates.
 
Property, Plant and Equipment
 
Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the useful lives of the assets. Major renewals and betterments are capitalized and depreciated; maintenance and repairs that do not extend the life of the respective assets are charged to expense as incurred. Upon disposal of assets, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in income. Depreciation related to property and equipment used in production is reported in cost of sales. Property and equipment are depreciated over their estimated useful lives as follows:
 
Buildings
20-30 years
Machinery and equipment
10 years
Furniture and office equipment
5 years
Motor vehicles
5 years 

   
December 31,
2007
  
December 31,
2006
  
Machinery and equipment
  
$
13,672,861
  
$
8,386,700
  
Furniture and office equipment
    
200,266
    
57,006
  
Motor vehicles
    
193,899
    
155,769
  
Buildings
    
6,489,513
    
2,990,250
  
Subtotal
    
20,556,539
    
11,589,725
  
Less: accumulated depreciation
    
(2,992,392
)
  
(1,507,750
)
Net property and equipment
  
$
17,564,147
  
$
10,081,975
  
 
Depreciation expense included in general and administration expenses for the years ended December 31, 2007 and 2006 was $188,100 and $162,123, respectively. Depreciation expense included in cost of sales for the years ended December 31, 2007 and 2006 was $1,138,102 and $1,314,552, respectively.
 
Long-term assets of the Company are reviewed annually to assess whether the carrying value has become impaired according to the guidelines established in Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” No impairment of assets was recorded in the periods reported.

 
 
F-32
 

SKYPEOPLE FRUIT JUICE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
Foreign Currency and Comprehensive Income
 
The accompanying financial statements are presented in U.S. dollars. The functional currency is the renminbi (“RMB”) of the PRC. The financial statements are translated into U.S. dollars from RMB at year-end exchange rates for assets and liabilities, and weighted average exchange rates for revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.
 
On July 21, 2005, the PRC changed its foreign currency exchange policy from a fixed RMB/USD exchange rate into a flexible rate under the control of the PRC’s government. We use the closing rate method in currency translation of the financial statements of the Company. RMB is not freely convertible into the currency of other nations. All such exchange transactions must take place through authorized institutions. There is no guarantee the RMB amounts could have been, or could be, converted into U.S. dollars at rates used in translation.
 
Taxes
 
Income tax expense is based on reported income before income taxes. Deferred income taxes reflect the effect of temporary differences between assets and liabilities that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. In accordance with Statement of Financial Accounting Standards (“SFAS”) No.109, Accounting for Income Taxes, these deferred taxes are measured by applying currently enacted tax laws.
 
The Company has implemented SFAS No.109, Accounting for Income Taxes, which provides for a liability approach to accounting for income taxes. Deferred income taxes result from the effect of transactions that are recognized in different periods for financial and tax reporting purposes. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of FIN 48.
 
Restrictions on Transfer of Assets Out of the PRC
 
Dividend payments by Shaanxi Tianren and its subsidiaries are limited by certain statutory regulations in the PRC. No dividends may be paid by Shaanxi Tianren without first receiving prior approval from the Foreign Currency Exchange Management Bureau. Dividend payments are restricted to 85% of profits, after tax.
 
Minority Interest in Subsidiaries
 
Minority interest represents the minority stockholders’ proportionate share of 1% of the equity of Shaanxi Tianren and 8.85% of the equity of Xi’an Tianren.
 
FIN 46R requires the primary beneficiary of the variable interest entity to consolidate its financial results with the variable interest entity. SkyPeople has evaluated its relationship with Huludao Wonder and has concluded that Huludao Wonder is a variable interest entity for accounting purposes.
 
New Accounting Pronouncements
 
In March 2008, The Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities. The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company has not completed its evaluation of the potential impact, if any, of the adoption of SFAS No. 161 on its consolidated financial position, results of operations and cash flows.

 
 
F-33
 

SKYPEOPLE FRUIT JUICE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
In December 2007, the SEC published Staff Accounting Bulletin (“SAB”) No. 110, which amends SAB No. 107 by extending the usage of a “simplified” method, as discussed in SAB No. 107, in developing an estimate of expected term of “plain vanilla” share options in accordance with SFAS No. 123 (revised 2004), Share-Based Payment. In particular, the SEC indicated in SAB 107 that it will accept a company’s election to use the simplified method, regardless of whether the company has sufficient information to make more refined estimates of expected terms. The Company does not expect that the adoption of this EITF will have a material impact on its consolidated results of operations or financial position.
 
In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations, (“SFAS No. 141(R)”), and SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB No. 51 (“SFAS No. 160”). These new standards are the U.S. GAAP outcome of a joint project with the International Accounting Standards Board (“IASB”). SFAS No. 141(R) and SFAS No. 160 introduce significant changes in the accounting for and reporting of business acquisitions and non-controlling interests in a subsidiary. SFAS No. 141(R) and SFAS No. 160 continue the movement toward the greater use of fair values in financial reporting and increased transparency through expanded disclosures. SFAS No. 141(R) changes how business acquisitions are accounted for and will impact financial statements at the acquisition date and in subsequent periods. SFAS No. 160 requires non-controlling interests (previously referred to as minority interests) to be reported as a component of equity, which changes the accounting for transactions with non-controlling interest holders. SFAS No. 141(R) and SFAS No. 160 are effective for our fiscal 2009. The Company believes the adoption of SFAS No. 141(R) and SFAS No. 160 will have an impact on the accounting for future acquisitions.
 
In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, or SFAS No. 159. SFAS No. 159 permits, but does not require, entities to choose to measure eligible items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided that a company also elects to apply the provisions of SFAS No. 157, “Fair Value Measurements.” Management is in the process of assessing if this statement will have a material impact on the Company’s financial statements once adopted.
 
3.           INCOME TAX
 
Prior to 2007, the Company was subject to a 33% income tax rate by the PRC. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of FIN 48. Shaanxi Tianren was awarded the status of a nationally recognized High and New Technology Enterprise in December 2006, which entitled Shaanxi Tianren to tax-free treatment for two years starting from 2007, and thereafter reduced income taxes at 50% of its regular income tax rate then effective from 2009 to 2010. In December 2007, the tax rate of Xi’an Tianren was reduced from 33% to 25%, effective beginning January 2008.
 
The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of FIN 48. The current year tax was $1,109,160 and $2,035,675 for fiscal year 2007, and 2006, respectively. The Company has recorded no deferred tax assets or liabilities as of December 31, 2007 and 2006, since nearly all differences in tax basis and financial statement carrying values are permanent differences.
 
Income Tax Expenses
  
December 31, 2007
  
December 31, 2006
  
Current
  
$
1,109,106
  
$
2,035,675
  
Deferred
    
—
    
—
  
Total
  
$
1,109,106
  
$
2,035,675
  

 
 
F-34
 

SKYPEOPLE FRUIT JUICE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
4.           LAND USAGE RIGHTS
 
According to the laws of the PRC, the government owns all of the land in the PRC. Companies or individuals are authorized to possess and use the land only through land use rights granted by the PRC government. Accordingly, the Company paid in advance for land use rights. Prepaid land use rights are being amortized and recorded as lease expenses using the straight-line method over the use terms of the lease, which is 20 to 50 years. The amortization expenses were $128,544 and $63,799 for fiscal year 2007 and 2006, respectively.
 
5.           RELATED PARTIES RECEIVABLES
 
During the year, the Company had some outstanding loans to related entities with common owners and directors. The loans are unsecured and bear no interest. These loans have no fixed payment terms. The loans balance at December 31, 2007 and 2006 totaled $4,970,427 and $419,523, respectively.
 
Name of Related Party to Whom Loans were Given
  
December 31,
2007
  
Relation
  
           
Mr. Andu Liu
  
$
22,177
    
Former Shareholder of Shaanxi Tianren
  
               
Mr. Ke Lu
  
$
7,734
    
Manager of Shaanxi Tianren
  
               
Shaanxi Hede Investment Management Co., Ltd. (“Hede”)
  
$
4,490,173
    
Former shareholder of Shaanxi Tianren
  
               
Xi’an Hede Investment Consultation Co., Ltd.
  
$
101,286
    
The Managing Director of Xi’an Hede is one of the family members of the Chairman of Shaanxi Tianren
  
               
Shaanxi Xirui Group Co., Ltd.
  
$
198,216
    
Shareholder of Xi’an Tianren
  
               
Yingkou Trusty Fruits Co., Ltd. (“Yingkou”)
  
$
77,212
    
Hede is one of the shareholders of Yingkou
  
               
Shaanxi Fruits Processing Co., Ltd.
  
$
73,629
    
Former shareholder of Shaanxi Tianren
  
               
Total Loan to Related Parties
  
$
4,970,427
        

Name of Related Party to Whom Loans were Given
    
December 31,
2006
    
Relation
  
Ms Yao Li
  
$
6,403
    
Former Shareholder of Shaanxi Tianren
  
               
Shaanxi Hede Investment Management Co., Ltd
              
   
$
174,149
    
Former Shareholder of Shaanxi Tianren
  
Xi’an Qinmei Food Co., Ltd. (“Xi’an Qinmei”)
  
$
238,971
    
Shareholder of Xi’an Tianren
  
               
Total Loan (from) Related Parties
  
$
419,523
        

 
 
F-35
 

SKYPEOPLE FRUIT JUICE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
6.           RELATED PARTY PAYABLES
 
The Company has the outstanding borrowing from its shareholders and related entities with common owners and directors which amounted to$143,366 and $1,950,892 as of December 31, 2007 and 2006, respectively. These loans bear no interest and have no fixed payment terms.

 
Name of Related Party from Whom Loans were Received
  
December 31, 2007
    
Relation
  
               
Mr. Guang Li
  
$
(137
)
  
Director of Shaanxi Tianren
  
               
Mr. Yongke Xue
  
$
(32,308
)
  
Former Shareholder of Shaanxi Tianren
  
               
Ms. Yuan Cui
  
$
(62,387
)
  
Former Shareholder of Shaanxi Tianren
  
               
Mr. Hongke Xue
  
$
(48,397
)
  
President of Shaanxi Tianren
  
               
Ms. Xiaoqin Yan
  
$
(137
)
  
Director of the Company
  
Total
  
$
(143,366
)
      

Name of Related Party from Whom Loans were Received
  
December 31, 2006
    
Relation
  
Mr. Hongke Xue
  
$
(1,233
)
  
President of Shaanxi Tianren
  
Ms. Yuan Cui
  
$
(135,197
)
  
Former Shareholder of Shaanxi Tianren
  
               
Mr. Yongke Xue
  
$
(30,223
)
  
Former Shareholder of Shaanxi Tianren
  
Xi’an Hede Investment Consultation Co., Ltd.
  
$
(1,464,108
)
  
The Managing Director of Xi’an Hede is one of the family members of the Chairman of Shaanxi Tianren
  
               
Mr. Andu Liu,
  
$
(25,589
)
  
Shareholder of Xi’an Tianren
  
               
Shaanxi Xirui Group Co., Ltd.
  
$
(230,512
)
  
Shareholder of Xi’an Tianren
  
               
Mr. Xiujun Wang
  
$
(64,030
)
  
Shareholder of Xi’an Tianren
  
Total
  
$
(1,950,892
)
      
 
7.           LOAN PAYABLE
 
During 2007, the Company borrowed a short-term loan from a bank in the amount of RMB 54,000,000 ($7,392,602 based on the exchange rate as of December 31, 2007) with an interest rate ranging from 5.40% to 9.48% per annum due from January 2008 to September 2008. During December 2007, a short-tem loan of RMB 720,000 ($985,680) was paid off. At December 31, 2007, the short -term loan balance was $6,406,922.
 
During 2007, the Company borrowed a long-term loan from a bank in the amount of RMB 15,000,000 ($2,053,501 based on the exchange rate of December 31, 2007) at the bank’s prime rate of 9.49% plus a floating rate per annum. The loan has a term of two years from the date of draw down. The principal of RMB 10,000,000 ($1,369,000) is due on July 10, 2009, and the balance of RMB 5,000,000 ($684,501) is due on September 20, 2009. At December 31, 2007, the long-term loan balance was $2,053,501.

 
 
F-36
 

SKYPEOPLE FRUIT JUICE INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
8.           VALUE ADDED TAX
 
On December 13, 1993, The State Council of China promulgated The Provisional Regulation of the People’s Republic of China on Value Added Tax, which was put into effect on January 1, 1994 and is currently effective in China. According to The Provisional Regulation of the PRC on Value-Added Tax (“VAT”), VAT should be paid by enterprises or individuals who sell merchandise, provide processing, repairing, or assembling services, or import goods within the territory of the People’s Republic of China on the added value derived from their production, sales of merchandise, industrial repairing or assembling services. Exports from China are not subject to value added tax. The VAT tax rate for the Company is 17%. At December 31, 2007 and 2006, unpaid taxes payable amounted to $114,909 and $1,583,884, respectively.
 
9.           ACCQUISITION OF XI’AN TIANREN
 
The acquisition of the equity interest in Xi’an Tianren was effective on May 26, 2006 after the agreement was signed and consideration paid. The purchase price of RMB 36,460,000 (U.S. $4,573,221) was determined by the parties based upon the market value of the assets and business potential of Xi’an Tianren.
 
The fair value of the Xi’an Tianren assets and liabilities at the date of acquisition are presented below:
 
Cash
  
$
359,559
  
Accounts receivable
    
1,147,265
  
Inventories
    
101,945
  
Advances to suppliers
    
162,618
  
Other receivables
    
3,484
  
Related party receivables
    
260,879
  
Property, plant and equipment
    
3,634,559
  
Prepaid land leases
    
1,293,966
  
Accounts payable
    
(344,382
)
Accrued payroll and welfare
    
(51,983
)
Related party payables
    
(1,549,051
)
Other payables
    
(1,612
)
Net assets acquired
    
5,017,247
  
Less minority interest
    
(444,026
)
Purchase price
  
 
4,573,221
  
Less cash acquired
    
(359,559
)
Net cash paid
     $
4,213,662
  
 
The following pro forma information is presented on a consolidated basis as if the acquisition took place at the beginning of the period presented.
 
   
Year ended December 31,
  
   
2006
  
Revenues
  
$
19,793,060
  
Income before extraordinary items and the cumulative effect of accounting changes
  
$
4,310,695
  
Net income
  
$
4,310,695
  
Earnings per share
    
N/A
  

 
 
F-37
 

SKYPEOPLE FRUIT JUICE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
10.           CONTINGENCIES
 
The Company has not, historically, carried any property or casualty insurance and has never incurred property damage or incurred casualty losses. Management feels the chances of such an obligation arising are remote. Accordingly, no amounts have been accrued for any liability that could arise from a lack of insurance.
 
Deposits in banks in the PRC are not insured by any government entity or agency, and are consequently exposed to risk of loss. Management believes the probability of a bank failure, causing loss to the Company, is remote.
 
11.           CONCENTRATIONS, RISKS AND UNCERTAINTIES
 
The Company has the following concentrations of business with one customer constituting greater than 10% of the Company’s revenue:
 
   
For years ended December 31,
  
Major Customer
  
2007
  
2006
  
China National Electronic Import and Export Shaanxi Co., Ltd.
    
N/A
    
14
%
Shaanxi Jiedong Trade Company, Ltd.
    
N/A
    
16
%
Yunnan Machinery Import and Export Company, Ltd.
    
N/A
    
12
%
Hebei Rifong Food Company
    
N/A
    
N/A
  
 
The Company has not experienced any significant difficulty in collecting its accounts receivable in the past and is not aware of any financial difficulties being experienced by its major customers. There was bad debt expense of $0 and $424 during the years ended December 31, 2007 and 2006, respectively.
 
The Company has the following concentrations of business with two vendors constituting greater than 10% of the Company’s purchases:
 
     
For years ended December 31,
  
Major Vendors
    
2007
    
2006
  
Shaanxi Longchang Steel Drum Production Co., Ltd.
    
N/A
    
13
%
Xi’an Steel Drum Production Factory of Shaanxi Haomai Industry and Trade Co., Ltd.
              
N/A
          
13
%
 
12.           RELATED PARTY TRANSACTIONS
 
During the year ended December 31, 2006, the Company made sales of $109,910 to Xi’an Qinmei Food Co., Ltd., which is an 8.85% shareholder of Xi’an, and purchased a car for $30,008 from Yongke Xue, the CEO and Chairman of the Company. The sales were made at the same prices and on other terms no less favorable to the Company than it could obtain in arms length transactions.
 
During the year ended December 31, 2007, the Company made a loan of $198,216 to Shaanxi Xirui Group Co. Ltd, which is a shareholder of former Xi’an Tianren.

 
 
F-38
 


SKYPEOPLE FRUIT JUICE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
Yongke Xue, the Chairman of the Board, and Chief Executive Officer of the Company, owns 80% of the equity interest of Shaanxi Hede Investment Management Co., Ltd. (“Hede”), a PRC company. Xiaoqin Yan, a director of Shaanxi Tianren, owns the remaining 20% of Hede.
 
On May 31, 2007, Huludao Wonder was acquired by Hede at the fair market price of RMB 48,250,000, which was based on a third party valuation. At the time Hede acquired Huludao Wonder, both Hede and Shaanxi Tianren intended that Huludao Wonder would be sold to Shaanxi Tianren after a one year holding period. The management of Shaanxi Tianren wanted an affiliate to run Huludao Wonder first to make sure there were no issues before it was conveyed to Shaanxi Tianren. Shaanxi Tianren participated significantly in the design of this purchase transaction, and the purchase price was agreed upon by the Board of Shaanxi Tianren. The purchase agreement under which Hede acquired Huludao Wonder required that installments of the purchase price be paid as follows: RMB 10,000,000 on June 10, 2007; RMB 20,000,000 before September 2007; and RMB 18,250,000 before March 31, 2008. Immediately following the acquisition, Hede leased to Shaanxi Tianren all of the assets and facilities of Huludao Wonder under a Lease Agreement dated June 2, 2007 between Hede and Shaanxi Tianren (the “Huludao Lease”). The Huludao Lease was for a term of one year from July 1, 2007 to June 30, 2008. The monthly rent under the Huludao Lease was RMB 300,000 (approximately $42,367). Upon execution of the lease, Hede was paid RMB 1.8 million, representing the first 6 months rent, and a refundable security deposit of RMB 1.2 million.
 
On June 6, 2007 Shaanxi Tianren loaned to Hede RMB 7 million (approximately $958,300 based on the exchange rate as of December 31, 2007) pursuant to a Loan Agreement entered into by the parties on June 5, 2007. The entire principal of the loan was due on June 5, 2008. The proceeds of such loan (as well an aggregate of RMB 3,000,000 received as a prepayment of rent and a security deposit on the Huludao Lease) were used by Hede to pay a portion of the purchase price for its acquisition of Huludao Wonder.
 
On August 1, 2007 Shaanxi Tianren loaned to Hede RMB 20 million (approximately $2,738,001 based on the exchange rate as of December 31, 2007) pursuant to a Loan Agreement entered into by the parties on such date. The loan was due on August 1, 2008. The loan agreement provides that no interest shall accrue on the outstanding amount of the loan, but if Hede does not pay the outstanding loan when due, then it shall be required to pay in addition to the principal of the loan liquidated damages at the rate of 2% of the loan amount per day. Before August 27, 2007, the total amount of RMB 20 million in cash was transferred to Hede.
 
In December 2007, Shaanxi Tianren made additional advances aggregating RMB 4,544,043 (approximately $622,800 based on the exchange rate as of December 31, 2007) to Hede. These advances are unsecured and bear no interest. These advances also have no fixed payment terms. The proceeds from these loan advances were transferred to Huludao Wonder directly on behalf of Hede for the purchase price of Huludao Wonder.
 
13.           MINORITY INTEREST-VARIABLE INTEREST ENTITY
 
On June 2, 2007, Shaanxi Tianren entered into a lease agreement with Hede pursuant to which Shaanxi Tianren, for a term of one year and for a monthly lease payment of RMB300,000, leased all the assets and operating facilities of Huludao Wonder, which is wholly-owned by Hede. This lease arrangement resulted in the combination of Huludao Wonder’s operating results with those of Shaanxi Tianren as of June 1, 2007 and forward.
 
FIN 46R requires the primary beneficiary of the variable interest entity to consolidate its financial results with the variable interest entity. SkyPeople has evaluated its relationship with Huludao Wonder and has concluded that Huludao Wonder is a variable interest entity for accounting purposes.

 
 
F-39
 

 

SKYPEOPLE FRUIT JUICE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
Pro Forma Financial Information
 
The following pro forma information is presented on a consolidated basis as if the acquisition took place at the beginning of the period presented.
 
The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the acquisition taken place at the beginning of the period presented. The unaudited pro forma combined statements of operations combine the historical results of the Company and the historical results of the acquired entity for the periods described above.
 
   
Year ended December 31,
  
   
2006
  
Revenues
  
$
22,156,425
  
Income before extraordinary items and the cumulative effect of accounting changes
  
$
3,860,134
  
Net income
  
$
3,860,134
  
Earnings per share
    
N/A
  
 
Note: The currency exchange rate is based on the average exchange rate of the related period.
 
14.            SUBSEQUENT EVENT
 
On May 23, 2008, we amended the Company’s Articles of Incorporation and changed its name to SkyPeople Fruit Juice, Inc. to better reflect our business. The 1-for- 328.72898 reverse stock split of the outstanding shares of Common Stock and a mandatory 1-for-22.006 conversion of Series A Preferred Stock, which had been approved by written consent of the holders of a majority of the outstanding voting stock, were also effective on May 23, 2008.

 
 
F-40
 

PART II:
 
INFORMATION NOT REQUIRED IN PROSPECTUS
 
Item 13. Other Expenses of Issuance and Distribution.
 
Although we will not receive any of the proceeds from the sale of the shares being registered in this registration statement, we have agreed to bear the costs and expenses of the registration of those shares. Our expenses in connection with the issuance and distribution of the securities being registered, other than the underwriting discount, are as follows:
 
SEC Registration Fee
  
$
827.00
  
Professional Fees and Expenses
  
$
225,000.00
*
Printing and Engraving Expenses
  
$
5,000.00
*
Transfer Agent’s Fees
  
$
2,500.00
*
Miscellaneous Expenses
  
$
3,000.00
*
Total
  
$
236,327.00
*
 
*Estimates
 
Item 14. Indemnification of Directors and Executive Officers.
 
The Florida Business Corporation Act provides that a person who is successful on the merits or otherwise in defense of an action because of service as an officer or director of a corporation, such person is entitled to indemnification of expenses actually and reasonably incurred in such defense. F.S. 607.0850(3)
 
Such act also provides that the corporation may indemnify an officer or director, advance expenses, if such person acted in good faith and in a manner the person reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to a criminal action, had no reasonable cause to believe his conduct was unlawful. F.S. 607.0850(1)(2).
 
A court may order indemnification of an officer or director if it determines that such person is fairly and reasonably entitled to such indemnification in view of all the relevant circumstances. F.S.607.0850(9).
 
Article VIII of our Amended and Restated Articles of Incorporation authorizes us, among other things, to indemnify our officers, directors, employees or agents against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by them in connection with certain actions, suits or proceedings if they acted in good faith and in a manner in which they reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, has no reasonable cause to believe their conduct was unlawful. Article VII of our By—laws authorizes us to indemnify our officers and directors to the fullest extent authorized or permitted by the Florida Business Corporation Act.
 
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed hereby in the Securities Act and we will be governed by the final adjudication of such issue.

 
 
II-1
 

 
Item 15. Recent Sales of Unregistered Securities.
 
Under the Share Exchange Agreement, on February 26, 2008, we issued 1,000,000 shares of our Series A Stock in exchange for all of the outstanding shares of the Common Stock of Pacific. At the completion of that share exchange, Pacific became the Company’s wholly owned subsidiary. The Share Exchange was accomplished in reliance upon Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”).
 
In connection with the Share Exchange, on February 26, 2008, the Company issued 2,833,333 shares of Series B Stock and warrants to purchase 7,000,000 shares of Common Stock (the “Warrants”) to two investors, in exchange for a cash payment in the amount of $3,400,000. The issuance of the Series B Stock was accomplished in reliance upon Section 4(2) of the Securities Act. Under the stock purchase agreement relating to such sale, the Company also deposited 2,000,000 shares of the Series B Stock into an escrow account to be held by an escrow agent as make good shares in the event the Company’s consolidated pre-tax income and pre-tax income per share, on a fully-diluted basis, for the years ended December 31, 2007, 2008 or 2009 are less than certain pre-determined target numbers.
 
On February 26, 2008, the Company issued to Barron Partners an aggregate of 615,147 shares of Series B Stock in exchange for the cancellation of all principal and accrued interest aggregating approximately $5,055,418 on certain promissory notes of the Company held by Barron. The issuance of the Series B Stock was accomplished in reliance upon Section 4(2) of the Securities Act. All the Company’s outstanding convertible notes were converted into an aggregate of 615,147 shares of Series B Preferred Stock, which will be convertible into an aggregate of 615,147 shares of Common Stock upon effectiveness of the Reverse Split. The 615,147 shares of Common Stock issuable upon conversion of the Series B Preferred Stock which were issued in satisfaction of the convertible notes represents only approximately 2.4% of Common Stock post-reverse stock split. Moreover, the Company is not obligated to register the resale of such 615,147 shares and has not included such shares in the S-1 it has filed.
 
On February 22, 2008 the Company issued to the persons set forth in the table below the number of shares of Common Stock set forth opposite the name of such person for the consideration set forth opposite the name of the person. All of such shares were issued in reliance upon an exemption from registration pursuant to Section 4(2) of the Securities Act.
 
Name
Number of Shares Issued
Consideration for Issuance
Grover Moss
59,060
  
Cancellation of indebtedness
Joseph I. Emas
37,098
  
Past services
Walker Street Associates
37,098
  
Past services
Terence Leong
2,890
  
Past services
Burr Northrop
31,941
  
Past services
 
As part of a settlement with its former Chairman and Chief Executive Officer, Steven Rosenthal, the Company issued to him 913 shares of its Common Stock during December 2007. The issuance of the Common Stock was accomplished in reliance upon Section 4(2) of the Securities Act.
 
As part of a settlement with our former registered accounting firm, RBSM, the Company issued 138 shares of the Company’s Common Stock during December 2007. The issuance of the Common Stock was accomplished in reliance upon Section 4(2) of the Securities Act.

        During the year ended September 30, 2006, the Company issued 12,853 shares that were previously subscribed. The issuance of the Common Stock was accomplished in reliance upon Section 4(2) of the Securities Act.
 
As of June 30, 2006, the Company sold units consisting of convertible notes that are convertible into 190,735 Common Stock and warrants that are exercisable for 60,536 Common Stock. Conversion of the convertible notes and exercise of the warrants are limited such that the note holder cannot convert notes or exercise warrants that would result in beneficial ownership by the holder or its affiliates of more than 4.9% of the outstanding Common Stock on the conversion or exercise date.
 
The offer and sale of such shares of our Common Stock were effected in reliance on the exemptions for sales of securities not involving a public offering, as set forth in Rule 506 promulgated under the Securities Act of 1933, as amended (the “Securities Act”) and in Section 4(2) of the Securities Act.
 
During the three months ended March 31, 2006, the Company cancelled 4,563 shares previously issued to a former employee and issued 913 shares to replace the cancelled shares pursuant to an agreement between the Company and the former employee. The Company issued 304 shares for public relations services and recorded compensation expense of $5,000 based on the closing market price of $16.45 on the date of issuance, April 4, 2006. The issuance of the Common Stock was accomplished in reliance upon Section 4(2) of the Securities Act.
 
During the three months ended December 31, 2005, the Company entered into a settlement agreement with a vendor to satisfy accounts payable totaling $162,935. Terms of the agreement provided for payment in cash of $35,000, and the issuance of 3,042 shares of Common Stock. The Common Stock issued were valued at $90,000, or $29.59 per share, which was the fair market value of the Common Stock on the agreement date. The resulting gain on settlement totaling $37,935 was recorded as other income. The issuance of the Common Stock was accomplished in reliance upon Section 4(2) of the Securities Act.
 
In December 2005, the Company entered into settlement agreement with a law firm in which the Company issued 684 shares of Common Stock. The services were performed during the year ended September 30, 2005, legal expense of $36,000 ($52.63 per share) was recorded during the year ended September 30, 2005 based on the fair market value of the Common Stock, and the shares were subscribed for issuance as of September 30, 2005.
 
II-2
During the three months ended September 30, 2005, the Company subscribed 12,168 shares of Common Stock to investors at $.8.22 per share for cash, and received proceeds of $100,001. The Company also issued 2,434 shares to a related party to convert $50,000 of notes and $10,000 of interest payable when the fair market value of the stock was $24.65 per share. The Company issued 608 shares as incentive compensation to an employee when the fair market value of the stock was $24.67 and recorded $15,000 as compensation expense. The issuance of the Common Stock was accomplished in reliance upon Section 4(2) of the Securities Act.
 
During the three months ended June 30, 2005, the Company issued 51 shares of Common Stock to investors in an earlier sale of Common Stock as a goodwill restructuring of the terms of the previous sale. The Company charged the amount of $17 to additional paid-in capital. The issuance of the Common Stock was accomplished in reliance upon Section 4(2) of the Securities Act.
 
During the three months ended March 31, 2005, the Company issued 4,563 shares of Common Stock to a former officer and director and recorded compensation expense of $90,000. The shares were recorded at their market price of $19.72 per share as of the date of the agreement pertaining to the issuance. The issuance of the Common Stock was accomplished in reliance upon Section 4(2) of the Securities Act.
 
Item 16. Exhibits and Financial Statement Schedules.
 
(a) Exhibits
 
2.1 Share Exchange Agreement, dated as of February 22, 2008 by and among Pacific Industry Holding Group Co. Ltd. (“Pacific”), Terrence Leong, the Company and the shareholders of Pacific. (1)
 
3.1 Amended and Restated Articles of Incorporation of SkyPeople Fruit Juice, Inc. (2)
 
3.3 Certificate of Designations, Preferences and Rights of the Company’s Series A Convertible Preferred Stock. (1)
 
3.4 Certificate of Designations, Preferences, Rights and Limitations of the Company’s Series B Convertible Preferred Stock. (1)
 
3.5 Bylaws of Entech, Inc. (2)
 
4.1 Warrants issued to Barron Partners LP, dated as of February 25, 2008. (2)
 
4.2 Warrants issued to EOS Holdings LLC, dated as of February 25, 2008. (2)
 
5.1 Legal Opinion of Guzov Ofsink, LLC re legality of the Common Stock being registered.**
 
9.1 Voting Trust Agreement, dated as of February 25, 2008, by and among Fancylight Limited and Hongke Xue.(2)
 
9.2 Voting Trust and Escrow Agreement, dated as of February 25, 2008, by and among Winsun Limited and Sixiao An.(2)
 
9.3 Voting Trust and Escrow Agreement, dated as of February 25, 2008, by and among China Tianren Organic Food Holding Company Limited and Lin Bai.(2)
 
10.1 Series B Convertible Preferred Stock Purchase Agreement by and among the Company, Barron Partners LP and EOS Holdings, LLC, dated as of February 25, 2008.(2)
 
10.2 Registration Rights Agreement by and among the Company, Barron Partners LP and EOS Holdings, LLC, dated as of February 25, 2008. (2)
 
10.3 Escrow Agreement by and among Shaanxi Tianren Organic Food Co., Ltd., Barron Partners LP, EOS Holdings, LLC and Tri-state Title & Escrow, LLC, dated as of February 6, 2008.(2)
 
10.4 Make Good Escrow Agreement by and among the Company, Barron Partners LP, EOS Holdings, LLC and Tri-state Title & Escrow, LLC, dated as of February 25, 2008. (2)
 
10.5 Call Option Agreement between Hongke Xue and Fancylight Limited, dated as of February 25, 2008. (2)
 
10.6 Share Transfer Agreement by and among Shaanxi Hede Investment Management Co., Ltd. Niu Hongling, Wang Qifu, Wang Jianping, Zhang Wei, Cui Youming and Yuan Ye, dated as of May 31, 2007.(2)
 
10.7 Lease Agreement between Shaanxi Tianren Organic Food Co., Ltd. and Shaanxi Hede Investment Management Co. Ltd., dated as of June 2, 2007.(2)

 
 
II-3
 

 
10.8 Loan Agreement between Shaanxi Tianren Organic Food Co., Ltd. and Shaanxi Hede Investment Management Co., Ltd., dated as of June 5, 2007.(2)
 
10.9 Loan Agreement between Shaanxi Tianren Organic Food Co., Ltd. and Shaanxi Hede Investment Management Co., Ltd., dated as of August 1, 2007.(2)
 
10.10 Stock Transfer Agreement dated as of May 31, 2008, by and between Shaanxi Tianren Organic Food Co., Ltd. and Shaanxi Hede Investment Management Co., Ltd. (4)
 
10.11 Credit Facility Letter dated July 09, 2004 between Huludao Wonder Fruit Co.，Ltd. and Industrial-Commercial Urban Credit Cooperative **
 
10.12 Credit Facility Letter dated September 25, 2004 between Huludao Wonder Fruit Co.，Ltd. and Industrial-Commercial Urban Credit Cooperative **
 
10.13 Credit Facility Letter dated April 30, 2006 between Huludao Wonder Fruit Co.，Ltd. and Suizhong Branch，Huludao City Commercial Bank **
 
10.14 Credit Facility Letter dated August 03, 2006 between Huludao Wonder Fruit Co.，Ltd. and Suizhong Branch，Huludao City Commercial Bank **
 
10.15 Credit Facility Letter dated September 25, 2006 between Huludao Wonder Fruit Co.，Ltd. and Suizhong Branch，Huludao City Commercial Bank **
 
10.16 Credit Facility Letter dated August 10, 2007 between Shaanxi Tianren Organic Food Co.，Ltd. and Hi-tech Industrial Development Zone, Xi’an branch of China Construction Bank **
 
10.17 Credit Facility Letter dated September 24, 2007 between Shaanxi Tianren Organic Food Co.，Ltd. and Gaoxin Branch of China Construction Bank**
 
10.18 Credit Facility Letter dated September 28, 2007 between Huludao Wonder Fruit Co.，Ltd. and Suizhong Branch，Huludao City Commercial Bank **
 
10.19 Credit Facility Letter dated April 21, 2008 between Shaanxi Tianren Organic Food Co.，Ltd. and Hi-tech Industrial Development Zone, Xi’an branch of China Construction Bank **
 
10.20 Credit Facility Letter dated June 18, 2008 between Shaanxi Tianren Organic Food Co.，Ltd. and Hi-tech Industrial Development Zone, Xi’an branch of China Construction Bank **
 
10.21 Credit Facility Letter dated June 18, 2008 between Shaanxi Tianren Organic Food Co.，Ltd. and Hi-tech Industrial Development Zone, Xi’an branch of China Construction Bank **
 
10.22 Credit Facility Letter dated June 27, 2008 between Huludao Wonder Fruit Co.，Ltd. and Suizhong Branch，Huludao City Commercial Bank **
 
10.23 Credit Facility Letter dated June 27, 2008 between Shaanxi Tianren Organic Food Co.，Ltd. and Hi-tech Industrial Development Zone, Xi’an branch of China Construction Bank **
 
10.24 Credit Facility Letter dated August 10, 2008 between Huludao Wonder Fruit Co.，Ltd. and Suizhong Branch，Huludao City Commercial Bank **
 
10.25 Real Estate Lease, dated June 23, 2008 between Zhonghai Trust Co.,Ltd. and Shaanxi Tianren Organic Food Co., Ltd. for the premises located at the 16th floor of National Development Bank Tower in Xi’an, China **
 
16.1 Letter from Tavarsan Askelson & Company LLP dated March 6, 2008. (3)

 
II-4
 

 
21.1 Description of Subsidiaries of the Company. (2)
 
23.1 Consent of counsel to the use of the opinion annexed at Exhibit 5.1 (contained in the opinion annexed at Exhibit 5.1)
 
23.2 Consent of Child, Van Wagoner & Bradshaw, PLLC**
 
* Previously Filed
 
** Filed herewith
 
(1) Incorporated by reference to our Current Report on Form 8-K filed with the Commission on February 28, 2008.
 
(2) Incorporated by reference to our Current Report on Form 8-K filed with the Commission on March 3, 2008.
 
(3) Incorporated by reference to our Current Report on Form 8-K filed with the Commission on March 6, 2008.
 
(4) Incorporated by reference to our Current Report on Form 8-K filed with the Commission on June 5, 2008.
 
(b) Financial Statement Schedules
 
Item 17. Undertakings.
 
The undersigned Registrant hereby undertakes:
 
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
 
i. To include any prospectus required by Section 10(a)(3) of the Securities Act;
 
ii. To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement;
 
iii. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

 
 
II-5
 

 
(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;
 
(3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.
 
(4) Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

 
 
II-6
 

SIGNATURES
 
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in Shaanxi, PRC, on October 6, 2008.
 
 
SkyPeople Fruit Juice, Inc.
  
     
 
/s/ Yongke Xue
  
     
 
By: Yongke Xue
  
 
Chief Executive Officer and
  
 
Director
  
 
(principal executive officer)
  
 
Pursuant to the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates indicated.
 
Name and Title
  
Date
     
/s/ Yongke Xue
  
October 6, 2008
     
Yongke Xue
    
Chief Executive Officer and Director
    
(principal executive officer)
    
     
/s/ Spring Liu
    
     
Spring Liu
    
Chief Financial Officer
    
(principal financial officer and accounting officer)
October 6, 2008
     
/s/ Xiaoqing Yan
    
     
Xaioqing Yan, Director
  
October 6, 2008
     
/s/ Guolin Wang
    
     
Guolin Wang, Director
  
October 6, 2008
     
/s/ Robert B. Fields.
    
     
Robert B. Fields., Director
  
October 6, 2008
     
/s/ Norman Ko
    
     
Norman Ko, Director
  
October 6, 2008
 



 EX-5 2 e5.htm OPINION OF COUNSEL e5.htm
EXHIBIT 5


GUZOV OFSINK, LLC
600 Madison Avenue
New York, New York 10022

 October 6, 2008

SkyPeople Fruit Juice Inc.
16F National Development Bank Tower, Gaoxin 2nd Road,
Hi-Tech Industrial Zone, Xi’an, Shaanxi province
PRC 710075
 
 

                     Re:                                          Registration Statement on Form S-1
           of SkyPeople Fruit Juice, Inc.

Gentlemen:

           We have acted as counsel to SkyPeople Fruit Juice, Inc., a Florida corporation (the "Company"), in connection with the filing of a Registration Statement on
Form S-1 (the "Registration Statement") with the Securities and Exchange Commission (the "Commission"), with respect to the registration under the Securities Act of 1933, as amended (the "Act"), of 9,833,333 shares of the Company's Common Stock, par value $.001 per share (the “Shares”) for resale.

 In our capacity as counsel, we are familiar with the proceedings taken by the Company in connection with the authorization, issuance and sale of the Company’s Series B Preferred Stock (“Series B Stock”) and warrants to purchase Common Stock (“Warrants”), which securities may be converted into or exercised for the Shares.  In addition, in connection with the registration of the foregoing Shares, we have reviewed such documents and records as we have deemed necessary to enable us to express an opinion on the matters covered hereby, including, but not limited to, certain agreements relating to the authorization, issuance, registration and sale of such securities and copies of resolutions of the Board of Directors authorizing the issuance of such securities and the registration for resale of the Shares pursuant to the Registration Statement.

           In rendering this opinion, we have (a) assumed (i) the genuineness of all signatures on all documents examined by us, (ii) the authenticity of all documents submitted to us as originals, and (iii) the conformity to original documents of all documents submitted to us as photostatic or conformed copies and the authenticity of the originals of such copies; and (b) relied on (i) certificates of public officials and (ii) as to matters of fact, statements and certificates of officers and representatives of the Company.

           Based upon the foregoing, we are of the opinion that the Shares are duly authorized and, when issued in accordance with the terms of the Series B Stock and the Warrants (including, in the case of the Warrants, payment of the exercise price thereof in full to the Company) and when sold, will be validly issued, fully paid and non-assessable.
 
 
 

We hereby consent to the use of this opinion as an exhibit to the Registration Statement. In giving the foregoing consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Securities and Exchange Commission thereunder.

Nothing herein shall be deemed to relate to or constitute an opinion concerning any matters not specifically set forth above. The foregoing opinions relate only to matters of the internal law of the State of Florida without reference to conflict of laws and to matters of federal law, and we do not purport to express any opinion on the laws of any other jurisdiction.  We assume no obligation to supplement this opinion if, after the date hereof, any applicable laws change, or we become aware of any facts that might change our opinions, as expressed herein.

The opinion expressed herein may be relied upon by the Company in connection with the registration of the Shares, as contemplated by, and in conformity with, the Registration Statement. With the exception of the foregoing, the opinion expressed herein may not be relied upon by any other person without our prior written consent.

We express no opinion as to compliance with the securities or "blue sky" laws of any state or country in which the Shares are proposed to be offered and sold.

                                Very truly yours,

 /s/ Guzov Ofsink                                                                                                                                   Guzov Ofsink, LLC




 EX-10.11 3 e10-11.htm RMB FACILITY LOAN CONTRACT e10-11.htm
EXHIBIT 10.11


 
RMB Facility Loan Contract
 
Contract No: 2004 Zhongdi 003
 
Type of Loan: Medium-term Current Capital Loan
 
Borrower (Party A): Huludao Wonder Fruit Co.，Ltd.
 
Address: Hujia Village, Gaotai Town, Suizhong County
 
Post Code: 125200
 
Legal Representative (Chief Officer): Niu Hongling
 
Fax: 86-0429-6833995                                           Tel: 86-0429-6833997
 
Lender (Party B): Industrial-Commercial Urban Credit Cooperative
 
Address: No.11，2nd Section of Xinxing Street，Suizhong Town，Suizhong County 125200
 
Chief Officer: Li Yumin
 
Fax:           Tel：

 
 
 

 
Borrower (“Party A”): Huludao Wonder Fruit Co.，Ltd.
 
Lender (“Party B”): Industrial-Commercial Urban Credit Cooperative
 
Whereas Party A applies to Party B for, and Party B agrees to provide Party A with, a loan facility (the “Facility”). Pursuant to relevant laws and regulations and through consultation, Party A and Party B enter into this Contract:
 
Article 1. Type of Loan
 
Working Capital Loan (short-term or middle-term)
 
Article 2. Use of Loan
 
2.1 The Loan is only for buying fixed assets unless given written consent from Party B.
 
2.2 Party B cannot change the use of Loan according to the Contract without the written consent of Party A.
 
Article 3. Availability Period and Amount of the Facility
 
The Availability Periodic the Facility shall commence from   July 9，2004 and end on July 10，2009 (the “Availability Period”).
 
The amount of the Facility shall be RMB ten million (in words) (the “Maximum Amount”).
 
Article 4. Interest Rate, Calculation and Payment of Interests and Fees
 
4.1 The monthly interest rate applicable to the Loan shall be fixed at 7.905‰.
 
4.2 Interest Settlement
 
The interest rate shall be calculated and paid according to the fixed interest rate, and the 20th day of each month shall be the date for the settlement of interest.
 
4.3 The interest rate should be flexible with the adjustment of the interest rate of China People’s Bank. In the event of interest rate adjustment, Party B can make an adjustment over the interest rate and calculation method without informing Party A.
 
Article 5. Repayment
 
5.1 Interest Payment
 
Party A shall pay to Party B the due interest on the Interest Payment Date. The first

 
 
 

 
interest payment shall be made on the first Interest Payment Date after the disbursement of the Loan. Upon the maturity date for the Loan, Party A shall pay in full all the unpaid interest together with the principal.
 
5.2 Method of Repayment
 
Party A shall deposit into its account with Party B such funds as sufficient to repay the amount due to Party B before each Repayment Date specified in this Contract, and shall automatically transfer such funds to Party B for repayment; or Party A shall transfer a sufficient amount from its other accounts to make such repayment on the aforementioned Repayment Date. If Party A fails to repay any indebtedness punctually, Party B has the right to directly debit for the corresponding amount any account opened by Party A with any branch or office of China Construction Bank.
 
Article 6. Security for the Loan
 
6.1 The security(ies) for this Contract shall be Item [2] as below.
 
(1)
Guarantee
 
(2)           Mortgage
 
(3)           Pledge
 
(4)           Standby Letter of Credit
 
(5)           Credit Insurance
 
(6)           Other Forms of Security: Mortgage
 
6.2 Party A should use all their efforts to coordinate with Party B to sign the loan contract of No: 2004 Zhongdi 003.
 
6.3 If the status of the Mortgage changed in Creditor’s right, which is likely to cause damage to the interest of the Creditor’s right, Party A should provide a new Mortgage until the Mortgage meets the requirements of Party B.
 
Article 7. Rights and Obligations of Party A
 
7.1 Party A has the right to require Party B to keep in confidence relevant financial information and trade secrets relating to production and operation of Party A unless otherwise provided by laws and regulations.
 
7.2 Party A shall provide relevant financial information and the information relating to production and operation as required by Party B and shall be responsible for the authenticity, integrity and validity of such information.

 
 
 

 
7.3 Party A undertakes that all settlements and deposits relating to the Loan shall be conducted through its accounts opened with Party B or Party B’s relevant branch.
 
7.4 Party A shall assist in and accept Party B’s inspection and supervision of its production, operation, financial activities and the utilization of the Loan.
 
7.5 Party A shall utilize the Loan for the purpose as provided for hereunder.
 
7.6 Party A shall punctually repay the principal and interest in accordance with this Contract.
 
7.7 Party A or its investors shall not transfer any funds or assets in order to evade the indebtedness owed to Party B.
 
7.8 Party A shall give Party B a prior written notice for Party B’s consent if Party A intends to provide security for any third party during the term of this Contract and such security may affect Party A’s ability to make repayment under this Contract.
 
7.9 Party A shall promptly arrange for new security(ies) satisfactory to Party B where the Guarantor in respect to this Contract ceases or suspends production; its corporate registration is canceled or business license revoked; it is bankrupt or dissolved; it is operating at a loss; or any other negative change has occurred, and such aforesaid incidents result in loss or partial loss of the Guarantor’s ability to secure the Loan, or where the mortgaged or pledged property(ies) for securing the Loan depreciate(s) or is (are) damaged or destroyed.
 
7.10 Party A shall promptly inform Party B of any relevant changes during the term of this Contract, including without limitation its business name, legal representative (or chief officer), registered office, business purpose or registered capital.
 
7.11 Where Party A intends to carry out activity(ies) during the term of this Contract which may have an impact on the realization of Party B’s rights hereunder, Party A shall give Party B a [30] banking days prior written notice for its consent to such intended activity(ies) and shall further take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security in accordance with Party B’s instructions. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division, setting up a joint venture, application for suspension of production or for winding up or for bankruptcy
 
7.12 Party A shall promptly inform Party B in writing, take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security(ies) in accordance with Party B’s instructions if there has occurred to Party A incident(s) during the term of this Contract that may have substantially negative effects on Party B’s performance of its obligations hereunder. The aforementioned incidents shall include without limitation the following: Party A ceases or suspends production; its corporate registration is canceled or business license revoked; its legal representative or

 
 
 

 
high-ranking officers are involved in illegal activities; it is involved in litigation with a major impact; great difficulties arise in respect to its production or operation; or its financial standing deteriorates.
 
7.13 Party A shall bear all fees and expenses in connection with this Contract and the security(ies) for this Contract including without limitation fees and expenses in respect to legal services, insurance, evaluation, registration, storage, authentication and notarization.
 
Article 8. Rights and Obligations of Party B
 
8.1 Party B is entitled to have access to information about production, operation, and financial activities of Party A, and to require Party A to provide financial information and documents in respect to its production and operation.
 
8.2 If the credit rating of Party A declines, Party B is entitled to adjust or even cancel the Facility that is otherwise available.
 
8.3 Party B is entitled to debit any account opened by Party A with any branch or office of China Commerce Bank for any amount due to Party B under this Contract.
 
8.4 Party B shall disburse the Loan to Party A in accordance with this Contract, except for any delay caused by Party A.
 
8.5 Party B shall keep in confidence financial information and trade secrets in relation to production and operation of Party A unless otherwise required by laws or regulations.
 
Article 9. Effectiveness，Modification, Rescission and Termination
 
9.1 The Contract will be effective after the signing and stamping.
 
9.2 Party B will rescind the contract and ask for repayment and compensation if Party A breaks any item below:
 
9.2.1 Dissolution and shop closure or revocation of the business license has happened.
 
9.2.2 There are some changes in the Mortgage under the provision of the contract, which is likely to cause damage to the creditor’s right; in this case, Party A fails to provide a new Mortgage that is satisfactory to Party B.
 
9.2.3 Other serious default activities.
 
9.3 If Party A ask for extension of the contract, Party A should offer a written application to Party B with the written consent from cautioner at least 30 days before

 
 
 

 
the contract will expire. The extension contract will not become effective until Party A gets approval from Party B. The loan contract remains effective until the signing of the extension contract.
 
9.4 Neither Party should make any adjust or expiration without consent from the opposite Party except for the provision already defined in the Contract. Any adjustment or expiration requires approval from both Parties and must be reached by written agreement if the status is necessary.
 
9.5 The original contract remains effective until both Parties reach a consensus.
 
Article 10. Amendment to this Contract
 
Upon effect of this Contract, any Party intending to amend this Contract shall notify the other Party promptly and a written agreement shall be executed if the Parties so agree, unless otherwise provided in this Contract or in any other agreement.
 
Article 11. Dispute Resolution
 
11.1 Any dispute arising out of or in connection with this Contract shall be settled through friendly consultation. If no agreement is reached through such friendly consultation, such dispute shall be settled in accordance with the following:
 
11.2 Instituting legal proceedings with the People’s Court in the location of Party B.
 
11.3 The Parties shall perform this Contract in accordance with the undisputed parts during the course of such legal proceedings or arbitration.
 
Article 12. This Contract Shall be Made in [2] Counterparts
 
All documents created within the Availability Period and within the Maximum Amount of the Facility which underlie the debtor-creditor relationship between the Parties (including but not limited to Application for Drawing, Notice of Drawing or other certificates and documents) are integral parts of this Contract.
 
Article 13. Representations
 
13.1 Party A is fully informed and aware of the business purpose and powers of Party B.
 
13.2 Party A has read all the terms of this Contract and Party B has given explanation as required by Party A. Party A hereby acknowledges that it fully understands all terms of this Contract and corresponding legal consequences thereof.
 
13.3 Party A has the right and power to execute this Contract.

 
 
 

 
Party A : Huludao Wonder Fruit Co.，Ltd.
 
Legal Representative (or Chief Officer) or Authorized Representative (Signature):
 
 /s/：Niu Hongling
 
Date: 07/09/2004
 
Party B: Industrial-Commercial Urban Credit Cooperative
Chief Officer or Authorized Representative (Signature): /s/: Li Yumin
 
Date: 07/09/2004


 EX-10.12 4 e10-12.htm RMB FACILITY LOAN CONTRACT e10-12.htm
EXHIBIT 10.12

 
RMB Facility Loan Contract
 
Contract No: 2004 Zhongdi 006
 
Type of Loan: Medium-term Current Capital Loan
 
Borrower (Party A): Huludao Wonder Fruit Co.，Ltd.
 
Address: Hujia Village, Gaotai Town, Suizhong County 125200
 
Legal Representative (Chief Officer): Niu Hongling
 
Fax: 86-0429-6833995                                           Tel: 86-0429-6833997
 
Lender (Party B): Industrial-Commercial Urban Credit Cooperative
 
Address: No.11，2nd Section of Xinxing Street，Suizhong Town125200
 
Chief Officer: Li Yumin
 
Fax:                                                       Tel:

 
 
 

 
Borrower (“Party A”): Huludao Wonder Fruit Co.，Ltd.
 
Lender (“Party B”): Industrial-Commercial Urban Credit Cooperative
 
Whereas Party A applies to Party B for, and Party B agrees to provide Party A with, a loan facility (the “Facility”). Pursuant to relevant laws and regulations and through consultation, Party A and Party B enter into this Contract:
 
Article 1. Type of Loan
 
Working Capital Loan (short-term or middle-term)
 
Article 2. Use of Loan
 
2.1 The Loan is only allowed for buying fixed assets unless given written consent from Party B.
 
2.2 Party A cannot change the using of the Loan according to the Contract without the written consent of Party B.
 
Article 3. Availability Period and Amount of the Facility
 
The Availability Period of the Facility shall commence from Sep.25，2004 and end on Sep.20，2009 (the “Availability Period”).
 
The amount of the Facility shall be RMB five million (in words) (the “Maximum Amount”).
 
Article 4. Interest Rate, Calculation and Payment of Interests and Fees
 
4.1 The monthly interest rate applicable to the Loan shall be fixed at 7.915‰.
 
4.2 Interest Settlement
 
The interest rate shall be calculated and paid according to the fixed interest rate, and the 20th day of each month shall be the date for the settlement of interest.
 
4.3 The interest rate should be flexible with the adjustment of the interest rate of China People’s Bank. In the event of interest rate adjustment, Party B can make an adjustment over the interest rate and calculation method without informing Party A.
 
Article 5. Repayment
 
5.1 Interest Payment
 
Party A shall pay to Party B the due interest on the Interest Payment Date. The first interest payment shall be made on the first Interest Payment Date after the Disbursement of the Loan. Upon the maturity date for the Loan, Party A shall pay in

 
 
 

 
full all the unpaid interest together with the principal.
 
5.2 Method of Repayment
 
Party A shall deposit into its account with Party B such funds as sufficient to repay the amount due to Party B before each Repayment Date specified in this Contract, and shall automatically transfer such funds to Party B for repayment; or Party A shall transfer a sufficient amount from its other accounts to make such repayment on the aforementioned Repayment Date. If Party A fails to repay any indebtedness punctually, Party B has the right to directly debit for the corresponding amount any account opened by Party A with any branch or office of China Construction Bank.
 
Article 6. Security for the Loan
 
6.1 The security(ies) for this Contract shall be Item [2] as below.
 
(1)           Guarantee
 
(2)           Mortgage
 
(3)           Pledge
 
(4)           Standby Letter of Credit
 
(5)           Credit Insurance
 
(6)           Other Forms of Security: Mortgage
 
6.2 Party A should use all their efforts to coordinate with Party B to sign the loan contract of No: 2004 Zhongdi 006.
 
6.3 If the status of the Mortgage changed in Creditor’s right, which is likely to cause damage to the interest of the Creditor’s right, Party A should provide a new Mortgage until the Mortgage meets the requirements of Party B.
 
Article 7. Rights and Obligations of Party A
 
7.1 Party A has the right to require Party B to keep in confidence relevant financial information and trade secrets relating to production and operation of Party A unless otherwise provided by laws and regulations.
 
7.2 Party A shall provide relevant financial information and information relating to production and operation as required by Party B and shall be responsible for the authenticity, integrity and validity of such information.
 
7.3 Party A undertakes that all settlements and deposits relating to the Loan shall be conducted through its accounts opened with Party B or Party B’s relevant branch.

 
 
 

 
7.4 Party A shall assist in and accept Party B’s inspection and supervision of its production, operation, financial activities and utilization of the Loan.
 
7.5 Party A shall utilize the Loan for the purpose as provided for hereunder.
 
7.6 Party A shall punctually repay the principal and interest in accordance with this Contract.
 
7.7 Party A or its investors shall not transfer any funds or assets in order to evade the indebtedness owed to Party B.
 
7.8 Party A shall give Party B a prior written notice for Party B’s consent if Party A intends to provide security for any third party during the term of this Contract and such security may affect Party A’s ability to make repayment under this Contract.
 
7.9 Party A shall promptly arrange for new security(ies) satisfactory to Party B where the Guarantor in respect of this Contract ceases or suspends production; its corporate registration is canceled, or business license revoked; it is bankrupt or dissolved; it is operating at a loss; or any other negative change has occurred, and such aforementioned incidents result in loss or partial loss of the Guarantor’s ability to secure the Loan, or where the mortgaged or pledged property(ies) for securing the Loan depreciate(s) or is (are) damaged or destroyed.
 
7.10 Party A shall promptly inform Party B of any relevant changes during the term of this Contract, including without limitation its business name, legal representative (or chief officer), registered office, business purpose or registered capital.
 
7.11 Where Party A intends to carry out activity(ies) during the term of this Contract which may have an impact on the realization of Party B’s rights hereunder, Party A shall give Party B a [30] banking days prior written notice for its consent to such intended activity(ies) and shall further take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security in accordance with Party B’s instructions. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division, setting up a joint venture, application for suspension of production or for winding up or for bankruptcy.
 
7.12 Party A shall promptly inform Party B in writing, take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security(ies) in accordance with Party B’s instructions if there has occurred to Party A incident(s) during the term of this Contract that may have substantially negative effects on Party B’s performance of its obligations hereunder. The aforementioned incidents shall include without limitation the following: Party A ceases or suspends production; its corporate registration is canceled, or business license revoked; its legal representative or high-ranking officers are involved in illegal activities; it is involved in litigation with a major impact; great difficulties arise in respect to its production or operation; or its financial standing deteriorates.

 
 
 

 
7.13 Party A shall bear all fees and expenses in connection with this Contract and the security(ies) for this Contract including without limitation fees and expenses in respect to legal services, insurance, evaluation, registration, storage, authentication and notarization.
 
Article 8. Rights and Obligations of Party B
 
8.1 Party B is entitled to have access to information about the production, operation, and financial activities of Party A, and to require Party A to provide financial information and documents in respect to its production and operation.
 
8.2 If the credit rating of Party A declines, Party B is entitled to adjust or even cancel the Facility which is otherwise available.
 
8.3 Party B is entitled to debit any account opened by Party A with any branch or office of China Commerce Bank for any amount due to Party B under this Contract.
 
8.4 Party B shall disburse the Loan to Party A in accordance with this Contract, except for any delay caused by Party A.
 
8.5 Party B shall keep in confidence financial information and trade secrets in relation to production and operation of Party A unless otherwise required by laws or regulations.
 
Article 9. Effectiveness，Modification, Rescission and Termination
 
9.1 The Contract will become effective after the signing and stamping.
 
9.2 Party B will rescind the contract and ask for repayment and compensation if Party A breaks any item below:
 
9.2.1 Dissolution and shop closure or revocation of the business license happens.
 
9.2.2 There are some changes in the Mortgage under the provision of the Contract, which are likely to cause damage to the creditor’s right; in this case, Party A fails to provide a new Mortgage that is satisfactory to Party B.
 
9.2.3 Other serious default activities.
 
9.3 If Party A asks for extension of the Contract, Party A should offer a written application to Party B with the written consent from guarantor at least 30 days before the contract will expire. The extension contract will not become effective until Party A gets approval from Party B. The loan Contract will remain effective until the signing of the extension Contract.
 
9.4 Neither Party should make any adjustment or expiration without consent from the opposite Party except for the provision already defined in the Contract. Any adjustment or expiration must get approval from both Parties and be reached by

 
 
 

 
written agreement if the status is necessary.
 
9.5 The original Contract remains effective until both parties reach a consensus.
 
Article 10. Amendment to this Contract
 
Upon taking effect of this Contract, any Party intending to amend this Contract shall notify the other Party promptly and a written agreement shall be executed if the Parties so agree, unless otherwise provided in this Contract or in any other agreement.
 
Article 11. Dispute Resolution
 
11.1 Any dispute arising out of or in connection with this Contract shall be settled through friendly consultation. If no agreement is reached through such friendly consultation, such dispute shall be settled in accordance with the following:
 
11.2 Instituting legal proceedings with the People’s Court in the location of Party B.
 
11.3 The Parties shall perform this Contract in accordance with the undisputed parts during the course of such legal proceedings or arbitration.
 
Article 12. This Contract Shall be Made in [2] Counterparts.
 
All documents created within the Availability Period and within the Maximum Amount of the Facility which underlie the debtor-creditor relationship between the Parties (including but not limited to Application for Drawing, Notice of Drawing or other certificates and documents) are integral parts of this Contract.
 
Article 13. Representations
 
13.1 Party A is fully informed and aware of the business purposes and powers of Party B.
 
13.2 Party A has read all the terms of this Contract and Party B has given explanation as required by Party A. Party A hereby acknowledges that it fully understands all terms of this Contract and the corresponding legal consequences thereof.
 
13.3 Party A has the right and power to execute this Contract.

 
 
 

 
Party A: Huludao Wonder Fruit Co.，Ltd.
 
Legal Representative (or Chief Officer) or Authorized Representative (Signature):
 
/s/：Niu Hongling
 
Date: 09/25/2004
 
Party B: Industrial-Commercial Urban Credit Cooperative
 
Chief Officer or Authorized Representative (Signature): /s/: Li Yumin
Date: 09/25/2004


 EX-10.13 5 e10-13.htm RMB FACILITY LOAN CONTRACT e10-13.htm
EXHIBIT 10.13

 
RMB Facility Loan Contract
 
Contract No: Hushang (Suizhong Liudai 1520080430116
 
Type of Loan:
 
Borrower (Party A): Huludao Wonder Fruit Co. Ltd.
 
Address: Hujia Village, Gaotai Town, Suizhong County 125200
 
Legal Representative (Chief Officer): Yan Xiaoqin
 
Fax: 86-0429-6833995                                           Tel: 86-0429-6833997
 
Lender (Party B): Suizhong Branch，Huludao City Commercial Bank
 
Address: No.11，2nd Section of Xinxing Street，Suizhong Town125200
 
Chief Officer: Wang Dong
 
Fax:           Tel:

 
 
 

 
Borrower (“Party A”): Huludao Wonder Fruit Co.，Ltd.
 
Lender (“Party B”): Suizhong Branch，Huludao City Commercial Bank
 
Whereas Party A applies to Party B for, and Party B agrees to provide Party A with, a loan facility (the “Facility”). Pursuant to relevant laws and regulations and through consultation, Party A and Party B enter into this Contract:
 
Article 1. Type of Loan
 
Working Capital Loan (short-term or middle-term)
 
Article 2. Use of Loan
 
2.1 The Loan is only allowed for transferring the loan unless given written consent from Party B.
 
2.2 Party A cannot change the use of the Loan according to the Contract without the written consent of Party B.
 
Article 3. Availability Period and Amount of the Facility
 
The Availability Period of the Facility shall commence from April 30，2008 and end on Oct.29，2009 ( the “Availability Period”).
 
The amount of the Facility shall be RMB eighteen million (in words) (the “Maximum Amount”).
 
Article 4. Interest Rate, Calculation and Payment of Interests and Fees
 
4.1 The monthly interest rate applicable to the Loan shall be the fixed at 8.19‰.
 
4.2 Interest Settlement
 
The interest rate shall be calculated and paid according to the fixed interest rate, and the 20th day of each month shall be the date for the settlement of interest.
 
4.3 The interest rate should be flexible with the adjustment of the interest rate of China People’s Bank. In the event of interest rate adjustment, Party B can make an adjustment over the interest rate and calculation method without informing Party A.
 
Article 5. Repayment
 
5.1 Interest Payment
 
Party A shall pay to Party B the due interest on the Interest Payment Date. The first interest payment shall be made on the first Interest Payment Date after the Disbursement of the Loan. Upon the maturity date of the Loan, Party A shall pay in

 
 
 

 
full all the unpaid interest together with the principal.
 
5.2 Method of Repayment
 
Party A shall deposit into its account with Party B such funds as sufficient to repay the amount due to Party B before each Repayment Date specified in this Contract, and shall automatically transfer such funds to Party B for repayment; or Party A shall transfer a sufficient amount from its other accounts to make such repayment on the aforementioned Repayment Date. If Party A fails to repay any indebtedness punctually, Party B has the right to directly debit for the corresponding amount any account opened by Party A with any branch or office of China Construction Bank.
 
Article 6. Security for the Loan
 
6.1 The security(ies) for this Contract shall be Item [2] as below.
 
(1)           Guarantee
 
(2)           Mortgage
 
(3)           Pledge
 
(4)           Standby Letter of Credit
 
(5)           Credit Insurance
 
(6)           Other Forms of Security: Mortgage
 
6.2 Party A should use their all efforts to coordinate with Party B to sign the loan contract of No. Hushang (Suizhong) Liudai 1520080430116.
 
6.3 If the status of the Mortgage changed in Creditor’s right, which is likely to cause damage to the interest of the Creditor’s right, Party A should provide a new Mortgage until the Mortgage meets the requirements of Party B.
 
Article 7. Rights and Obligations of Party A
 
7.1 Party A has the right to require Party B to keep in confidence relevant financial information and trade secrets relating to production and operation of Party A unless otherwise provided by laws and regulations.
 
7.2 Party A shall provide relevant financial information and information relating to production and operation as required by Party B and shall be responsible for the authenticity, integrity and validity of such information.
 
7.3 Party A undertakes that all settlements and deposits relating to the Loan shall be conducted through its accounts opened with Party B or Party B’s relevant branch.

 
 
 

 
7.4 Party A shall assist in and accept Party B’s inspection and supervision of its production, operation, financial activities and the utilization of the Loan.
 
7.5 Party A shall utilize the Loan for the purpose as provided for hereunder.
 
7.6 Party A shall punctually repay the principal and interest in accordance with this Contract.
 
7.7 Party A or its investors shall not transfer any funds or assets in order to evade the indebtedness owed to Party B.
 
7.8 Party A shall give Party B a prior written notice for Party B’s consent if Party A intends to provide security for any third party during the term of this Contract and such security may affect Party A’s ability to make repayment under this Contract.
 
7.9 Party A shall promptly arrange for new security(ies) satisfactory to Party B where the Guarantor in respect to this Contract ceases or suspends production; its corporate registration is canceled, or business license revoked; it is bankrupt or dissolved; it is operating at a loss; or any other negative change has occurred, and such aforementioned incidents result in loss or partial loss of the Guarantor’s ability to secure the Loan, or where the mortgaged or pledged property(ies) for securing the Loan depreciate(s) or is (are) damaged or destroyed.
 
7.10 Party A shall promptly inform Party B of any relevant changes during the term of this Contract, including without limitation its business name, legal representative (or chief officer), registered office, business purpose or registered capital.
 
7.11 Where Party A intends to carry out activity(ies) during the term of this Contract which may have an impact on the realization of Party B’s rights hereunder, Party A shall give Party B a [30] banking days prior written notice for its consent to such intended activity(ies) and shall further take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security in accordance with Party B’s instructions. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division, setting up a joint venture, application for suspension of production or for winding up or for bankruptcy
 
7.12 Party A shall promptly inform Party B in writing, take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security(ies) in accordance with Party B’s instructions if there has occurred to Party A incident(s) during the term of this Contract that may have substantially negative effects on Party B’s performance of its obligations hereunder. The aforementioned incidents shall include without limitation the following: Party A ceases or suspends production; its corporate registration is canceled, or business license revoked; its legal representative or high-ranking officers are involved in illegal activities; it is involved in litigation with a major impact; great difficulties arise in respect of its production or operation; or its financial standing deteriorates.

 
 
 

 
7.13 Party A shall bear all fees and expenses in connection with this Contract and the security(ies) for this Contract including without limitation fees and expenses in respect to legal services, insurance, evaluation, registration, storage, authentication and notarization.
 
Article 8. Rights and Obligations of Party B
 
8.1 Party B is entitled to have access to information about the production, operation, and financial activities of Party A, and to require Party A to provide financial information and documents in respect to its production and operation.
 
8.2 If the credit rating of Party A declines, Party B is entitled to adjust or even cancel the Facility which is otherwise available.
 
8.3 Party B is entitled to debit any account opened by Party A with any branch or office of China Commerce Bank for any amount due to Party B under this Contract.
 
8.4 Party B shall disburse the Loan to Party A in accordance with this Contract, except for any delay caused by Party A.
 
8.5 Party B shall keep in confidence financial information and trade secrets in relation to production and operation of Party A unless otherwise required by laws or regulations.
 
Article 9. Effectiveness，Modification, Rescission and Termination
 
9.1 The Contract will become effective after the signing and stamping.
 
9.2 Party B will rescind the contract and ask for repayment and compensation if Party A breaks any item below:
 
9.2.1 Dissolution and shop closure or revocation of the business license happens.
 
9.2.2 There are some changes in the Mortgage under the provision of the Contract, which are likely to cause damage to the creditor’s right; in this case, Party A fails to provide a new Mortgage that is satisfactory to Party B.
 
9.2.3 Other serious default activities.
 
9.3 If Party A asks for extension of the Contract, Party A should offer a written application to Party B with the written consent from guarantor at least 30 days before the contract will expire. The extension contract will not become effective until Party A gets approval from Party B. The loan contract will remain effective until the signing of the extension contract.
 
9.4 Neither Party should make any adjustment or expiration without consent from the opposite Party except for the provision already defined in the Contract. Any adjustment or expiration must get approval from both Parties and be reached by

 
 
 

 
written agreement if the status is necessary.
 
9.5 The original contract remains effective until both Parties reach a consensus.
 
Article 10. Amendment to this Contract
 
Upon taking effect of this Contract, any Party intending to amend this Contract shall notify the other Party promptly and a written agreement shall be executed if the parties so agree, unless otherwise provided in this Contract or in any other agreement.
 
Article 11. Dispute Resolution
 
11.1 Any dispute arising out of or in connection with this Contract shall be settled through friendly consultation. If no agreement is reached through such friendly consultation, such dispute shall be settled in accordance with the following:
 
11.2 Instituting legal proceedings with the People’s Court in the location of Party B.
 
11.3 The Parties shall perform this Contract in accordance with the undisputed parts during the course of such legal proceedings or arbitration.
 
Article 12. This Contract Shall be Made in [2] Counterparts
 
All documents created within the Availability Period and within the Maximum Amount of the Facility which underlie the debtor-creditor relationship between the Parties (including but not limited to Application for Drawing, Notice of Drawing or other certificates and documents) are integral parts of this Contract.
 
Article 13. Representations
 
13.1 Party A is fully informed and aware of the business purposes and powers of Party B.
 
13.2 Party A has read all the terms of this Contract and Party B has given explanation as required by Party A. Party A hereby acknowledges that it fully understands all terms of this Contract and corresponding legal consequences thereof.
 
13.3 Party A has the right and power to execute this Contract.

 
 
 

 
Party A: Huludao Wonder Fruit Co.，Ltd.
 
Legal Representative (or Chief Officer) or Authorized Representative (Signature):
 
/s/：Yan Xiaoqin
 
Date: 04/30/2006
 
Party B: Suizhong Branch，Huludao City Commercial Bank
 
Chief Officer or Authorized Representative (Signature): /s/: Wang Dong
Date: 04/30/2008


 EX-10.14 6 e10-14.htm RMB FACILITY LOAN CONTRACT e10-14.htm
EXHIBIT 10.14
 
 
RMB Facility Loan Contract
 
Contract No: 2006 Zhongdi 007
 
Type of Loan: Medium-term Current Capital Loan
 
Borrower (Party A): Huludao Wonder Fruit Co. Ltd.
 
Address: Hujia Village,Gaotai Town,Suizhong County 125200
 
Legal Representative (Chief Officer):Niu Hongling
 
Fax: 86-0429-6833995                                           Tel: 86-0429-6833997
 
Lender (Party B): Suizhong Branch Huluda City Commercial Bank
 
Address: No.11 2nd Section of Xinxing Street Suizhong Town125200
 
Chief Officer: Li Yumin
 
Fax:           Tel：

 
 
 

 
Borrower (“Party A”): Huludao Wonder Fruit Co. Ltd
 
Lender (“Party B”): Suizhong Branch Huludao City Commercial Bank
 
Whereas Party A applies to Party B for, and Party B agrees to provide Party A with, a loan facility (the “Facility”). Pursuant to relevant laws and regulations and through consultation, Party A and Party B enter into this Contract:
 
Article 1. Type of Loan
 
Working Capital Loan (short-term or middle-term)
 
Article 2. Use of Loan
 
2.1 The Loan is only allowed for use as early stage set-up capital unless given written consent from Party B.
 
2.2 Party A cannot change the use of the Loan according to the Contract without the written consent of Party B.
 
Article 3. Availability Period and Amount of the Facility
 
The Availability Period of the Facility shall commence from Aug.3 2006 and end on Jan.15 2008 (the “Availability Period”).
 
The amount of the Facility shall be RMB five million (in words) (the “Maximum Amount”).
 
Article 4. Interest Rate, Calculation and Payment of Interests and Fees
 
4.1 The monthly interest rate applicable to the Loan shall be the fixed at 6.5325‰.
 
4.2 Interest Settlement
 
The interest rate shall be calculated and paid according to the fixed interest rate, and the 20th day of each month shall be the date for the settlement of interest.
 
4.3 The interest rate should be flexible with the adjustment of the interest rate of China People’s Bank. In the event of interest rate adjustment, Party B can make an adjustment over the interest rate and calculation method without informing Party A.
 
Article 5. Repayment
 
5.1 Interest Payment
 
Party A shall pay to Party B the due interests on the Interest Payment Date. The first interest payment shall be made on the first Interest Payment Date after the

 
 
 

 
Disbursement of the Loan. Upon the maturity date for the Loan, Party A shall pay in full all the unpaid interest together with the principal.
 
5.2 Method of Repayment
 
Party A shall deposit into its account with Party B such funds as sufficient to repay the amount due to Party B before each Repayment Date specified in this Contract, and shall automatically transfer such funds to Party B for repayment; or Party A shall transfer a sufficient amount from its other accounts to make such repayment on the aforementioned Repayment Date. If Party A fails to repay any indebtedness punctually, Party B has the right to directly debit for the corresponding amount any account opened by Party A with any branch or office of China Construction Bank.
 
Article 6. Security for the Loan
 
6.1 The security(ies) for this Contract shall be Item [2] as below.
 
(1)           Guarantee
 
(2)           Mortgage
 
(3)           Pledge
 
(4)           Standby Letter of Credit
 
(5)           Credit Insurance
 
(6)           Other Forms of Security: Mortgage
 
6.2 Party A should use all their efforts to coordinate with Party B to sign the loan contract of No: 2006 Zhongdi 007.
 
6.3 If the status of the Mortgage changed in Creditor’s right, which is likely to cause damage to the interest of the Creditor’s right, Party A should provide a new Mortgage until the Mortgage meets the requirements of Party B.
 
Article 7. Rights and Obligations of Party A
 
7.1 Party A has the right to require Party B to keep in confidence relevant financial information and trade secrets relating to production and operation of Party A unless otherwise provided by laws and regulations.
 
7.2 Party A shall provide relevant financial information and information relating to production and operation as required by Party B and shall be responsible for the authenticity, integrity and validity of such information.
 
7.3 Party A undertakes that all settlements and deposits relating to the Loan shall

 
 
 

 
be conducted through its accounts opened with Party B or Party B’s relevant branch.
 
7.4 Party A shall assist in and accept Party B’s inspection and supervision of its production, operation, financial activities and the utilization of the Loan.
 
7.5 Party A shall utilize the Loan for the purpose as provided for hereunder.
 
7.6 Party A shall punctually repay the principal and interest in accordance with this Contract.
 
7.7 Party A or its investors shall not transfer any funds or assets in order to evade the indebtedness owed to Party B.
 
7.8 Party A shall give Party B a prior written notice for Party B’s consent if Party A intends to provide security for any third party during the term of this Contract and such security may affect Party A’s ability to make repayment under this Contract.
 
7.9 Party A shall promptly arrange for new security(ies) satisfactory to Party B where the Guarantor in respect of this Contract ceases or suspends production; its corporate registration is canceled, or business license revoked; it is bankrupt or dissolved; it is operating at a loss; or any other negative change has occurred, and such aforementioned incidents result in loss or partial loss of the Guarantor’s ability to secure the Loan, or where the mortgaged or pledged property(ies) for securing the Loan depreciate(s) or is (are) damaged or destroyed.
 
7.10 Party A shall promptly inform Party B of any relevant changes during the term of this Contract, including without limitation its business name, legal representative (or chief officer), registered office, business purpose or registered capital.
 
7.11 Where Party A intends to carry out activity(ies) during the term of this Contract which may have an impact on the realization of Party B’s rights hereunder, Party A shall give Party B a [30] banking days prior written notice for its consent to such intended activity(ies) and shall further take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security in accordance with Party B’s instructions. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division, setting up a joint venture, application for suspension of production or for winding up or for bankruptcy
 
7.12 Party A shall promptly inform Party B in writing, take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security(ies) in accordance with Party B’s instructions if there has occurred to Party A incident(s) during the terms of this Contract that may have substantially negative effects on Party B’s performance of its obligations hereunder. The aforementioned incidents shall include without limitation the following: Party A ceases or suspends production; its corporate registration is canceled, or business license revoked; its legal representative or high-ranking officers are involved in illegal activities; it is

 
 
 

 
involved in litigation with a major impact; great difficulties arise in respect to its production or operation; or its financial standing deteriorates.
 
7.13 Party A shall bear all fees and expenses in connection with this Contract and the security(ies) for this Contract including without limitation fees and expenses in respect to legal services, insurance, evaluation, registration, storage and authentication
 
Article 8. Rights and Obligations of Party B
 
8.1 Party B is entitled to have access to information about the production, operation, and financial activities of Party A, and to require Party A to provide financial information and documents in respect to its production and operation.
 
8.2 If the credit rating of Party A declines, Party B is entitled to adjust or even cancel the Facility which is otherwise available.
 
8.3 Party B is entitled to debit any account opened by Party A with any branch or office of China Commerce Bank for any amount due to Party B under this Contract.
 
8.4 Party B shall disburse the Loan to Party A in accordance with this Contract, except for any delay caused by Party A.
 
8.5 Party B shall keep in confidence financial information and trade secrets in relation to production and operation of Party A unless otherwise required by laws or regulations.
 
Article 9. Effectiveness Modification, Rescission and Termination
 
9.1 The Contract will go effective after the signing and stamping.
 
9.2 Party B will rescind the contract and ask for repayment and compensation if Party A breaks any item below:
 
9.2.1 Dissolution and shop closure or revocation of the business license happens.
 
9.2.2 There are some changes in the Mortgage under the provision of the contract, which are likely to cause damage to the creditor’s right; in this case, Party A fails to provide a new Mortgage that is satisfactory to Party B.
 
9.2.3 Other serious default activities.
 
9.3 If Party A asks for an extension of the contract, Party A should offer a written application to Party B with the written consent from guarantor at least 30 days before the contract will go expire. The extension contract will not become effective until Party A gets approval from Party B. The loan contract remains effective until the signing of the extension contract.

 
 
 

 
9.4 Neither Party should make any adjustments or expiration without the consent from the opposite Party except for the provision already defined in the Contract. Any adjustment or expiration requires approval from both Parties and must be reached by written agreement if the status is necessary.
 
9.5 The original contract remains effective until both Parties reach a consensus.
 
Article 10. Amendment to this Contract
 
Upon taking effect of this Contract, any Party intending to amend this Contract shall notify the other party promptly and a written agreement shall be executed if the parties so agree, unless otherwise provided in this Contract or in any other agreement.
 
Article 11. Dispute Resolution
 
11.1 Any dispute arising out of or in connection with this Contract shall be settled through friendly consultation. If no agreement is reached through such friendly consultation, such dispute shall be settled in accordance with the following:
 
11.2 Instituting legal proceedings with the People’s Court in the location of Party B.
 
11.3 The Parties shall perform this Contract in accordance with the undisputed parts during the course of such legal proceedings or arbitration.
 
Article 12. This Contract Shall be Made in [2] Counterparts
 
All documents created within the Availability Period and within the Maximum Amount of the Facility which underlie the debtor-creditor relationship between the Parties (including but not limited to Application for Drawing, Notice of Drawing or other certificates and documents) are integral parts of this Contract.
 
Article 13. Representations
 
13.1 Party A is fully informed and aware of the business purpose and powers of Party B.
 
13.2 Party A has read all the terms of this Contract and Party B has given explanation as required by Party A. Party A hereby acknowledges that it fully understands all terms of this Contract and the corresponding legal consequences thereof.
 
13.3Party A has the right and power to execute this Contract.

 
 
 

 
Party A: Huludao Wonder Fruit Co. Ltd.
 
Legal Representative (or Chief Officer) or Authorized Representative (Signature): /s/：Niu Hongling
 
Date: 08/03/2006
 
Party B: Suizhong Branch Huludao City Commercial Bank
 
Chief Officer or Authorized Representative (Signature): /s/: Li Yumin
Date: 08/03/2006


 EX-10.15 7 e10-15.htm RMB FACILITY LOAN CONTRACT e10-15.htm
EXHIBIT 10.15
 
 
RMB Facility Loan Contract
 
Contract No: 2006 Zhongdi 020
 
Type of Loan: Medium-term Current Fund Loan
 
Borrower (Party A): Huludao Wonder Fruit Co. Ltd.
 
Address: Hujia Village, Gaotai Town, Suizhong County 125200
 
Legal Representative (Chief Officer):
 
Fax: 86-0429-6833995                                           Tel: 86-0429-6833997
 
Lender (Party B): Suizhong Branch Huludao City Commercial Bank
 
Address: No.11 2nd Section of Xinxing Street Suizhong Town125200
 
Chief Officer: Li Yumin
 
Fax:            Tel

 
 
 

 
Borrower (“Party A”): Huludao Wonder Fruit Co. Ltd.
 
Lender (“Party B”): Suizhong Branch Huludao City Commercial Bank
 
Whereas Party A applies to Party B for, and Party B agrees to provide Party A with, a loan facility (the “Facility”). Pursuant to relevant laws and regulations and through consultation, Party A and Party B enter into this Contract:
 
Article 1. Type of Loan
 
Working Capital Loan (short-term or middle-term)
 
Article 2. Use of Loan
 
2.1 The Loan is only allowed for use as current capital unless given written consent from Party B.
 
2.2 Party A cannot change the use of the loan according to the Contract without the written consent of Party B.
 
Article 3. Availability Period and Amount of the Facility
 
3.1 The Availability Period of the Facility shall commence from Sep.25 2006 and end on March 15 2008 (the “Availability Period”).
 
3.2 The amount of the Facility shall be RMB eight million (in words) (the “Maximum Amount”).
 
Article 4. Interest Rate, Calculation and Payment of Interest and Fees
 
4.1 The monthly interest rate applicable to the Loan shall be the fixed at 6.825‰.
 
4.2 Interest Settlement
 
The interest rate shall be calculated and paid according to the fixed interest rate, and the 20th day of each month shall be the date for the settlement of interest.
 
4.3 The interest rate should be flexible with the adjustment of the interest rate of China People’s Bank. In the event of interest rate adjustment, Party B can make an adjustment over the interest rate and calculation method without informing Party A.
 
Article 5. Repayment
 
5.1 Interest Payment
 
Party A shall pay to Party B the due interest on the Interest Payment Date. The first interest payment shall be made on the first Interest Payment Date after the Disbursement of the Loan. Upon the maturity date for the Loan, Party A shall pay in

 
 
 

 
full all the unpaid interest together with the principal.
 
5.2 Method of Repayment
 
Party A shall deposit into its account with Party B such funds as sufficient to repay the amount due to Party B before each Repayment Date specified in this Contract, and shall automatically transfer such funds to Party B for repayment; or Party A shall transfer a sufficient amount from its other accounts to make such repayment on the aforementioned Repayment Date. If Party A fails to repay any indebtedness punctually, Party B has the right to directly debit the corresponding amount from any account opened by Party A with any branch or office of China Construction Bank.
 
Article 6. Security for the Loan
 
6.1 The security(ies) for this Contract shall be Item [2] as below.
 
(1)           Guarantee
 
(2)           Mortgage
 
(3)           Pledge
 
(4)           Standby Letter of Credit
 
(5)           Credit Insurance
 
(6)           Other Forms of Security: Mortgage
 
6.2 Party A should use all their efforts to coordinate with Party B to sign the loan contract of No: 2006 Zhongdi 020.
 
6.3 If the status of the Mortgage changed in Creditor’s right, which is likely to cause damage to the interest of the Creditor’s right, Party A should provide a new Mortgage that meets the requirements of Party B.
 
Article 7. Rights and Obligations of Party A
 
7.1 Party A has the right to require Party B to keep in confidence relevant financial information and trade secrets relating to production and operation of Party A unless otherwise provided by laws and regulations.
 
7.2 Party A shall provide relevant financial information and information relating to production and operation as required by Party B and shall be responsible for the authenticity, integrity and validity of such information.
 
7.3 Party A undertakes that all settlements and deposits relating to the Loan shall be conducted through its accounts opened with Party B or Party B’s relevant branch.

 
 
 

 
7.4 Party A shall assist in and accept Party B’s inspection and supervision of its production, operation, financial activities and utilization of the Loan.
 
7.5 Party A shall utilize the Loan for the purpose as provided for hereunder.
 
7.6 Party A shall punctually repay the principal and interest in accordance with this Contract.
 
7.7 Party A or its investors shall not transfer any funds or assets in order to evade the indebtedness owed to Party B.
 
7.8 Party A shall give Party B a prior written notice for Party B’s consent if Party A intends to provide security for any third party during the term of this Contract and such security may affect Party A’s ability to make repayment under this Contract.
 
7.9 Party A shall promptly arrange for new security(ies) satisfactory to Party B where the Guarantor in respect of this Contract ceases or suspends production; its corporate registration is canceled, or business license revoked; it is bankrupt or dissolved; it is operating at a loss; or any other negative change has occurred, and such aforementioned incidents result in loss or partial loss of the Guarantor’s ability to secure the Loan, or where the mortgaged or pledged property(ies) for securing the Loan depreciate(s) or is (are) damaged or destroyed.
 
7.10 Party A shall promptly inform Party B of any relevant changes during the term of this Contract, including without limitation its business name, legal representative (or chief officer), registered office, business purpose or registered capital.
 
7.11 Where Party A intends to carry out activity(ies) during the term of this Contract which may have an impact on the realization of Party B’s rights hereunder, Party A shall give Party B a [30] banking days prior written notice for its consent to such intended activity(ies) and shall further take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security in accordance with Party B’s instructions. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division, setting up a joint venture, application for suspension of production or for winding up or for bankruptcy
 
7.12 Party A shall promptly inform Party B in writing, take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security(ies) in accordance with Party B’s instructions if there has occurred to Party A incident(s) during the term of this Contract that may have substantially negative effects on Party B’s performance of its obligations hereunder. The aforementioned incidents shall include without limitation the following: Party A ceases or suspends production; its corporate registration is canceled, or business license revoked; its legal representative or high-ranking officers are involved in illegal activities; it is involved in litigation with a major impact; great difficulties arise in respect to its production or operation; or its financial standing deteriorates.

 
 
 

 
7.13 Party A shall bear all fees and expenses in connection with this Contract and the security(ies) for this Contract including without limitation fees and expenses in respect to legal services, insurance, evaluation, registration, storage, authentication and notarization.
 
Article 8. Rights and Obligations of Party B
 
8.1 Party B is entitled to have access to information about the production, operation, and financial activities of Party A, and to require Party A to provide financial information and documents in respect to its production and operation.
 
8.2 If the credit rating of Party A declines, Party B is entitled to adjust or even cancel the Facility which is otherwise available.
 
8.3 Party B is entitled to debit any account opened by Party A with any branch or office of China Commerce Bank for any amount due to Party B under this Contract.
 
8.4 Party B shall disburse the Loan to Party A in accordance with this Contract, except for any delay caused by Party A.
 
8.5 Party B shall keep in confidence financial information and trade secrets in relation to production and operation of Party A unless otherwise required by laws or regulations.
 
Article 9. Effectiveness Modification, Rescission and Termination
 
9.1 The Contract will become effective after the signing and stamping.
 
9.2 Party B will rescind the contract and ask for repayment and compensation if Party A breaks any item below:
 
9.2.1 Dissolution and shop closure or revocation of the business license happens.
 
9.2.2 There are some changes in the Mortgage under the provision of the Contract, which are likely to cause damage to the creditor’s right; in this case, Party A fails to provide a new Mortgage that is satisfactory to Party B.
 
9.2.3 Other serious default activities.
 
9.3 If Party A ask for extension of the contract, Party A should offer a written application to Party B with the written consent from guarantor at least 30 days before the contract will expire. The extension contract will not become effective until Party A gets approval from Party B. The loan contract remains effective until the signing of the extension contract.
 
9.4 Neither Party should make any adjustment or expiration without consent from the opposite Party except for the provision already defined in the Contract. Any adjustment or expiration must get approval from both Parties and be reached by

 
 
 

 
written agreement if the status is necessary.
 
9.5 The original Contract remains effective until both Parties reach a consensus.
 
Article 10. Amendment to this Contract
 
Upon taking effect of this Contract, any Party intending to amend this Contract shall notify the other Party promptly and a written agreement shall be executed if the Parties so agree, unless otherwise provided in this Contract or in any other agreement.
 
Article 11. Dispute Resolution
 
11.1 Any dispute arising out of or in connection with this Contract shall be settled through friendly consultation. If no agreement is reached through such friendly consultation, such dispute shall be settled in accordance with the following:
 
11.2 Instituting legal proceedings with the People’s Court in the location of Party B.
 
11.3 The Parties shall perform this Contract in accordance with the undisputed parts during the course of such legal proceedings or arbitration.
 
Article 12. This Contract Shall be Made in [2] Counterparts
 
All documents created within the Availability Period and within the Maximum Amount of the Facility which underlie the debtor-creditor relationship between the Parties (including but not limited to Application for Drawing, Notice of Drawing or other certificates and documents) are integral parts of this Contract.
 
Article 13. Representations
 
13.1 Party A is fully informed and aware of the business purposes and powers of Party B.
 
13.2 Party A has read all the terms of this Contract and Party B has given explanation as required by Party A. Party A hereby acknowledges that it fully understands all terms of this Contract and the corresponding legal consequences thereof.
 
13.3 Party A has the right and power to execute this Contract.

 
 
 

 
Party A: Huludao Wonder Fruit Co. Ltd.
 
Legal Representative (or Chief Officer) or Authorized Representative (Signature):
 
/s/ Niu Hongling
 
Date: 09/25/2006
 
Party B: Suizhong Branch Huludao City Commercial Bank
 
Chief Officer or Authorized Representative (Signature): /s/: Li Yumin
Date: 09/25/2006


 EX-10.16 8 e10-16.htm RMB FACILITY LOAN CONTRACT e10-16.htm
EXHIBIT 10.16


 
RMB Facility Loan Contract
 
Contract No.: Shanjiankaidai(2007)038
 
Type of Loan: Industrial Current Capital Loan
 
Borrower (Party A): Shaanxi Tianren Organic Food Co.，Ltd.
 
Address: A-4/F Tongxinge Xietong Building, No.12, Gaoxin 2nd Rd,
 
High-tech Zone, Xi'an, China 710075
 
Legal Representative (Chief Officer): Xue Hongke
 
Fax: 86-029-88386230
Tel: 86-029-88386415
 
Lender (Party B): Hi-tech Industrial Development Zone,
 
 Xi'an Branch of China Construction Bank
 
Address: No.42Gaoxin Road, Xi'an 710075
 
Chief Officer: Zhou Cunxing
 
Fax: 86-029-88321414
Tel: 86-029-88321414

 
 
 

Whereas Party A applies to Party B for, and Party B agrees to provide Party A with, a loan facility (the ‘Facility’). Pursuant to relevant laws and regulations and through consultation, Party A and Party B enter into this Contract:
 
Article1. Amount of the Facility
 
The amount of the Facility shall be RMB ten million (in words) (the ‘Maximum Amount’).
 
Article 2. Use of Loan
 
The Loan is only allowed to turnover short-term current capital unless given written consent from Party B.
 
Article 3. Availability Period
 
1. The Availability Period of the Facility shall commence from Aug. 10，2007 and end onJune 17，2008 (the ‘Availability Period’) for 303 days. Party A’s obligation to repay its indebtedness in respect of any individual loan provided within the Availability Period shall not be affected by the expiration of the Availability Period even if the maturity date for such individual loan comes after the Availability Period expires.
 
2. Upon the expiration of the Availability Period, the Facility not drawn shall become invalid automatically.
 
3. The term of each individual Loan means the period commencing from the date of the drawing of such individual Loan and ending on the maturity date of such Loan as provided for under this Contract.
 
Article 4. Drawing of the Facility
 
4. During the Availability Period and within the Maximum Amount of the Facility, Party A can apply for Loans subject always to the formalities which shall be completed by both parties. The amount, interest rate, term and purpose of each individual Loan shall be determined according to the Notice of Drawing issued by Party B to Party A.
 
5. If any security provider has performed its obligations in accordance with any security contract, the Facility shall decrease by the amount of principal which has been repaid by such security provider
 
1.           Drawing Schedule
 
Time: Aug.10, 2007 Amount: RMB 6,000,000.00
 
Time: Sep.6, 2007 Amount: RMB 4,000,000.00

 
 
 

 
Article 5. Interest Rate, Calculation and Payment of Interests and Fees
 
The annual interest rate applicable to each individual Loan shall be fixed at 7.524%.
 
1. Penalty Interest Rate
 
2. The annual interest rate shall be adjusted up to 15.048% if Party A does not perform according the agreement and the interest shall be calculated and paid in accordance with relevant regulations of the People’s Bank of China.
 
3. The annual interest rate shall be adjusted to 11.286% for the overdue loan.
 
4. Interest Settlement
 
The interest rate shall be calculated and paid according to the fixed interest rate, and the 20th day of each month shall be the date for the settlement of interest.
 
Article 6. Disbursement of the Loan
 
Subject to a waiver by Party B, Party B is not obliged to make any disbursement to Party A unless the following conditions precedent have been satisfied:
 
1. Party A has obtained and/or completed all approval, registration, delivery and other necessary formalities relating to the Loan in accordance with relevant laws and regulations; and
 
2. The security documents acceptable to Party B have become effective and remain in full effect; and
 
3. No Event of Default specified in this Contract has occurred; and
 
Transferring export rebates account of client to our bank to take it as current capital to provide pledge.
 
The Application for Drawing has been verified and approved by Party B.
 
Article 7. Repayment
 
1. Principle of Repayment
 
Any repayment by Party A under this Contract shall be made in accordance with the principle that the interests shall be paid before the repayment of any principal.
 
2.  Interest Payment
 
Party A shall pay to Party B the due interest on the Interest Payment Date. The first interest payment shall be made on the first Interest Payment Date after the Disbursement of the Loan. Upon the maturity date for the Loan, Party A shall pay in full all the unpaid interest together with the principal.

 
 
 

 
3. Principal Repayment
 
Party A shall repay the principal in accordance with the Principal Repayment Schedule set forth:
 
Repayment Schedule:
 
 
•
Time: Feb. 6, 2008 Amount: RMB 2,000,000.00
 
 
•
Time: March 6, 2008 Amount: RMB 2,000,000.00
 
 
•
Time: April 6, 2008 Amount: RMB 2,000,000.00
 
 
•
Time: May 6, 2008 Amount: RMB 2,000,000.00
 
 
•
Time: June 6, 2008 Amount: RMB 2,000,000.00
 
4. Method of Repayment
 
Party A shall deposit into its account with Party B such funds as sufficient to repay the amount due to Party B before each Repayment Date specified in this Contract, and shall automatically transfer such funds to Party B for repayment; or Party A shall transfer a sufficient amount from its other accounts to make such repayment on the aforementioned Repayment Date. If Party A fails to repay any indebtedness punctually, Party B has the right to directly debit for the corresponding amount any account opened by Party A with any branch or office of China Construction Bank.
 
5. Prepayment
 
(1) Party A may prepay the interest with prior notice to Party B.
 
(2) Party A shall submit to Party B a written application [30] banking days in advance of any prepayment. Party A may prepay all or any part of the principal subject to Party B’s consent to such application.
 
(3) In the case of prepayment of the principal, the interest shall be calculated on the basis of the actual number of days elapsed and at the interest rate set forth in Article 4 of this Contract.
 
(4) In the case of prepayment of the principal, Party B is entitled to demand of Party A a compensation fee calculated in accordance with the following formula:
 
(5) Compensation Fee = Prepayment Amount × 1‰ × Number of Days of Prepayment
 
(6) Where any individual Loan shall be repaid in installments and Party A prepays part of the principal, such prepayment shall be effected in a reverse order of the Repayment Schedule. The interest on the outstanding indebtedness after such prepayment shall still be calculated at the interest rate as specified in this Contract.

 
 
 

 
Article 8. Security for the Loan
 
The security(ies) for this Contract shall be Items [1，2，3] as below:
 
(1)           Guarantee
 
(2)           Mortgage
 
(3)           Pledge
 
(4)           Standby Letter of Credit
 
(5)           Credit Insurance
 
(6)           Other Forms of Security:
 
Article 9. Rights and Obligations of Party A
 
1. Party A has the right to require Party B to keep in confidence relevant financial information and trade secrets relating to production and operation of Party A unless otherwise provided by laws and regulations.
 
2. Party A shall provide relevant financial information and information relating to production and operation as required by Party B and shall be responsible for the authenticity, integrity and validity of such information.
 
3. Party A undertakes that all settlements and deposits relating to the Loan shall be conducted through its accounts opened with Party B or Party B’s relevant branch.
 
4. Party A shall assist in and accept Party B’s inspection and supervision of its production, operation, financial activities and utilization of the Loan.
 
5. Party A shall utilize the Loan for the purpose as provided for hereunder.
 
6. Party A shall punctually repay the principal and interest in accordance with this Contract.
 
7. Party A or its investors shall not transfer any funds or assets in order to evade the indebtedness owed to Party B.
 
8. Party A shall give Party B prior written notice for Party B’s consent if Party A intends to provide security for any third party during the term of this Contract and such security may affect Party A’s ability to make repayment under this Contract.

 
 
 

 
9. Party A shall promptly arrange for new security(ies) satisfactory to Party B where the Guarantor in respect to this Contract ceases or suspends production; its corporate registration is canceled, or business license revoked; it is bankrupt or dissolved; it is operating at a loss; or any other negative change has occurred, and such aforementioned incidents result in loss or partial loss of the Guarantor’s ability to secure the Loan, or where the mortgaged or pledged property(ies) for securing the Loan depreciate(s) or is (are) damaged or destroyed.
 
10. Party A shall promptly inform Party B of any relevant changes during the term of this Contract, including without limitation its business name, legal representative (or chief officer), registered office, business purpose or registered capital.
 
11. Where Party A intends to carry out activity(ies) during the term of this Contract which may have an impact on the realization of Party B’s rights hereunder, Party A shall give Party B a [30] banking days prior written notice for its consent to such intended activity(ies) and shall further take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security in accordance with Party B’s instructions. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division, setting up a joint venture, application for suspension of production or for winding up or for bankruptcy
 
12. Party A shall promptly inform Party B in writing, take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security(ies) in accordance with Party B’s instructions if there has occurred to Party A incident(s) during the term of this Contract that may have substantially negative effects on Party B’s performance of its obligations hereunder. The aforementioned incidents shall include without limitation the following: Party A ceases or suspends production; its corporate registration is canceled, or business license revoked; its legal representative or high-ranking officers are involved in illegal activities; it is involved in litigation with a major impact; great difficulties arise in respect of its production or operation; or its financial standing deteriorates.
 
13. Party A shall bear all fees and expenses in connection with this Contract and the security(ies) for this Contract including without limitation fees and expenses in respect to legal services, insurance, evaluation, registration, storage, authentication and notarization.
 
Article 10. Rights and Obligations of Party B
 
1. Party B is entitled to have access to information about the production, operation, and financial activities of Party A, and to require Party A to provide financial information and documents in respect to its production and operation.
 
2. If the credit rating of Party A declines, Party B is entitled to adjust or even cancel the Facility which is otherwise available.
 
3. Party B is entitled to debit any account opened by Party A with any branch or office of China Construction Bank for any amount due to Party B under this Contract.

 
 
 

 
4. Party B shall disburse the Loan to Party A in accordance with this Contract, except for any delay caused by Party A.
 
5. Party B shall keep in confidence financial information and trade secrets in relation to production and operation of Party A unless otherwise required by laws or regulations.
 
Article 11. Liabilities for Default
 
1. Events of Default
 
(1) Events of Default by Party A
 
(I) Party A fails to provide true, complete and valid financial information, or information relating to its production and operation or other relevant documents as required by Party B.
 
(II) Party A fails to utilize the Loan for the purpose agreed by the Parties.
 
(III) Party A fails to repay punctually the principal and/or interest.
 
(IV) Party A refuses Party B’s demand for supervision and/or inspection over the utilization of the Loan or hinders Party B from doing so.
 
(V) Party A transfers or misappropriates funds or assets in order to evade the indebtedness.
 
(VI) Party A’s operational and financial conditions deteriorate and as a result it is unable to repay its indebtedness upon maturity; or it is involved or likely to be immediately involved in litigation or arbitration with a major impact or other legal disputes, and any of the aforementioned incidents in Party B’s judgment may or has affect(ed) or impair(ed) Party B’s rights and interests hereunder.
 
(VII) Any other indebtedness owed by Party A has affected or may affect its performance of the obligations to Party B hereunder.
 
(VIII) Party A fails to repay any other indebtedness due to China Construction Bank upon maturity.
 
(IX) Party A carries out activity(ies) during the term of this Contract which may change its operational or managerial modes or equity structure and which in Party B’s sole judgment may affect or has affected the rights and interests of Party B hereunder. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division or setting up a joint venture.
 
(X) Other events which Party B believes will affect the realization of its rights under this Contract.

 
 
 

 
(XI) Party A fails to perform or comply with any of its other obligations hereunder.
 
(2) Any of the following events in relation to the Guarantor for this Contract shall be deemed as an event of default by Party A unless Party A provides new security in favor of, and satisfactory to, Party B:
 
(I) During the term of this Contract, there occurs to the Guarantor such incident(s) as may affect its ability to act as a joint and several liability guarantor. Such incidents shall include without limitation contracting, leasing, consolidation, merger, setting up a joint venture, division, forming an economic association with another enterprise, transformation to a stock company, bankruptcy and dissolution.
 
(II) The Guarantor provides beyond its capacity any security for any third party.
 
(III) The Guarantor loses or may lose its capability to act as a guarantor.
 
(IV) Other events of default by the Guarantor as provided for in the guarantee contract.
 
(3) Any of the following events in relation to the Mortgager for this Contract shall be deemed as an event of default by Party A unless Party A provides new security in favor of, and satisfactory to, Party B:
 
(I) The Mortgager fails to effect or maintain insurance for the mortgaged property, or fails to dispose of insurance proceeds in accordance with the mortgage contract upon occurrence of any insured event.
 
(II) The Mortgager fails to dispose of proceeds of compensation in accordance with the mortgage contract where the mortgaged property is damaged or destroyed or its value decreases as a result of the act of any third party.
 
(III) The Mortgager transfers, leases, re-mortgages or disposes of by any other means the mortgaged property without Party B’s written consent.
 
(IV) The Mortgager fails to handle the proceeds of the disposal of the mortgaged property in accordance with the mortgage contract, although such disposal is effected with Party B’s consent.
 
(V) The Mortgager fails to restore the value of the mortgaged property promptly, or fails to provide other security acceptable to Party B, where the mortgaged property is damaged, destroyed or decreases in value, which may affect the repayment of the indebtedness hereunder.
 
(VI) Other events of default by the Mortgager provided for in the mortgage contract.
 
(4) Any of the following events in relation to the Pledger for this Contract shall be deemed as an event of default by Party A unless Party A provides new security in favor of, and satisfactory to, Party B:

 
 
 

 
(I) The Pledger fails to effect or maintain insurance for the pledged property, or fails to dispose of insurance proceeds in accordance with the pledge contract upon occurrence of any insured event.
 
(II) The Pledger fails to dispose of the proceeds of compensation in accordance with the pledge contract where the pledged property is damaged or destroyed or its value decreases as a result of the act of any third party.
 
(III) The Pledger fails to handle the proceeds of disposal of the pledged property in accordance with the pledge contract, although such disposal is effected with the consent of Party B.
 
(IV) The Pledger fails to restore the value of the pledged property promptly, or fails to provide other security acceptable to Party B, where the pledged property is damaged, destroyed or decreases in value, which may have an impact on the repayment of the indebtedness hereunder.
 
(V) Other events of default by the Pledger provided for in the pledge contract.
 
(5) Any of the following shall constitute an Event of Default by Party A unless Party A provides new security as required by Party B: the security documents or other securities do not take effect, or are void or rescinded, or the security provider totally or partially loses its capacity to secure the indebtedness or refuses to perform its obligations.
 
2 Remedies
 
If any Event of Default in item (1) to (5) above occurs, Party B is entitled to enforce its rights hereunder by taking one or more of the following measures:
 
(1)           Party B is entitled to adjust, cancel or suspend the Facility or to adjust the Availability Period.
 
(2)           Party B is entitled to cease Disbursement of the Loan, to accelerate forthwith the Loan, and to require Party A to repay forthwith all principal, interest and fees.
 
(3)           Party B is entitled to liquidated damages of [0.235]‰ per day of the outstanding principal.
 
(4)           Where Party A fails to repay the Loan upon maturity, Party A shall pay interest and compound interest on the principal and interest which are not punctually repaid (including all or part of the principal and interest which are accelerated by Party B) at the overdue interest rate stipulated by the People’s Bank of China and in accordance with the interest payment provisions set out in this Contract.
 
(5)           In the event that Party A fails to utilize the Loan for the purpose set forth in this Contract, Party A shall pay default interest on the misappropriated part of the Loan in accordance with relevant regulations of the People’s Bank of China.

 
 
 

 
(6)           Party B is entitled to debit any account in any currency opened by Party A with any branch or office of China Construction Bank for any amount payable by Party A under this Contract.
 
(7)           Party B is entitled to enforce its security rights.
 
(8)           Party B is entitled to require Party A to provide new security(ies) satisfactory to Party B.
 
(9)           Party B is entitled to terminate this Contract.
 
Article 12. Amendment to this Contract
 
Upon taking effect of this Contract, any Party intending to amend this Contract shall notify the other Party promptly and a written agreement shall be executed if the Parties so agree, unless otherwise provided in this Contract or in any other agreement.
 
Article 13. Miscellaneous
 
1. After our client has fulfilled the entire acquisition of Zhouzhi production facilities and assets, they will take all the facilities including the kiwifruit production line as credit to provide the mortgage in its entirety.
 
2. The Current capital loan must be used according to the purchase contract，and the individual drawing amount should be less than 60% of the amount under the purchase contract，the availability term should be less than 10 months and at least 80% of received payments will be used to repay the bank.
 
Article 14. Dispute Resolution
 
Any dispute arising out of or in connection with this Contract shall be settled through friendly consultation. If no agreement is reached through such friendly consultation, such dispute shall be settled in accordance with item (1) thefollowing:
 
1. Instituting legal proceedings with the People’s Court in the location of Party B.
 
2. Submitting the disputes to the [ ] for arbitration (the venue for such arbitration shall be __________), which shall be conducted in accordance with the arbitration rules in effect as of the date of submission. The arbitration award shall be final and binding on both Parties.
 
3. The Parties shall perform this Contract in accordance with the undisputed parts during the course of such legal proceedings or arbitration.
 
Article 15. Effectiveness
 
This Contract shall take effect upon the execution by the legal representative (chief officer) or authorized representative of Party A and by the chief officer or authorized representative of Party B with the company chops of both Parties affixed.

 
 
 

 
Article 16. This Contract Shall be Made in [6] Counterparts
 
All documents created within the Availability Period and within the Maximum Amount of the Facility which underlie the debtor-creditor relationship between the Parties (including but not limited to Application for Drawing, Notice of Drawing or other certificates and documents) are integral parts of this Contract.
 
Article 17. Representations
 
1. Party A is fully informed and aware of the business purposes and powers of Party B.
 
2. Party A has read all the terms of this Contract and Party B has given explanation as required by Party A. Party A hereby acknowledges that it fully understands all terms of this Contract and the corresponding legal consequences thereof.
 
3. Party A has the right and power to execute this Contract.
 
Party A (Company Seal)
 
Legal Representative (or Chief Officer) or Authorized Representative (Signature):
 
/s/: Xue Hongke
 
Date: 08/10/2007
 
Party B (Company Seal)
Chief Officer or Authorized Representative (Signature): /s/: Zhou Cunxing
 
Date: 08/10/2007
 



 EX-10.17 9 e10-17.htm FACILITY FOR TRADE FINANCING CONTRACT e10-17.htm
EXHIBIT 10.17
 
Facility for Trade Financing Contract
 
Contract No.: Shanjiankaimaoyirongzi(2007) 044
 
Party A: Shaanxi Tianren Organic Food Co., Ltd
 
Address: A-4 Tongxiege Building, No.12, Gaoxin 2nd Rd, Hi-tech Zone, Xi’an, China 710075
 
Legal Representative (Chief Officer): Xue Hongke
 
Primary Depositary Bank: Gaoxin Branch of China Construction Bank
 
Account No. with Party B: 61001920900052507096
 
Telephone: 88386230
 
Fax:  88386495
 
Post Code: 710075
 
Party B: China Construction Bank, [ Gaoxin Branch  ]
 
Address: No. 42 Gaoxin Road
 
Chief Officer: Zhou Cunxing
 
Telephone: 88321414
 
Fax: 88221824
 
Post Code: 710075

 
 
 

 
In order to promote cooperation between Party A and Party B in export-import trade financing, Party B agrees to provide Party A with a revolving facility up to a certain amount for a fixed term at the application by Party A and subject to the satisfaction of conditions required by Party B. Party A and Party B hereby enter into this Contract.
 
Article 1. Facility for Trade Financing
 
 “Facility for Trade Financing” (the “Facility”) shall mean the maximum amount of outstanding principal that Party B agrees to provide to Party A for the purpose of trade financing under certain conditions and within the Availability Period provided in Article 4. At any time within the Availability Period, Party A may apply for trade financing on a revolving basis in accordance with the terms and conditions of this Contract and without limitation on frequency and amount of each individual financing (unless this Contract provides otherwise), subject always to:
 
The amount of the outstanding principals provided by Party B does not exceed the Maximum Amount of the Facility; and
 
The aggregate of the amount of Party A’s any individual application and the amount of the outstanding principal at the time of such application does not exceed the Maximum Amount of the Facility.
 
For the purpose of this Contract, any service Party B agrees to provide under any individual Line specified in Article 2 shall be deemed as a form of financing.
 
Article 2. Categories of the Facility
 
The Facility shall include Item(s) [3, 5] of the following individual lines:
 
Line for Issuance of L/C refers to the credit line for sight Letter of Credit to be issued by Party B for the account of Party A where Party B is able to have control over the title of the underlying goods.
 
Line for T/R refers to the credit line under which Party B is to provide import financing to Party A upon the issuance of a trust receipt by the latter. The Line for T/R is applicable to the following forms of financing: issuance of sight L/C where Party B is unable to have control over the title of the underlying goods; issuance of usance L/C; issuance of Shipping Guarantee for Party A (Party B shall be the issuing bank of the L/C in relation to such Shipping Guarantee); and Trust Receipt Loans provided on the maturity date of the payment under L/C.
 
Line for Packing Loan refers to the credit line under which Party B is to provide Party A with loans for the purpose of preparing the goods under L/C  on the condition that the beneficiary under such L/C shall be Party A and the original copy of the L/C and  of the amendment thereto (if any) shall be held by Party B. The proceeds in foreign currencies under such L/C shall be applied with first priority to repay the principal and interest of the Packing Loan and relevant expenses.

 
 
 

 
Line for Short Term Financing under Export L/C refers to the credit line under which Party B is to pay the negotiated amount to the exporter with recourse and in accordance with the issuing bank’s authorization upon presentation by Party A of a full set of documents conforming the terms of the L/C, and claim thereafter reimbursement from the issuing bank for payment under the L/C by presenting such documents.
 
Line for Loan under Export Collection refers to the credit line under which Party B is to provide short term financing with recourse to Party A during the course of documentary collection under export L/C upon the presentation by Party A of the documents. The Line shall be applicable to D/P (Document against Payment) only, but not to D/A (Document against Acceptance).
 
Article 3. Amount of the Facility
 
Party B agrees to provide to Party A the Facility with an amount not exceeding [sixteen million] (amount in words)(the “Maximum Amount “), and among other things,
 
(1) Line for Issuance of L/C shall not exceed [0] (currency) zero] (amount in words).  For issuance of each L/C under this Line, Party A shall provide to Party B a margin with an amount not less than 0]% of the aggregate of the L/C amount and the over-shipment value;
 
(2) Line for T/R shall not exceed [0 ] (currency) [zero] (amount  in words).  For issuance of each L/C under this Line, Party A shall provide a margin with an amount not less than [  ]% of the aggregate of the L/C amount and the over-shipment value; and for each Shipping Guarantee, Party A shall provide a margin with an amount not less than [  ]% of the value of the goods under such Shipping Guarantee;
 
(3) Line for Packing Loan shall not exceed [sixteen million]  (amount in words) and any individual loan shall not exceed [90]% of the L/C amount;
 
(4) Line for Short Tern Financing under Export L/C shall not exceed [0] (currency) [zero] (amount in words);
 
(5) Line for Loan under Export Collection shall not exceed [sixteen                                                                                                                     million] (amount in words), and each individual loan shall not exceed [90]% of the value indicated on the draft or on the invoice.
 
All outstanding amounts under the Facility for Trade Financing Contract No. Shanjiankaifamaoyirongzi(2007) 044 shall be deducted from the Facility under this Contract, which can be reinstated after such outstanding amounts are repaid in full.
 
If any security provider has performed its obligations in accordance with the security contract, the Facility shall decrease by the amount of the principal which has been repaid by such security provider.
 
If Party A provides a margin when applying for financing under the Facility, the amount of such margin shall not affect the amount of the available Facility at the time of such application.

 
 
 

 
Article 4. Availability Period
 
The Facility under this Contract shall be available from [September 24, 2007] to [June 7, 2008] (the “Availability Period”).
 
Within the Availability Period the term for each individual financing under the Facility shall be determined as follows:
 
1) Under the Line for T/R the term of any individual financing shall not exceed [  ] days and among other things:
 
For sight L/C under which Party B is not able to control the title to the goods and for usance L/C:
 
This Line shall be deducted accordingly upon the issuance of the L/C;
 
For sight L/C where Party B is unable to control the title to the goods, the term of individual financing shall commence from the date of receipt of the documents;
 
For usance L/C, the term of individual financing shall commence from the date on which Party B agrees to make payment;
 
The interest on financing shall accrue from the date of payment by Party B.
 
For issuance of Shipping Guarantee, this Line shall be deducted and the term of individual financing shall commence upon such issuance.
 
For T/R Loan:
 
For sight L/C where Party B is able to control the title to the goods, if Party A submits an Application for T/R Loan for payment under such L/C and Party B approves such Application, the Line for Issuance of L/C shall be reinstated and the Line for T/R shall be deducted accordingly on the date of payment by Party B; the term of individual financing and the interest on such financing shall commence/accrue from such payment date;
 
For sight L/C where Party B is unable to control the title to the goods and for usance L/C, Party A shall submit an Application for T/R Loan before the maturity date of such L/C if it needs T/R Loan for payment under such L/C. The term of such T/R loan shall not exceed the remaining term of individual financing in respect to such L/C and the interest thereon shall accrue from the date of payment by Party B.
 
2) For Line for Packing Loan, the term of any individual loan shall not exceed [120] days;
 
3) For Line for Short Term Financing under Export L/C, the term of individual financing shall not exceed [60] days;

 
 
 

 
The Facility shall terminate automatically and the unused Facility shall become void upon the expiration of the Availability Period. Party A may apply for a new facility and enter into a new contract with Party B subject to Party B’s review of and consent to such application.
 
4.4 Party A’s obligation to repay its indebtedness in respect to any individual financing provided within the Availability Period shall not be affected by the expiration of Availability Period even if the maturity date for such individual financing comes after the Availability Period expires.
 
Article 5.                      Interests and Fees
 
Interest rate, calculation and payment of interests
 
1) Under the Packing Loan, the interest rate, calculation and payment of the interest shall be as follows.
 
(1) The applicable interest rate on each individual RMB loan shall be Item [1] of the following:
 
(i) The interest rate for loans with the same term as promulgated by the People’s Bank of China (the “PBOC”) and applicable on the date of issuance of Notice of Drawing (the “PBOC rate”).
 
(ii) 100% [minus/plus] % of the PBOC rate.
 
(2) The interest for each individual RMB loan shall be calculated and paid in accordance with Item [   ] of the following:
 
(i) The interest shall be calculated on a daily basis and shall be paid in full together with the repayment of the principal;
 
(ii)The interest shall be calculated on a daily basis and shall be paid [     ] (monthly/quarterly). The Interest Payment Date shall be the 20th day of (each month/the last month of each quarter).
 
Daily interest rate = monthly interest rate/30.
 
(3) Where the loan under this Contract is in foreign currency, the interest rate and calculation and payment of the interest shall be as follows:
 
[                                                   ]
 
2) The interest rate for Short Term Financing under Export L/C and for Loan under Export Collection shall be calculated and paid as follows:

 
 
 

 
(1)Interest rate for individual Short Term Financing under Export L/C shall be a fixed interest rate, i.e. Item [    ] of the following:
 
(i)           LIBOR for [  ] period plus a margin of [   ].
 
(ii)           HIBOR for [  ] period plus a margin of [   ].
 
(iii)           [6.48] per annum.
 
(2) The interest rate for individual Loan under Export Collection shall be a fixed interest rate, i.e. Item [3] of the following:
 
(i)           LIBOR for [     ] period plus a margin of [    ].
 
(ii)           HIBOR for [     ] period plus a margin of [    ].
 
(iii)           [6.48%] per annum.
 
(3) The interest rate shall remain unchanged within the term of each individual financing.
 
(4) Calculation and payment of interest
 
Party A shall repay the principal and interest in full upon the maturity date of each individual financing. If the sum under relevant L/C or under export collection has been received before such maturity date, Party A shall forthwith repay to Party B such principal and interest.
 
3) Under the T/R Loan, the interest rate, calculation and payment of interest shall be as follows.
 
(1) The interest rate for each individual loan shall be the annual rate and Item [   ] of the following:
 
(i) Fixed interest rate, i.e. LIBOR for [   ] month(s) period plus a margin of [   ], which shall remain unchanged within each loan term.
 
(ii) Fixed interest rate, i.e. HIBOR for [  ] month(s) period plus a margin of [   ] , which shall remain unchanged within each loan term.
 
(iii) Fixed interest rate, i.e. [   ] per annum, which shall remain unchanged within each loan term.
 
(iv) Floating interest rate, i.e. LIBOR for [  ] month(s) period plus a margin of [   ], which shall be adjusted every [   ] months.
 
(v) Floating interest rate, i.e. HIBOR for [  ] month(s) period plus a margin of [   ], which shall be adjusted every [   ] months.
 
(2) The interest on T/R Loan shall be calculated and paid in accordance with the following provisions:

 
 
 

 
(i) For T/R Loan with a fixed interest rate, the interest shall be calculated and paid at the interest rate as agreed; for T/R Loan with a floating interest rate, the interest shall be calculated and paid at the interest rate applicable to the current floating interest period. If the floating interest period is shorter than the Interest Payment Period, the interest that has accrued in each of the floating interest periods shall be calculated first, and then be summed up and paid on the Interest Payment Date.
 
(ii) Under T/R Loan, the interest shall be paid in accordance with Mode [   ] of the following:
 
Mode 1: The interest shall be paid every (month/quarter/half year) and on the date corresponding to the Value Date; if no corresponding date exists in the month for interest payment, the last day of such month shall be the Interest Payment Date.
 
Mode 2: The interest shall be paid in full together with the repayment of the principal upon maturity.
 
4) The interest on Short Term Financing under Export L/C and on Loan under  Export Collection shall accrue from the date on which the loan proceeds are deposited into Party A’s account. The interest on the loan and on the advance payment under the Line for T/R shall accrue from the date of payment by Party B. The aforementioned date of deposit or date of payment shall be the Value Date of the financing. The interest under this Contract shall accrue on a daily basis and such daily rate shall be on a 365-day year basis if the financing is in Hong Kong dollars or English pounds or on a 360-day year basis if the financing is in currency other than Hong Kong dollars and English pounds. Each interest period shall include the first day of such period, but exclude the last day.
 
The term “LIBOR” shall mean the inter-bank offered rate for the same currency and the same period which is published by the British Bankers Association (BBA) and which appears on the TELERATE page or similar banking display terminals as of 11:00 a.m. (London time) two banking days prior to the occurrence of any individual financing or two banking days prior to an interest rate adjustment day.
 
The term “HIBOR” shall mean the inter-bank offered rate for the same currency and the same period which is published by the Hong Kong Bankers Association (HKBA) and which appears on the TELERATE page or similar banking display terminals as of 11:30 a.m. (Hong Kong time) two banking days prior to the occurrence of any individual financing or two banking days prior to an interest rate adjustment day.
 
Under this Contract, Party A shall pay to Party B the following fees:
 
(1) Management Fees which shall be calculated and paid at [  ]% of the Maximum Amount of the Facility;
 
(2) All expenses incurred by Party B in respect to all individual financing under this Contract;
 
(3) All expenses incurred by Party B in collecting sums under and/or in respect of the L/C, negotiable instruments, guarantee, mortgage, and pledge in connection with the Facility;

 
 
 

 
(4) All expenses under this Contract or in connection with the security for this Contract, including without limitation expenses for legal services, insurance, evaluation, registration, safekeeping, authentication, and notarization.
 
Article 6 Utilization of the Facility
 
6.1 Conditions Precedent for using the Facility
 
Subject to a waiver by Party B, Party B is not obligated to provide financing unless the following conditions are satisfied:
 
(1) Party A has obtained and/or completed all necessary approvals, registrations, deliveries, and other legal formalities relating to the Facility in accordance with relevant laws and regulations; and
 
(2) The security contracts or other security documents satisfactory to Party B have become effective and remain in full force and effect; and
 
(3) No event of default listed in this Contract has occurred; and
 
(4) If Party A shall pay Management Fees as required in this Contract, such Fees have been paid to Party B within [   ] banking days after the execution of this Contract;
 
(5)  All other documents required by Party B have been submitted;
 
(6) The Application for Drawing and other relevant documents have been examined and approved by Party B;
 
(7) Other conditions precedent:
 
[                                        ]
 
6.2 At any time during the Availability Period the aggregate of the outstanding principal of all individual financings shall not exceed the Maximum Amount of the Facility.
 
6.3 Subject to the limitation of amount set on each individual Line, Party A may use each individual Line repeatedly during the Availability Period without any restriction on frequency or amount of individual financing.
 
6.4 The indebtedness owed by Party A to Party B shall occur upon Party A’s use of any individual Line. Such indebtedness shall include without limitation all the principal, interest, overdue interest, default interest, management fees, banking charges, liquidated damages, compensations and other fees or expenses incurred by Party B in realizing its creditor’s rights (including but not limited to litigation fees, arbitration fees, property preservation fees, traveling expenses, enforcement costs, evaluation fees and auction fees.)
 
6.5 Party A shall use the Facility in accordance with this Contract and internal regulations of Party B in respect to trade financing, provision of credit facility, settlement and loan.

 
 
 

 
6.6 No separate contract is needed for Party A to use the Facility. Party A, however, shall submit to Party B an Application for Drawing and/or other relevant applications (including without limitation Application for Documentary Credit and Commitment Letter, Application for Shipping Guarantee, Application for T/R Loan under L/C, Application for Packing Loan, and Memorandum for Presentation of Documents under Export L/C or Export Collection) and Party B shall issue a Notice of Drawing upon its approval of such applications.
 
 Application for Drawing, other relevant applications and Notice of Drawing shall be deemed as attachments to and shall be integral parts of this Contract.
 
6.7 During the Availability Period specified in Article 4 and subject always to Party B’s approval, Party A may apply for drawing the Facility on a revolving basis within the Maximum Amount specified in Article 3. Relevant individual Lines may be reinstated accordingly under the following circumstances: (1) Party A has repaid/paid in full the principal and interest under the Line for T/R Loan, Line for Short Term Financing under Export L/C and/or Line for Packing Loan; (2) Party A has made punctual payments under import L/C; (3) the guarantee obligations of Party B have been released under the Shipping Guarantee.
 
Article 7. Rights and Obligations of the Parties
 
7.1 Party A has the right to require Party B to keep confidential relevant information and trade secrets relating to production and operation of Party A unless otherwise required by laws and regulations.
 
7.2 Party A may apply to Party B for utilizing the Facility at any time within the Availability Period. Party B shall grant approval if Party B, after review, affirms that the Application complies with relevant laws and regulations, this Contract and relevant internal regulations of Party B.
 
7.3 Party A shall provide financial statements and information relating to planning, statistics, production and operation as required by Party B and shall be responsible for the authenticity, integrity and validity of such information and documents.
 
7.4 Party A shall be subject to Party B’s inspection and supervision over its operation, financial activities and the use of the Facility under this Contract and shall provide assistance as required by Party B.
 
7.5 Whenever Party A’s credit standing degrades or other circumstances happen that, in Party B’s sole judgment, may affect Party A’s normal business operations, Party B has the right to adjust or cancel the unused Facility.
 
7.6 Party A shall open the settlement account in RMB or a foreign currency with Party B and have import and export settlements, trade financing and other settlements conducted through Party B.
 
7.7 Party A shall utilize the Facility for the purpose as agreed by the Parties.

 
 
 

 
7.8 Party A shall repay the principal and interest within the term agreed by the Parties.
 
7.9 Party A shall bear the exchange rate risk. If the fluctuation of exchange rate may result in the aggregate of individual financings that have been provided exceeding the Maximum Amount of the Facility, Party A shall promptly provide security satisfactory to Party B upon its receipt of notice from Party B. Party B is under no obligation to provide financing for any additional amount arising from the fluctuation of exchange rate.
 
7.10 Party A shall deposit into its account opened with Party B such funds as sufficient to pay the amount due to Party B before each Repayment Date specified in this Contract or in any Attachment hereto, and Party B has the right to debit the aforementioned account for such amount.  If Party A does not repay any indebtedness punctually and in full, Party B has the right to directly debit for such amount Party A’s margin account or any account opened by Party A with any branch or office of the China Construction Bank. If Party A fails to repay any amount due, Party B has the right to enforce the security or to take other measures to realize its creditor’s rights.
 
7.11 Party A shall not misappropriate or transfer its funds or assets to evade its indebtedness to Party B.
 
7.12 If Party A intends to create any security for any third party within the term of this Contract and such security may affect Party A’s ability for repayment under this Contract, Party A shall give Party B a prior written notice for Party B’s consent.
 
7.13 Party A shall promptly arrange for other security satisfactory to Party B where the Guarantor in respect to this Contract ceases or suspends production; its corporate registration is canceled, or business license revoked; it is bankrupt or dissolved; or it is operating at a loss or any other negative change has occurred, and such aforementioned incidents result in loss or partial loss of the Guarantor’s ability to secure the Facility, or where the mortgaged or pledged property(ies) for securing the Facility depreciate(s) or is (are) damaged or destroyed
 
Before the repayment of the indebtedness in full, Party A shall promptly inform Party B of any change of its business name, legal representative (chief officer), address, business purpose or registered capital and other relevant matters.
 
Where Party A intends to carry out activity(ies) which may have an impact on the realization of Party B’s creditor’s rights before the indebtedness hereunder is repaid in full, Party A shall give Party B a [   ] days prior written notice for its consent to such intended activity(ies) and shall further take sufficient measures to safeguard the  repayment of the indebtedness under this Contract and arrange for security in accordance with Party B’s instructions. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division, setting up a joint venture, application for suspension of production or for winding up or for bankruptcy.
 
7.16 Before the indebtedness hereunder is repaid in full, Party A shall promptly inform Party B in writing, take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security in accordance with Party B’s instructions if there has occurred to Party A incident(s) that may have substantially negative effects on Party B’s performance of its obligations hereunder. The aforementioned incidents shall include without limitation the following: Party A ceases or

 
 
 

 
suspends production; its corporate registration is canceled, or business license revoked; its legal representative or high-ranking officers are involved in illegal activities or litigation with a major impact; great difficulties arise in respect to its production or operation; or its financial standing deteriorates.
 
7.17 Party A shall not enter into with any third party any contract that is detrimental to the rights and interests of Party B under this Contract.
 
7.18 Before the repayment of all the indebtedness hereunder, Party A shall not provide security to any third party with the assets procured by using the Facility the without prior written consent of Party B.
 
7.19 Party A shall compensate Party B for all losses incurred by Party B in connection with the disputes arising from the underlying Contract and all losses caused by any third party.
 
7.20 In respect to L/C, Party A and Party B shall have the following additional rights and obligations:
 
(1) Party A shall submit to Party B the underlying commercial contracts and other relevant documents as required by Party B and shall be responsible for the authenticity of all such documents.
 
(2) All settlements in both RMB and foreign currency under the L/C opened for the account of Party A shall be conducted through Party B.
 
(3) Party B’s issuance of the L/C shall be subject to the International Chamber of Commerce Uniform Custom and Practice for Documentary Credits (UCP 500), and Party B shall be responsible for all liabilities arising from such issuance.
 
(4) Party A shall repay all indebtedness under this Contract. The “indebtedness” herein shall include but not be limited to the amount payable for the goods under the L/C, relevant charges, telecommunication expenses, disbursements, overdue interest payable by Party A for Party B’s advance payment under the L/C, liquidated damages, compensations, relevant banking expenses refused by the overseas beneficiary and the expenses incurred by Party B in realizing its creditor’s rights.
 
(5) Party A shall submit to Party B an Application if any amendment needs to be made to the L/C. Party A shall be responsible for all expenses relating to any amendment to the L/C (including without limitation the banking expenses refused by the overseas beneficiary).
 
(6) Party A shall instruct in writing Party B to make payment/give acceptance/confirm deferred payment/refuse payment within the period stated in the Advice of Inward Documents under Letter of Credit.  If Party A fails to give such written instructions within such stated period, Party B has the right to determine at its sole discretion to make payment/give acceptance/confirm deferred payment/refuse payment. Party A shall be responsible for all liabilities and consequences incurred in respect to the aforementioned activities.

 
 
 

 
(7) If there is any discrepancy between the documents and the L/C and Party A intends to instruct Party B to refuse payment/refuse acceptance/refuse to confirm deferred payment, Party A shall instruct in writing Party B as to the aforementioned refusals within the period stated in the Advice of Inward Documents under Letter of Credit. Party A shall give reasons for such refusals and provide a full list of all the discrepancies. Party A shall further return all the documents provided by Party B. Notwithstanding all of the above, Party B is entitled to determine and deal with the discrepancy at its sole discretion and to decide whether or not to make payment/give acceptance/confirm deferred payment.
 
(8) If the L/C is a sight L/C and Party B determines in its judgment that there is no discrepancy between the documents and the L/C, Party A shall pay to Party B all amounts and relevant expenses within 3 banking days after Party B issues the Advice of Inward Documents under Letter of Credit.
 
If the L/C is a usance L/C, Party A shall pay to Party B all amounts and relevant expenses before the maturity date of payment under the L/C.
 
(9) Party A shall compensate Party B for any loss incurred in connection with any dispute arising from the underlying commercial contract and for any loss caused by any third party.
 
(10) Party B shall not be responsible for any delay or loss in transmission of any message, letter or other document, nor for any delay, omission or mistake arising in the course of telecommunication.
 
(11) Party A shall complete in English the Application for Amendment to Documentary Credit and all expressly-required parts of the Application for Irrevocable Documentary Credit. If Party A fills in Chinese where English is required, Party B shall not be responsible for any ambiguity caused thereby.
 
(12) Party A shall be solely responsible for any illegibility or ambiguity in the Application for Amendment to Documentary Credit and in the Application for Irrevocable Documentary Credit.
 
7.21 In respect to Shipping Guarantee, Party A and Party B shall have the following additional rights and obligations:
 
(1) Party B has the right to require Party A to issue a trust receipt and provide other relevant documents. If the beneficiary raises any claims against Party B after issuance of the Shipping Guarantee, Party A shall deposit within three banking days after receipt of the Notice of Payment such amounts as sufficient to satisfy the claim and relevant expenses into the account designated by Party B.
 
(2) Party A shall not create mortgage or pledge over the goods under the Shipping Guarantee in favor of any other institution or individual without the written consent of Party B.
 
(3) Party A shall unconditionally make payment or accept upon receipt from Party B of the Advice of Inward Documents under Letter of Credit whether or not there is any discrepancy. If Party A fails to pay or accept within the stated period, Party B has the right to debit for the corresponding amount Party A’s account opened with any branch or office of China Construction Bank so as to make punctual payment.

 
 
 

 
(4) Party A shall take the Shipping Guarantee back from the carrier or its agent and return it to Party B within fifteen days after it receives the original bill of lading. If Party A fails to retake the Shipping Guarantee within thirty days, Party B has the right to present the bill of lading to the carrier or its agent in exchange for the return of Shipping Guarantee and all expenses so incurred shall be borne by Party A.
 
(5) If any legal action is instituted against Party B as a result of issuance of the Shipping Guarantee, Party A shall provide Party B upon demand with sufficient funds for defense, unconditionally assume all the liabilities and risks and compensate Party B for all the expenses and losses so incurred. The said liabilities, risks, expenses and losses shall include, without limitation, compensations, litigation fees, legal fees and traveling fees.
 
(6) If the ship related to the Shipping Guarantee or other ships or assets of the owner of that same ship are seized or are facing possible seizure due to the Shipping Guarantee, Party A shall be responsible for their release on bail or shall take all other necessary measures to prevent the aforementioned occurrences.  Regardless of the legality or not of such seizure, Party A shall compensate Party B for any and all losses, damage and expenses so incurred.
 
(7) Party A shall compensate Party B for any other losses incurred by Party B in respect to its issuance of the Shipping Guarantee.
 
7.22 In respect to T/R Loan, Party A and Party B shall have the following additional rights and obligations:
 
(1) Party A has the right to require Party B to provide T/R Loan in accordance with this Contract.
 
(2) Party B shall keep confidential all trade secrets of Party A.
 
(3) All settlements in both RMB and foreign currency under this Contract shall be conducted through its account opened with Party B.
 
(4) Party B acquires upon payment the title to the documents and the title to the goods under such documents (the “Goods”).
 
(5) Party B shall return the documents to Party A upon issuance of a Trust Receipt by the latter.
 
(6) As trustor under the Trust Receipt, Party B is entitled to the interests and benefits of the disposal of the trust property by Party A.
 
(7) As trustee under the Trust Receipt, Party A has the right to hold the documents under the L/C and the Goods. Party A may determine at its discretion to unload, store, manufacture, process or sell the Goods. The proceeds of the sale of the Goods shall be used to repay Party A’s indebtedness under the Trust Receipt Loan and any deficiency shall be repaid by Party A by drawing on other financial sources.
 
(8) Party A shall bear all fees and expenses incurred in connection with the Goods or disposal of the same.

 
 
 

 
(9) After the Goods have been sold, Party B has the right to collect the purchase price from the buyer and issue effective receipts without the need to give prior notice to Party A.
 
(10) Party A shall dispose of the Goods in accordance with any special requirements by Party B.
 
(11) The documents and the Goods relating to the T/R Loan shall be the trust property of Party B and independent of Party A. Such trust property shall not be subject to liquidation in the event of bankruptcy or the dissolution of Party A. The creditor’s rights derived by Party A from its management and disposal of the aforementioned documents and Goods shall not be setoff against its indebtedness arising from its own property.
 
(12) Before the principal, interest, fees and expenses under the Trust Receipt Loan are repaid in full, Party A shall not create any mortgage (pledge) over the documents or the Goods.
 
(13) Before the sale of the Goods, Party A shall deliver to Party B relevant documents in respect to the Goods or to store the same pursuant to Party B’s instructions and issue the warehouse receipt to the order of its bank.
 
(14) Party A shall insure the Goods at its own expenses with reputable insurers against fire and other risks in accordance with business practices for the full value of the Goods and shall hold as trustee for Party B, and deliver upon Party B’s demand the insurance policies or contracts under which Party B is designated as the beneficiary or under which the beneficiary has been changed to Party B through due endorsement. In the event of any claim in respect to the Goods under the insurance policy, Party A shall inform Party B forthwith of such claim, and shall pay to Party B all the insurance proceeds upon receipt of the same.
 
(15) Party B has the right to determine/examine the modes of transportation, the place(s) and method(s) for storage of the goods and types of insurance. Party A shall provide necessary cooperation including but not limited to allowing Party B’s personnel to enter the warehouses and sites which are owned, occupied or managed by Party A. Party A shall execute upon the demand of Party B all such documents as necessary to facilitate the delivery taking of the goods and claims by Party B.
 
(16) Party B has the right to supervise the sale of the Goods and the collection of the proceeds. Party A shall forthwith advise Party B in writing of relevant information at the request of Party B.
 
(17) If Party A fails to dispose of the trust property in accordance with Party B’s instructions, Party B has the right to terminate the trust, repossess the trust property and dispose of the same at its sole discretion. Party A shall return upon demand to Party B the full set of title certificates and documents in relation to the Goods and other relevant documents or the Goods in accordance with Party B’s instructions.
 
7.23 In respect to Packing Loan, Party A and Party B shall have the following additional rights and obligations:

 
 
 

 
(1) The L/C relating to the Packing Loan shall be either L/C under which Party B is the advising bank or L/C which is negotiable if Party B is not the advising bank. Any delivery of documents and collection of payments in connection with exports under the Packing Loan shall be made through Party B.
 
(2) All settlements in both RMB and foreign currencie under the Packing Loan shall be conducted through its accounts opened with Party B.
 
(3) The proceeds received by Party A from its export and/or short term financing under export L/C shall promptly be used to repay the principal, the interest and other expenses. In relation to the L/C for shipment in installments, each installment payment received by Party A shall promptly be used to repay the principal, interest and other expenses. When the loan is due, Party A shall repay outstanding principal, interest and other expenses in full. If the issuing bank of the L/C in respect to the Packing Loan refuses to make payment, Party B has the right to accelerate forthwith the Packing Loan. If Party A fails to deliver the documents conforming to the L/C within the validity period of the L/C, Party B has the right to forthwith accelerate the Packing Loan.
 
(4) The proceeds of the loan shall be used by Party A exclusively for the preparation of goods under the L/C relating to the Packing Loan and shall not be used for any other purposes.
 
(5) Except as otherwise agreed in writing by Party B and the security provider, Party A shall not require or accept any amendment to or revocation of the L/C.
 
(6) If amendments are made to the terms and conditions of the L/C within the loan term that may materially and adversely affect Party B’s rights and interests, including but not limited to any decrease of the amount under the L/C, any extension of the payment period, or revocation of the L/C, Party A shall make prepayment in accordance with the notice by Party B of accelerating the loan.
 
(7) Except as otherwise agreed by Party B in writing, Party A shall not transfer its rights and/or obligations under the L/C or under this Contract to any third party.
 
(8) Party A shall provide to Party B information relating to the use of the loan and the preparation of goods under the L/C. Party A shall dispatch the goods as required under the L/C subject to Party B’s supervision and shall submit to Party B the full set of original and clean documents under the L/C.
 
7.24 In respect to Short Term Financing under Export Credit, Party A and Party B shall have the following additional rights and obligations:
 
(1) Party A has the right to request Party B to provide such Financing.
 
(2) All settlements in both RMB and foreign currencies under such Financing shall be conducted through its accounts opened with Party B. (3) Party A shall submit to Party B original copies of the L/C and amendments thereto (if any) and a complete set of documents as provided for in the L/C in order for Party B to claim reimbursement against the issuing bank upon presentation of those documents. All the proceeds received by Party B from the issuing bank shall be applied directly for the repayment of the principal and interests of such Financing and other expenses. The deficiency, if any, shall be paid by Party A by drawing on other financial sources. Party B also has the right to debit for the corresponding amount any account opened by Party A with any branch or office of China Construction Bank.

 
 
 

 
If the issuing bank refuses to make payment, Party B has the right to accelerate forthwith such Financing.
 
(4) In case of any discrepancy between the documents and the L/C, Party B has the right to refuse to provide such financing.
 
(5) Party B is entitled to hold Party A liable for all unpaid principal, interest, expenses and any other losses and to debit for such amount any account opened by Party A with any branch or office of China Construction Bank, and to set off other account receivables of Party A against such amount if the overseas banks (including the issuing bank and its nominated bank) (“Overseas Banks”) refuse payment, or delay in payment, or make any deduction from payment due to the occurrence of any event that is not caused by Party B’s fault including without limitation the discrepancy between the documents and the L/C, social unrest, wars, financial crisis in the countries where the Overseas Banks are located, bankruptcy of such Overseas Banks, late delivery or loss of the documents during the course of mailing, telecommunication errors/omissions or other events of force majeure. Party B also has the right to dispose of at its sole discretion upon the occurrence of any event mentioned above the documents and the goods under this Contract and to get compensated from the proceeds of such disposal. If such proceeds are insufficient, Party B is entitled to demand Party A for payment of the deficiency.
 
(6) Party A has the right to prepay such Financing. The interest shall be calculated at the Interest Rate as specified in this Contract and on the basis of the actual number of days elapsed.
 
7.25 In respect to Loan under Export Collection, Party A and Party B shall have the following additional rights and obligations:
 
(1) Party A has the right to require Party B to provide the loan under the terms and conditions of this Contract.
 
(2) All settlements in both RMB and foreign currencies under this Contract shall be conducted through its accounts opened with Party B.
 
(3) Party A shall assign to Party B the rights and interests under the export credit insurance arranged by Party A. Party A shall submit to Party B a complete set of the collection documents under this Contract so that Party B can claim reimbursement against relevant obligors with those documents. All the proceeds received by Party B shall be applied directly for the repayment of the principal, interest and other expenses under this Contract and the deficiency (if any) shall be repaid by Party A.
 
(4) If Party B receives notice from the collecting bank stating that the payer refuses to make payment, the loan shall forthwith become due and payable.
 
(5) If the payer refuses to make payment, or delays in payment, or makes deduction from any payment or does so due to the occurrence of any event that is not caused by Party B’s fault, including without limitation any delay or loss of the documents during the mailing process, telecommunication omissions or other events of force majeure, Party B is entitled to hold Party A liable for all losses incurred by Party B in respect to principal and interest, expenses and any other losses. Party B has the right to debit for such amount any account opened by Party A with any branch or office of China Construction Bank, or to set off other account receivables of Party A against such amount. Party B also has the

 
 
 

 
right to dispose of at its sole discretion the documents and the goods under this Contract and to get compensated from the proceeds of such disposal. Party B is further entitled to hold Party A liable for the deficiency, if any.
 
(6) Party A has the right to prepay the loan. The interest shall be calculated on the basis of the actual number of days elapsed and at the interest rate specified in this Contract.
 
Article 8. Security
 
8.1 The security(ies) available hereunder shall be Item [1.2] of the following:
 
(1)           Guarantee
 
(2)           Mortgage
 
(3)           Pledge
 
(4)           Deposit
 
(5)           Standby Letter of Credit
 
(6)           Credit Insurance
 
(7)           Other Forms of Security:                       .
 
8.2 Where Party A cannot pay any due amount punctually and such amount is converted into Working Capital Loan, the security(ies) mentioned above shall be available to Party B for securing the indebtedness in respect to such Working Capital Loan.  Party B has the right to request Party A to change security provider or to provide other security as the case may be.
 
Article 9. Liabilities for Default
 
Events of Default
 
Events of Default by Party A
 
Party A fails to provide true, complete and valid financial information or information relating to its production and operation or other relevant documents as required by Party B.
 
Party A fails to utilize the Facility for the purpose agreed by the Parties.
 
(III) Party A fails to punctually repay the principal and/or interest.
 
(IV) Party A refuses Party B’s demand for supervision and/or inspection over the utilization of the loan or hinders Party B from doing so.

 
 
 

 
(V) Party A transfers or misappropriates funds or assets in order to evade its debts.
 
Party A is in breach of Article 7 of this Contract.
 
Party A’s operational and financial conditions deteriorate and as a result it is unable to repay its debts on the due date or it is involved or likely to be immediately involved in litigation or arbitration with a major impact or other legal disputes, and any of the aforementioned incidents, in Party B’s judgment, may or has affect(ed) or impair(ed) Party B’s rights and interests hereunder.
 
Any other indebtedness owed by Party A has affected or may affect its ability to perform its obligations to Party B hereunder.
 
Party A fails to repay any other indebtedness due to China Construction Bank upon maturity.
 
During the term of this Contract, Party A carries out activity(ies) which may change its operational or managerial modes or equity structure and which in Party B’s sole judgment may affect or has affected the rights and interests of Party B hereunder. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division, setting up a joint venture, application for suspension of production or for winding up or for bankruptcy.
 
Other events which Party B believes may affect the realization of Party B’s creditor’s rights.
 
Party A fails to perform or comply with any of its other obligations hereunder.
 
Any of the following events in relation to the Guarantor for this Contract shall be deemed as an event of default by Party A unless Party A provides new security in favor of, and satisfactory to, Party B:
 
(I) There occur to the Guarantor such incident(s) as may affect its ability to act as a joint and several liability guarantor and such incidents shall include without limitation contracting, leasing, consolidation, merger, setting up a joint venture, division, forming an economic association with another enterprise, transformation to a stock company, bankruptcy and dissolution.
 
(II) The Guarantor provides beyond its capacity any security for any third party.
 
(III) The Guarantor loses or may lose its capability to act as a guarantor.
 
(IV) Other events of default by the Guarantor as provided for in the guarantee contract.
 
Any of the following events in relation to the Mortgager for this Contract shall be deemed as an event of default by Party A unless Party A provides new security in favor of, and satisfactory to, Party B:

 
 
 

 
(I) The Mortgager fails to effect or maintain insurance for the mortgaged property, or fails to dispose of insurance proceeds in accordance with the mortgage contract upon occurrence of any insured event.
 
(II) The Mortgager fails to dispose of proceeds of compensation in accordance with the mortgage contract where the mortgaged property is damaged or destroyed or its value decreases as a result of the act of any third party.
 
(III) The Mortgager transfers, leases, re-mortgages or disposes of by any other means the mortgaged property without Party B’s written consent.
 
(IV) The Mortgager fails to handle the proceeds of the disposal of the mortgaged property in accordance with the mortgage contract, although such disposal is effected with Party B’s consent.
 
(V) The Mortgager fails to restore the value of the mortgaged property promptly, or fails to provide other security(ies) acceptable to Party B where the mortgaged property is damaged, destroyed or decreases in value, which may affect the repayment of the indebtedness hereunder.
 
(VI) Other events of default by the Mortgager provided for in the mortgage contract.
 
Any of the following events in relation to the Pledger for this Contract shall be deemed as an event of default by Party A unless Party A provide new security in favor of, and satisfactory to, Party B:
 
(I) The Pledger fails to effect or maintain insurance for the pledged property, or fails to dispose of insurance proceeds in accordance with the pledge contract upon occurrence of any insured event.
 
(II) The Pledger fails to dispose of the proceeds of compensation in accordance with the pledge contract, where the pledged property is damaged or destroyed or its value decreases as a result of the act of any third party.
 
(III) The Pledger fails to handle the proceeds of disposal of the pledged property in accordance with the pledge contract, although such disposal is effected with the consent of Party B.
 
(IV) The Pledger fails to restore the value of the pledged property promptly, or fails to provide other security acceptable to Party B where the pledged property is damaged, destroyed or decreases in value, which may have an impact on the repayment of the indebtedness hereunder.
 
(V) Other events of default by the Pledger provided for in the pledge contract.
 
Any of the following shall constitute an Event of Default by Party A unless Party A provides new security as required by Party B: the security documents or other securities do not take effect, or are void or rescinded, or the security provider totally or partially loses its capacity to secure the indebtedness or refuses to perform its obligations.

 
 
 

 
Remedies
 
If any Event of Default in Items (1) to (5) above occurs, Party B is entitled to enforce its rights hereunder by taking one or more of the following measures:
 
Party B is entitled to adjust or cancel the Facility or any individual Line under this Contract.
 
Party B is entitled to accelerate forthwith the indebtedness under this Contract, and to require Party A to repay forthwith all principal, interest and fees, whether they are due or not.
 
(3) If Party B makes advance payment under the L/C due to Party A’s breach of this Contract, Party B is entitled to overdue interest payable by Party A at the overdue interest rate for the period commencing from the date of such advance payment. Such overdue interest rate shall be 50%.
 
Before the maturity date of the Packing Loan, Party A shall pay compound interest on the interest not paid punctually at the Interest Rate and in accordance with the interest payment provisions set forth in Article 5 of this Contract; where Party A defaults in repayment of the RMB Loan upon maturity, with respect to such Loan (including all or part of the Loan which is accelerated by Party B), Party A shall pay interest and compound interest at the overdue interest rate as promulgated by the People’s Bank of China and applicable at the time of such default and in accordance with the interest payment provisions set forth in this Contract for the period commencing from the date of such failure; where Party A defaults in repayment of the Loan in foreign currency upon maturity, with respect to such loan (including all or part of the loan which is accelerated by Party B), Party A shall pay interest and compound interests at the overdue interest rate and in accordance with the interest payment provisions set forth in this Contract for the period commencing from the date of such default.
 
Where Party A defaults in repayment of Short Term Financing under Export Credit or Loan under Export Collection upon maturity, Party A shall pay interest and compound interest at the overdue interest rate on a quarterly basis commencing from the date of such default. Such overdue interest rate shall be 50% [         ].
 
Before the Trust Receipt Loan matures, and where Party A defaults in payment of the due interests, Party A shall pay compound interest on such unpaid interest at the interest rate and in accordance with the interest payment provisions set forth in this Contract; where the principal and the interest shall be paid in a number of installments and Party A defaults in repayment of any indebtedness upon maturity, with respect to the indebtedness not repaid punctually, Party A shall pay interest and compound interest at the overdue interest rate and in accordance with the interest payment provisions set forth in this Contract for the period commencing from the date of such default; where the principal and the interest shall be repaid in one installment and Party A defaults in repayment of the indebtedness upon maturity, with respect to such indebtedness, Party A shall pay the interest and compound interest on a quarterly basis at the overdue interest rate for the period commencing from the date of such default. Such overdue interest rate shall be [50%].
 
(4) Party B is entitled to debit any account in any currency opened by Party A with any branch or office of China Construction Bank for any unpaid amount.

 
 
 

 
(5) Party B is entitled to require Party A to provide new security(ies) for all the indebtedness in respect to the Facility.
 
(6) Party B is entitled to enforce its security rights.
 
(7) Party B is entitled to terminate this Contract.
 
Article 10. Amendment to this Contract
 
Upon taking effect of this Contract, any Party intending to amend this Contract shall notify the other Party promptly and a written agreement shall be executed if the Parties so agree, unless otherwise provided in this Contract or any other agreement.
 
Article 11. Miscellaneous
 
1  
 
2  
 
3  
 
4   
 
Article 12. Dispute Resolution
 
Any dispute arising out of or in connection with this Contract shall be settled through friendly consultation. If no agreement is reached through such friendly consultation, such dispute shall be settled in accordance with _____ of the following:
 
(1) Instituting legal proceedings with the People’s Court in the location of Party B.
 
(2) Submitting the disputes to the [                ] for arbitration (the venue for such arbitration shall be __________), which shall be conducted in accordance with the arbitration rules in effect as of the date of submission. The arbitration award shall be final and binding on both Parties.
 
The Parties shall perform this Contract in accordance with the undisputed parts during the course of such legal proceedings or arbitration.
 
Article 13. Effectiveness

 
 
 

 
This Contract shall take effect upon the execution by the legal representative (chief officer) or authorized representative of Party A and by chief officer or authorized representative of Party B with the company chops of both Parties affixed.
 
Article 14. Counterparts
 
This Contract shall be made in [    ] counterparts.
 
All documents created within the Availability Period and within the Maximum Amount which underlie the debtor-creditor relationship between the Parties (including but not limited to Application for Drawing, Notice of Drawing, or other certificates and documents) shall be integral parts of this Contract.
 
Article 15.  Representations
 
Party A is fully informed and aware of the business purpose and powers of Party B.
 
Party A has read all the terms of this Contract and Party B has given explanation as required by Party A. Party A hereby acknowledges that it fully understands all terms of this Contract and the corresponding legal consequences thereof.
 
Party A has the right and power to execute this Contract.
 
Party A (Company Chop): Shaanxi Tianren Organic Food Co., Ltd.
 
Legal Representative (or Chief Officer) or Authorized Representative (Signature):  /s/ Xue Hongke
 
Date:
 
Party B (Company Chop): Gaoxin Branch of China Construction Bank
Chief Officer or Authorized Representative (Signature): /s/ Zhou Cunxing
 
Date:


 EX-10.18 10 e10-18.htm RMB FACILITY LOAN CONTRACT e10-18.htm
EXHIBIT 10.18
 
 
RMB Facility Loan Contract
 
Contract No : 1520070929715
 
Type of Loan :
 
Borrower (Party A): Huludao Wonder Fruit Co. Ltd.
 
Address : Hujia Village, Gaotai Town, Suizhong County 125200
 
Legal Representative (Chief Officer): Yan Xiaoqin
 
Fax : 86-0429-6833995                                            Tel : 86-0429-6833997
 
Lender (Party B): Suizhong Branch Huludao City Commercial Bank
 
Address: No.11 2nd Section of Xinxing Street Suizhong Town Suizhong, County 125200
 
Chief Officer: Wan Dong
 
Fax :                                                                                      Tel :

 
 
 

 
Borrower (“Party A”): Huludao Wonder Fruit Co. Ltd.
 
Lender (“Party B”): Suizhong Branch Huludao City Commercial Bank
 
Whereas Party A applies to Party B for, and Party B agrees to provide Party A with, a loan facility (the “Facility”). Pursuant to relevant laws and regulations and through consultation, Party A and Party B enter into this Contract:
 
Article 1. Type of Loan
 
Working Capital Loan (short-term or middle-term)
 
Article 2. Use of Loan
 
2.1 The Loan is only allowed for transfering the loan unless given written consent from Party B.
 
2.2 Party A cannot change the use of the loan according to the Contract without the written consent of Party B.
 
Article 3. Availability Period and Amount of the Facility
 
The Availability Period of the Facility shall commence from Sep.28 2007 and end on Sep. 20 2008 (the “Availability Period”).
 
The amount of the Facility shall be RMB ten million (in words) (the “Maximum Amount”).
 
Article 4. Interest Rate, Calculation and Payment of Interests and Fees
 
4.1. The monthly interest rate applicable to the Loan shall be fixed at 7.8975‰.
 
4.2 Interest Settlement
 
The interest rate shall be calculated and paid according to the fixed interest rate, and the 20th day of each month shall be the date for the settlement of interest.
 
4.3 The interest rate should be flexible with the adjustment of the interest rate of China People’s Bank. In the event of interest rate adjustment, Party B can make an adjustment over the interest rate and calculation method without informing Party A.
 
Article 5. Repayment
 
5.1 Interest Payment
 
Party A shall pay to Party B the due interest on the Interest Payment Date. The first

 
 
 

 
interest payment shall be made on the first Interest Payment Date after the Disbursement of the Loan. Upon the maturity date for the Loan, Party A shall pay in full all the unpaid interest together with the principal.
 
5.2 Method of Repayment
 
Party A shall deposit into its account with Party B such funds as sufficient to repay the amount due to Party B before each Repayment Date specified in this Contract, and shall automatically transfer such funds to Party B for repayment; or Party A shall transfer a sufficient amount from its other accounts to make such repayment on the aforementioned Repayment Date. If Party A fails to repay any indebtedness punctually, Party B has the right to directly debit for the corresponding amount any account opened by Party A with any branch or office of China Construction Bank.
 
Article 6. Security for the Loan
 
6.1 The security(ies) for this Contract shall be Item [2] as below.
 
(1)           Guarantee
 
(2)           Mortgage
 
(3)           Pledge
 
(4)           Standby Letter of Credit
 
(5)           Credit Insurance
 
(6)           Other Forms of Security: Mortgage
 
6.2 Party A should use all their efforts to coordinate with Party B to sign the loan contract of No. 1520070929715.
 
6.3 If the status of the Mortgage changed in Creditor’s right, which is likely to cause damage to the interest of the Creditor’s right, Party A should provide a new Mortgage until the Mortgage meets the requirements of Party B.
 
Article 7. Rights and Obligations of Party A
 
7.1 Party A has the right to require Party B to keep in confidence relevant financial information and trade secrets relating to production and operation of Party A unless otherwise provided by laws and regulations.
 
7.2 Party A shall provide relevant financial information and the information relating to production and operation as required by Party B and shall be responsible for the authenticity, integrity and validity of such information.

 
 
 

 
7.3 Party A undertakes that all settlements and deposits relating to the Loan shall be conducted through its accounts opened with Party B or Party B’s relevant branch.
 
7.4 Party A shall assist in and accept Party B’s inspection and supervision of its production, operation, financial activities and utilization of the Loan.
 
7.5 Party A shall utilize the Loan for the purpose as provided for hereunder.
 
7.6 Party A shall punctually repay the principal and interest in accordance with this Contract.
 
7.7 Party A or its investors shall not transfer any funds or assets in order to evade the indebtedness owed to Party B.
 
7.8 Party A shall give Party B a prior written notice for Party B’s consent if Party A intends to provide security for any third party during the term of this Contract and such security may affect Party A’s ability to make repayment under this Contract.
 
7.9 Party A shall promptly arrange for new security(ies) satisfactory to Party B where the Guarantor in respect of this Contract ceases or suspends production; its corporate registration is canceled, or business license revoked; it is bankrupt or dissolved; it is operating at a loss; or any other negative change has occurred, and such aforementioned incidents result in loss or partial loss of the Guarantor’s ability to secure the Loan, or where the mortgaged or pledged property(ies) for securing the Loan depreciate(s) or is (are) damaged or destroyed.
 
7.10 Party A shall promptly inform Party B of any relevant change during the term of this Contract, including without limitation its business name, legal representative (or chief officer), registered office, business purpose or registered capital.
 
7.11 Where Party A intends to carry out activity(ies) during the term of this Contract which may have an impact on the realization of Party B’s rights hereunder, Party A shall give Party B a [30] banking days prior written notice for its consent to such intended activity(ies) and shall further take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security in accordance with Party B’s instructions. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division, setting up a joint venture, application for suspension of production or for winding up or for bankruptcy
 
7.12 Party A shall promptly inform Party B in writing, take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security(ies) in accordance with Party B’s instructions if there has occurred to Party A incident(s) during the term of this Contract that may have substantially negative effects on Party B’s performance of its obligations hereunder. The aforementioned incidents shall include without limitation the following: Party A ceases or suspends production; its corporate registration is canceled, or business license revoked; its legal representative or

 
 
 

 
high-ranking officers are involved in illegal activities; it is involved in litigation with a major impact; great difficulties arise in respect of its production or operation; or its financial standing deteriorates.
 
7.13 Party A shall bear all fees and expenses in connection with this Contract and the security(ies) for this Contract including without limitation fees and expenses in respect to legal services, insurance, evaluation, registration, storage, authentication and notarization.
 
Article 8. Rights and Obligations of Party B
 
8.1 Party B is entitled to have access to information about the production, operation, and financial activities of Party A, and to require Party A to provide financial information and documents in respect to its production and operation.
 
8.2 If the credit rating of Party A declines, Party B is entitled to adjust or even cancel the Facility which is otherwise available.
 
8.3 Party B is entitled to debit any account opened by Party A with any branch or office of China Commerce Bank for any amount due to Party B under this Contract.
 
8.4 Party B shall disburse the Loan to Party A in accordance with this Contract, except for any delay caused by Party A.
 
8.5 Party B shall keep in confidence financial information and trade secrets in relation to production and operation of Party A unless otherwise required by laws or regulations.
 
Article 9. Effectiveness Modification, Rescission and Termination
 
9.1 The Contract will become effective after the signing and stamping.
 
9.2 Party B will rescind the contract and ask for repayment and compensation if Party A breaks any item below:
 
9.2.1 Dissolution and shop closure or revocation of the business license happens.
 
9.2.2 There are some changes in the Mortgage under the provision of the Contract, which are likely to cause damage to the creditor’s right; in this case, Party A fails to provide a new Mortgage that is satisfactory to Party B.
 
9.2.3 Other serious default activities.
 
9.3 If Party A asks for extension of the Contract, Party A should offer a written application to Party B with the written consent from guarantor at least 30 days before the Contract will expire. The extension contract will not become effective until Party A

 
 
 

 
gets approval from Party B. The loan contract remains effective until the signing of the extension contract.
 
9.4 Neither Party should make any adjustments or expiration without consent from the opposite Party except for the provision already defined in the Contract. Any adjustment or expiration must get approval from both Parties and be reached by written agreement if the status is necessary.
 
9.5 The original Contract remains effective until both Parties reach a consensus.
 
Article 10. Amendment to this Contract
 
Upon taking effect of this Contract, any Party intending to amend this Contract shall notify the other party promptly and a written agreement shall be executed if the Parties so agree, unless otherwise provided in this Contract or in any other agreement.
 
Article 11. Dispute Resolution
 
11.1 Any dispute arising out of or in connection with this Contract shall be settled through friendly consultation. If no agreement is reached through such friendly consultation, such dispute shall be settled in accordance with the following:
 
11.2 Instituting legal proceedings with the People’s Court in the location of Party B.
 
11.3 The Parties shall perform this Contract in accordance with the undisputed parts during the course of such legal proceedings or arbitration.
 
Article 12. This Contract Shall be Made in [2] Counterparts.
 
All documents created within the Availability Period and within the Maximum Amount of the Facility which underlie the debtor-creditor relationship between the Parties (including but not limited to Application for Drawing, Notice of Drawing or other certificates and documents) are integral parts of this Contract.
 
Article 13. Representations
 
13.1 Party A is fully informed and aware of the business purposes and powers of Party B.
 
13.2 Party A has read all the terms of this Contract and Party B has given explanation as required by Party A. Party A hereby acknowledges that it fully understands all terms of this Contract and the corresponding legal consequences thereof.
 
13.3 Party A has the right and power to execute this Contract.

 
 
 

 
Party A: Huludao Wonder Fruit Co.  Ltd.
 
Legal Representative (or Chief Officer) or Authorized Representative (Signature):
 
/s/: Yan Xiaoqin
 
Date: 09/28/2007
 
Party B: Suizhong Branch Huludao City Commercial Bank
 
Chief Officer or Authorized Representative (Signature): /s/: Wang Dong
 
Date: 09/28/2007


 EX-10.19 11 e10-19.htm RMB FACILITY LOAN CONTRACT e10-19.htm
EXHIBIT 10.19
RMB Facility Loan Contract
 
Contract No: Shanjiankaidai (2008)020
 
Type of Loan: Short-term Industrial Current Capital Loan
 
Borrower (Party A): Shaanxi Tianren Organic Food Co. Ltd.
 
Address:                      A-4/F Tongxinge Xietong Building, No.12, Gaoxin 2nd Rd,
 
High-tech Zone, Xi’an, China 710075
 
Legal Representative (Chief Officer): Xue Hongke
 
Fax:           86-029-88386230                                 Tel: 86-029-88386415
 
Lender (Party B): Hi-tech Industrial Development Zone,
 
 Xi’an Branch of China Constuction Bank
 
Address: No.42 Gaoxin Road,Xi’an                                                                710075
 
Chief Officer: Zhou Cunxing
 
Fax:           86-029-88321414                                                                Tel: 86-029-88221824

 
 
 


 
Whereas Party A applies to Party B for, and Party B agrees to provide Party A with, a loan facility (the “Facility”). Pursuant to relevant laws and regulations and through consultation, Party A and Party B enter into this Contract:
 
Article 1. Amount of the Facility
 
The amount of the Facility shall be RMB four million                                                                                                 (in words) (the “Maximum Amount”).
 
Article 2. Use of Loan
 
The Loan is only allowed for buying raw materials unless given written consent from Party B.
 
Article 3. Availability Period
 
1.  The Availability Period of the Facility shall commence from April 21 2008 and end on  Dec.7 2008(the “Availability Period”). Party A’s obligation to repay its indebtedness in respect to any individual Loan provided within the Availability Period shall not be affected by the expiration of Availability Period even if the maturity date for such individual Loan comes after the Availability Period expires.
 
2.  Upon the expiration of the Availability Period, the Facility not drawn shall become invalid automatically.
 
3.  The term of each individual Loan means the period commencing from the date of the drawing of such individual Loan and ending on the maturity date of such Loan as provided for under this Contract.
 
Article 4. Drawing of the Facility
 
1.  During the Availability Period and within the Maximum Amount of the Facility, Party A can apply for Loans subject always to the formalities which shall be completed by both parties. The amount, interest rate, term and purpose of each individual Loan shall be determined according to the Notice of Drawing issued by Party B to Party A.
 
2.  If any security provider has performed its obligations in accordance with any security contract, the Facility shall decrease by the amount of principals which has been repaid by such security provider.
 
3.  Drawing Schedule
 
Time: April 21, 2008 Amount: RMB 4,000,000.00
 
Article 5. Interest Rate, Calculation and Payment of Interests and Fees

 
 
 

 
1. The annual interest rate applicable to each individual Loan shall be fixed at 7.47%.
 
2.  Penalty Interest Rate
 
3.  The annual interest rate shall be adjusted up to 100% if Party A does not perform according to the agreement, and the interest shall be calculated and paid in accordance with relevant regulations of the People’s Bank of China. The annual interest rate shall be adjusted to 50% for the overdue loan.
 
4.  Interest Settlement
 
The interest rate shall be calculated and paid according to the fixed interest rate, and the 20th day of each month shall be the date for the settlement of interest.
 
Article 6. Disbursement of the Loan
 
1.  Subject to a waiver by Party B, Party B is not obliged to make any disbursement to Party A unless the following conditions precedent have been satisfied:
 
2.  Party A has obtained and/or completed all approval, registration, delivery and other necessary formalities relating to the Loan in accordance with relevant laws and regulations; and
 
3.  The security documents acceptable to Party B have become effective and remain in full effect; and
 
4.  No Event of Default specified in this Contract has occurred; and The Application for Drawing has been verified and approved by Party B.
 
Article 7. Repayment
 
1.  Principle of Repayment
 
Any repayment by Party A under this Contract shall be made in accordance with the principle that the interests shall be paid before the repayment of any principal.
 
2.  Interest Payment
 
Party A shall pay to Party B the due interest on the Interest Payment Date. The first interest payment shall be made on the first Interest Payment Date after the Disbursement of the Loan. Upon the maturity date for the Loan, Party A shall pay in full all the unpaid interest together with the principal.
 
3.  Principal Repayment
 
Party A shall repay the principal in accordance with the Principal Repayment Schedule set forth:

 
 
 

 
Repayment Schedule:
 
Time: December 7, 2008 Amount: RMB 4,000,000.00
 
4.  Method of Repayment
 
Party A shall deposit into its account with Party B such funds as sufficient to repay the amount due to Party B before each Repayment Date specified in this Contract, and shall automatically transfer such funds to Party B for repayment; or Party A shall transfer a sufficient amount from its other accounts to make such repayment on the aforementioned Repayment Date. If Party A fails to repay any indebtedness punctually, Party B has the right to directly debit for the corresponding amount any account opened by Party A with any branch or office of China Construction Bank.
 
5.  Prepayment
 
1) Party A may prepay the interest with prior notice to Party B.
 
2) Party A shall submit to Party B a written application [30] banking days in advance of any prepayment. Party A may prepay all or any part of the principal subject to Party B’s consent to such application.
 
In the case of prepayment of the principal, the interest shall be calculated on the basis of the actual number of days elapsed and at the interest rate set forth in Article 4 of this Contract.
 
In the case of prepayment of the principal, Party B is entitled to demand of Party A a compensation fee calculated in accordance with the following formula:
 
Compensation Fee = Prepayment Amount × 1‰ × Number of Days of Prepayment
 
Where any individual Loan shall be repaid in installments and Party A prepays part of the principal, such prepayment shall be effected in a reverse order of the Repayment Schedule. The interest on the outstanding indebtedness after such prepayment shall still be calculated at the interest rate as specified in this Contract.
 
Article 8. Rights and Obligations of Party A
 
1.  Party A has the right to require Party B to keep in confidence relevant financial information and trade secrets relating to production and operation of Party A unless otherwise provided by laws and regulations.
 
2.  Party A shall provide relevant financial information and information relating to production and operation as required by Party B and shall be responsible for the authenticity, integrity and validity of such information.
 
3.  Party A undertakes that all settlements and deposits relating to the Loan shall be conducted through its accounts opened with Party B or Party B’s relevant branch.

 
 
 

 
4.  Party A shall assist in and accept Party B’s inspection and supervision of its production, operation, financial activities and utilization of the Loan.
 
5.  Party A shall utilize the Loan for the purpose as provided for hereunder.
 
6.  Party A shall punctually repay the principal and interest in accordance with this Contract.
 
7.  Party A or its investors shall not transfer any funds or assets in order to evade the indebtedness owed to Party B.
 
8.  Party A shall give Party B a prior written notice for Party B’s consent if Party A intends to provide security for any third party during the term of this Contract and such security may affect Party A’s ability to make repayment under this Contract.
 
9.  Party A shall promptly arrange for new security(ies) satisfactory to Party B where the Guarantor in respect of this Contract ceases or suspends production; its corporate registration is canceled, business license revoked; it is bankrupt or dissolved; it is operating at a loss; or any other negative change has occurred, and such aforementioned incidents result in loss or partial loss of the Guarantor’s ability to secure the Loan, or where the mortgaged or pledged property(ies) for securing the Loan depreciate(s) or is (are) damaged or destroyed.
 
10.  Party A shall promptly inform Party B of any relevant changes during the term of this Contract, including without limitation its business name, legal representative (or chief officer), registered office, business purpose or registered capital.
 
11.  Where Party A intends to carry out activity(ies) during the term of this Contract which may have an impact on the realization of Party B’s rights hereunder, Party A shall give Party B a [ 30 ] banking days prior written notice for its consent to such intended activity(ies) and shall further take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security in accordance with Party B’s instructions. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division, setting up a joint venture, application for suspension of production or for winding up or for bankruptcy
 
12.  Party A shall promptly inform Party B in writing, take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security(ies) in accordance with Party B’s instructions if there has occurred to Party A incident(s) during the term of this Contract that may have substantially negative effects on Party B’s performance of its obligations hereunder. The aforementioned incidents shall include without limitation the following: Party A ceases or suspends production; its corporate registration is canceled, or business license revoked; its legal representative or high-ranking officers are involved in illegal activities; it is involved in litigation with a major impact; great difficulties arise in respect of its production or operation; or its financial standing deteriorates.

 
 
 

 
13.  Party A shall bear all fees and expenses in connection with this Contract and the security(ies) for this Contract including without limitation fees and expenses in respect to legal services, insurance, evaluation, registration, storage, authentication and notarization.
 
Article 9. Rights and Obligations of Party B
 
1．Party B is entitled to have access to information about the production, operation, and financial activities of Party A, and to require Party A to provide financial information and documents in respect to its production and operation.
 
2．If the credit rating of Party A declines, Party B is entitled to adjust or even cancel the Facility which is otherwise available.
 
3．Party B is entitled to debit any account opened by Party A with any branch or office of China Construction Bank for any amount due to Party B under this Contract.
 
4．Party B shall disburse the Loan to Party A in accordance with this Contract, except for any delay caused by Party A.
 
5．Party B shall keep in confidence financial information and trade secrets in relation to production and operation of Party A unless otherwise required by laws or regulations.
 
Article 10. Liabilities for Default
 
1.  Event of Default
 
Events of Default by Party A
 
(I) Party A fails to provide true, complete and valid financial information or information relating to its production and operation or other relevant documents as required by Party B.
 
(II) Party A fails to utilize the Loan for the purpose agreed by the Parties.
 
(III) Party A fails to repay punctually the principal and/or interest.
 
(IV) Party A refuses Party B’s demand for supervision and/or inspection over the utilization of the Loan or hinders Party B from doing so.
 
(V) Party A transfers or misappropriates funds or assets in order to evade the indebtedness.
 
(VI) Party A’s operational and financial conditions deteriorate and as a result it is unable to repay its indebtedness upon maturity; or it is involved or likely to be immediately involved in litigation or arbitration with a major impact or other legal disputes, and any of the aforementioned incidents in Party B’s judgment may or has

 
 
 

 
affect(ed) or impair(ed) Party B’s rights and interests hereunder.
 
(VII) Any other indebtedness owed by Party A has affected or may affect its performance of the obligations to Party B hereunder.
 
(VIII) Party A fails to repay any other indebtedness due to China Construction Bank upon maturity.
 
(IX) Party A carries out activity(ies) during the term of this Contract which may change its operational or managerial modes or equity structure and which in Party B’s sole judgment may affect or has affected the rights and interests of Party B hereunder. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division, or setting up a joint venture.
 
(X) Other events that Party B believes will affect the realization of its rights under this Contract.
 
(XI) Party A fails to perform or comply with any of its other obligations hereunder.
 
Any of the following events in relation to the Guarantor for this Contract shall be deemed as an event of default by Party A unless Party A provides new security in favor of, and satisfactory to, Party B:
 
(I) During the term of this Contract, there occurs to the Guarantor such incident(s) as may affect its ability to act as a joint and several liability guarantor. Such incidents shall include without limitation contracting, leasing, consolidation, merger, setting up a joint venture, division, forming an economic association with another enterprise, transformation to a stock company, bankruptcy and dissolution.
 
(II) The Guarantor provides beyond its capacity any security for any third party.
 
(III) The Guarantor loses or may lose its capability to act as a guarantor.
 
(IV) Other event of default by the Guarantor as provided for in the guarantee contract.
 
Any of the following events in relation to the Mortgagor for this Contract shall be deemed as an event of default of Party A unless Party A provides new security in favor of, and satisfactory to, Party B:
 
(I) The Mortgager fails to effect or maintain insurance for the mortgaged property, or fails to dispose of insurance proceeds in accordance with the mortgage contract upon occurrence of any insured event.
 
(II) The Mortgager fails to dispose of proceeds of compensation in accordance with the mortgage contract where the mortgaged property is damaged or destroyed or its value decreases as a result of the act of any third party.

 
 
 

 
(III) The Mortgager transfers, leases, re-mortgages or disposes of by any other means the mortgaged property without Party B’s written consent.
 
(IV) The Mortgager fails to handle the proceeds of the disposal of the mortgaged property in accordance with the mortgage contract although such disposal is effected with Party B’s consent.
 
(V) The Mortgager fails to restore the value of the mortgaged property promptly, or fails to provide other security acceptable to Party B, where the mortgaged property is damaged, destroyed or decreases in value, which may affect the repayment of the indebtedness hereunder.
 
(VI) Other events of default by the Mortgager provided for in the mortgage contract.
 
Any of the following events in relation to the Pledger for this Contract shall be deemed as an event of default by Party A unless Party A provides new security in favor of, and satisfactory to, Party B:
 
(I) The Pledger fails to effect or maintain insurance for the pledged property, or fails to dispose of insurance proceeds in accordance with the pledge contract upon occurrence of any insured event.
 
(II) The Pledger fails to dispose of the proceeds of compensation in accordance with the pledge contract, where the pledged property is damaged or destroyed or its value decreases as a result of the act of any third party.
 
(III) The Pledger fails to handle the proceeds of disposal of the pledged property in accordance with the pledge contract although such disposal is effected with the consent of Party B.
 
(IV) The Pledger fails to restore the value of the pledged property promptly, or fails to provide other security acceptable to Party B, where the pledged property is damaged, destroyed or decreases in value, which may have an impact on the repayment of the indebtedness hereunder.
 
(V) Other events of default by the Pledger provided for in the pledge contract.
 
Any of the following shall constitute an Event of Default by Party A unless Party A provides new security as required by Party B: the security documents or other securities do not take effect, or are void or rescinded, or the security provider totally or partially loses its capacity to secure the indebtedness or refuses to perform its obligations.
 
2.  Remedies
 
If any Event of Default in item (1) to (5) above occurs, Party B is entitled to enforce its rights hereunder by taking one or more of the following measures:

 
 
 

 
(1) Party B is entitled to adjust, cancel or suspend the Facility or to adjust the Availability Period.
 
(2) Party B is entitled to cease Disbursement of the Loan, to accelerate forthwith the Loan, and to require Party A to repay forthwith all principal, interest and fees.
 
(3) Party B is entitled to liquidated damages of [ 10 ]‰ of the outstanding principal.
 
(4) Where Party A fails to repay the Loan upon maturity, Party A shall pay interest and compound interest on the principal, and interest which is not punctually repaid (including all or part of the principal and interest which are accelerated by Party B) at the overdue interest rate stipulated by the People’s Bank of China and in accordance with the interest payment provisions set out in this Contract.
 
(5) In the event that Party A fails to utilize the Loan for the purpose set forth in this Contract, Party A shall pay default interest on the misappropriated part of the Loan in accordance with relevant regulations of the People’s Bank of China.
 
(6) Party B is entitled to debit any account in any currency opened by Party A with any branch or office of China Construction Bank for any amount payable by Party A under this Contract.
 
(7) Party B is entitled to enforce its security rights.
 
(8) Party B is entitled to require Party A to provide new security(ies) satisfactory to Party B.
 
(9) Party B is entitled to terminate this Contract.
 
Article 11. Amendment to this Contract
 
Upon taking effect of this Contract, any Party intending to amend this Contract shall notify the other Party promptly and a written agreement shall be executed if the Parties so agree, unless otherwise provided in this Contract or in any other agreement.
 
Article 12. Miscellaneous
 
1 ______________________________
 
2 ______________________________
 
3 ______________________________
 
4 ______________________________
 
Article 13. Dispute Resolution

 
 
 

 
Any dispute arising out of or in connection with this Contract shall be settled through friendly consultation. If no agreement is reached through such friendly consultation, such dispute shall be settled in accordance with _____ of the following:
 
1.  Instituting legal proceedings with the People’s Court in the location of Party B.
 
2.  Submitting the disputes to the [          ] for arbitration (the venue for such arbitration shall be __________), which shall be conducted in accordance with the arbitration rules in effect as of the date of submission. The arbitration award shall be final and binding on both Parties.
 
3.  The Parties shall perform this Contract in accordance with the undisputed parts during the course of such legal proceedings or arbitration.
 
Article 14. Effectiveness
 
This Contract shall take effect upon the execution by the legal representative (chief officer) or authorized representative of Party A and by the chief officer or authorized representative of Party B with the company seals of both Parties affixed.
 
Article 15. This Contract Shall be Made in [5] Counterparts
 
All documents created within the Availability Period and within the Maximum Amount of the Facility which underlie the debtor-creditor relationship between the Parties (including but not limited to Application for Drawing, Notice of Drawing or other certificates and documents) are integral parts of this Contract.
 
Article 16. Representations
 
1.  Party A is fully informed and aware of the business purposes and powers of Party B.
 
2.  Party A has read all the terms of this Contract and Party B has given explanation as required by Party A. Party A hereby acknowledges that it fully understands all terms of this Contract and the corresponding legal consequences thereof.
 
3.  Party A has the right and power to execute this Contract.

 
 
 


 
Party A: Shaanxi Tianren Organic Food Co. Ltd.
 
Legal Representative (or Chief Officer) or Authorized Representative
 
(Signature): /s/: Xue Hongke
 
Date: 04/21/2008
 
Party B: Hi-tech Industrial Development Zone, Xi’an branch of China Constuction Bank
 
Chief Officer or Authorized Representative (Signature): /s/: Zhou Cunxing
Date: 04/21/2008


 EX-10.20 12 e10-20.htm EXPORT ORDER FINANCING CONTRACT e10-20.htm
EXHIBIT 10.20
Export Order Financing Contract
 
Contract No: Shanjiankaidai(2008)031
 
Type of Loan: Current Capital
 
Borrower (Party A): Shaanxi Tianren Organic Food Co.，Ltd.
 
Address: A-4/F Tongxinge Xietong Building, No.12, Gaoxin 2nd Rd., High-tech Zone, Xi’an, China 710075
 
Legal Representative (Chief Officer): Xue Hongke
 
Fax: 86-029-88386230 Tel: 86-029-88386415
 
Lender (Party B): Hi-tech Industrial Development Zone, Xi’an Branch of China Constuction Bank
 
Address: No.42 Gaoxin Road, Xi’an 710075
 
Chief Officer: Zhou Cunxing
 
Fax: 86-029-88321414                                                                Tel: 86-029-88221824

 
 
 

 
Whereas Party A signed “Sales Contracts” with EXPORT PACKERS COMPANY LIMITED, GOLDENDRAGON TRADING GMBH, SUNRISE INTERNATIONAL FOOD CO., LTD. separately, and the contract numbers are No. SXTR-080530，No. 88-2008，No. ST003/08, respectively, hereby Party B applies for a loan facility (the “Facility”). Pursuant to relevant laws and regulations and through consultation, Party A and Party B enter into this Contract:
 
Article 1. Amount of the Facility
 
The amount of the Facility shall be RMB ten million (in words) (the “Maximum Amount”).
 
Article 2. Use of the Loan:
 
The Loan is only allowed to purchase , produce, transport, and arrange export goods unless given written consent from Party B.
 
Article 3. Availability Period
 
Term of the Loan: three months from the drawing date.
 
Article 4. Conditions Precedent to Disbursement of the Loan
 
1. Subject to a waiver by Party B, Party B is not obliged to provide the Loan to Party A unless the conditions precedent set out below have been satisfied:
 
2. Party A has obtained and/or completed all consents, approvals, registrations and other necessary formalities relating to the Loan under this Contract in accordance with relevant laws and regulations; and Party A has submitted all relevant documents satisfactory to Party B; and
 
3. The security documents or other security(ies) acceptable to Party B have become effective; and
 
4. No event of default in respect to Party A specified under this Contract has occurred.
 
Article 5. Interest Rate, Calculation and Payment of Interests and Fees
 
1. The annual interest rate applicable to each individual Loan shall be the fixed at 6.57%.
 
2. Interest Settlement
 
The interest rate shall be calculated and paid according to the fixed interest rate, and the 20th day of each month shall be the date for the settlement of interest.

 
 
 

 
Daily interest rate = monthly interest rate/30
 
Article 6. Repayment
 
1.After delivery is confirmed and Party A has consented to convert export order finance to export invoice finance or to export collection loan or to export factoring prepayment in accordance with the intention of Party B, on the Loan issued afterward, Party A promise to repay principal and interest under the Contract ..
 
2.On the condition that Party A cannot deliver goods or fails to make the repayment in accordance with the foregoing terms for any other reasons，Party A should pay the Loan with other terms. Before the due date of the Loan，Party A should pay off all of the Loan principal and interest as well as other fees.
 
3.During the Loan term, if Party A cannot deliver goods in accordance with the provisions of the Contract for any reason, the Loan will be treated as expired and Party A is obliged to pay the Loan under Party B’s requirements.
 
4. If Party A pays the Loan with money beyond capital gotten by collection, Party A should notice Party B 5 banking days in advance before the repayment date.
 
Article 7. Rights and Obligations of Parties
 
1. Party B shall conduct to Party A in accordance with the terms and conditions of this Collection Contract. Party A must conduct through Party B after the loading. Party A must make a note that credit right has been transferred to Party B and the wiring must be transferred to the Account opened by Party B.
 
2. Party A should use their best efforts to provide the information of use of the Loan and exporting to Party B. Transferring any document to any third party is prohibited.
 
3. Conduct through related transactions to escape the payment of the Loan is prohibited.
 
4. If Party A belongs to the class of group client, Party A should disclose any related transaction exceeding 10% of the net assets to Party B, including: (1) the relation among the related parties; (2) project and nature; (3) amount and percentage of the transaction; and(4) Price determination Policy.
 
5. Party A has the right to require Party B to keep in confidence relevant financial information and trade secrets relating to production and operation of Party A unless otherwise provided by laws and regulations.
 
6. Party A shall provide relevant financial information and information relating to

 
 
 

 
production and operation as required by Party B and shall be responsible for the authenticity, integrity and validity of such information.
 
7. Party A shall assist in and accept Party B’s inspection and supervision of its production, operation, financial activities and utilization of the Loan.
 
8. Party A shall utilize the Loan for the purpose as provided for hereunder.
 
9. Party A shall punctually repay the principal and interest in accordance with this Contract.
 
10. Party A or its investors shall not transfer any funds or assets in order to evade the indebtedness owed to Party B.
 
11. Party A shall give Party B a prior written notice for Party B’s consent if Party A intends to provide security for any third party during the term of this Contract and such security may affect Party A’s ability to make repayment under this Contract.
 
12. Party A shall promptly arrange for new security(ies) satisfactory to Party B where the Guarantor in respect to this Contract ceases or suspends production; its corporate registration is canceled, or business license revoked; it is bankrupt or dissolved; it is operating at a loss; or any other negative change has occurred, and such aforementioned incidents result in loss or partial loss of the Guarantor’s ability to secure the Loan, or where the mortgaged or pledged property(ies) for securing the Loan depreciate(s) or is (are) damaged or destroyed.
 
13. Party A shall promptly inform Party B of any relevant changes during the term of this Contract, including without limitation its business name, legal representative (or chief officer), registered office, business purpose or registered capital.
 
14. When Party A intends to carry out activity(ies) during the term of this Contract which may have an impact on the realization of Party B’s rights hereunder, Party A shall give Party B a [30] banking days prior written notice for its consent to such intended activity(ies) and shall further take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security in accordance with Party B’s instructions. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division, setting up a joint venture, application for suspension of production or for winding up or for bankruptcy
 
15. Party A shall promptly inform Party B in writing, take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security(ies) in accordance with Party B’s instructions if there has occurred to Party A incident(s) during the term of this Contract that may have substantially negative effects on Party B’s performance of its obligations hereunder. The aforementioned incidents shall include without limitation the following: Party A ceases or suspends production; its corporate registration is canceled, or business license revoked; its legal representative or high-ranking officers are involved in illegal activities; it is involved in litigation with a major impact; great difficulties arise in respect to its production or operation; or its financial standing deteriorates.

 
 
 

 
16. Party B is entitled to debit any account opened by Party A with any branch or office of China Construction Bank for any amount due to Party B under this Contract.
 
Article 8. Liabilities for Default
 
1. Party A fails to provide true, complete and valid financial information, or information relating to its production and operation or other relevant documents as required by Party B.
 
2. Party A fails to utilize the Loan for the purpose agreed by the Parties.
 
3. Party A fails to repay punctually the principal and/or interest.
 
4. Party A refuses Party B’s demand for supervision and/or inspection over the utilization of the Loan or hinders Party B from doing so.
 
5. Party A transfers or misappropriates funds or assets in order to evade the indebtedness.
 
6. Party A’s operational and financial conditions deteriorate and as a result it is unable to repay its indebtedness upon maturity, or it is involved or likely to be immediately involved in litigation or arbitration with a major impact or other legal disputes, and any of the aforementioned incident in Party B’s judgment may or has affect(ed) or impair(ed) Party B’s rights and interests hereunder.
 
7. Any other indebtedness owed by Party A has affected or may affect its performance of the obligations to Party B hereunder.
 
8. Party A fails to repay any other indebtedness due to China Construction Bank upon maturity.
 
9. Party A carries out activity(ies) during the term of this Contract which may change its operational or managerial modes or equity structure and which in Party B’s sole judgment may affect or have affected the rights and interests of Party B hereunder. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division or setting up a joint venture.
 
10. Other events which Party B believes will affect the realization of its rights under this Contract.
 
11. Party A fails to perform or comply with any of its other obligations hereunder.

 
 
 

 
Article 9. Remedies
 
If any Event of Default in Item 1 above occurs, Party B is entitled to enforce its rights hereunder by taking one or more of the following measures:
 
1. Party B is entitled to adjust or cancel the Facility or any individual Line under this Contract.
 
2. Party B is entitled to accelerate forthwith the indebtedness under this Contract and to require Party A to repay forthwith all principal, interest and fees, whether they are due or not.
 
3. If Party A fails to utilize the Loan for the purpose set forth in this contract，Party A must pay the interest occurred and the compound interest on the misappropriated part of the Loan in accordance with the penalty interest rate and the settlement provisions under the contract for the period commencing from defaulting date and ending on the date that all the principal and interest are settled. The penalty interest rate will be 100% higher than the normal Loan interest rate in RMB currency.
 
4. If Party A defaults in repayment of the RMB Loan upon maturity, with respect to such loan (including all or part of the loan which is accelerated by Party B), Party A shall pay interest and compound interest at the overdue interest rate as promulgated by the People’s Bank of China and applicable at the time of such default and in accordance with the interest payment provisions set forth in this Contract for the period commencing from the date of such failure. Such overdue interest rate shall be 50% higher than the normal Loan interest rate in RMB currency.
 
5. Party B is entitled to enforce its security rights.
 
6. Party B is entitled to require Party A to provide new security(ies) satisfactory to Party B.
 
7. Party B is entitled to terminate this Contract.
 
Article 10. Miscellaneous
 
1 ____________________________________
 
2 ___________________________________
 
3 ____________________________________
 
4 ____________________________________

 
 
 

 
Article 11. Dispute Resolution
 
Any dispute arising out of or in connection with this Contract shall be settled through friendly consultation. If no agreement is reached through such friendly consultation, such dispute shall be settled in accordance with Item 1 of the following:
 
1. Instituting legal proceedings with the People’s Court in the location of Party B.
 
2. Submitting the disputes to the [ ] for arbitration (the venue for such arbitration shall be __________), which shall be conducted in accordance with the arbitration rules in effect as of the date of submission. The arbitration award shall be final and binding on both Parties.
 
3. The Parties shall perform this Contract in accordance with the undisputed parts during the course of such legal proceedings or arbitration.
 
Article 12. Effectiveness
 
This Contract shall take effect upon the execution by the legal representative (chief officer) or authorized representative of Party A and by the chief officer or authorized representative of Party B with the company chops of both Parties affixed.
 
Article 13. Counterparts
 
This Contract shall be made in [5] counterparts.
 
All documents created within the Availability Period and within the Maximum Amount which underlie the debtor-creditor relationship between the Parties (including but not limited to Application for Drawing, Notice of Drawing, or other certificates and documents) shall be integral parts of this Contract.
 
Article 14. Representations
 
1. Party A is fully informed and aware of the business purposes and powers of Party B.
 
2. Party A has read all the terms of this Contract and Party B has given explanation as required by Party A. Party A hereby acknowledges that it fully understands all terms of this Contract and the corresponding legal consequences thereof.
 
3. Party A has the right and power to execute this Contract.

 
 
 

 
Party A: Shaanxi Tianren Organic Food Co.，Ltd.
 
Legal Representative (or Chief Officer) or Authorized Representative
 
(Signature): /s/: Xue Hongke
 
Date: 06/18/2008
 
Party B: Hi-tech Industrial Development Zone, Xi’an branch of China Construction
 
Bank
 
Chief Officer or Authorized Representative
 
(Signature): /s/: Zhou Cunxing
Date: 06/18/2008


 EX-10.21 13 e10-21.htm EXPORT ORDER FINANCING CONTRACT e10-21.htm
EXHIBIT 10.21
Export Order Financing Contract
 
Contract No : Shanjiankaidai(2008)036
 
Type of Loan : Current Capital
 
Borrower (Party A) : Shaanxi Tianren Organic Food Co. Ltd.
 
Address :                      A-4/F Tongxinge Xietong Building,No.12,Gaoxin 2nd Rd, High-tech Zone, Xi’an, China 710075
 
Legal Representative (Chief Officer): Xue Hongke
 
Fax:           86-029-88386230                                Tel: 86-029-88386415
 
Lender (Party B): Hi-Tech Industrial Development Zone, Xi’an Branch of China Construction Bank
 
Address:                      No. 42 Gaoxin Road,Xi’an 710075
 
Chief Officer: Zhou Cunxing
 
Fax:           86-029-88321414                                   Tel: 86-029-88221824

 
 
 

 
Whereas Party A signed “Sales Contracts” with EXPORT PACKERS COMPANY LIMITED, GOLDENDRAGON TRADING GMBH, SUNRISE INTERNATIONAL FOOD CO., LTD. separately, and the contract numbers are No. SXTR-080530 No. 88-2008 and No. ST003/08, respectively. hereby Party B applies for a loan facility (the “Facility”). Pursuant to relevant laws and regulations and through consultation, Party A and Party B enter into this Contract:
 
Article 1. Amount of the Facility
 
The amount of the Facility shall be RMB two million (in words) (the “Maximum Amount”).
 
Article 2. Use of the Loan:
 
The Loan is only allowed for the purchase, production, transportation, and arrangement of export goods unless given written consent from Party B.
 
Article 3. Availability Period
 
Term of the Loan:  three  months from the draw date.
 
Article 4. Conditions Precedent to Disbursement of the Loan
 
Subject to a waiver by Party B, Party B is not obliged to provide the Loan to Party A unless the conditions precedent set out below has been satisfied:
 
1. Party A has obtained and/or completed all consents, approvals, registrations and other necessary formalities relating to the Loan under this Contract in accordance with relevant laws and regulations; and
 
2. Party A has submitted all relevant documents satisfactory to Party B; and
 
3. The security documents or other security(ies) acceptable to Party B have become effective; and
 
4. No event of default in respect to Party A specified under this Contract has occurred.
 
Article 5. Interest Rate, Calculation and Payment of Interests and Fees
 
1. The annual interest rate applicable shall be fixed at 6.57%.
 
2. Interest Settlement
 
The interest rate shall be calculated and paid according to the fixed interest rate, and the 20th day of each month shall be the date for the settlement of interest.

 
 
 

 
Daily interest rate = monthly interest rate/30
 
Article 6. Repayment
 
1. After the delivery is confirmed, Party A consents to convert export order finance to export invoice finance or to export collection loan or to export factoring prepayment in accordance with the intention of Party B. On the loan issued afterward, Party A promises to repay principal and interest under the contract.
 
On the condition that Party A cannot deliver goods or fails to make the repayment in accordance with the foregoing terms for any other reasons Party A should pay the loan with other terms. Before the due date of the loan Party A should pay off all the loan principal and interest, as well as other fees.
 
2. During the loan term, if Party A cannot deliver goods in accordance with the provisions of the contract for any reason, the loan will be treated as expired, and Party A is obliged to pay the loan under Party B’s requirements。
 
3. If Party A pays the loan with money beyond capital from collection, Party A should notice Party B five banking days in advance of the repayment date.
 
Article 7. Rights and Obligations of Parties
 
1. Party B shall conduct business with Party A in accordance with the terms and conditions of this Collection Contract. Party A must conduct business through Party B after the loading. Party A must make a note that credit right has been transferred to Party B and the wiring must be transferred to the account opened in Party B’s name.
 
2. Party A should use their best efforts to provide the information regarding use of the loan and exportation to Party B. Transferring any document to any third party is prohibited.
 
3. Any conduct through related transactions to escape the payment of loan is prohibited.
 
4. If Party A belongs to the class of group client, Party A should disclose any related transactions exceeding 10% of the net assets to Party B, including: (1) the relationship among the related parties; (2) project and nature; (3) amount and percentage of the transaction; and(4) price determination policy.
 
5. Party A has the right to require Party B to keep in confidence relevant financial information and trade secrets relating to the production and operation of Party A unless otherwise provided by the laws and regulations.

 
 
 

 
6. Party A shall provide relevant financial information and the information relating to production and operation as required by Party B and shall be responsible for the authenticity, integrity and validity of such information.
 
7. Party A shall assist in and accept Party B’s inspection and supervision of its production, operation, financial activities and the utilization of the Loan.
 
8. Party A shall utilize the Loan for the purpose as provided for hereunder.
 
9. Party A shall punctually repay the principal and interest in accordance with this Contract.
 
10. Party A or its investors shall not transfer any funds or assets in order to evade the indebtedness owed to Party B.
 
11. Party A shall give Party B a prior written notice for Party B’s consent if Party A intends to provide security for any third party during the term of this Contract and such security may affect Party A’s ability to make repayment under this Contract.
 
12. Party A shall promptly arrange for new security(ies) satisfactory to Party B where the Guarantor in respect of this Contract ceases or suspends production; its corporate registration is canceled, its business license revoked; it is bankrupt or dissolved; it is operating at a loss; or any other negative change has occurred, and such aforementioned incidents result in loss or partial loss of the Guarantor’s ability to secure the Loan, or where the mortgaged or pledged property(ies) for securing the Loan depreciate(s) or is (are) damaged or destroyed.
 
13. Party A shall promptly inform Party B of any relevant changes during the term of this Contract, including without limitation its business name, legal representative (or chief officer), registered office, business purpose or registered capital.
 
14. When Party A intends to carry out activity(ies) during the term of this Contract which may have an impact on the realization of Party B’s rights hereunder, Party A shall give Party B a [30] banking days prior written notice for its consent to such intended activity(ies) and shall further take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security in accordance with Party B’s instructions. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division, setting up a joint venture, application for suspension of production or for winding up or for bankruptcy
 
15. Party A shall promptly inform Party B in writing, take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security(ies) in accordance with Party B’s instructions if there has occurred to Party A incident(s) during the terms of this Contract that may have substantially negative effects on Party B’s performance of its obligations hereunder. The aforementioned incidents shall include without limitation the following: Party A ceases or suspends production; its corporate registration is canceled, or business license revoked; its legal representative or high-ranking officers are involved in illegal activities; it is involved in litigation with a major impact; great difficulties arise in respect to its production or operation; or its financial standing deteriorates.

 
 
 

 
16. Party B is entitled to debit any account opened by Party A with any branch or office of China Construction Bank for any amount due to Party B under this Contract.
 
Article 8. Liabilities for Default
 
1. Party A fails to provide true, complete and valid financial information or information relating to its production and operation or other relevant documents as required by Party B.
 
2. Party A fails to utilize the Loan for the purpose agreed upon by the Parties.
 
3. Party A fails to repay punctually the principal and/or interest.
 
4. Party A refuses Party B’s demand for supervision and/or inspection over the utilization of the Loan or hinders Party B from doing so.
 
5. Party A transfers or misappropriates funds or assets in order to evade the indebtedness.
 
6. Party A’s operational and financial conditions deteriorate and as a result it is unable to repay its indebtedness upon maturity; or it is involved or likely to be immediately involved in litigation or arbitration with a major impact or other legal disputes, and any of the aforementioned incidents in Party B’s judgment may or has affect(ed) or impair(ed) Party B’s rights and interests hereunder.
 
7. Any other indebtedness owed by Party A has affected or may affect its performance of the obligations to Party B hereunder.
 
8. Party A fails to repay any other indebtedness due to China Construction Bank upon maturity.
 
9. Party A carries out activity(ies) during the term of this Contract which may change its operational or managerial modes or equity structure and which in Party B’s sole judgment may affect or have affected the rights and interests of Party B hereunder. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division, or setting up a joint venture.
 
10. Other events which Party B believes will affect the realization of its rights under this Contract.

 
 
 

 
11. Party A fails to perform or comply with any of its other obligations hereunder.
 
Article 9. Remedies
 
If any Event of Default in Items (1) above occurs, Party B is entitled to enforce its rights hereunder by taking one or more of the following measures:
 
1. Party B is entitled to adjust or cancel the Facility or any individual Line under this Contract.
 
2. Party B is entitled to accelerate forthwith the indebtedness under this Contract, and to require Party A to repay forthwith all principals, interests and fees, whether they are due or not.
 
3. If Party A fails to utilize the Loan for the purpose set forth in this contract Party A must pay interest occurred and compound interest on the misappropriated part of the Loan in accordance with the penalty interest rate and the settlement provisions under the contract for the period commencing from the default date and ending on the date that all the principal and interest are settled. The penalty interest rate will be 100% higher than the normal loan interest rate in RMB currency.
 
4. When Party A defaults in repayment of the RMB Loan upon maturity, with respect to such Loan (including all or part of the Loan which is accelerated by Party B), Party A shall pay interest and compound interest at the overdue interest rate as promulgated by the People’s Bank of China and applicable at the time of such default and in accordance with the interest payment provisions set forth in this Contract for the period commencing from the date of such failure. Such overdue interest rate shall be 50% higher than the normal loan interest rate in RMB currency.
 
5. Party B is entitled to enforce its security rights.
 
6. Party B is entitled to require Party A to provide new security(ies) satisfactory to Party B.
 
7. Party B is entitled to terminate this Contract.
 
Article 10.Miscellaneous
 
1  _______________________________________
 
2  _______________________________________
 
3  _______________________________________
 

 
4  _______________________________________

 
 
 

 
Article 11. Dispute Resolution
 
Any dispute arising out of or in connection with this Contract shall be settled through friendly consultation. If no agreement is reached through such friendly consultation, such dispute shall be settled in accordance with Item 1. of the following:
 
1. Instituting legal proceedings with the People’s Court in the location of Party B;
 
2. Submitting the disputes to the [ ] for arbitration (the venue for such arbitration shall be __________), which shall be conducted in accordance with the arbitration rules in effect as of the date of submission. The arbitration award shall be final and binding on both Parties.
 
3. The Parties shall perform this Contract in accordance with the undisputed parts during the course of such legal proceedings or arbitration.
 
Article 12. Effectiveness
 
This Contract shall take effect upon the execution by the legal representative (chief officer) or authorized representative of Party A and by the chief officer or authorized representative of Party B with the company seal of both Parties affixed.
 
Article 13. Counterparts
 
This Contract shall be made in [5] counterparts.
 
All documents created within the Availability Period and within the Maximum Amount which underlie the debtor-creditor relationship between the Parties (including but not limited to Application for Drawing, Notice of Drawing, or other certificates and documents) shall be integral parts of this Contract.
 
Article 14. Representations
 
1. Party A is fully informed and aware of the business purposes and powers of Party B.
 
2. Party A has read all the terms of this Contract and Party B has given explanation as required by Party A. Party A hereby acknowledges that it fully understands all terms of this Contract and the corresponding legal consequences thereof.
 
3. Party A has the right and power to execute this Contract.

 
 
 

 
Party A: Shaanxi Tianren Organic Food Co. Ltd.
 
Legal Representative (or Chief Officer) or Authorized Representative (Signature):
 
/s/: Xue Hongke
 
Date: 06/18/2008
 
Party B: Hi-Tech Industrial Development Zone, Xi’an branch of China Construction
 
Bank
 
Chief Officer or Authorized Representative (Signature): /s/: Zhou Cunxing
Date: 06/18/2008


 EX-10.22 14 e10-22.htm RMB FACILITY LOAN CONTRACT e10-22.htm
EXHIBIT 10.22


 
RMB Facility Loan Contract
 
Contract No: 2008 Duandi 6661
 
Type of Loan: Short-term Current Capital Loan
 
Borrower (Party A): Huludao Wonder Fruit Co.，Ltd.
 
Address: Hujia Village, Gaotai Town, Suizhong County Post Code: 125200
 
Legal Representative (Chief Officer): Yan Xiaoqin
 
Fax: 86-0429-6833995
Tel: 86-0429-6833997
 
Lender (Party B): Suizhong Branch，Huludao City Commercial Bank
 
Address: No.11，2nd Section of Xinxing Street, Suizhong Town 125200
 
Chief Officer: Wang Dong
 
Fax:
  
Tel：
 


 
 
 

 
Borrower (“Party A”): Huludao Wonder Fruit Co.，Ltd.
 
Lender (“Party B”): Suizhong Branch，Huludao City Commercial Bank
 
Whereas Party A applies to Party B for, and Party B agrees to provide Party A with, a loan facility (the “Facility”). Pursuant to relevant laws and regulations and through consultation, Party A and Party B enter into this Contract:
 
Article 1. Type of Loan
 
Working Capital Loan (short-term or middle-term)
 
Article 2. Use of Loan
 
2.1 The Loan is only allowed to revolve loan（as current capital） unless given written consent from Party B.
 
2.2 Party A cannot change the use of the Loan according to the Contract without the written consent of Party B.
 
Article 3. Availability Period and Amount of the Facility
 
The Availability Period of the Facility shall commence from June 27，2008 and end on May 25，2009 (the “Availability Period”).
 
The amount of the Facility shall be RMB eight million (in words) (the “Maximum Amount”).
 
Article 4. Interest Rate, Calculation and Payment of Interests and Fees
 
4.1 The monthly interest rate applicable to the Loan shall be the fixed at 8.0925‰.
 
4.2 Interest Settlement
 
The interest rate shall be calculated and paid according to the fixed interest rate, and the 20th day of each month shall be the date for the settlement of interest.
 
4.3 The interest rate should be flexible with the adjustment of the interest rate of China People’s Bank. In the event of interest rate adjustment, Party B can make an adjustment over the interest rate and calculation method without informing Party A.
 
Article 5. Repayment
 
5.1 Interest Payment
 
Party A shall pay to Party B the due interest on the Interest Payment Date. The first interest payment shall be made on the first Interest Payment Date after the Disbursement of the Loan. Upon the maturity date for the Loan, Party A shall pay in full all the unpaid interest together with the principal.

 
 
 

 
5.2 Method of Repayment
 
Party A shall deposit into its account with Party B such funds as sufficient to repay the amount due to Party B before each Repayment Date specified in this Contract, and shall automatically transfer such funds to Party B for repayment; or Party A shall transfer a sufficient amount from its other accounts to make such repayment on the aforementioned Repayment Date. If Party A fails to repay any indebtedness punctually, Party B has the right to directly debit for the corresponding amount any account opened by Party A with any branch or office of China Construction Bank.
 
Article 6. Security for the Loan
 
6.1 The security(ies) for this Contract shall be Item [2] as below.
 
(1)           Guarantee
 
(2)           Mortgage
 
(3)           Pledge
 
(4)           Standby Letter of Credit
 
(5)           Credit Insurance
 
(6)           Other Forms of Security: Mortgage
 
6.2 Party A should use all their efforts to coordinate with Party B to sign the loan contract of No: 2008 Duandi 6661.
 
6.3 If the status of the Mortgage changed in Creditor’s right, which is likely to cause damage to the interest of the Creditor’s right, Party A should provide a new Mortgage until the Mortgage meets the requirements of Party B.
 
Article 7. Rights and Obligations of Party A
 
7.1 Party A has the right to require Party B to keep in confidence relevant financial information and trade secrets relating to production and operation of Party A unless otherwise provided by laws and regulations.
 
7.2 Party A shall provide relevant financial information and the information relating to production and operation as required by Party B and shall be responsible for the authenticity, integrity and validity of such information.
 
7.3 Party A undertakes that all settlements and deposits relating to the Loan shall be conducted through its accounts opened with Party B or Party B’s relevant branch.

 
 
 

 
7.4 Party A shall assist in and accept Party B’s inspection and supervision of its production, operation, financial activities and utilization of the Loan.
 
7.5 Party A shall utilize the Loan for the purpose as provided for hereunder.
 
7.6 Party A shall punctually repay the principal and interest in accordance with this Contract.
 
7.7 Party A or its investors shall not transfer any funds or assets in order to evade the indebtedness owed to Party B.
 
7.8 Party A shall give Party B a prior written notice for Party B’s consent if Party A intends to provide security for any third party during the term of this Contract and such security may affect Party A’s ability to make repayment under this Contract.
 
7.9 Party A shall promptly arrange for new security(ies) satisfactory to Party B where the Guarantor in respect of this Contract ceases or suspends production; its corporate registration is canceled, or business license revoked; it is bankrupt or dissolved; it is operating at a loss; or any other negative change has occurred, and such aforementioned incidents result in loss or partial loss of the Guarantor’s ability to secure the Loan, or where the mortgaged or pledged property(ies) for securing the Loan depreciate(s) or is (are) damaged or destroyed.
 
7.10 Party A shall promptly inform Party B of any relevant changes during the term of this Contract, including without limitation its business name, legal representative (or chief officer), registered office, business purpose or registered capital.
 
7.11 Where Party A intends to carry out activity(ies) during the term of this Contract which may have an impact on the realization of Party B’s rights hereunder, Party A shall give Party B a [30] banking days prior written notice for its consent to such intended activity(ies) and shall further take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security in accordance with Party B’s instructions. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division, setting up a joint venture, application for suspension of production or for winding up or for bankruptcy.
 
7.12 Party A shall promptly inform Party B in writing, take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security(ies) in accordance with Party B’s instructions if there has occurred to Party A incident(s) during the term of this Contract that may have substantially negative effects on Party B’s performance of its obligations hereunder. The aforementioned incidents shall include without limitation the following: Party A ceases or suspends production; its corporate registration is canceled, or business license revoked; its legal representative or high-ranking officers are involved in illegal activities; it is involved in litigation with a major impact; great difficulties arise in respect to its production or operation; or its financial standing deteriorates.

 
 
 

 
7.13 Party A shall bear all fees and expenses in connection with this Contract and the security(ies) for this Contract including without limitation fees and expenses in respect to legal services, insurance, evaluation, registration, storage, authentication and notarization.
 
Article 8. Rights and Obligations of Party B
 
8.1 Party B is entitled to have access to information about the production, operation, and financial activities of Party A, and to require Party A to provide financial information and documents in respect to its production and operation.
 
8.2 If the credit rating of Party A declines, Party B is entitled to adjust or even cancel the Facility which is otherwise available.
 
8.3 Party B is entitled to debit any account opened by Party A with any branch or office of China Commerce Bank for any amount due to Party B under this Contract.
 
8.4 Party B shall disburse the Loan to Party A in accordance with this Contract, except for any delay caused by Party A.
 
8.5 Party B shall keep in confidence financial information and trade secrets in relation to production and operation of Party A unless otherwise required by laws or regulations.
 
Article 9. Effectiveness，Modification, Rescission and Termination
 
9.1 The Contract will become effective after the signing and stamping.
 
9.2 Party B will rescind the contract and ask for repayment and compensation if Party A breaks any item below:
 
9.2.1 Dissolution and shop closure or revocation of the business license happens.
 
9.2.2 There are some changes in the Mortgage under the provision of the Contract, which are likely to cause damage to the creditor’s right; in this case, Party A fails to provide a new Mortgage that is satisfactory to Party B.
 
9.2.3 Other serious default activities.
 
9.3 If Party A asks for extension of the Contract, Party A should offer a written application to Party B with the written consent from guarantor at least 30 days before the Contract will expire. The extension contract will not become effective until Party A gets approval from Party B. The loan contract remains effective until the signing of the extension contract.
 
9.4 Neither Party should make any adjustments or expiration without consent from the opposite Party except for the provision already defined in the contract. Any adjustment or expiration must get approval from both Parties and be reached by written agreement if the status is necessary.

 
 
 

 
9.5 The original contract remains effective until both parties reach a consensus.
 
Article 10. Amendment to this Contract
 
Upon taking effect of this Contract, any Party intending to amend this Contract shall notify the other Party promptly and a written agreement shall be executed if the Parties so agree, unless otherwise provided in this Contract or in any other agreement.
 
Article 11. Dispute Resolution
 
11.1 Any dispute arising out of or in connection with this Contract shall be settled through friendly consultation. If no agreement is reached through such friendly consultation, such dispute shall be settled in accordance with the following:
 
11.2 Instituting legal proceedings with the People’s Court in the location of Party B.
 
11.3 The Parties shall perform this Contract in accordance with the undisputed parts during the course of such legal proceedings or arbitration.
 
Article 12. This Contract Shall be Made in [2] Counterparts
 
All documents created within the Availability Period and within the Maximum Amount of the Facility which underlie the debtor-creditor relationship between the Parties (including but not limited to Application for Drawing, Notice of Drawing or other certificates and documents) are integral parts of this Contract.
 
Article 13. Representations
 
13.1 Party A is fully informed and aware of the business purposes and powers of Party B.
 
13.2 Party A has read all the terms of this Contract and Party B has given explanation as required by Party A. Party A hereby acknowledges that it fully understands all terms of this Contract and the corresponding legal consequences thereof.
 
13.3 Party A has the right and power to execute this Contract.
 
Party A: Huludao Wonder Fruit Co.，Ltd.
 
Legal Representative (or Chief Officer) or Authorized Representative (Signature): /s/：Yan xiaoqin

 
 
 

 
Date: 06/27/2008
 
Party B: Suizhong Branch，Huludao City Commercial Bank
Chief Officer or Authorized Representative (Signature): /s/: Wang Dong
 
Date: 06/27/2008
 



 EX-10.23 15 e10-23.htm RMB CREDIT LIMITATION CONTRACT e10-23.htm
EXHIBIT 10.23


 
RMB Credit Limitation Contract
 
Contract No.: Shanjiankaidai (2008)030
 
Type of Loan:
 
Borrower (Party A): Shaanxi Tianren Organic Food Co. Ltd.
 
Address:                      A-4/F Tongxinge Xietong Building, No.12, Gaoxin 2nd Rd,
 
High-tech Zone, Xi'an, China 710075
 
Legal Representative (Chief Officer): Xue Hongke
 
Fax:           86-029-88386230                                Tel: 86-029-88386415
 
Lender (Party B): Hi-tech Industrial Development Zone, Xi'an Branch of China Construction Bank
 
Address:                      No.42 Gaoxin Road, Xi'an                                                      Post Code:710075
 
Chief Officer: Zhou Cunxing
 
Fax:                      86-029-88321414                                                                           Tel: 86-209-88321414

 
 
 

 
Whereas Party A applies to Party B for, and Party B agrees to provide Party A with, a credit limitation contract (the “Contract”). Pursuant to relevant laws and regulations and through consultation, Party A and Party B enter into this Contract:
 
Article 1. Amount of the Contract
 
The amount of the Contract shall be RMB   twelve million (in words) (the “Maximum Amount”).
 
Article 2. Availability Period
 
The Availability Period of the Contract shall commence from June 27 2008 and end on June 26 2009 (the “Availability Period”). Party A’s obligation to repay its indebtedness in respect to any individual Loan provided within the Availability Period shall not be affected by the expiration of the Availability Period even if the maturity date for such individual Loan comes after the Availability Period expires.
 
Upon the expiration of the Availability Period, the Facility not drawn shall become invalid automatically.
 
The term of each individual Loan means the period commencing from the date of the drawing of such individual Loan and ending on the maturity date of such Loan as provided for under this Contract.
 
Article 3. Drawing of the Facility
 
During the Availability Period and within the Maximum Amount of the Facility, Party A can apply for Loans subject always to the formalities which shall be completed by both Parties. The amount, interest rate, term and purpose of each individual Loan shall be determined according to the Notice of Drawing issued by Party B to Party A.
 
If any security provider has performed its obligations in accordance with any security contract, the Facility shall decrease by the amount of principal which has been repaid by such security provider.
 
The amount of each individual Loan shall be no less than RMB 1,000,000.00, and its term shall be no shorter than 30 days, but no longer than 10 months.
 
Article 4. Interest Rate, Calculation and Payment of Interests and Fees
 
1. The annual interest rate applicable to each individual Loan shall be fixed at 7.47%.
 
2. Penalty Interest Rate

 
 
 

 
The annual interest rate shall be adjusted up to 100% if Party A does not perform according to the agreement and the interest shall be calculated and paid in accordance with relevant regulations of the People’s Bank of China.
 
3. The annual interest rate shall be adjusted to 50% for the overdue loan.
 
4. Interest Settlement
 
The interest rate shall be calculated and paid according to the fixed interest rate, and the 20th day of each month shall be the date for the settlement of interest.
 
Article 5. Management Fee
 
Where Party A shall pay to Party B a Management Fee of RMB 24,000.00 in accordance with this Contract, Party A has paid such Management Fee to Party B within 30 banking days after the execution of this Contract.
 
Article 6. Disbursement of the Loan
 
Application for Drawing of the Facility
 
1 Party A shall submit to Party B an Application for Drawing in advance. For any individual Loan with an amount exceeding RMB 2,000,000.00, such Application shall be submitted 5 banking days in advance. Party B shall determine whether or not to provide Loans within3 banking days after its receipt of such Application.
 
2 Conditions Precedent to the Disbursement of the Loan
 
3 Subject to a waiver by Party B, Party B is not obliged to make any disbursement to Party A unless the following conditions precedent have been satisfied:
 
4 Party A has obtained and/or completed all approval, registration, delivery and other necessary formalities relating to the Loan in accordance with relevant laws and regulations; and
 
5 The security documents acceptable to Party B have become effective and remain in full effect; and
 
6 No Event of Default specified in this Contract has occurred; and
 
7 The Application for Drawing has been verified and approved by Party B; and
 
8 Other conditions precedent:

 
 
 

 
Article 7. Repayment
 
Principle of Repayment
 
1 Any repayment by Party A under this Contract shall be made in accordance with the principle that the interest shall be paid before the repayment of any principal.
 
2 Interest Payment
 
3 Party A shall pay to Party B the due interest on the Interest Payment Date. The first interest payment shall be made on the first Interest Payment Date after the Disbursement of the Loan. Upon the maturity date for the Loan, Party A shall pay in full all the unpaid interest together with the principal.
 
4 Party A shall repay the principal in accordance with the Principal Repayment Schedule set forth in the Notice of Drawing.
 
Method of Repayment
 
1 Party A shall deposit into its account with Party B such funds as sufficient to repay the amount due to Party B before each Repayment Date specified in this Contract, and shall automatically transfer such funds to Party B for repayment; or Party A shall transfer a sufficient amount from its other accounts to make such repayment on the aforementioned Repayment Date. If Party A fails to repay any indebtedness punctually, Party B has the right to directly debit for the corresponding amount any account opened by Party A with any branch or office of China Construction Bank.
 
2 Party A may prepay the interest with prior notice to Party B.
 
3 Party A shall submit to Party B a written application [10] banking days in advance of any prepayment. Party A may prepay all or any part of the principal subject to Party B’s consent to such application.
 
4 In the case of prepayment of the principal, the interest shall be calculated on the basis of the actual number of days elapsed and at the interest rate set forth in Article 4 of this Contract.
 
5 In the case of prepayment of the principal, Party B is entitled to demand of Party A a compensation fee calculated in accordance with the following formula:
 
6 Compensation Fee = Prepayment Amount × 1‰ × Number of Days of Prepayment
 
7 Where any individual Loan shall be repaid in installments and Party A prepays part of the principal, such prepayment shall be effected in a reverse order of the Repayment Schedule. The interest on the outstanding indebtedness after such prepayment shall still be calculated at the interest rate as specified in this Contract.

 
 
 

 
Article 8. Rights and Obligations of Party A
 
1.Party A has the right to require Party B to keep in confidence relevant financial information and trade secrets relating to production and operation of Party A unless otherwise provided by laws and regulations.
 
2.Party A shall provide relevant financial information and information relating to production and operation as required by Party B and shall be responsible for the authenticity, integrity and validity of such information.
 
3.Party A undertakes that all settlements and deposits relating to the Loan shall be conducted through its accounts opened with Party B or Party B’s relevant branch.
 
4.Party A shall assist in and accept Party B’s inspection and supervision of its production, operation, financial activities and utilization of the Loan.
 
5.Party A shall utilize the Loan for the purpose as provided for hereunder.
 
6.Party A shall punctually repay the principal and interest in accordance with this Contract.
 
7.Party A or its investors shall not transfer any funds or assets in order to evade the indebtedness owed to Party B.
 
8.Party A shall give Party B a prior written notice for Party B’s consent if Party A intends to provide security for any third party during the term of this Contract and such security may affect Party A’s ability to make repayment under this Contract.
 
9.Party A shall promptly arrange for new security(ies) satisfactory to Party B where the Guarantor in respect of this Contract ceases or suspends production; its corporate registration is canceled, or business license revoked; it is bankrupt or dissolved; it is operating at a loss; or any other negative change has occurred, and such aforementioned incidents result in loss or partial loss of the Guarantor’s ability to secure the Loan, or where the mortgaged or pledged property(ies) for securing the Loan depreciate(s) or is (are) damaged or destroyed.
 
10.Party A shall promptly inform Party B of any relevant changes during the term of this Contract, including without limitation its business name, legal representative (or chief officer), registered office, business purpose or registered capital.
 
11.Where Party A intends to carry out activity(ies) during the term of this Contract which may have an impact on the realization of Party B’s rights hereunder, Party A shall give Party B a [30] banking days prior written notice for its consent to such intended activity(ies) and shall further take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security in accordance with Party B’s instructions. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division, setting up a joint venture, application for suspension of production or for winding up or for bankruptcy

 
 
 

 
12.Party A shall promptly inform Party B in writing, take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security(ies) in accordance with Party B’s instructions if there has occurred to Party A incident(s) during the term of this Contract that may have substantially negative effects on Party B’s performance of its obligations hereunder. The aforementioned incidents shall include without limitation the following: Party A ceases or suspends production; its corporate registration is canceled, or business license revoked; its legal representative or high-ranking officers are involved in illegal activities; it is involved in litigation with a major impact; great difficulties arise in respect to its production or operation; or its financial standing deteriorates.
 
13.Party A shall bear all fees and expenses in connection with this Contract and the security(ies) for this Contract including without limitation fees and expenses in respect to legal services, insurance, evaluation, registration, storage, authentication and notarization.
 
Article 9. Rights and Obligations of Party B
 
1.Party B is entitled to have access to information about the production, operation, and financial activities of Party A, and to require Party A to provide financial information and documents in respect to its production and operation.
 
2.If the credit rating of Party A declines, Party B is entitled to adjust or even cancel the Facility which is otherwise available.
 
3.Party B is entitled to debit any account opened by Party A with any branch or office of China Construction Bank for any amount due to Party B under this Contract.
 
4.Party B shall disburse the Loan to Party A in accordance with this Contract, except for any delay caused by Party A.
 
5.Party B shall keep in confidence financial information and trade secrets in relation to production and operation of Party A unless otherwise required by laws or regulations.
 
Article 10. Liabilities for Default
 
Events of Default
 
Events of Default by Party A

 
 
 

 
(I) Party A fails to provide true, complete and valid financial information, or information relating to its production and operation or other relevant documents as required by Party B.
 
(II) Party A fails to utilize the Loan for the purpose agreed by the Parties.
 
(III) Party A fails to repay punctually the principal and/or interest.
 
(IV) Party A refuses Party B’s demand for supervision and/or inspection over the utilization of the Loan or hinders Party B from doing so.
 
(V) Party A transfers or misappropriates funds or assets in order to evade the indebtedness.
 
(VI) Party A’s operational and financial conditions deteriorate and as a result it is unable to repay its indebtedness upon maturity; or it is involved or likely to be immediately involved in litigation or arbitration with a major impact or other legal disputes, and any of the aforementioned incident in Party B’s judgment may or has affect(ed) or impair(ed) Party B’s rights and interests hereunder.
 
(VII) Any other indebtedness owed by Party A has affected or may affect its performance of the obligations to Party B hereunder.
 
(VIII) Party A fails to repay any other indebtedness due to China Construction Bank upon maturity.
 
(IX) Party A carries out activity(ies) during the term of this Contract which may change its operational or managerial modes or equity structure and which in Party B’s sole judgment may affect or has affected the rights and interests of Party B hereunder. The aforementioned activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division or setting up a joint venture.
 
(X) Other events which Party B believes will affect the realization of its rights under this Contract.
 
(XI) Party A fails to perform or comply with any of its other obligations hereunder.
 
(2) Any of the following events in relation to the Guarantor for this Contract shall be deemed as an event of default by Party A unless Party A provides new security in favor of, and satisfactory to, Party B:
 
(I) During the term of this Contract, there occurs to the Guarantor such incident(s) as may affect its ability to act as a joint and several liability guarantor. Such incidents shall include without limitation contracting, leasing, consolidation, merger, setting up a joint venture, division, forming an economic association with another enterprise, transformation to a stock company, bankruptcy and dissolution.

 
 
 

 
(II) The Guarantor provides beyond its capacity any security for any third party.
 
(III) The Guarantor loses or may lose its capability to act as a guarantor.
 
(IV) Other events of default by the Guarantor as provided for in the guarantee contract.
 
(3) Any of the following events in relation to the Mortgager for this Contract shall be deemed as an event of default of Party A unless Party A provides new security in favor of, and satisfactory to, Party B:
 
(I) The Mortgager fails to effect or maintain insurance for the mortgaged property, or fails to dispose of insurance proceeds in accordance with the mortgage contract upon occurrence of any insured event.
 
(II) The Mortgager fails to dispose of proceeds of compensation in accordance with the mortgage contract, where the mortgaged property is damaged or destroyed or its value decreases as a result of the act of any third party.
 
(III) The Mortgager transfers, leases, re-mortgages or disposes of by any other means the mortgaged property without Party B’s written consent.
 
(IV) The Mortgager fails to handle the proceeds of the disposal of the mortgaged property in accordance with the mortgage contract, although such disposal is effected with Party B’s consent.
 
(V) The Mortgager fails to restore the value of the mortgaged property promptly, or fails to provide other security acceptable to Party B, where the mortgaged property is damaged, destroyed or decreases in value, which may affect the repayment of the indebtedness hereunder,
 
(VI) Other events of default by the Mortgager provided for in the mortgage contract.
 
(4) Any of the following events in relation to the Pledger for this Contract shall be deemed as an event of default by Party A unless Party A provides new security in favor of, and satisfactory to, Party B:
 
(I) The Pledger fails to effect or maintain insurance for the pledged property, or fails to dispose of insurance proceeds in accordance with the pledge contract upon occurrence of any insured event.
 
(II) The Pledger fails to dispose of the proceeds of compensation in accordance with the pledge contract, where the pledged property is damaged or destroyed or its value decreases as a result of the act of any third party.

 
 
 

 
(III) The Pledger fails to handle the proceeds of disposal of the pledged property in accordance with the pledge contract although such disposal is effected with the consent of Party B.
 
(IV) The Pledger fails to restore the value of the pledged property promptly, or fails to provide other security acceptable to Party B where the pledged property is damaged, destroyed or decreases in value, which may have an impact on the repayment of the indebtedness hereunder.
 
(V) Other events of default by the Pledger provided for in the pledge contract.
 
(5) Any of the following shall constitute an Event of Default by Party A unless Party A provides new security as required by Party B: the security documents or other securities do not take effect, or are void or rescinded, or the security provider totally or partially loses its capacity to secure the indebtedness or refuses to perform its obligations.
 
Remedies
 
If any Event of Default in item (1) to (5) above occurs, Party B is entitled to enforce its rights hereunder by taking one or more of the following measures:
 
1.Party B is entitled to adjust, cancel or suspend the Facility or to adjust the Availability Period.
 
2.Party B is entitled to cease Disbursement of the Loan, to accelerate forthwith the Loan, and to require Party A to repay forthwith all principal, interest and fees.
 
3.Party B is entitled to liquidated damages of [10]‰ of the outstanding principal.
 
4.Where Party A fails to repay the Loan upon maturity, Party A shall pay interest and compound interest on the principal and interest which are not punctually repaid (including all or part of the principal and interest which are accelerated by Party B) at the overdue interest rate stipulated by the People’s Bank of China and in accordance with the interest payment provisions set out in this Contract.
 
5.In the event that Party A fails to utilize the Loan for the purpose set forth in this Contract, Party A shall pay default interest on the misappropriated part of the Loan in accordance with relevant regulations of the People’s Bank of China.
 
6.Party B is entitled to debit any account in any currency opened by Party A with any branch or office of China Construction Bank for any amount payable by Party A under this Contract.
 
7.Party B is entitled to enforce its security rights.
 
8.Party B is entitled to require Party A to provide new security(ies) satisfactory to Party B.

 
 
 

 
9.Party B is entitled to terminate this Contract.
 
Article 11. Amendment to this Contract
 
Upon taking effect of this Contract any Party intending to amend this Contract shall notify the other Party promptly and a written agreement shall be executed if the Parties so agree, unless otherwise provided in this Contract or in any other agreement.
 
Article 12. Miscellaneous
 
1 _________________________________
 
3 _________________________________
 
4 _________________________________
 
Article 13. Dispute Resolution
 
Any dispute arising out of or in connection with this Contract shall be settled through friendly consultation. If no agreement is reached through such friendly consultation, such dispute shall be settled in accordance with Resolution（1）of the following:
 
(1)           Instituting legal proceedings with the People’s Court in the location of Party B.
 
(2)           Submitting the disputes to the [] for arbitration (the venue for such arbitration shall be __________), which shall be conducted in accordance with the arbitration rules in effect as of the date of submission. The arbitration award shall be final and binding on both Parties.
 
The Parties shall perform this Contract in accordance with the undisputed parts during the course of such legal proceedings or arbitration.
 
Article 14. Effectiveness
 
This Contract shall take effect upon the execution by the legal representative (chief officer) or authorized representative of Party A and by the chief officer or authorized representative of Party B with the company seals of both Parties affixed.

 
 
 

 
Article 15. This Contract Shall be Made in [5] Counterparts
 
All documents created within the Availability Period and within the Maximum Amount of the Facility which underlie the debtor-creditor relationship between the Parties (including but not limited to Application for Drawing, Notice of Drawing and or certificates and documents) are integral parts of this Contract.
 
Article 16. Representations
 
1.Party A is fully informed and aware of the business purposes and powers of Party B.
 
2.Party A has read all the terms of this Contract and Party B has given explanation as required by Party A. Party A hereby acknowledges that it fully understands all terms of this Contract and the corresponding legal consequences thereof.
 
3.Party A has the right and power to execute this Contract.

 
 
 

 
Party A: Shaanxi Tianren Organic Food Co. Ltd.
 
Legal Representative (or Chief Officer) or Authorized Representative (Signature):
 
/s/: Xue Hongke
 
Date: 06/27/2008
 
Party B: Hi-tech Industrial Development Zone, Xi'an branch of China Constuction
 
Bank
 
Chief Officer or Authorized Representative (Signature): /s/: Zhou Cunxing
 
Date: 06/27/2008


 EX-10.24 16 e10-24.htm RMB FACILITY LOAN CONTRACT e10-24.htm
EXHIBIT 10.24


 
RMB Facility Loan Contract
 
Contract No: 2006 Zhongdi 009
 
Type of Loan: Medium-term Current Capital Loan
 
Borrower (Party A): Huludao Wonder Fruit Co.，Ltd.
 
Address: Hujia Village, Gaotai Town, Suizhong County 125200
 
Legal Representative (Chief Officer): Niu Hongling
 
Fax: 86-0429-6833995                                           Tel: 86-0429-6833997
 
Lender (Party B): Suizhong Branch，Huludao City Commercial Bank
 
Address: No.11，2nd Section of Xinxing Street，Suizhong Town 125200
 
Chief Officer: Li Yumin
 
Fax:           Tel _______________

 
 
 


 
Borrower (“Party A”): Huludao Wonder Fruit Co.，Ltd.
 
Lender (“Party B”): Suizhong Branch，Huludao City Commercial Bank
 
Whereas Party A applies to Party B for, and Party B agrees to provide Party A with, a loan facility (the “Facility”). Pursuant to relevant laws and regulations and through consultation, Party A and Party B enter into this Contract:
 
Article 1. Type of Loan
 
Working Capital Loan (short-term or middle-term)
 
Article 2. Use of Loan
 
2.1 The Loan is only for buying apples, unless given written consent from Party B.
 
2.2 Party A cannot change the use of the Loan according to the Contract without the written consent of Party B.
 
Article 3. Availability Period and Amount of the Facility
 
3.1 The Availability Period of the Facility shall commence from Aug.10，2006 and end on Jan.15，2008 (the “Availability Period”).
 
3.2 The amount of the Facility shall be RMB ten million (in words) (the “Maximum Amount”).
 
Article 4. Interest Rate, Calculation and Payment of Interests and Fees
 
4.1 The monthly interest rate applicable to the Loan shall be fixed at 6.5325‰.
 
4.2 Interest Settlement
 
The interest rate shall be calculated and paid according to the fixed interest rate, and the 20th day of each month shall be the date for the settlement of interest.
 
4.3 The interest rate should be flexible with the adjustment of the interest rate of China People’s Bank. In the event of interest rate adjustment, Party B can make an adjustment over the interest rate and calculation method without informing Party A.
 
Article 5. Repayment
 
5.1 Interest Payment
 
Party A shall pay to Party B the due interest on the Interest Payment Date. The first interest payment shall be made on the first Interest Payment Date after the disbursement of the Loan. Upon the maturity date for the Loan, Party A shall pay in full all the unpaid interest together with the principal.

 
 
 

 
5.2 Method of Repayment
 
Party A shall deposit into its account with Party B such funds as sufficient to repay the amount due to Party B before each Repayment Date specified in this Contract, and shall automatically transfer such funds to Party B for repayment; or Party A shall transfer a sufficient amount from its other accounts to make such repayment on the aforementioned Repayment Date. If Party A fails to repay any indebtedness punctually, Party B has the right to directly debit for the corresponding amount any account opened by Party A with any branch or office of China Construction Bank.
 
Article 6. Security for the Loan
 
6.1 The security(ies) for this Contract shall be Item [2] as below.
 
(1)           Guarantee
 
(2)           Mortgage
 
(3)           Pledge
 
(4)           Standby Letter of Credit
 
(5)           Credit Insurance
 
(6)           Other Forms of Security: Mortgage
 
6.2 Party A should use all their efforts to coordinate with Party B to sign the loan contract of No: 2006 Zhongdi 009.
 
6.3 If the status of the Mortgage changed in Creditor’s right, which is likely to cause damage to the interest of the Creditor’s right, Party A should provide a new Mortgage until the Mortgage meets the requirements of Party B.
 
Article 7. Rights and Obligations of Party A
 
7.1 Party A has the right to require Party B to keep in confidence relevant financial information and trade secrets relating to production and operation of Party A unless otherwise provided by laws and regulations.
 
7.2 Party A shall provide relevant financial information and information relating to production and operation as required by Party B and shall be responsible for the authenticity, integrity and validity of such information.
 
7.3 Party A undertakes that all settlements and deposits relating to the Loan shall be conducted through its accounts opened with Party B or Party B’s relevant branch.
 
7.4 Party A shall assist in and accept Party B’s inspection and supervision of its production, operation, financial activities and the utilization of the Loan.

 
 
 

 
7.5 Party A shall utilize the Loan for the purpose as provided for hereunder.
 
7.6 Party A shall punctually repay the principal and interest in accordance with this Contract.
 
7.7 Party A or its investors shall not transfer any funds or assets in order to evade the indebtedness owed to Party B.
 
7.8 Party A shall give Party B a prior written notice for Party B’s consent if Party A intends to provide security for any third party during the term of this Contract and such security may affect Party A’s ability to make repayment under this Contract.
 
7.9 Party A shall promptly arrange for new security(ies) satisfactory to Party B where the Guarantor in respect of this Contract ceases or suspends production; its corporate registration is canceled, or business license revoked; it is bankrupt or dissolved; it is operating at a loss; or any other negative change has occurred, and such aforesaid incidents result in loss or partial loss of the Guarantor’s ability to secure the Loan, or where the mortgaged or pledged property(ies) for securing the Loan depreciate(s) or is (are) damaged or destroyed.
 
7.10 Party A shall promptly inform Party B of any relevant changes during the term of this Contract, including without limitation its business name, legal representative (or chief officer), registered office, business purpose or registered capital.
 
7.11 Where Party A intends to carry out activity(ies) during the term of this Contract, which may have an impact on the realization of Party B’s rights hereunder, Party A shall give Party B a [30] banking days prior written notice for its consent to such intended activity(ies) and shall further take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security in accordance with Party B’s instructions. The aforesaid activities shall include without limitation contracting, leasing, transformation to a stock company, forming an economic association with another enterprise, consolidation, merger, division, setting up a joint venture, application for suspension of production or for winding up or for bankruptcy
 
7.12 Party A shall promptly inform Party B in writing, take sufficient measures to safeguard the repayment of the indebtedness under this Contract and arrange for security(ies) in accordance with Party B’s instructions if there has occurred to Party A incident(s) during the term of this Contract that may have substantially negative effects on Party B’s performance of its obligations hereunder. The aforementioned incidents shall include without limitation the following: Party A ceases or suspends production; its corporate registration is canceled, or business license revoked; its legal representative or high-ranking officers are involved in illegal activities; it is involved in litigation with a major impact; great difficulties arise in respect to its production or operation; or its financial standing deteriorates.
 
7.13 Party A shall bear all fees and expenses in connection with this Contract and the security(ies) for this Contract including without limitation fees and expenses in respect to legal services, insurance, evaluation, registration, storage, authentication and notarization.

 
 
 

 
Article 8. Rights and Obligations of Party B
 
8.1 Party B is entitled to have access to information about the production, operation, and financial activities of Party A, and to require Party A to provide financial information and documents in respect to its production and operation.
 
8.2 If the credit rating of Party A declines, Party B is entitled to adjust or even cancel the Facility that is otherwise available.
 
8.3 Party B is entitled to debit any account opened by Party A with any branch or office of China Commerce Bank for any amount due to Party B under this Contract.
 
8.4 Party B shall disburse the Loan to Party A in accordance with this Contract, except for any delay caused by Party A.
 
8.5 Party B shall keep in confidence financial information and trade secrets in relation to production and operation of Party A unless otherwise required by laws or regulations.
 
Article 9. Effectiveness，Modification, Rescission and Termination
 
9.1 The Contract will be effective after the signing and stamping.
 
9.2 Party B will rescind the contract and ask for repayment and compensation if Party A breaks any item blow:
 
9.2.1 Dissolution and shop closure or revocation of the business license has happened.
 
9.2.2 There are some changes in the Mortgage under the provision of the Contract, which is likely to cause damage to the creditor’s right; in this case, Party A fail to provide a new Mortgage that is satisfactory to Party B.
 
9.2.3 Other serious default activities.
 
9.3 If Party A ask for extension of the contract, Party A should offer a written application to Party B with the written consent from guarantor at least 30 days before the contract will expire. The extension contract will not become effective until Party A gets approval from Party B. The loan contract remains effective until the signing of the extension contract.
 
9.4 Neither Party should make any adjustment or expiration without consent from the opposite Party except for the provision already defined in the Contract. Any adjustment or expiration requires approval from both Parties and must be reached by written agreement if the status is necessary. The original contract remains effective until both parties reach a consensus.

 
 
 

 
Article 10. Amendment to this Contract
 
Upon taking effect of this Contract, any Party intending to amend this Contract shall notify the other Party promptly and a written agreement shall be executed if the Parties so agree, unless otherwise provided in this Contract or in any other agreement.
 
Article 11. Dispute Resolution
 
Any dispute arising out of or in connection with this Contract shall be settled through friendly consultation. If no agreement is reached through such friendly consultation, such dispute shall be settled in accordance with the following:
 
Instituting legal proceedings with the People’s Court in the location of Party B;
 
The Parties shall perform this Contract in accordance with the undisputed parts during the course of such legal proceedings or arbitration.
 
Article 12. This Contract Shall be Made in [2] Counterparts.
 
All documents created within the Availability Period and within the Maximum Amount of the Facility which underlie the debtor-creditor relationship between the Parties (including but not limited to Application for Drawing, Notice of Drawing or other certificates and documents) are integral parts of this Contract.
 
Article 13. Representations
 
1. Party A is fully informed and aware of the business purpose and powers of Party B.
 
 2. Party A has read all the terms of this Contract and Party B has given explanation as required by Party A. Party A hereby acknowledges that it fully understands all terms of this Contract and corresponding legal consequences thereof.
 
3. Party A has the right and power to execute this Contract.

 
 
 

 
Party A: Huludao Wonder Fruit Co.，Ltd.
 
Legal Representative (or Chief Officer) or Authorized Representative (Signature):
 
/s/: Niu Hongling
 
Date: 08/10/2006
 
Party B: Suizhong Branch，Huludao City Commercial Bank
 
Chief Officer or Authorized Representative (Signature): Li Yuming
Date: 08/10/2008


 EX-10.25 17 e10-25.htm TIANREN LEASE AGREEMENT e10-25.htm
EXHIBIT 10.25


 
LEASE CONTRACT
 
Lessor (hereinafter referred to as Party A)：Zhonghai Trust Co., Ltd.
 
Lessee (hereinafter referred to as Party B)：Shaanxi Tianren Organic Food Co., Ltd.
 
In accordance with relevant Chinese laws、decrees and pertinent rules and regulations, Party A and Party B have reached an agreement through friendly consultation to conclude the following contract:
 
Article 1.
 
Party A should guarantee that the lease of premises and facilities is legal according to regulations and there is no mortgage or dispute on the premises.
 
Article 2. Location of the Premises，Size, Decoration, Facilities and Utilization
 
Party A will lease to Party B the premises and attached facilities all owned by Party A itself, which is located at the 16th floor of National Development Bank Tower. The House Proprietary Certificate No: 107510607-12-1-12010.
 
Party A has informed the status of the ownership of the house, facilities, decoration etc. to Party B and Party B has agreed to rent the premises.
 
Party B guarantees that it is for work use only. Any change in the utilization of the premises is not allowed without the written consent of Party A and approval from related authority.
 
Article 3.
 
Party A should provide a copy of the House Proprietary Certificate and a copy of the business license as an attachment to the contract. Party B should provide its copy of the business license as an attachment to the contract.
 
Article 4. Lease Term
 
As the premises were still under the occupation of Bankrupcy Liquidation Group of Cambridge Stock Co., Ltd. during the signing, both Parties agreed that Party B could negotiate with the bankruptcy liquidation group directly after Party B made the payment of rent and deposit according to Article 5 below. Party B is responsible for negotiating the settlement of relative fees occurred by the Bankruptcy Liquidation Group, in which the occurred fees include: administration fees, water, electricity, gas etc. Party B agreed that the calculation of the rent term and the decoration term should not be effected if the interchange of the premises and facilities were delayed. Party A should use its best efforts to coordinate with Party B during the interchange.
 
The lease term should be one year effective from July 1, 2008 to June 30, 2009. Party A has the right to withdraw the house proprietary upon the expiration date and Party B should return the house to Party A. If the return is delayed by Party B, 200% of the lease fee per day and the incurred fee should be paid to party A as overdue fine.

 
 
 

 
Article 5. Rental Payment
 
1. Party A agrees to offer one month for decoration, effective from July 1, 2008 to July 31, 2008. During the term, Pary A offers free rental fee, while Party A should bear the fee of water, electricity, etc.
 
2. Rental fee should be ￥45.00 per month for each square meter starting from August 1, 2008.
 
3. Payment Method: Party A should pay ￥400,000.00 as rental fee and ￥100,000.00 as deposits within 3 working days after the contract is signed. Party A agrees that Party B can move into the premises after the rental fee and deposits are paid. Party A will deduct the rental fee per month from the total rental fee paid by Party B on the 5th of each month if the rental fee is paid off and Party B pays the rental fee to Party A on the 5th of each month without any delay.
 
4. If Party B to intends to purchase the premises and facilities of 16th and 23rd of National Development Bank Tower, and if the purchase agreement could be reached by both parties and the purchase payment made to Party A before December 31, 2008, the rental fee and deposit will be included in the total amount to purchase the premises aforementioned.
 
5. Party A should offer the invoice recognized by the relevant authority after receiving the payment.
 
Article 6. Occurred Fees during the Period and Tax
 
1. During the rental term, Party B should bear all the fees incurred for water, electricity, gas and premises administration.
 
2. Both Parties should bear the tax separately according to the regulation of authority.
 
Article 7. Maintaining and Repairing
 
1. In case the premise and attached facilities are damaged by quality problems, natural damages or disasters, Party A will be responsible for repair and must pay the relevant expenses. 

 
 
 

 
2. Party B will not transfer the lease of the premises or sublet it without Party A's approval and should take good care of the premises. Otherwise, Party B will be responsible to compensate any damages of the premises and attached facilities caused by its fault and negligence. 
 
.Article 8. Transferring and Sublease of the Premises
 
1. Within two months before the contract expires, Party A will notify Party B if it intends to sell the premises. In this situation, Party B should have priority to buy the premises.
 
2. During the rental, Party B is not allowed to lease all or part of the premises to a third party without the written consent of Party A.
 
Article 9. Modification, Termination and Dissolution of the Contract
 
1. If both parties mutually agree through negotiations, the contract can be changed or cancelled.
 
2. If Party B does any of the following, Party A can break the contract and has the right to take back the premises and get twice the rent as liquidated damages by the month. In case the default fine is not sufficient to cover the loss suffered by the faultless Party, the Party in breach should pay additional compensation to the other Party:
 
9.2.1 Changing the use of the house without the approval of Party A, which causes damages to the house
 
9.2.2 There is principal structural damage to the house caused by Party B.
 
9.2.3 Without approval from Party A, subleasing ,transferring the lease items or making subtenancy, transpose.
 
9.2.4 Delaying in rent payment for more than 2 months.
 
3. If Party B intends to continue to rent, it shall inform party A in written form one months in advance. After confirmation by party A, the contract can be renewed. Under the same condition, Party B has the priority to continue the contract to other civil parties.
 
4. When the lease term comes to an end, the contract naturally terminates.

 
 
 

 
5. The lease contract comes to an end in the case of force majeure.
 
Article 10. Delivery and Acceptance
 
10.1 Party A should guarantee that the premises and attached facilities and equipment are in good condition.
 
10.2 Party B should return the premises and attached facilities and equipment to Party A when the lease contract comes to an end.
 
10.3 Party A should keep the house and attached facilities in sound condition, without any items retained, or impact the normal use of the house. The items retained will be regarded as disposed of by Party B, and Party A will have the right to handle them.
 
Article 11. Liabilities for Default of Party A and Remedies
 
11.1 If Party A violates the contract and demands back the house in advance, Party A should pay twice the rental as penalty based on the days remaining in the contract. If the penalty is not sufficient to cover such items, Party A shall bear additional compensation.
 
11.2 If the contract is caused by Party A to be ineffective due to flaws or illegality of the house, Party A should compensate for the loss of Party B.
 
Article 12. Liabilities for Default of Party B
 
12.1 During the leasing period, if Party B terminates the lease in advance without the consent of Party A，Party B should pay a penalty of twice the rent based on the days remaining in the contract. If the penalty is not sufficient to cover such items, Party A shall bear additional compensation, which can be withheld from the deposit by Party A. If the deposit is insufficient，Party B should pay the remainder in other ways.
 
Article 13. Exemption Clause
 
13.1 Neither Party is held responsible if, because of force majeure, it is unable to carry out the contract in whole or part.

 
 
 

 
13.2 If the contract is terminated for the foregoing reason, the rent will be calculated in accordance with the actual usage time. If it is less than one month，the rent will be charged based on the days according to the principle of returning the overcharge and demand payment of the shortage.
 
13.3 “Force majeure events” refer to objective situations that cannot be foreseen and avoided.
 
Article 14.
 
As for any unsettled matter, Party A and Party B can consult with each other to reach agreement and add in complementary items. Complementary items and any annex are an integral part of this contract and equally valid.
 
Article 15. Dispute Settlement
 
If any dispute comes out during the execution of this contract, Party A and Party B should negotiate to solve the dispute. In case an agreement cannot be reached, any Party may summit the dispute to the court that has the jurisdiction over the matter.
 
Article 16.
 
This contract and its enclosure come into effect upon both parties’ signature.
 
Article 17.
 
This contract has 4 copies; each party is to keep two copies.
 
Lessor ：Zhonghai Trust Co.,Ltd
 
Signature:
 
Date: June 23, 2008
 
Lessee：Shaanxi Tianren Organic Food Co., Ltd.
 
Signature:
 
Date: June 23, 2008


 EX-23.2 18 e23-2.htm CONSENT OF AUDITOR e23-2.htm 
	    		    	    	    							 EXHIBIT 23.2
 
 
                                          CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
SkyPeople Fruit Juice, Inc.

We hereby consent to the use of our report dated May 15, 2008, with respect to the
financial statements of SkyPeople Fruit Juice, Inc. in the Registration Statement of
SkyPeople Fruit Juice, Inc. on Form S-1 Amendment No. 2 to be filed on or about October
6, 2008. We also consent to the use of our name and the reference to us in the Experts
section of the Registration Statement. 
 
/s/ Child, Van Wagoner & Bradshaw, PLLC

CHILD, VAN WAGONER & BRADSHAW, PLLC
Salt Lake City, Utah
October 6, 2008
GRAPHIC 20 companystructure.jpg COMPANY STRUCTURE begin 644 companystructure.jpg M_]C_X``02D9)1@`!`0$`8`!@``#_X0!F17AI9@``24DJ``@````$`!H!!0`! M````/@```!L!!0`!````1@```"@!`P`!`````@`!`3$!`@`0````3@`````` M``!@`````0```&`````!````4&%I;G0N3D54('8T+C`P`/_;`$,``@$!`0$! M`@$!`0("`@("!`,"`@("!00$`P0&!08&!@4&!@8'"0@&!PD'!@8("P@)"@H* M"@H&"`L,"PH,"0H*"O_;`$,!`@("`@("!0,#!0H'!@<*"@H*"@H*"@H*"@H* M"@H*"@H*"@H*"@H*"@H*"@H*"@H*"@H*"@H*"@H*"@H*"@H*"O_``!$(`5T! MM`,!(@`"$0$#$0'_Q``?```!!0$!`0$!`0```````````0(#!`4&!P@)"@O_ MQ`"U$``"`0,#`@0#!04$!````7T!`@,`!!$%$B$Q008346$'(G$4,H&1H0@C M0K'!%5+1\"0S8G*""0H6%Q@9&B4F)R@I*C0U-CH.$A8:'B(F*DI.4E9:7F)F:HJ.DI::GJ*FJ MLK.TM;:WN+FZPL/$Q<;'R,G*TM/4U=;7V-G:X>+CY.7FY^CIZO'R\_3U]O?X M^?K_Q``?`0`#`0$!`0$!`0$!`````````0(#!`4&!P@)"@O_Q`"U$0`"`0($ M!`,$!P4$!``!`G<``0(#$00%(3$&$D%1!V%Q$R(R@0@40I&AL<$)(S-2\!5B M7J"@X2%AH>(B8J2DY25EI>8F9JBHZ2EIJ>HJ:JRL[2UMK>X MN;K"P\3%QL?(RKR\_3U]O?X^?K_V@`,`P$` M`A$#$0`_`/W\HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`**Y?XQ7%U#X M)%O:>(_[*^VZWI5E/=AY4.22.1XDD7:4>16WQ[?,4B^$'A M.'[/LU;Q2?LUC-:1[_'&JMF.3S-S/FY^>0>:VV5LR)A-K+Y:;>F%&E[%5)R: MNVE97V2>]UW7?\KXRJ5/:0>:VV5LR)A-K+Y:;2+X0>$X?L^S5O%)^S6,UI' MO\<:JV8Y/,W,^;GYY!YK;96S(F$VLOEIM'#!_P`\O_`5Y_W_`$_'MJ0>:VV5L MR)A-K+Y:;2+X0>$X?L^S5O%)^S6,UI'O\<:JV8Y/,W,^;GYY!YK;96S(F$VL MOEIM'#!_SR_\!7G_`'_3\>VIS8C^5?>__D?7^MNHHKEXOA!X3A^S[-6\4G[- M8S6D>_QQJK9CD\S0>:VV5LR)A-K+Y:;1PP?\\O_``%>?]_T_'MJ_QQJK9CD\S0>:VV5LR)A-K+Y:;1PP?\`/+_P%>?]_P!/Q[:G-B/Y M5][_`/D?7^MNHHKEXOA!X3A^S[-6\4G[-8S6D>_QQJK9CD\S0>:VV5LR)A- MK+Y:;1PP?\\O_`5Y_P!_T_'MJ+X0>$X?L^S5O%)^ MS6,UI'O\<:JV8Y/,W,^;GYY!YK;96S(F$VLOEIM(OA!X3A^S[-6\4G[-8S6D M>_QQJK9CD\S_P`<:JV8Y/,W,^;GYY!YK;96 MS(F$VLOEIM(OA!X3A^S[-6\4G[-8S6D>_P`<:JV8Y/,W,^;GYY!YK;96S(F$ MVLOEIM'#!_SR_P#`5Y_W_3\>VIS8C^5?>_\`Y'U_K;J**Y>+X0>$X?L^S5O% M)^S6,UI'O\<:JV8Y/,W,^;GYY!YK;96S(F$VLOEIM(OA!X3A^S[-6\4G[-8S M6D>_QQJK9CD\SVIS8C M^5?>_P#Y'U_K;J**Y>+X0>$X?L^S5O%)^S6,UI'O\<:JV8Y/,W,^;GYY!YK; M96S(F$VLOEIM(OA!X3A^S[-6\4G[-8S6D>_QQJK9CD\S?\`?]/Q[:G-B/Y5][_^1]?ZVZBBN7B^$'A.'[/LU;Q2 M?LUC-:1[_'&JMF.3S-S/FY^>0>:VV5LR)A-K+Y:;2+X0>$X?L^S5O%)^S6,U MI'O\<:JV8Y/,W,^;GYY!YK;96S(F$VLOEIM'#!_SR_\``5Y_W_3\>VIS8C^5 M?>__`)'U_K;J**Y>+X0>$X?L^S5O%)^S6,UI'O\`'&JMF.3S-S/FY^>0>:VV M5LR)A-K+Y:;?$O\`@G-\0?%GCO2?&D7C+Q_K>LW.C^-_%FDVD.JSM,EO86/C MWQ;IUEME>1FDD%K900,SKN*VL):21B=M>QH2ISE3DVXJ^L;:72Z2?=?BK[77 MM*L9Q4XK731^5^R[/^MOI6BBBN0W"BBB@`HHHH`****`"BBB@`HHHH`****` M"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`Y?XOR^3X3M'^WV-MG MQ3H:^9J%IY\9SJMH-@7RWQ(V=J/@;)&1]T>W>O45R_Q?E\GPG:/]OL;;/BG0 MU\S4+3SXSG5;0;`OEOB1L[4?`V2,C[H]N]>HKIDO]CA_BE^4/+]?DNN,?]XE MZ+\Y?U_6GR=^UI^W#\0OA+^VCX,_9/\`"_Q0^%WP_;Q+X4_M?P_>_%G2[UX? M'>HF^%M_8&FW<-U;Q6-T@,)9W6\E;[?`8K27RY`V)X:_;0^._P`(_P!K3QK9 M?MF>)K/2O!VA_L^>$?%=QX/\'^#KG4IM"U:]U&^LKV,268N;O4V,\`5#$B(( M_+`BW+)-)WG[;'P'_:$^/8UOX>Q_`GX*?%[X7Z]X=LK67X??%G6;K2OLFII+ M>--J*75OI>H%OD>S5(_+1T>)I$FB*XD^2C_P2!_;N\(?$_P7\2_!'BCX>:UK M?P?^$WAC0/ACXA\3_$O6UBO-7TJ[NIWDU/2QIDL4EH\.HW5I$6GGN8$ACECE M265C'QT&U."GTE*[W]V4:NMNKBW3LDW>T6N27/?JJ\KISY=W&-EM[RG2NK]. M9*=V[>-4\76W@6/QA<:%J/PG\1V!?&C]MG]K7Q=^TA\,O"'[(GQ<^%>D M>`?BM\+->\8:'JOQ1^#FO"\LDTM;$_Z0'UC3W2&?[:'#/;QM"D>=LP8$:_[3 MWA&X_:2^*OPK^'WG MD0,BL=_R/M]8^+W[>_[*?P'\>)\//BG\2;K3KH/8IJ.J1>%M3NM(T9KV416@ MU+5+>V>QTLS.RA!=S0[@Z$9#*3X+^U/_`,$Q1XZ_:WTKX_\`@C]DG]G3XJ>% MI/AG9>#[GP/\9M(2W3PQ]@NI9;*\TF5-*OU$9BN[B*6T\N`-Y-L5F`4@)\8O M^"?/[3NNZU\=O@]X`U+X=7_PK_:1BLSXMU#6;Z\L=8\(2G2[?2;\V%I':W$. MI1O:VD#V\4MQ:BWEW@F5:Z)2A5JZ4J"@E% MRT2C=[[I7:6CE:5URZ-I]N MFFN@GWG>>9]L,48>.!?E70]+\1_MB?M-?MK?L)?LX>,/A)?^%/%VN:#H?C7Q M%<_$EYM=T+3U\-Z9IU\]II,%A-'=R1F*>`/-=VZQW2,KJ3$RMZ?\8O\`@F=^ MTY\<_#_[3W@SQ)8?"VRT_P")WC#PUXD^&G]JZS=Z];W4V@P:=#;V>NV4^FPI M]FNO[+B,XCDN"JW4B`2^6&DQ@[TXU%]J"=[::NDV^7>\5SVU]Y7BM;N6T8Q] MIR3TVNNL7T5^M[N^B4;)R6JM]=?!O]HSX:_M0_#_`%CQ/^S]XP=KG3+ZYTF\ MA\2>%K^PN]%U2-%;R;_3+U+6[@8"2*7RI!"SQ2(RL%D5S\3?LK?\%*?VH?C3 MXEU[PWXR_;3_`&:6\4^"_B1K^C^(/A#X;^$FM7/B>_T?1;^:.[O8+>V\1W5U M!)-:6\LL*FRG4RO#$/-+KN^K?V/O@5K'[/?PAUO1]"_9$^"/PGU*\O9+NV\& M_!^[9-(NIQ`J)/@X']@']F[]JW]G/X(^/_``W\ M;/AO\+[CQ-??$3Q-XR\$1Z!X]OKVT:YU:ZN[K[-<7,^C0268C-Q]G,\4,[/& M\C^6O^J8J.5*K.=-7M2;2>J=2\.6RZ_;NOY=):V:QB_:4(IK5U$NSY+3O=]/ ML*_?6.ET^A^%G_!5W]ACXUW_`(+M?AC\3?$.J6OQ#U%-/\&:X/ACXBATG4[Q MH)I_LJ:A+8+:+.J6]P&B>5722WFC8+)$Z+!?_MP?!CXN:I\)?$GPD_:0UKPW MI>O_`!9U'PQ(]0LK.^2XT*X-Y:QR:/+'/$9_-E6,N;%XUW!FQ MY-\._P!@S]LGP)^PE^SI\)6TCX97/Q'_`&?/'&GZO;ZHKHFO6UO97MDP M:^_L@SVLCQ7SN%%I*JO&J[F#$C(\!_L&_P#!0#1$\"1>)O#?P=D;PY^UIKGQ M6U>>P^(NJ@/INI?VEFUAC?1>;B/^U)!AG"/]E0[T\XB+2*3Q+C]E323_`+O- M1U\_=E5;71P2:ULZJ\D:3<'=N,NG7EKZ>6L:*3T?OMQ=[./TM^Q5^W5\-?VY M=&\7ZY\-_`GC?0HO"'C"^\/W4?C/P7J&DM/):SR0-)&;J"-&)DBDW0HS2PC8 M)UAD;RQXM\+O^"A7Q5^'W[0'QKT/]M'XF>#(/`/P[^)FC>"/#MSX*^$.NB[F MOM6L[*[LI;VXBU"_CMX@;Q;0N\$432F-C+%YBPGTW]D?X!_M)?LZ:#\8/!.H M6O@>2WU_XB^)?%GPZUV'7+RY>XDU:^NKT0ZE9&TA%JL#RQ(3#?%#7_`(?6WQC^+OCWPSXPNM+T#5;YO#-G?:&-(\FW M2ZFM/M0AN&THN[&!FA%SY8$QB\V7.D_>A.6RIT^;K[TG3Y[+^9)5.ED[66R' M44/:3@MG4DH_X4Y/_`(C7-IKMUJ%AI\TEOX9U*ZT[3;R^<)96U_J,%N]GITUPS((H MKJ:)Y/,3:"'7/R=\4/V%/^"D'Q0T+XZSW_@?X(VFI_%SXF^!O%NFVL/Q4UAH M--30_P"RO/M)93H&Z4O_`&2@298US]I8F-/*`D][\%_!;]L;X(_M0>/O%?PN MTGX;:W\/_BMXDTWQ%KESXA\37]GJ_AC4$L+;3[U+>WAT^6+586ALK:2+S+BS M9':13E0IJJ";C%5--4WZ\M*\4_LJ_M+2=XKE6C+?\`9NM_'UR/%-[<75MIGG>'-0CTS4;NU0O=65KJ MCP"QNKR%4D,MI%.\\8AEWQKY4FVK^WO\5OB[\!OV-/B5\>/@;J?ANV\2>!O! MNH>(;-?%FA7&HV-RME;O$OBM/HUXGCV-+Y9KQM)DAL-!O+B=UN9[ MBV2ZMYY9?LS1JMG(R^4WO_[57@_X_P#[5G_!.WQ9\-OAW\/_``[I/CGXF_#2 M?2)M&\7>)+NRLM'DU&R:&G>+3TU5[?$FEY]X+_`."L MW[._PM^'^F^'/VQ?C*D/Q'L_A]IWC#Q=9^%/A#XCAM(M*O(S,M_;0JE\9;&! M3Y4]W'/-##(C><:?9;B1]KNC%!E7^?Y&Q\A^)?V"/^"DGC#P]\1=)U#X>?`^ MRE\8?LG6/P@T\P_%_6)EANH#>J=0DSX;3$934)6$8!;=;HN<2EXO8_#'[/7[ M=GP:^+.B_'7X4^%?A1K%_P"(?A)HGA'XC>%O$/CO4K2#2KW29;A[6]TV_BTB M9[V)EOKM9+>6WM%W=\JO??FY:+EZZSJZ+5^SLKMI/ZTMKFVO;:.\L[A)H9D#Q2Q.&5U(R& M!'!!'.:?6%X"O/B7>6-\/B?XK=K%VOIM_7]='W2+C>VN_P#7];M=FPKY8_X)?7_F>'_B'I?] MMWTGD_%?X@2_V=(G^C0;_B7XT'FQG>BBBN8V"BBB@`HHHH`****`"BBB@` MHHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`Y?XOR^3 MX3M'^WV-MGQ3H:^9J%IY\9SJMH-@7RWQ(V=J/@;)&1]T>W>O45R_Q?E\GPG: M/]OL;;/BG0U\S4+3SXSG5;0;`OEOB1L[4?`V2,C[H]N]>HKIDO\`8X?XI?E# MR_7Y+KC'_>)>B_.7]?UH4445S&P4444`%%%%`!1110`4444`%%%%`!1110`4 M444`%%%%`!1110`4444`%?+'_!+Z_P#,\/\`Q#TO^V[Z3R?BO\0)?[.D3_1H M-_Q+\:#S8SO.9'V;7&Q<"&+YGSA/J>OEC_@E]?\`F>'_`(AZ7_;=])Y/Q7^( M$O\`9TB?Z-!O^)?C0>;&=YS(^S:XV+@0Q?,^<)TT%^ZJ_P"'_P!NCY?Y>O1X MU?CAZ_\`MK_KJ?4]%%%!OB(W MA'6;Q8CIGB>+1+749-+GCF25+B.WNT>!Y4*!D,BLJN%;:=N*\#O_`-B']O.3 M[;_9?_!:#XKP^9?!].^T?"SP+)Y%M^\S')C1%\V3F+]XOE@;'^0[QL^IZ*Z* M>)JTX*"M:]]8Q>]NK3?1:;;]W?*5&$Y9CDQHB^;)S%^\7RP-C_`"'>-GU/10L7572/ M_@$?+R\OS[L/80[O_P`"E_G_`%\CY8O_`-B']O.3[;_9?_!:#XKP^9?!].^T M?"SP+)Y%M^\S')C1%\V3F+]XOE@;'^0[QL+_`/8A_;SD^V_V7_P6@^*\/F7P M?3OM'PL\"R>1;?O,QR8T1?-DYB_>+Y8&Q_D.\;/J>BA8NJND?_`(^7EY?GW8 M>PAW?_@4O\_Z^1\L7_[$/[>9CD MQHB^;)S%^\7RP-C_`"'>-A?_`+$/[>9CDQHB^;)S%^\7RP-C_(=XV?4]%"Q=5=(_\`@$?+R\OS[L/80[O_`,"E M_G_7R/EB_P#V(?V\Y/MO]E_\%H/BO#YE\'T[[1\+/`LGD6W[S,1;?O,QR8T1?-DYB_>+Y8&Q_D.\;"_\`V(?V\Y/MO]E_\%H/ MBO#YE\'T[[1\+/`LGD6W[S,7E^?=A["'=_P#@4O\`/^OD?+%_^Q#^WG)]M_LO_@M!\5X?,O@^G?:/A9X% MD\BV_>9CDQHB^;)S%^\7RP-C_(=XV%_^Q#^WG)]M_LO_`(+0?%>'S+X/IWVC MX6>!9/(MOWF8Y,:(OFRPAW?\`X%+_ M`#_KY'+W_P"Q#^WG)]M_LO\`X+0?%>'S+X/IWVCX6>!9/(MOWF8Y,:(OFR-A?\`[$/[>__`#*4?\,;_M%?])8/C_\`^$Y\/?\`YE*% MBZJZ1_\``(^7EY?GW8>PAW?_`(%+_/\`KY'+W_[$/[>9CDQHB^;)S%^\7RP-C_`"'>-A?_`+$/[>9CDQHB^;)S%^\7RP-C_(=XV=1_PQO^T5_P!) M8/C_`/\`A.?#W_YE*/\`AC?]HK_I+!\?_P#PG/A[_P#,I0L7572/_@$?+R\O MS[L/80[O_P`"E_G_`%\CE[_]B']O.3[;_9?_``6@^*\/F7P?3OM'PL\"R>1; M?O,QR8T1?-DYB_>+Y8&Q_D.\;"__`&(?V\Y/MO\`9?\`P6@^*\/F7P?3OM'P ML\"R>1;?O,QR8T1?-DYB_>+Y8&Q_D.\;.H_X8W_:*_Z2P?'_`/\`"<^'O_S* M4?\`#&_[17_26#X__P#A.?#W_P"92A8NJND?_`(^7EY?GW8>PAW?_@4O\_Z^ M1R]_^Q#^WG)]M_LO_@M!\5X?,O@^G?:/A9X%D\BV_>9CDQHB^;)S%^\7RP-C M_(=XV>C_`+('[+&N?LH^&-5\&WOQOUCQK9W^L:EJ<-WKEA!;W37>H:SJ>KWE MS.+41VS32W&IN"8+>W0)!$HC`48P/^&-_P!HK_I+!\?_`/PG/A[_`/,I6A_P M3T\<_$OQ]^S?/>?%SXCW_B[6]%^)_COPVWB35;&RMKJ_M=)\7:OI=H\T=C!; MVXE^RV<`8Q0QJS*6V@DTGBJK@X:6>GPQ79[I7Z+\>[N*A!24M=/-^?GY_P!6 M1[?1117.;!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!11 M10`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`5\XW/_*72 MS_[-PN?_`$_P5]'5\XW/_*72S_[-PN?_`$_P4`?1U%%%`'@'Q&_Y2F?!O_L@ M'Q+_`/3YX$KW^O`/B-_RE,^#?_9`/B7_`.GSP)7O]`'C/A;]K#Q!X@_;J\3? ML9ZG\#=2TBST'X>V?BC3O&M]K5H\6M">[DMGC@M86DDCCC9,&2=HG9PX$.P) M+)R&F?\`!0;4;WXH6<]W\'[.W^$NJ?$RY^'FE?$4^*B;V7Q%!-+:MYFF&U"Q MV#WUO-9)5IQ&3;K$_G"+3O"_QP7_`(*T:E\4IOV<_$T?@&;X-6WAB'X@ M-JVBFP>^COI;]L6XU`WPCQ*(0QM1^]5N/+Q*?/\`PO\`LL_M&65SH7['>I_" M^\;P+X=^/MS\1F^*LNKZ=]BO-*_MJXUZUTQ+9)_MHOUO9HK=]UNEOY$#RB=G M80$P_O1H<^[;YO\`#[9QN^TE2]Z*TN[.TMFL1>*K^SZ6Y?7V'-9=TZMDW?36 M.F\?1=,_X*#:C>_%"SGN_@_9V_PEU3XF7/P\TKXBGQ43>R^(H)I;5O,TPVH6 M.P>^MYK)+D73RM.(R;=8G\X9G[-?_!32P^./Q-\1:%XW^&&G^#O"-EH_B35_ M#OBNX\7?:99K#0=:?2-1EU*V-K$FEL)E$D:B>X#1;R[1.C1UQOA?]EG]HRRN M="_8[U/X7WC>!?#OQ]N?B,WQ5EU?3OL5YI7]M7&O6NF);)/]M%^M[-%;ONMT MM_(@>43L["`^SZE^RMX)O?CCKWBWP'\"O"_@U+]K?5_$OBC3=`T^&Z\R-[+`//F@LY?WY\[:TDQBVGRTD$LPERTE.2O\6G5KV<7%M:6DIN>EXIJ*C; MWN-GT_B335^J<%#6S:NY65G$]6^&WBCQ!XU\&VGBKQ'X0DT*: M_,DMOID\Y>:.V+MY#3`HABF:+8[PX/E.S)N?;N.[7R%_P2R^%?[<7PN?Q58? MM;CQ:MNVB:)#)/XR\?IK[ZQXGB^UC6M7TXK=7!L=*N=UB;>S;[-Y7ER?Z';Y M._Z]K:I&,)V3OZ?\,OQ2?=)Z*(MMN_\`77SVVW>JW>[****S*"O`/^":G_)N MOB/_`++_`/%C_P!6%XAKW^O`/^":G_)NOB/_`++_`/%C_P!6%XAH`]_HHHH` M****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`H MHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"OG&Y_Y2Z6?_9N%S_Z? MX*^C9!(8V$3*KE3M9ER`>V1D9_.OYW]9_P""SO\`P6JLO^"XB_LG+\`/@D_Q M9BNF^&ENO_"*:R-.DTR2]2^&K&/^U?-"?9U6ZW;\"`G*YYH`_HAHIENMPMO& MMW*CRA`)7CC*JS8Y(4DD#/;)QZFGT`>`?$;_`)2F?!O_`+(!\2__`$^>!*]_ MKYP_:?@^-W@+]L_X6?M%_#7]E[QA\3M$T7X8>-?#FMVO@K5]!MKJPNM1U'PO M=6CNNL:E8H\3)I-X"8W=E94!4!@:T/\`ALC]HK_I$_\`'_\`\*/X>_\`S5T` M>_T5X!_PV1^T5_TB?^/_`/X4?P]_^:NC_ALC]HK_`*1/_'__`,*/X>__`#5T M`>_T5X!_PV1^T5_TB?\`C_\`^%'\/?\`YJZ/^&R/VBO^D3_Q_P#_``H_A[_\ MU=`'O]%>`?\`#9'[17_2)_X__P#A1_#W_P":NC_ALC]HK_I$_P#'_P#\*/X> M_P#S5T`>_P!%>`?\-D?M%?\`2)_X_P#_`(4?P]_^:NC_`(;(_:*_Z1/_`!__ M`/"C^'O_`,U=`'O]>`?\$U/^3=?$?_9?_BQ_ZL+Q#1_PV1^T5_TB?^/_`/X4 M?P]_^:NM#_@GGX&^)G@+]FZXL_B[\-M0\(:WK7Q/\>>(V\-ZM?65S=6%KJWB M[5]4M$FDL;BXMS*;6\@9A%-(JLQ7<2#0![?1110`4444`%%%%`!1110`4444 M`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`'RG\'? M&_\`P4;_`&EM'\1_$OX>?M!?!/PGH5I\3/&'AO2-"UKX&ZOJ]W#;Z+XCU'1H MY)KN+Q1:)-)*M@)FVP1A3*5`.W<>M_X5S_P5,_Z/(^`'_B-6N?\`S94?\$U/ M^3=?$?\`V7_XL?\`JPO$-=)^W3^T1X^_9*_93\:_M+_#_P"%^C^,9?`VA7.M MZGH6L^*I='6>QMH7FG\J>.RNR9MJ82-HU5B>9$'-9U:L*--SF[);ETZ^#G[:W@?PA\(-6TGX8Z=\1+;6H?B4NI:#/X=NYS;>=+?7EG MI[6L\5P/+DCDAV8=&25]Q"^[Q?M._LUS_!,_M*P_M"^!G^'*P&8^/U\669T0 M1"7R2_V[S/(VB7]WG?C?\O7BMJD)4K\^EKW\K-Q?_DT9+U3[&4)QJ6Y>MK?- M*2^^,HOT:?4\X_X5S_P5,_Z/(^`'_B-6N?\`S94?\*Y_X*F?]'D?`#_Q&K7/ M_FRK>T_]J#PAXW^-'@FQ^%?[1'P=U?P3XC\#:KKDD-OXMCN-:U1(IK9+>^TT M0RF&?3T'VM;B;G:_D!6'SU\T>$?^"I7CG]H_QEJWC[]E3]K/]E`?#?0_B=%X M0U;3O&_BB>/58T_M&.WCOH+RUO'@N6U!(;\65LUO"'(AD6>=0\=3!<]106[W M\ES^SU_[?:5M];VLI6J5HT^=[:+YN/-_Z2F[[>=VK^\_\*Y_X*F?]'D?`#_Q M&K7/_FRH_P"%<_\`!4S_`*/(^`'_`(C5KG_S95Z9XN_:._9Z^'_Q/T/X(^// MCQX,T3QIXF0/X;\(:OXHM+;5-64LR@VUK)()9QE&&45N5([&O+OVY?VO/C9^ MROXH^%.A?"[X"^%?&5O\3_'\/A`77B#XBW.AMIE]/;SW$,A2'2KT30^7:S[F MW(RMY8".'9D2:;BE]J2BNW,W:U]EJTM>HVFE)O[,7)_X4KMV]$WZ(E_X5S_P M5,_Z/(^`'_B-6N?_`#94?\*Y_P""IG_1Y'P`_P#$:M<_^;*NR\`?MI_L=?%7 MQ%HG@[X9?M9?#+Q'K/B2"YF\/:3H'CW3[VYU1+=G6X>VCBF9YUB:.0.4!"&- M@V-IQY7^U9_P4+T?X,_M<_!7]D_X9>/?A=JNN^./B`-(\?\`AG4/&"OXDT?3 MGTN[O(+F#3(B'".T"[KF9@D8:-1'*9P\1=<\(_SM)>K=ONONPL^6;?V$Y/R4 M5=_/31=]#HO^%<_\%3/^CR/@!_XC5KG_`,V5>*3_`/!+?]K2X_;S@_X*/R_M M,_`0_$ZW\"-X5COO^&;=9^S_`&4R[_M'E_\`"89^U!"T`FW9\EBF,8Q]1^%_ MVQOV1?&Y\,+X+_:H^'&KGQM?7=EX-&E^.+"X_MZYM1\`/_$:M<_^;*M;_AY'_P`$[?[* M;7O^&]O@M]A6:>%KW_A:6D>4)($CDF0O]HQNC26)G&'?#?@KX_P#@G6-1\7Z(^L^$[#2_%5G<3:WIJ'#WMHDKL>;?\*Y_X*F?]'D?`#_Q&K7/_`)LJ/^%< M_P#!4S_H\CX`?^(U:Y_\V54=%_:__:%UW_@H#XL_8MM?V=O!BZ1X9\#6?BF/ MQC)\3[O[3=6MY)=V]K&;`:,5CE-S9R+(/M+*D3+(K2MF(4_V0?\`@H%J_P`8 M_@=X[_:"_:N\&^`/@[X;\#>-]5\-7>K2?%-K^R$VG7TMA=3SW-YIVGQVT1GC M41$EBZN-PC;Y"HRC.',GIRN7;13Y&]>T]&MUVMJ5*,H3Y6M;J/?64>=+3O'5 M/;YFU_PKG_@J9_T>1\`/_$:M<_\`FRH_X5S_`,%3/^CR/@!_XC5KG_S95GR? MMLZQXM_;/^#WPK^#.I>`/%7PE^*'P^\3:Y:^.M!\0MJ-Q>7FF3V,?EVY@_T9 M;<"ZYE$DS2/N7;#Y.Z;!\9?\%(O#L?\`P44T#]CSX;?%'X1:MH$7@#Q/JWQ` MNX/&R76L^&M3TQ[0+!?6T3!--MPD[LTDS.\A60;(1`6E4I**5^JF[=?GO6M;OOT\^S.N_X5S_P5,_Z/(^`'_B-6N?\`S94?\*Y_ MX*F?]'D?`#_Q&K7/_FRJ?X;?MU?L_P"@?!SPKJW[37[8_P`![+Q7?>`K;Q)K MESX:^(5I'HUQ:,PADU*Q:[G$CZ<9\QIOY?YK[UW1R/_"N?^"IG_1Y'P`_\1JUS_P"; M*C_A7/\`P5,_Z/(^`'_B-6N?_-E7M_A+Q=X4\?\`A;3O'/@3Q/IVMZ)K%C%> MZ1K&D7L=S:WUM*@>.:&6,E)8W4AE=20P(()!K0H:<79[B335T>`?\*Y_X*F? M]'D?`#_Q&K7/_FRH_P"%<_\`!4S_`*/(^`'_`(C5KG_S95[_`$4AGSG\-OB3 M^V1X!_;(\+_LY?M&_%#X9^,-)\8?#/Q-XDLKWP3\,]1\.W&GW&DZCH%J(W-U MK>HK/'*FM.>%B*&W7E@Q`^C*\`^(W_*4SX-_]D`^)?\`Z?/`E>_T`%%%%`!1 M110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%% M%`!1110`4444`>`?\$U/^3=?$?\`V7_XL?\`JPO$-._X*C>#?BQ\4/V`?BM\ M'/@?\']8\;^*/&_@C4O#VD:/HVHZ;:LDUY:RPI/+)J-U;1+"C,"^':3!^5'/ M%-_X)J?\FZ^(_P#LO_Q8_P#5A>(:]5^-_P`;_A7^SA\*M9^-GQL\96^@>&-` MMA/JFIW,;OL#.J(B1QJTDTKR,D<<4:M)([JB*S,`<<13A6H2IS=DU9^C_P`] MOR-L/4G1KQJ05Y)IKUZ'Q[I?[$-U\$OV0T^*O[/'[&>NW_QF\00^%K7Q;I_Q M.\96WBOQ)9VFGW\19["YUK5[K3TN+0"2\LX?MB6J3)"[*S1^2>!^`_[-'[<7 MPZ^!WA;7O$?[,7C/Q#K/PV_:BUOQ])X1\7^(_"L>I>+M'U9]3"W,#:=>KID6 MHVG]I+OK/X?_`+%_"?Q%_8Z^,GP['C:_%KX6 MU3QCHFF/:W1^RS71,[:=J%VVFG9"%$5^MM*\DR1I&SK*L?N]=CD[ MVZ1]Z$VDNFL%=;J[ZVMS0C&GAXX?=)?^!)QG3NVM[J4E=:77K?XSL?AI\7+C M]MWX#_&#P/\`L!ZSX#\&Z+X9\=_\)7!:ZEX9A&CW^LW%C,CW4%IJ)\VXFDL9 MY97MA_:;'C?1='N?%/ MA+==Z3/XRCUUG$B:VT2216UOY;H[J3--&$\Q-\B?I?165-*G*,E]G1>GM8U? M_2HI?X=-]39SDX*+Z24OFHSC_P"WMOSM\_D+2/A9\6O!/[5?Q.TSX@?L.-\3 M_!WQ5\;^'O%FA^-9-1T*2V\.SVMC9VHM=3M[^[6X1K&>P%U!+9077-SE=LBL M3<_X*;^#OV@?&WCC]GV]^"'[,/BKQ_:^!?C59>,?%%UX?UG0K1;.QMK&^MFB M`U/4;1I)G:\1E5`R;8I-SH=BO]8UX)KO[?WA27XH>(_AO\&OV?\`XE?%"W\# M:@MA\0?%'@'3-/ETWPY=[!)):LUY>V\VH7$43!Y;?38KR:,E8V03,L12DHRI M13^!QDO2GR\KETLN6*"?$L/\`P3G\9Z-J7_#;'B3XF>*[^/7_``>LXT*_BU2&">>2 M'6F:>41:E;QM&I=@EG,HR%A$NE'^S?\`MG>!OB=X`\#:K^Q3XB\7#P9^V!K7 MQ&U#XLZ%XD\-BTU;0M2BU5(I62]U2"^2[@CU&UMI(?LY7RM/_=22@1JWZ#?! MOXJ^'?CC\*O#_P`8/"5AJ=IIOB32H;^SM-:T][2\@210PCG@?YH95^ZR-RK` M@]*Z6JI)X=PBE\#C:_\`<]BHI];+V,+K2[YK]+.M4>)4V_M\VW]_VS;7_@^: M7ER]G?\`-YOV>OVT/!/Q2\)^!],_8T\4:YH7A7]M#7/B7=^--/\`%7AR.SN] M"U1=7V/;PSZG'=&6%]302QR11G;"[1>:2%./\=?V0/VWO&8^)'A;X3_`+QPG M@M?$T7B+2O!_CSQ+X7OO-U.+QGI6JRGPO?QWGVJWM;VVL[RXFL]5>"..=[9( MBBAPGW?^UW^TOIG['W[/GB3]I#Q%\+?%/BW1O"6G2ZCKVG^#SI_VRWL88VDG MN0M_=VL;I&B$E%D,AX"(YXK1\'_'KPSJ_P"S];?M'?$G1;SX=Z(^@-K.J0>- M[ZPBDTBR5#(9;J6UN9[9%$0$A*S.%4C<005&5%QH4DT]*5KM_P#7N$(MWT=E M133M;FBWTLKJ2G5Q"E)7.+KPU?/JFEV^@V^ES:?<#2]3O7`WB[8(W[ MKR[ACN#.Z5UO_!.+X3_%KPGH.J7/QB\:VWB.U\$75YX#^&.JPJ2UQX=L;R14 MNIBP#?:Y"D%M.P^24Z3%*N0^3VG[)4555(UPBA54`*,`#BMH)PE*-K.G&$&MGM M)1;ZW45.*W5I3ND[,QJ/VD*SCU"RN=1O)I8;:[U![ MJ%)UN8($;'4IK.&ZL([Z"=(+F2W@\VV5$D(`DB\%7.L66B6D1N(8=49I M;F6;1;B^N#9I/&&U"$"25_/9*G[*_P`"OVS_`(,_$[]FVQ\=?\$^?%9;X(?" MSQAX2\8^--"\4^%9K/Q%>W9L'AU"T,VKQ7CI=RV,TS_:((9$FO5WKCS)%_2Z MBI]FO8QI=%'E7IRSBE\HSDO/3FO96;FY2;>[;?SDU)M]VVD];V>UKN_YA_LT M?LT?M7_#D_L?2_%;_@G5XNU1O@=\'O%FE^(\Z[X0N3I^L7:6L5J+;S-9&YY( M[*91*F%5;Z(,RYG$7CW@KX#_`+5_A?X0V/[-7B/]EOQAI\MO^S1X>\(_M!Z; MI\O@W6=0ATN"_P!9,#6<]QXLL8]*E$(NGANBM^C"2-GMXFMMLO[.UY_\6/V3 M/V5_CWXLTCQY\=/V:/A_XTUS0`!H.M>+/!ECJ-WIH$@D'V>:XB=X<.`XV$?, M,]>:T*/#MEJVDIJ=JT-R+:X@2:(2QMRC['7(/0YZU MTM%%54E&51N*LF]%O;Y]3GIP<*:B^BMV"BBBH+/`/B-_RE,^#?\`V0#XE_\` MI\\"5[_7@'Q&_P"4IGP;_P"R`?$O_P!/G@2O?Z`"BBB@`HHHH`****`"BBB@ M`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`/ M`/\`@FI_R;KXC_[+_P#%C_U87B&LK_@JO^S[\:?VA/V7;*W_`&>](@UKQ=X( M^(?ASQKI/A*\OTM8/$K:3J4-XVF/-(RQQ^:L9V-(0@E6/<5&675_X)J?\FZ^ M(_\`LO\`\6/_`%87B&O?Z33YHR3LXN,D^SBU)/Y-(::2::NFFFNZ:::^:;6F MO;4^%/BM^U7^T'^U#\:?@5H/[)]Y^T?\,HM3\5A/C#XAS6GVA+F*WM@;.\=)%F?RA(2DJ^!_!G]E^UT;]ACXZ>+OV:/V,?% MFD^+A\;M7DN?#]U\--1\.:MK?PZE\4QW\^AZ.FJ6]N$M;G2XY=MG;[8_,F=2 MBS3/N_6>BB"4).26KOOJM90;6NKA[EN5MZ3J)NTK*G-M*+V3B^U^55%?33F_ M>7YDEK&+2NKGY2_&+]DGPYXN^$?QB^(?[)O[)WB+0OA-8^(OAUXD\$?#2;X1 MW^CW-MXBTK65FUS5=&T"YM(KJTD?2_(MRUO;Q_:G2<*)"S/)Q/[5GASX0^*O M@_\`M<>.-3_9?\<>&?#6L_M`?#3QEX3OM6^#FN:!A^ M--5T1GN;=Q)`[RZ9EMME=.7,^LI.762EX%_P3?^$WA3P;^T3\:/B/^S;\$];^ M'/P6\46_A_\`L7PUKO@K4/#1OO$D$-RFJ:I!I6H06\]JDD#:;"\K0I]IFM9) M/F(,DG+_`+%_C;6O^"&$`)'*C-$X*_<6DZ9;:+I5MHUG)$OA'IVI^/-8L/!VJZLE[<10K%< MB.[M+62*_O3*C_Z-"SW4@Q((B'#'W&L[Q=X0\)_$#PMJ/@;QYX7T[6]$U>RD ML]6T?5[*.YM;VWD4K)#-%("DD;*2K(P(()!%1%RIT90@EJ[^6\VOQG:3^U&, M5\2:I'E#/WKI.DZ5H&E6VA:%IEO96-E;I!9V=I"L<4$ M2*%2-$4`*JJ``H````%6*SK485:=>FG[M1)>:Y5/E^=YMOT5K;O2A7J4JE"I M9XK?.]]E^./[5/P/^&GC;X#^(O!/B3]@#QQK7@&\_9,ETG]G M?0-'_9UUR2/POXW5]075`VE0Z;]HT:_GN&TV2*^FAA22..1DG*L^[]/OV:/B MEH.O_#OP5X%C\-^+[#4O^%=Z=J4D>O>`M7TV.&/8L!AEFN[6..*Z#HVZT=EN M%7#F,(0Q]0HKKE5_UX!\1O^4IGP;_`.R`?$O_`-/G@2O?Z`"BBB@`HHHH`****`"BBB@`HHHH M`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`/`;G_@ MFA^R\^LZOK6CZO\`%[0_[316=EJ\5O!Y MMS/-,RQ1HN^5C@9I/^':G[.O_11OC_\`^)8?$+_Y>U[_`$4`>`?\.U/V=?\` MHHWQ_P#_`!+#XA?_`"]H_P"':G[.O_11OC__`.)8?$+_`.7M>_T4`>`?\.U/ MV=?^BC?'_P#\2P^(7_R]H_X=J?LZ_P#11OC_`/\`B6'Q"_\`E[7O]%`'@'_# MM3]G7_HHWQ__`/$L/B%_\O:/^':G[.O_`$4;X_\`_B6'Q"_^7M>_T4`>`?\` M#M3]G7_HHWQ__P#$L/B%_P#+VC_AVI^SK_T4;X__`/B6'Q"_^7M>_P!%`'@' M_#M3]G7_`**-\?\`_P`2P^(7_P`O:\4U3]C#X<6__!1C0_@/#\9OC^/"EY\% M-5U^YTK_`(:E\>G?J,.KZ?;QS>;_`&UY@Q%/*NP-L.[)4D`C[JKYPUK_`)2[ M>&O^S<-<_P#3_I-`&A_P[4_9U_Z*-\?_`/Q+#XA?_+VJ7B3_`()\?LJ>#?#M M_P"+_%_QD^.6E:3I5E+>:IJFI?M=?$""WL[>)"\DTLCZ\%CC1%9F=B`H!)(` MKZ,KP#_@K!_RBS_:5_[(!XR_],=Y0!X!_P`)M_P0J_Z2X_\`G13Q/_\`-/1_ MPFW_``0J_P"DN/\`YT4\3_\`S3U]_44`?`/_``FW_!"K_I+C_P"=%/$__P`T M]'_";?\`!"K_`*2X_P#G13Q/_P#-/7W]10!\`_\`";?\$*O^DN/_`)T4\3__ M`#3T?\)M_P`$*O\`I+C_`.=%/$__`,T]??U%`'P#_P`)M_P0J_Z2X_\`G13Q M/_\`-/1_PFW_``0J_P"DN/\`YT4\3_\`S3U]_44`?`/_``FW_!"K_I+C_P"= M%/$__P`T]'_";?\`!"K_`*2X_P#G13Q/_P#-/7W]10!\J?L8Z=_P2Y\2?'*; MQS^R'^UU8_%/QYI7A.\L6$G[3FJ^/+G3-(N;FRDNO+M[[5KT6L`?$;_`)2F?!O_`+(!\2__`$^>!*]_H`****`"BBB@`HHHH`** M**`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHH MH`****`"BBB@`HHHH`****`"BBB@`KYPUK_E+MX:_P"S<-<_]/\`I-?1]?.& MM?\`*7;PU_V;AKG_`*?])H`^CZ\`_P""L'_*+/\`:5_[(!XR_P#3'>5[_7@' M_!6#_E%G^TK_`-D`\9?^F.\H`]_KX_\`^"F'POU/Q%\1?!/Q3^+G[*%E\=/@ MAX7\,Z^WCCX?W=WH8&F:BR6\EIKS0:[=VEC.D%O#?0%GF$L(O-\:D&0C[`KS MWXY?LL_`[]I6XT@?'/PI=^(M/T:8RQ>&[SQ!?+HM\V]'7[?IDI!'CC>, M7<,PB=0Z!6YK.I!S:V^:NM4U?EVE:]TKK6S332:TIR4;WO\`+1[I[]+VL]]+ MIIIM/\^O"7A3XG_%7]C_`/9__:`_:;_8\U#XS?!72O`OB>[UOX9>,]1T5]1T M6UEN1-X?UN\37[VWL[M[;1XGMWEDN&FC-V94WEI6K/LOV//V@OVTOV)_@?\` MM":_<:%8:5H_P_UQ--3XR:SWO-'\46LB070GU>STJSCC!D>%F M\W=]K7=*)/T5^.'[*_P,_:2FT>/XX>$KKQ#IVBS&2'PU=Z_?+HM\VY'7[=ID MI!'BC>,7<,PB=0Z!6YKJO&7@+PMX_P!,MM%\5V$ES9VNH6][':QWDL,; MRPN'C$BQLHEC#!28GW1L5&Y3@5T>T:J.<='S\ROKI>=W)Z<[M-I7LXV]V2NG M#GY+TXPD[KEL^B^S9):\JO&[MI*_O1?OVH+K;V\GD>7;Q3K$(#-)]>5 MY=\4?V+_`-FKXS?%_0OCO\1_AN;_`,3>'9+1[*[CUF]MX+EK27V"B]TY>G+IR]O>OSHS>#-%\42?#S3?);PK=7$.HG4VA$ M`0J+6".Z<@%E\MXP<@B@#^D6O`/^"L'_`"BS_:5_[(!XR_\`3'>5[U8P36ME M#:W-[)`?\`#M3] MG7_HHWQ__P#$L/B%_P#+VC_AVI^SK_T4;X__`/B6'Q"_^7M`'O\`17@'_#M3 M]G7_`**-\?\`_P`2P^(7_P`O:/\`AVI^SK_T4;X__P#B6'Q"_P#E[0![_17@ M'_#M3]G7_HHWQ_\`_$L/B%_\O:/^':G[.O\`T4;X_P#_`(EA\0O_`)>T`>_T M5X!_P[4_9U_Z*-\?_P#Q+#XA?_+VC_AVI^SK_P!%&^/_`/XEA\0O_E[0`?$; M_E*9\&_^R`?$O_T^>!*]_KR'X._L-_`'X&_%"/XS^$9O'^J>)H-`N]%L]3\= M?&#Q-XG-I8W4]K/H`****`"BBB@`H MHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BB MB@`HHHH`^4_@[XW_`."C?[2VC^(_B7\//V@O@GX3T*T^)GC#PWI&A:U\#=7U M>[AM]%\1ZCHT1\`/_ M`!&K7/\`YLJ/^":G_)NOB/\`[+_\6/\`U87B&NQ_;(_::T']CS]F[Q+^T/XC MTB*_@T*.VCAM;G4X[&W:XN;J*T@-S=2`I:6PFGC,UPRL(8A))M?9M*E)15V5 M&,IR48[LX[_A7/\`P5,_Z/(^`'_B-6N?_-E1_P`*Y_X*F?\`1Y'P`_\`$:M< M_P#FRKSO]I#]NW]M+X(_!6\\9ZE^RAX0T;5=)\4^#;2_UI_'5QK'AZ_T[6M: M6PEETRXCL[6>\N(4>'=%<1681KCS`9HXXQ<_06C_`+6G[*OB'X7:U\<=`_:9 M^'U]X*\-W4MMXB\86?C.QETO2YHRHDBN;M93#`Z[TW*[`C>N<9%-Z1DW]EM/ MRLHM_+WEKWT)7O6MUV^>WSTO;MKL<#_PKG_@J9_T>1\`/_$:M<_^;*C_`(5S M_P`%3/\`H\CX`?\`B-6N?_-E7>MOS:7KH<9_PKG_@J9_T>1\`/_$:M<_\`FRH_X5S_`,%3/^CR/@!_ MXC5KG_S95W&N?MB?LC>&=9\/^'/$G[4WPXT_4/%FB_VQX6L+[QQ813:SIWEM M+]LM$:8-<0>6COYL89-J,#= M6U;[+I_BV.[US5S#<6\5O=Z8L$C17%BA^V)<2_-MD\E5(^<4TFY*?!6F:[X>T2/7/$/Q7 MN]$N[Z_U6\M[1/(M8M$O$>"&6ZA\R4S@\2!49DP>E^$/[2'[2OB7]HZR^"OQ MZ\-?!_P#>0Z=JDUYX/TWXCW.LZSKL21Z;)::GI1FLK!I;%#<7MOG1WVNU4ER;^3^]V7XZ>NFY/\`\*Y_X*F?]'D? M`#_Q&K7/_FRKS*[_`."?/[9U]^UW9_MRW/[1_P"STWQ(L?`TOA*#7#^S5K?& MFON1ID!N=0M;R[O-/TV2PN(K8&Y7?"T#PQ3'SE:,H9BU*]NC:?:Z2DU?N MHM.W9KN-IJR[JZ]+M7]+IJ^VC[,V/^%<_P#!4S_H\CX`?^(U:Y_\V5'_``KG M_@J9_P!'D?`#_P`1JUS_`.;*NJ_X;L_8A_X0O5?B3_PV1\*O^$=T*&PEUO7_ M`/A8>F_8M/COE#63SS^?Y<*W"D&$N0)004W9K/3_`(*-?\$]I?!UI\1(OV[_ M`(,MX?O]8?2;'75^*&DFSN-02-)'M(YOM&QYU26-S$"7"R(2,,":LVVNUOQM M;[[JWJNY-U9/OK^OY:F+_P`*Y_X*F?\`1Y'P`_\`$:M<_P#FRH_X5S_P5,_Z M/(^`'_B-6N?_`#95V?CO]M3]C?X6Z_JWA3XG?M:?#+PYJF@36<.NZ;KWCS3K M.XTZ2[0O:)/'+,K0M,@+1AP#(!E\\:?&/X6W?ASP-XB\ MB"7PQXA$ESX?LX]/MYKB/73(YCM+I9C\+^-_#TEQ)!'KOA#7[;4 MK)Y4.'C$]N[H64D`KG(SS745336Y*:>QX!_PKG_@J9_T>1\`/_$:M<_^;*C_ M`(5S_P`%3/\`H\CX`?\`B-6N?_-E7O\`12&?.?PV^)/[9'@']LCPO^SE^T;\ M4/AGXPTGQA\,_$WB2RO?!/PSU'P[<:?<:3J.@6HC M6#$#Z,KP#XC?\I3/@W_V0#XE_P#I\\"5[_0`4444`%%%%`!1110`4444`%%% M%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110!X!_P M34_Y-U\1_P#9?_BQ_P"K"\0UW_[4=AXXUCX(:OH/@'X+^'OB'"_ M% M?EUOVMKV/SA^(O\`P3^_:$TOX#_$[X2?LS_L$_$W1OA!XNUOP>^D_L[>+_'O MAC4(K"\M/$0U?6;VRAEUN:RL-.GMX_*-HMTQEN9_^/>&%3)7LM[\-_VT-*\3 M?M*^)?`?[!VII;^+_BEX/UOP1:Z]=^%+MIK&QM-*L+N^TVV?5'MHM3MS8O>6 MOVTPQ!DMW8LZFW/T_P#L_?M8>./CEXCL-)\0?L3?%GX?:;JN@/JVE^)O&,WA MR?3[A`8-L);2=8O9(9G6<.BRQH&6.3!RA%>R5LZEEN]?B/3/V*?VL?BM_P3K^! M?[)/C#]EWQGX`\<_#/P/?74'Q-L_%&B2:AX;UBRMGM[;3K-K+6D:2+45;4+B*)@\MOIL5 MY-&2L;()F6(^K?!OXJ^'?CC\*O#_`,8/"5AJ=IIOB32H;^SM-:T][2\@210P MCG@?YH95^ZR-RK`@]*VC-SJ.OOS/F?FY1DN;O:49:/9J*Z37HK MIM=O=>MMTY.^Z2^?O^"O/P]^.OQ=_99L/AK^S]\`-?\`'^LW'Q#\,ZI<6FAZ MMI%F+2UTW6;/49GD?4[ZU4[H[9T18RY,C*&"+EUC^-GA/]H7QY^WC\"/C1X4 M_9AUY]`T/X9^+K3Q)J&KZUHJ6^B7^JQZ:UM9W:)?O-)M:PDCE>UCN(P98RC2 M#>4^JJ\U_:[_`&E],_8^_9\\2?M(>(OA;XI\6Z-X2TZ74=>T_P`'G3_MEO8P MQM)/4K]N:'LW\K:Z[-7O:Z-*?M M)U8J"N[62[ZW^_5I=[[7L?G#IG[-_P#P4_$O]E"'X>Z M+X9TW4?`&FZ-H&LQ?VC&+'38++5D,6CQ#45-N]T\]T(XIP[#$,;=7X__`&-[ZPBD MTBR5#(9;J6UN9[9%$0$A*S.%4C<005&)^U3^TZO[.O['OC/]KCP?\.+_`,=V M_A7P7<>([70=+OH+*34+>*`SEO-NF58HQ'F1SAI`BMLBEDVQ/6+C&E3JQK:* M*:EY75=:[_\`/VI9OLGKRLO"5JM>M2E2U$^-G[%/QIAU3XH^'/@K_`,$T_$Z: M),U\38+;O\GS8EDV;L#=C=C.!G'05K5T8R%2=:I& MKHVYW2[R52,O6WM)\K;;5[)VT.?!5XTJ5*5+51C"U^JC.$T_*[A%22LFEMS: MGR'^TE^S-\>/C=\`/@#\9_`?P\%A\4_@AXDTKQ7;^!?%VK6L*>6">7RY@\D7FI%O95+.D'Q`\#?M&?M;?M%?#3]HCQI^RAXJ\`>&/ M@0=:\0:=X4\1:YH-QXC\8:YZ32?6*AZQ3>C]>:5VK M.SWT5OR\\(_!?]H#]F[_`()U?LH?"WPY^RO=>%?C=X&^(!CTCPP__"-:B\U\ MFD:S)?7HM5UZQM=1BFBFNB1_:-M<(\YN""T9BEY;X@?"K]IOXW?L?ZY^S!^S M-^S%XU_M.UT/Q]X4^(FM0Z;X)M==TOQ1J\EMJCZ;OOM4N[.T\.7+:@7ECTZX MO+R(6MO%YD#F^'?Q\^$'A;QQX?>YCN'T+QAX?MM3L MVF3.R0PW*.A=^`?A1X-T_X<_"WP/H_AKP]I%N(-)T'0-,B ML[*RB!)$<4$*JD:Y).U0!S2J?OW4]IM-MZ=W%1;N]E:_NK1MIWLG%]"K3C6I MU(_%'KZ2E):=[RTEHTKK5NY^;'QV_9U_:Y^+VO?%;Q>__!.'QK<:MXD_8IMO MAEX6U'5/$'@U[F+7)'OC0':_V*3&XK")+_A?]F+]N#XA_ M##X^WFL_LA:[X=U?6_&/P]\6>%_#'CKQ5H#P^,%\/V.CQWFDRRZ;J5XL#7$F ME2HK3[8B+B$NV#*J?IA15^TDJDJBW>OH_:RK72V^.3T=TU9-,RC:,(QZ15O5 M;?LX7,^OV'B'X@:I^R1>?"/5/$&M"YUC3];?17U36 M+A((HOMMT^CW5U!(?+CCB1VN'EV0@,J!5!])HHJ6[V\DE]RM_7X"2:W=]_QU M"BBBD,\`^(W_`"E,^#?_`&0#XE_^GSP)7O\`7@'Q&_Y2F?!O_L@'Q+_]/G@2 MO?Z`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HH MHH`****`"BBB@`HHHH`****`/`/^":G_`";KXC_[+_\`%C_U87B&J'_!72XU M.;_@FQ\9_"'AWP5XI\1:SXI^'FKZ%H.C>#_".H:U>7=]=6%?^"85[XH_90\,?&'Q!J/B+3/ M"TWC/P-XU\0:_<:]JFBZ??1G6-*M(?$,?#'P;UI?!T5U5JCJUZE6R]YWM:ZZ>Y+^:GHO<>E M[OJ<]""HT*=/?E5K]>]T_LR>MY+5IV['Y=^-_@;XQL?A+\=O%G[!/[.OCCPK M\$/$$O@C[=\(-.\`W_A:[U5+;42?%CZ1HEU!;3VQN-(-O;LL447VR2*7RQ)( M0\GL/_!)3PG\(O`'[0?[2^D_`#]FKQ3\-/`>O>-]%UGP=INJ?!C6?!^G3V_] M@V-M_P`*_L7^-M:_X)RW7Q*_9>_:%^#'Q5U2XU#X MJZ[XO\(^.O!7PJUCQ)IOBFPUF_FNX]\^DVMPEA=P.S6\T5X80`D+7\&>*!=71OH2= M-AF?3=1GAFTXQZFIC@C-G(JW8"!V_0JBL734J,*;?PQ44UORJ#IIKM*SOS;< MR3MRWB].=JI.2^TW)_XG-3?_`&ZY*UOY7)-WLUX=^S3XX\=?!#]FOP9\+OVI M=0\7^(/B)X2^$>G:GX\UBP\':KJR7MQ%"L5R([NTM9(K^],J/_HT+/=2#$@B M(<,>._X*>>.['XF?\$IOBE?_``Q\)^+_`!1+\0_A7J-AX1TKPSX$U;4=1O;B M_L)%MD:RM[9[FWRSJ'::-%B)Q(4YKZ1\7>$/"?Q`\+:CX&\>>%].UO1-7LI+ M/5M'U>RCN;6]MY%*R0S12`I)&RDJR,"""015G2=)TK0-*MM"T+3+>RL;*W2" MSL[2%8XH(D4*D:(H`554`!0````*K&KZ]"JIZ<]]MO>/B?\`8N^'_P"R9\4_%&NZ MU\$=6MKFU\;_``,\1:)86%]::+(]H4EUG388+B[.H):K!'$Q<./-4CRAGYN_ M:I^!_P`-/&WP'\1>"?$G[`'CC6O`-Y^R9+I/[.^@:/\`LZZY)'X7\;J^H+J@ M;2H=-^T:-?SW#:;)%?30PI)''(R3E6?=^QU%/%+ZU.M.6CJZOR=JL;Q[.U31 MZV<5NM!8:7U:E1IQ5U3VOUUIO7U=))[7C*2T;N>7_LT?%+0=?^'?@KP+'X;\ M7V&I?\*[T[4I(]>\!:OIL<,>Q8##+-=VL<<5T'1MUH[+<*N',80ACZA116]> MJ\16E5:UDVW\VW_7W^1A0I*A1C33TBDON27]?=YA1116)J%%%%`!1110`444 M4`%%%%`'@'Q&_P"4IGP;_P"R`?$O_P!/G@2O?Z\`^(W_`"E,^#?_`&0#XE_^ MGSP)7O\`0`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110!\Q M_P#!13X7_#3XU?$S]F'X4_&3X=Z%XM\+ZU\?+Q-8\-^)M(AO["^6+P'XNGB$ MUO.K1RA)HHI5#*=KQ(PP5!&[_P`.G_\`@EG_`-(U/@!_X9O0_P#Y%H_;(_Y. M*_9/_P"R_P"I?^J]\95[_0!X!_PZ?_X)9_\`2-3X`?\`AF]#_P#D6C_AT_\` M\$L_^D:GP`_\,WH?_P`BU\QZ#_P4IUVS_:"TV7Q5^V786OC6_P#V@9/A_K7[ M*&K0:-!=6&D2ZD]A::E:1_9TU=Y3;_9=4-S)/+:2Q3RHD48:-HOH[PE\4OV@ MXO\`@J?XL^!GBWXFZ;??#YO@OI_B'PQX9L?#*6TNG73:G-;32SW32R274C[# MC;Y,2H$41%U>60I?OE3:VGS6]8T_:M:;^X]&KQ;TN%5JE*I%[PY;_P#;U3V2 M^Z2=[V=E?M>]_P`.G_\`@EG_`-(U/@!_X9O0_P#Y%H_X=/\`_!+/_I&I\`/_ M``S>A_\`R+71?M[^*?C+X$_8N^*'CW]G[Q_IOA?Q=H'@?4M3T?7=5\/?VI%: MO;VSS%EMS-$K2;4(1G+1HY5GBF53$_+?$KXN?M"M^P7X5^(GPN\(^,?$_C'Q M#X9T:;5;KP!::,VKVD<]M'+>W]I!JLD5B\ZIYACBD#(9'3$,H'E-"FFI_P!U MP3_[?YDG?9)RULG/_PZ?_X)9_\` M2-3X`?\`AF]#_P#D6C_AT_\`\$L_^D:GP`_\,WH?_P`BUXI\>OCY\?D_9$^& MOC?]E3]HWXQ^,-`U;Q5JUMXY^)NE?"2RU3QGIZP6FHB"T?1(-#5(2NJP6]E. M#IOFPJK"3RR7N$]:\'_M;7%FOPUTW]I7XK>%?AKJ;V.FV/BZ+6=;L+./7_&% MS8H7\/6'VE]TS0O-YL@A^?>;>)'?%RB[*#E*45O%I>K:Z>FSZW<5;WHWSE-1 M47TDI/TY7:S\WNO)-NW*[:/_``Z?_P""6?\`TC4^`'_AF]#_`/D6C_AT_P#\ M$L_^D:GP`_\`#-Z'_P#(M>_T5!1X!_PZ?_X)9_\`2-3X`?\`AF]#_P#D6L+_ M`()U_"_X:?!7XF?M/?"GX-_#O0O"7A?1?CY9IH_AOPSI$-A86*R^`_",\HAM MX%6.(/-++*P51N>5V.2Q)^G*\`_8W_Y.*_:P_P"R_P"F_P#JO?!M`"W/_!-# M]EY]9U?6M'U?XO:'_;FOZCK6H:?X5_:,\;:18?;K^[EO+R:*SLM7BMX/-N9Y MIF6*-%WRL<#-)_P[4_9U_P"BC?'_`/\`$L/B%_\`+VO?Z*`/`/\`AVI^SK_T M4;X__P#B6'Q"_P#E[1_P[4_9U_Z*-\?_`/Q+#XA?_+VO?Z*`/`/^':G[.O\` MT4;X_P#_`(EA\0O_`)>T?\.U/V=?^BC?'_\`\2P^(7_R]KW^B@#P#_AVI^SK M_P!%&^/_`/XEA\0O_E[1_P`.U/V=?^BC?'__`,2P^(7_`,O:]_HH`\`_X=J? MLZ_]%&^/_P#XEA\0O_E[1_P[4_9U_P"BC?'_`/\`$L/B%_\`+VO?Z*`/`/\` MAVI^SK_T4;X__P#B6'Q"_P#E[7BGA']C#X<:I_P48^(/P'OOC-\?W\*:'\%/ M!VOZ7I7_``U+X]'D:C?:OXGM[J;S1K7F-OBT^S78S%%\G*JI=RWW/<7%O9V\ MEW=SI%%$A>661@JHH&223P`!WKY8\"?$SX;I_P`%:OBKJ#_$'0Q;R?LZ>`(X MYSJT.QG77O&190V[!(#*2.VX>HH`ZO\`X=J?LZ_]%&^/_P#XEA\0O_E[1_P[ M4_9U_P"BC?'_`/\`$L/B%_\`+VO?Z*`/`/\`AVI^SK_T4;X__P#B6'Q"_P#E M[1_P[4_9U_Z*-\?_`/Q+#XA?_+VO?Z*`/`/^':G[.O\`T4;X_P#_`(EA\0O_ M`)>T?\.U/V=?^BC?'_\`\2P^(7_R]KW^B@#P#_AVI^SK_P!%&^/_`/XEA\0O M_E[1_P`.U/V=?^BC?'__`,2P^(7_`,O:]_HH`\`_X=J?LZ_]%&^/_P#XEA\0 MO_E[1_P[4_9U_P"BC?'_`/\`$L/B%_\`+VO?Z*`/`/\`AVI^SK_T4;X__P#B M6'Q"_P#E[1_P[4_9U_Z*-\?_`/Q+#XA?_+VO?Z*`/(?@[^PW\`?@;\4(_C/X M1F\?ZIXF@T"[T6SU/QU\8/$WB.Z]]F$S0NMNZK(5.QG3<`>Q(!&1[9'UI-V0+<\ M"_X=/_\`!+/_`*1J?`#_`,,WH?\`\BT?\.G_`/@EG_TC4^`'_AF]#_\`D6O+ MO@I^V-^T/\-OV$OVA_C_`/M`^+M+\?>*_A+XY\;VNFOI^@+H]E=1Z<[&SM$@ M225XH0=L>Z26:7: MZQI&G:<;75=.DB@N]+4:?!`/L$DEW9-"9%DN(@)Q)<3Y381?.H..O/!3CYIT MW4MZJ";=[+2UVVKTXVDXMK2;@_)JI&G=^3E)6?:[Z.WK?_#I_P#X)9_](U/@ M!_X9O0__`)%H_P"'3_\`P2S_`.D:GP`_\,WH?_R+7C_Q'^+'[?/[.L'CGX$> M&/B7?_%WX@:Y\`M2\;_#V_U/PWIEO-8:[92PVUW806]E%;QW%L6O+26UBF#S M;DECEN)@Z[-'X&?M3_%_2OV>=?MOC1\6_$6F[_$^I-H'Q3^+WA:T\*ZCI?A& M".W\[7=5L[FSL8+1HKB6>VMUDM(Q,5MY'B:+SY122E=WTLW?H[3<&O524M[+ MEC*2;BFS/G7N^;2VVO!33?DU))6N^9J-KM'I_P#PZ?\`^"6?_2-3X`?^&;T/ M_P"1:/\`AT__`,$L_P#I&I\`/_#-Z'_\BU[7X(\9>#_B'X/TSQU\/_&&G>(= M#U>RCNM)US2+Z*ZM;^W=0R3131$QR(P((9"5(.1Q6I1).,FF.+4HIH\`_P"' M3_\`P2S_`.D:GP`_\,WH?_R+1_PZ?_X)9_\`2-3X`?\`AF]#_P#D6O?Z*0SP M#_AT_P#\$L_^D:GP`_\`#-Z'_P#(M/\`^"4]Q<7G_!+O]FV[NYWEEE^`?@YY M99&+,['1+0DDGDDGO7OE>`?\$G_^46?[-7_9`/!O_ICLZ`/?Z***`"BBB@`H MHHH`\`_;(_Y.*_9/_P"R_P"I?^J]\95[_7@'[9'_`"<5^R?_`-E_U+_U7OC* MO?Z`/$+;]DSQAX\_:*TS]H']I?XPVGBZ/P7?W<_PN\&Z)X7_`+*TG09)E>(: MA_MC2_&WPR_ABZ\ M`0^%%\$+X"N%OTMXYGNEF.I_VF8VD^TR.Q_T,#RML>-P,I]SHH@E"46MXWM_ MV]%Q;\VXMJ[N[==@E[ZDGM*U_P#MV2DK=DI).RLM^[OY+\>/@I\=/CA^S7\1 M_@9-\8_">FZKXTM=1TO1M?7P#=2V^E:3=+Y7E36O]J*UW=)`TJ_:%G@C:1D? MR`JF-X/#_P`(?VJOA]^S#X.^#_PU^/7P^M_&/AK3[33[_P`5ZY\++Z\TR^M( M(FB41Z;%K<$L$I40DN;R5[O<;=VF M^G-;RY[!/!/Q%5/$NIW-YJ%]XLU'1UF5]2 MNYFFN+H6B2(BKO=_+B#;4`0,9,-O\0_:\_X):Z1^T-H>A:'\+?BZO@=++P-K MO@K7'O?#G]KF^T369;6;49H2;F`P:J\UI'*M_(9UWR3-)!,7!7ZQHJDW&:DM MUMY:.-DMK^#:!GO\`117RI_P4X^&'PU^,_C[]EOX7?&'X>:'XL\,ZO^T8 MZ:MX=\2Z3#?V%ZJ>"O%A__(M'_#I__@EG_P!(U/@!_P"&;T/_`.1:`/?Z*\`_X=/_ M`/!+/_I&I\`/_#-Z'_\`(M'_``Z?_P""6?\`TC4^`'_AF]#_`/D6@#W^BO`/ M^'3_`/P2S_Z1J?`#_P`,WH?_`,BT?\.G_P#@EG_TC4^`'_AF]#_^1:`/?Z*\ M`_X=/_\`!+/_`*1J?`#_`,,WH?\`\BT?\.G_`/@EG_TC4^`'_AF]#_\`D6@# MWC5=*TS7=+N=$UK3X+NSO+=X+NTN8@\L_`CQ9X3GN/@G\-KB'XAV%W=QEX=1TB:9FTK3F9O]8WVJ.2"0-_ MK$T^Y/<5^XO_``Z?_P""6?\`TC4^`'_AF]#_`/D6C_AT_P#\$L_^D:GP`_\` M#-Z'_P#(M`'O]%>`?\.G_P#@EG_TC4^`'_AF]#_^1:/^'3__``2S_P"D:GP` M_P##-Z'_`/(M`'O]%>`?\.G_`/@EG_TC4^`'_AF]#_\`D6C_`(=/_P#!+/\` MZ1J?`#_PS>A__(M`'O\`17@'_#I__@EG_P!(U/@!_P"&;T/_`.1:/^'3_P#P M2S_Z1J?`#_PS>A__`"+0![_17@'_``Z?_P""6?\`TC4^`'_AF]#_`/D6C_AT M_P#\$L_^D:GP`_\`#-Z'_P#(M`'O]%>`?\.G_P#@EG_TC4^`'_AF]#_^1:DM M/^"57_!+ZPNXK^P_X)O?`2">"19(9H?@]HBO&X.0RD6N001D$4`>]T5\[_\` M!,K4M1U3X&>-I]3OY[EX_P!HGXI0QO/*7*QIXXUI$0$GA54!0.@``'`KZ(H` M****`/`/AS_RE,^,G_9`/AI_Z?/'=>_G.#M(!QP2*\`^'/\`RE,^,G_9`/AI M_P"GSQW7O])JZL!\R_`G_@G_`.)_#_P+^,G[/G[4_P`6/#?Q`T#XQ^(=;U/5 M8O#?@:XT`VBZL'%Y"/.U*^+@;E,3`HT>WDN2"LOA[_@GSJ/CS2_&-I^VA\7[ M/XF7'BGX:O\`#V&72?"IT..U\//O,V]#=7)EOYW9'FN5:*(FW@\JW@VMO^E: M*$DHI+I%17E%1Y%;M[K<;K5IM-ZLKGES9S_[>O\`3/"1T:&RTB*4S.98C=W/ MGWMQ+Y;SSJT43>1"(K>`!]]'XY?L0R_'/X0:YX:UWXEP6_C?5O%>D>(X?&*^ M'S);17>D:C%?:5;261N`TMA"\**]L)T,GF7#B2.2=G'OE%4VVXOMJNEGS<]U M;KS>]?=RN]VR(1C"_*M_RY>6WIRZ6VLEV1YG^R'^SU??LP?`VS^%&L>.QXEU M(ZSJVL:OK,6EBQ@GO=2U&YU"X$%MYDIM[=9KJ18HFEE9(U4-)(06/IE%%$FY M.[!)+\7]^K"BBBD,*\`_X)/_`/*+/]FK_L@'@W_TQV=>_P!>`?\`!)__`)19 M_LU?]D`\&_\`ICLZ`/?Z***`"BBB@`HHHH`\A_:T_9[^*'QPN?AOXN^"_P`6 M=`\(>)_AGX_D\3:5>^*/!L^NV%T9-#U;1Y+>6V@O[&3_`%6K22*ZSC:\*Y5@ M2*Y[_A7/_!4S_H\CX`?^(U:Y_P#-E7O]%`'@'_"N?^"IG_1Y'P`_\1JUS_YL MJ/\`A7/_``5,_P"CR/@!_P"(U:Y_\V5>_P!%`'@'_"N?^"IG_1Y'P`_\1JUS M_P";*C_A7/\`P5,_Z/(^`'_B-6N?_-E7O]%`'@'_``KG_@J9_P!'D?`#_P`1 MJUS_`.;*C_A7/_!4S_H\CX`?^(U:Y_\`-E7O]%`'@'_"N?\`@J9_T>1\`/\` MQ&K7/_FRH_X5S_P5,_Z/(^`'_B-6N?\`S95[_10!X!_PKG_@J9_T>1\`/_$: MM<_^;*NA_9+_`&>_BA\#[GXD>+OC1\6=`\7^)_B9X_C\3:K>^%_!L^A6%J8] M#TG1X[>*VGO[Z3_5:3'(SM.=SS-A5``KUZB@`KYP_;M_Y+Q^R5_V?V3_\`@I/\/-+^!_[1?B:^\'^+]=AU_P"!FEVVBV$K M:5XA:UFTFYL86:WW2R!=0E"*Y8>7J,8Y9-P`/Z%Z*\\_9+\!?&7X8_LU>"O` MO[1/Q3N/&WCRP\/P#QAXHN8HD-_J3#?<,BQ(B")9&9(P%'[M$SDY)]#H`*** M*`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHKP'_@I_P"#?VL?&7[# MOCQ/V&_BEJ7A/XJ:3I1U7PA>:9:P3O?3VW[UK`I/&Z-]HC5XEX&)'C;.`00# M._X)=_\`)!_'/_9Q_P`5O_4ZUNOH^OPC_P"#2[XO_P#!2S]K7XH>/_BA\;/V MC-=N?@_X1U/4[BY\/RZ59Q0ZWXLUB[FOKMF=(!)A&N)[F1%90LES;X`7Y:_= MR@`HHHH`\!^*/[-/[4?_``U'KO[2W[-'[1?@#PNWB?P!H/AG6]&\=?"B^\0# M&E7VLW4-Q!+:ZYIWE;_[9F1T=)/]2A##)%)_PKG_`(*F?]'D?`#_`,1JUS_Y MLJ]_HH`\`_X5S_P5,_Z/(^`'_B-6N?\`S94?\*Y_X*F?]'D?`#_Q&K7/_FRK MW^B@#P#_`(5S_P`%3/\`H\CX`?\`B-6N?_-E1_PKG_@J9_T>1\`/_$:M<_\` MFRKW^B@#P#_A7/\`P5,_Z/(^`'_B-6N?_-E1_P`*Y_X*F?\`1Y'P`_\`$:M< M_P#FRKW^B@#P#_A7/_!4S_H\CX`?^(U:Y_\`-E1_PKG_`(*F?]'D?`#_`,1J MUS_YLJ]_HH`\`_X5S_P5,_Z/(^`'_B-6N?\`S95Z#^RE\#$_9@_9<^&O[-,? MB(=6$<(U2SN[="UQIEL&9H6;9O"E2VX,_X8W_`&BO^DL'Q_\`_"<^'O\` M\RE'[9'_`"<5^R?_`-E_U+_U7OC*O?Z`/`/^&-_VBO\`I+!\?_\`PG/A[_\` M,I1_PQO^T5_TE@^/_P#X3GP]_P#F4KQ_Q'^V+^WA^SQ^UKXA^`'[4NI>`+C1 M/%_A6ZE_9UUOP'\(=6GD\1ZVN"=-O!)KC+'=0`^8;?,,5Q`))_MEJL$RIZ;\ M*OB1^T)X;^.WPO\`A!^UO^TSX47Q]KW@/7-2U3X?^`/A7J%KHFLR12V&9X-3 MO)KDHUCODC,9F1KA;U)#!&$444_WBB]N9/[TI-QMO=*_VW[PVFIZGXUO](\+V?@OP!J%Y?:M`GGRP M&+2],N-6N'8VUO-.S)(_[F/S98[5C)!%0\4?\%2/V(?"#>"4U3XIZO.WQ*\' M'Q1\/DTGX?ZY?MXCTY51W^Q"VLI#<7*(ZR/9IFZCC/F/$J9:IYH\O-?M?R;B MY6?9V3;7DWLA\DN;EMW^:3Y;KNKZ7'_\,;_M%?\`26#X_P#_`(3GP]_^92C_ M`(8W_:*_Z2P?'_\`\)SX>_\`S*5V^J?%;Q'\:?V9;;XP_L8:_H&KWGBO0[34 M/`VL:]83R:<\-R8V2YG@$MO,T:Q.9&BWQ2';LRK<5\P?"+]HK_@J!XW^,?QA M\#:O\4?@KJ6F?!7Q[HVCZY#H/P3UJ"_UK3KJPL;^[NK4GQ%<^1/#;W^UFU>]K7OLG917/!2CK=V5O-77WV=O^ M&/:/^&-_VBO^DL'Q_P#_``G/A[_\RE'_``QO^T5_TE@^/_\`X3GP]_\`F4KF MO!__``4>_9D^"G[)GPR^)WQS_:BU7QRGB;P*VLIX\TGX4:LLNL65K'"+S6KG M3=/M)7TFU5IHC(\R1PPF95+#(%=%\9/^"I'[$/P`\?Z[\+OBM\4]7T_7O#?A MRW\0ZK86WP_UR]VZ-,&(U2)[:RD2XL8]K+-=0L\-NPVS/&W%:3ARU7#=W:ZZ MM;Z.SZ;6NNJ$DW&]NE_E=*_I=I7[M+J/_P"&-_VBO^DL'Q__`/"<^'O_`,RE M'_#&_P"T5_TE@^/_`/X3GP]_^92MK5OV_OV6=&_:)7]E"[\9ZY)X_DM-/O(= M!LO`6M7`FL;UMD%_'/%9M!)9"3]U+>+(;>"0K'-)&[!3B:[_`,%0OV)_#=CX MLU/5_B=K*6_@SP[)XAU6>+X>Z[*MYHTW4:C*3LEK[O\`Y-\/_@5UR]^@O_#&_P"T5_TE M@^/_`/X3GP]_^92N+^*G_!+#7OC?XE\%^,?BO_P4;^-^N:G\//$H\0>#+R\\ M-?#_`'Z7J(@E@$Z;?"P#$),^%;&_@1\0 MI]9NM&TNQU2X,_AW4+&*ZT^]\T6E]:2W<$4=]:RF"8+<6S2Q$QL-^:\B\;_M MF_M!_!#_`(*=>'_V:OBY#X,N_A!\0=&@M_"&O:7H5W:ZMI'B.=;V6VT^]E>\ MEAN8IX=*ORDL<,)$ABC*\;Y+Y)JK&FU9O:_?HO5[+N[+=J\\R]E*:U4;-^2T MU]$FF^RUV3.S_P"&-_VBO^DL'Q__`/"<^'O_`,RE'_#&_P"T5_TE@^/_`/X3 MGP]_^92N4US]M3XOW?\`P4R_X9?T&\\%:'\+/#/PVU#Q'XR\2:]IMQ-?7EU: M2VJ3V]O.+N&"R@A2_MG>>2.XRTU"N\>E?!S]O/]E?XZ:IK6A^"?B+>65] MX?T!->U&R\8^%=3\.S'1W+JNJ0IJMM;-_P#S*4?\,;_M%?\`26#X_P#_`(3GP]_^92O+_P!F3_@HBGQ]_;_^*N@: M=\9&;X.^&?@OH'B?1H?$'PXO_#`TYI[K4!<7TESJL<4M_!)%;I*EW$$M/*VA M`S)+-)VVM_\`!8']@'PQKEMX6\5?%+Q/I.K7FL1Z7:Z1JWPF\36MW+=S0O-: M1""73ED)NTBF%F=N+UX98[8S21NBM:TXRVYKZ==)RA^,HNW?0;34Y16O+;5; M:PC/\%)7[-/IJ;7_``QO^T5_TE@^/_\`X3GP]_\`F4H_X8W_`&BO^DL'Q_\` M_"<^'O\`\RE9NB_\%;?V#=<\82_#Z'XH>([/6[3Q'INA:KI>L?"WQ'83:3>: MB81I_P!N6YT^,V$-RT\2PW-QY<$K-M21B&`^D:?++EYK:?\``3_)I^C7<5U> MW7^O\F>`?\,;_M%?])8/C_\`^$Y\/?\`YE*/^&-_VBO^DL'Q_P#_``G/A[_\ MRE>_T4@/`/\`AC?]HK_I+!\?_P#PG/A[_P#,I1_PQO\`M%?])8/C_P#^$Y\/ M?_F4KW^B@#P#_AC?]HK_`*2P?'__`,)SX>__`#*5T?\`P3_^*WC?X[_L'?!+ MXX?$W5$OO$GC/X1^&]=\0WL=LD*W%]=Z7;W$\@CC`1`TDCG:H"C.``!BO7*\ M`_X)/_\`*+/]FK_L@'@W_P!,=G0![_7@?[<7B3XM1^*?@;\(OA/\;-=^'Y^( M_P`7+C0M?\1^&=-TNYOX[&'PIXAU81PC5+.[MT+7&F6P9FA9MF\*5+;A[Y7@ M'[9'_)Q7[)__`&7_`%+_`-5[XRH`/^&-_P!HK_I+!\?_`/PG/A[_`/,I1_PQ MO^T5_P!)8/C_`/\`A.?#W_YE*]_KXB^)W_!1OQ1\`O\`@I5XF_9C_:3_`&P_ MV?/AQ\.K/X.-)?2]3OI;R:]M5M!>76NQP3&"2T29V2W!DCE\O;$ M0)3/,O:*'5WMYM1K2=NFEKW:*Y7[.4^BM?YR4;_>U?UOM<]>_X8W_`&BO M^DL'Q_\`_"<^'O\`\RE'_#&_[17_`$E@^/\`_P"$Y\/?_F4KR/\`X)Y?\%.= M6^,O@C3?$7[4OQA\#:M)X^^+>O\`@GX3ZE\+?AMK$6DZL^E3W*>;)?"]U*V4 MW4,!N80\L*E$D"-/L9EV_B_^W5K'Q&\5?L\^./V2_BQY/@CQ3^T!>>!?B)I6 ML_#Z\L]3NI;?3M4:2T(U)(9K'R;FQ82+]G\QV";98U1UFI6E*FD[J;AKVY^1 M)OJK<\.;2ZNM!6:C-O3D4V_/D4V[='?V<^7H^5ZZ.WH/_#&_[17_`$E@^/\` M_P"$Y\/?_F4H_P"&-_VBO^DL'Q__`/"<^'O_`,RE:'A#_@HO^R3XY/@Y?#_C M?7Q_PGGC34O"/AS^T/AYKMGG7;#S?M6GW/VBR3[!.ODSX2Z\KS/)E\O?L;'D M/[5O_!0M]'_;2^!G[-O[/OQ?D0:G\9I/#7Q/L8_AM?W-I>(-&O+O[#%KLD7] MGPSPO'"TUI&SW?SQ\PK'*LA#WZE.$?MRC%?]O.*3]%SQ;:O923V:'*+A&;EI MR1E)W_NJ5UZWA**7\R:Z.VU\#?\`@EAKW[-7AK4_!WP)_P""C?QO\,Z9K'B7 M4/$&IV>G>&OA^$GU&^G:>YG.[PL2"SMPHPJ*JH@5$51VG_#&_P"T5_TE@^/_ M`/X3GP]_^92ND^&G[<_[,?Q?^-]_^SOX`\=:C=^*;!-3;RKGPEJEK8WHTZZC MM+_['J$]LEG?FWN)4AE%M-*8W)5L$'$7PV_;S_97^+7Q#M= M'@[5M7\!ZA>:C!XGL;5)H[&:2/5H8I8GC,UYQ%$SQV"WM[QTE9;=M:2>1FTZ-M6 MCG,Z));O&HBRXD)3_>6MU^_X_9NZZ)-IW>G*XM7YE__`#*4?\,;_M%?])8/C_\`^$Y\/?\`YE*W M;O\`;T_9:TGXTVO[/NL?$>[@\0W>O#0;6^E\)ZI'HMQK/DF;^RX]7:W_`+.: M^V*W^ABY,^Y2FS<"*P/A+_P5&_8B^.'C_2OAA\./BGJ]SK>L>([_`,.V]IJ' MP_URP6VUFRCFEN=+NI;NRCCLKU8[>:06MPT6Y-;JZMU6FJ\ MM5]Z!WC%N2M;>_3??[G]S[#O^&-_VBO^DL'Q_P#_``G/A[_\RE'_``QO^T5_ MTE@^/_\`X3GP]_\`F4KR:[_X*5:+XV_X*7^!?A+\,?CQ`/A2/AMXRU+QA_:' MP^O=/L9[S2KBRC-_!KU]&MK?VD7F3H?L+&.)HY#-+('B6+T[7_\`@JY^PKX0 M\&ZWX^\;_%;6]`TSPSK6FZ;XD?Q#\.=?T^;2#J#,MC=W4%Q8I+;Z?.Z,D>HR M(MFSJ5$VX8I0:G3C-;2V_P#`W!??):=[KKH4XM2<>WYV3MZI/]=FF[?_``QO M^T5_TE@^/_\`X3GP]_\`F4H_X8W_`&BO^DL'Q_\`_"<^'O\`\RE4_P!LC]J_ MXA^$?^">7CC]LK]E&^TZSO\`PGX5U+Q!:6OQ.^'>K1B\AL8YFEMI+&:?3KNV M>1HBJROPH(<1R*RY\@^"G_!432?#W@F+]HS]HW_@H+\`?''PNAL["Q\4:G\( M/AGK(/A76M0>(645]?6VKZO;P0<7$:]K?W;__`#*5%)_P5'_8VM=$\::]JWB;QQIL?P]\ M+0>)/%MKJ_P;\4V=W9Z1+-)`M\EM/IJ37$`>&8.\*.(A#*TFQ8V(Y[XP?M^? M##X!>+OBQ\7/$/Q>\4^)_#_@7X+Z1XND^%?A_P"%MV]U;VDLMZ?[6M[XPJ+M M;D!(G0OY5I]BDDE:)?-98E4A"'-)Z:Z^BD^FK^"6W\KZ)M7&G.R5FVKJ^,9PE252+NFG)=VEU_1+>3NDFT[1?\`#&_[17_2 M6#X__P#A.?#W_P"92C_AC?\`:*_Z2P?'_P#\)SX>_P#S*5O_``V_;S_97^+7 MQJ?1K;3OJF5M)KJM_(\`_P"&-_VBO^DL'Q__`/"<^'O_`,RE M'_#&_P"T5_TE@^/_`/X3GP]_^92O?Z*`/(_^"?\`\5O&_P`=_P!@[X)?'#XF MZHE]XD\9_"/PWKOB&]CMDA6XOKO2[>XGD$<8"(&DD<[5`49P``,45SG_``2? M_P"46?[-7_9`/!O_`*8[.B@#W^BBB@#P#]LC_DXK]D__`++_`*E_ZKWQE7OY MSCBO`/VR/^3BOV3_`/LO^I?^J]\95[_0!\7_`!X_8G_:>_;0^&OQ(F_:H\!? M#B'QG8R)/^SJ_A?XCZB]OX1O86$UMJGVI]&CFL]16X2)WN(X[@/$OD+''&TX MN+7PP^`W_!2CQ7^TA\`OCO\`M5>'O@RU[\./!GB/0_'FJ>#O'FJ2/JD^I)I^ MV]M+2;1HD3Y]/!:%IE`\]MKG8%;K%_;<_:$^,7B/QM_PQ5^RAHWCKPU\/?$% MWH&M>(?&'Q(;PZVM:M:<7=KHT4>G7JW8AD!MVFNI+.(SAD5F17E78^$7_!4K M]@_XL_"7P]\6KO\`:5\(>#4\0Z`=7'ASQ_XHL-)U;3H$O6T^875M-/F,Q7R/ M:.X+1^C3DF^S;MRM M[>ZU:,7K'5+=FA^W5\+/VI/BUX+\.^'OV;=>TQ;1-?9_'7A^]\?:EX3FUK3# M:3JD,&M:7:75Y8.ET;:8^1&CRK&T9F1&=9/FC]FK]A'_`(*%_L_3?LYVTW@3 MX-:I;?`CX5^)O"ES*/BUJZ2:Q-?BT^SS*&\/MY2C^SX?,W,[+]ID(W^2/.^M M==_;J_8B\+_%Q?@!XF_;'^%>G>/'U&WT]/!-]\0M-AU=KN?9Y%N+-YQ,99/, MCV)LW-O7`.X4:?\`MU?L1ZMX3\4>/=+_`&QOA7TT" M664Q1QWLPGV6K/("BK*5+,"HR>*SY(.#?27XKEA)I-S-X2UNXO[*YCB)$ M_!;XF^)/V?OVIO@O+XC\!:/*+^_P#%'CBW;1?#FH/&WV3^VGMIO,LX&D`W M9*N5#;>:ZGQS^T[^S[\%](\+W'Q[_:%\`>$[CQ9Y<.@/KGBRTL(=9N2J$I9& MXD4W&3(FT)N.'3U%:5E[>I-SWE'E?FJEG][<4U^5M">:T5K?5O\`\!WOY6E9 M^75/4^%?%_\`P3/_`."COB#_`()S_#_]A2+Q5\/X]/TOX3ZUX1\8:7H_Q06M]&;WS+US_P`(Z,P@:C,54?,QMD!V^<3# M]:?M=?M7^%_V3/`6DZ]?>$]2\3^)/%GB6U\-^`O!NBO$EUK^LW.[R;99)F6* M",*DDLLTC!8XH9&^9@J-1^%/QH_:SO?B?I_PU_:'_9'TOPY;ZCI5Y?+XP\#? M$)O$&C6S0M`L=G.]S8:?_V8?VP?#7[7 MS_&3XO\`@OX:V'A6^^`>A>`[X^&_B)J%_J$-Y82W=P\\<,^C6\'?"__`()&_&_X+?L;?$/]EWP!^RE^RQ:^*]2^%^M^!O#_`,:= M':;2=<\36=YNM89]6$&AL]I*MJR33[+B]%S<0`?NA)YL?WG\'/VE?V<_VB1J MQ_9^^/W@GQU_8-TMMKO_``AWBJSU/^SIFW;8I_LTC^2YV/A7P3M/'!KMJJLO M;QDI[34K]+J_M-_M7^+_`(H>&KW1O`7AWP[JOA+0_P#A M5WC>S\97MQK>D^)-&OKC4=/OYK$Z8D4,?VJX`;RKMW$=N<;O/*Q=IX)_:[^. MOB3_`(*&^*/V*=:^`'A*RT#PUX,L_%!\;6OQ(NKB\N+&\GN[:U7^SFTF-$F, MMG)YB?:RJ(RLKRDE!UMO^W-^RC=?M;W7["\'QNT#_A:5EH4>K7/A)]2B2Y6& M16=(U5F!DF\I6G,2!G2';(X19(R].I+$TE'H[\\YREW4HS4VMK-;; M$QBJ#G&WP^S4K[64:<8)]&I1Y$^]]]6?+WQ:_P"":W[5/QA^)-YX/\0S>`H? M`NO_``!\0?#WQ-XWM/&-^FNSZCK4D%]>ZTFE_P!F?9Q_I\B?LW_\%"=)_::_;\^(_P"S?\*_'GPO M\6>`?!OP^T;5]-\1>`O%ZZS=MJ%S>7EO=6U\T)\FT>,VRA;9?,<*5E:3][Y, M7U!4Q][#PE'2,E.W2UY58R:[7^.]1U:YM;N&2 M_<:A'97>C6<8BD.H-^X,Y,8A`WR;\KRG@O\`X)M?M;>"=2^#&L^`/V'/V/?A M[J/@#Q]IGB#QYJOPR\17ND/XJ:UTR^L6D\N#PTGE9.H33)!(THC*[?./F%E_ M2"BJC-PJ*:W34OFIRJ7_`/`YR;2T>BM[L;0U>DZ?1IQ]$Z<:=O\`P&$=7K=; MZRO^?O[07["?_!0#XD7_`.T''X,\%_!TVOQ6^+O@WQ1X;FU/XHZK!)!8Z$=- MRMRB:!((YIQI,)VHTBQF[D&]_(4S??M@]])8PR:I;0PW+0J;B&WF,D:28&Y5 M^,J]_KP#]LC_DXK]D_P#[+_J7_JO?&5`'O]?+ MGASX"_M@:!_P4X\;?M8'P+\-I?`GB+X::=X3T[_BX>H+JZM83W]W%")D6Y;RDC,@:4GRA]1U\\^"?VN_CKXD_P""AOBC]BG6O@!X2LM`\-># M+/Q0?&UK\2+JXO+BQO)[NVM5_LYM)C1)C+9R>8GVLJB,K*\I)0**OB8$_@__P`)?X._:@U+XL>'M+M?B=JLFFZI!J4FJFYL+F[;05EM'A34R(Y4 MMYQ*T666(';2^"_V$?\`@H?H/_""0ZWX2^"\_P#PCG[5^O?%?5KBU^)FK)OL M-1_M'%I#&VA-F>/^U9OO.$;[(GS+YY\GZOM_VYOV4;K]K>Z_87@^-V@?\+2L MM"CU:Y\)/J427*PR*SI&JLP,DWE*TYB0,Z0[9'"+)&7\X_9O_P""A.D_M-?M M^?$?]F_X5^//A?XL\`^#?A]HVKZ;XB\!>+UUF[;4+F\O+>ZMKYH3Y-H\9ME" MVR^8X4K*TG[WR8C#\(^,+(#[1I-S!,%G9"4;_6VDEU M;D8P1.0>,UC_``E_8,LOA!^W#XJ_:9\,>+_)\(:[X0TJUT_P%'%_H]EKEM"; M*;55&,+(VG0V5JI4YVK*#PPKZ)HHI_NFW'2[;?FW%1U[Z)6OLTI*S28I_O%[ MW1)+NDI\2ZEX"U+X,2_'H_$S3O%G] MKWD?B:W7^VEU\:0]@;-K>4_VB&C^W_;`WV9L?9]Z@UQ>D_L`_P#!0F;1O".A MZ_X+^#MO'I7[4WB+XH:Q-I_Q9U9Y$T[5%U)1:P%O#R[[B/\`M68[FV(QM(^1 MYQ\G]$:*A4X**B]4K;];.F]>M_W5--]>6[UE)RT=6;;3OUNI.=^VLI2;5K.^WNQY8O[L86]V-[+HKV^?V8 M[MOW>SDI>%_\%`?@_P#'_P#:3_85\>?L_?"#P]X.'B[Q_P"#;O0+H>)?%=W9 MZ;IHO+5X9IUN(-/N);CRB^50P1^:!RT5>>_M2_LM_M6_&O\`8#\._!3P;\/? MA?:?$I-1\)GQ']O\=WT>EI;:)JD%^JQ7Z:.UQGLVW%+R3D][MWWV!2?N7UY5*W_;W+=^ONQ\M-M6?%/[2!XHP0\D08C$I MW?A;;?\`!0OQ]%IWAC]I_P`,?"CP?IUO8@>(=7^&OC34=9N->E\DH\45O?:5 M:+I<3.WF%O.NY`J^4I#-YZ^[T5O6E]8G4=174VVUT;>C?S5D^C22::2.>G!4 M80C#3E5D^J2UMZ+IU5VTTVV_BK]F#]@3]IKP/!\#?@]\?K_X?7G@S]FJ^NKC MP%XL\,ZI>'5_$P33[O2]/6^L);-(=.,=G=LTS175T9IXD($:LPKWZ/XR?'W2 M/B'\./AWXS^`^D)/XKMM3E\7WWAWQ!JNH6?A[[,FZ$QW3:-%;3B4LBE;F6RE MRQ\F.Y".5]7HIRJ3G+FF[MMM^;:=V_-Z7M_*MM1M+6VFEE_=5V[+R3;:O??M MH%%%%0,\`_X)/_\`*+/]FK_L@'@W_P!,=G11_P`$G_\`E%G^S5_V0#P;_P"F M.SHH`]_HHHH`\`_;(_Y.*_9/_P"R_P"I?^J]\95[_7@'[9'_`"<5^R?_`-E_ MU+_U7OC*O?Z`/B[]GCP#^U1_P3K?XB_`SX>?LA:S\5?"GB3XB:SXM^'7B/PG MXIT2P@TY=6N'NIM/U>/4KRVG@$%T\F)K.*]WV[J1&)$\EO.O@'^P!\;?V;/V MB_V9=+\4_`&7Q_8>"M*\?ZIX_P#B%HTVD)I&C>(/%%_#=.+2"_ODOS#`$NH3 M)'`SF&:/`9I)DC_1:BBE^Z]G;["45_A47!+TM:_5M)MZ#DW)S?\`,Y2?^*5[ MO_R:2MM:35MK?EO\-=1\<^!?CWI7C+Q3\&O$$OPET3]H?Q>OPIU;2],\/7%I M+XDUK4]1TDB]U.'Q%-J%UI\MQ>7;-;IHL)OV&_'@O?B7^RA#\/=%\,Z;J/@#3=&T#68O[1C%CIL%EJR&+1XAJ*F MW>Z>>Z$<4X=AB&-OTH\/?LF?LK^$?C'>_M%>%/V:/A_IGQ!U,RG4?'6G>#+& M'6;HR@"3S+U(A/)O``;NJ5E9N6 MJKSABI58]9*7S515/DG)*\;]W>[T_,7QQ^S9^UG=Z#\6O"'PS_X)X>+]"TGQ M3^Q'IOPU\-:=;:]X0MK8:]$FI`VWEPZSMBCC&IHOF8V?Z//M)'E&7UD_"?X\ M^#OBI9?$+QS^P'J?Q5\)_$3]G[0O!GB;P?+JWAN2\\*WEA-F:EXZ^!GCF'Q=H' M@6\U?[%8^(46RN+.ZTQ;@IMMY6@N)/L\SJ(UE5!)LC9RK/C'_P`-:_MN_LZ_ M$GX(:%\!/$/P-;Q%\/M7TBRUGX@ZWI,]]+J-U:M%;&V&A:A?)%;HS,TLTKK* M,*L<+[FDC^G**PG",Z52F]IMM^LHJ+?W16]UIMJ[W3G*E4IU(Z2A9)^49.23 M6V[>R3U\E;XR^`7PU_:!\0?'_P`-_M=?$']BW6OAEJ?PW^`]WX.O_"%CXCT. MZG\8WDDUI<0VMA);7[0FRMFLYUMWOY+5M^H9,<($K'Z$\.?M+:'KWQ]@_9QO M/`FKZ;X@?P'!XIO%N]5TB;^SXI)O)^RW$%M?2W,_ MM5_#/_@J-\1/VD])_P"">GQ2\6>#=5^%NA^$M)U7PYXD\&QM>75CJ&HW,MPL M5]K]M(ENR7D80R*DA97W1J`"W&_&OX!?M]_M!^/OB-XI;X$7W@W5?C5^R[/X M)L-9M/$>EM!X'U6*^URYMH-3:._:9RT%[9Q-/8)=+YK2-A$4&OT*HKG5-*E" MGORJ:6W_`"\512OT_P"7DFM-[=+I]"K35:51;RY/_*;IN/GI[./777K9KX6_ M94T']ICP[^V3K7Q_\3?\$UO&O@'1%_9MT'PM!ID'B+PC,LVJZ3=7]P;"V^RZ MRY,;QW44-M+,(4_=GS?LZ@$_;V@ZC>:QH=EJVH:#=Z5<75I'-/I=^\+3V;LH M9H9#!))$70DJQC=TR#M9A@FW16\JCFK/S?\`X%.4W][F_DEYWYXTXP>G:*^4 M81@ON4%\V[]+%%%%06%%%%`!1110`4444`%>`?\`!)__`)19_LU?]D`\&_\` MICLZ]_KP#_@D_P#\HL_V:O\`L@'@W_TQV=`'O]>`?MD?\G%?LG_]E_U+_P!5 M[XRKW^O`/VR/^3BOV3_^R_ZE_P"J]\94`>_U\3ZG>_M5_#/_`(*C?$3]I/2? M^">GQ2\6>#=5^%NA^$M)U7PYXD\&QM>75CJ&HW,MPL5]K]M(ENR7D80R*DA9 M7W1J`"WVQ122M6C43UCS6_[>BXO\)/[QMWI2I])6O_V[)27XQ1^>OQK^`7[? M?[0?C[XC>*6^!%]X-U7XU?LNS^";#6;3Q'I;0>!]5BOMV M<33V"72^:TC81%!KH?V5-!_:8\._MDZU\?\`Q-_P36\:^`=$7]FW0?"T&F0> M(O",RS:KI-U?W!L+;[+K+DQO'=10VTLPA3]V?-^SJ`3]TT4Z?[JW+TYK?]O> MUOZV]M.U[VTZWNZLG6OSZWY;_P#;OLONO[&%[6ZVM?2IH.HWFL:'9:MJ&@W> ME7%U:1S3Z7?O"T]F[*&:&0P221%T)*L8W=,@[688)MT44VTW#?_`$QV=%'_``2?_P"46?[-7_9`/!O_`*8[.B@#W^BBB@#@?V@OV9?A'^T] MHVAZ+\6;/7_^*9U\:UX?U#POXTU70+_3[[[)X3-M>74+*)-K) M,P8&O/O^':G[.O\`T4;X_P#_`(EA\0O_`)>U[_10!X!_P[4_9U_Z*-\?_P#Q M+#XA?_+VC_AVI^SK_P!%&^/_`/XEA\0O_E[7O]%`'@'_``[4_9U_Z*-\?_\` MQ+#XA?\`R]H_X=J?LZ_]%&^/_P#XEA\0O_E[7O\`10!X!_P[4_9U_P"BC?'_ M`/\`$L/B%_\`+VC_`(=J?LZ_]%&^/_\`XEA\0O\`Y>U[_10!X!_P[4_9U_Z* M-\?_`/Q+#XA?_+VC_AVI^SK_`-%&^/\`_P")8?$+_P"7M>_T4`>`?\.U/V=? M^BC?'_\`\2P^(7_R]H_X=J?LZ_\`11OC_P#^)8?$+_Y>U[_10!X!_P`.U/V= M?^BC?'__`,2P^(7_`,O:/^':G[.O_11OC_\`^)8?$+_Y>U[_`$4`>`?\.U/V M=?\`HHWQ_P#_`!+#XA?_`"]H_P"':G[.O_11OC__`.)8?$+_`.7M>_T4`>`? M\.U/V=?^BC?'_P#\2P^(7_R]H_X=J?LZ_P#11OC_`/\`B6'Q"_\`E[7O]%`' M@'_#M3]G7_HHWQ__`/$L/B%_\O:/^':G[.O_`$4;X_\`_B6'Q"_^7M>_T4`> M`?\`#M3]G7_HHWQ__P#$L/B%_P#+VC_AVI^SK_T4;X__`/B6'Q"_^7M>_P!% M`'@'_#M3]G7_`**-\?\`_P`2P^(7_P`O:/\`AVI^SK_T4;X__P#B6'Q"_P#E M[7O]%`'@'_#M3]G7_HHWQ_\`_$L/B%_\O:]@^%7PP\"_!'X7^&_@Q\+]"&E^ M&?".@6>B^'=,%Q),+2QM8$@MX?,E9I'V1QHNYV9CC))))K?HH`*X']H+]F7X M1_M/:-H>B_%FSU__`(IG7QK7A_4/"_C35=`O]/OOLES9F:*\TJYM[A,VUY=0 MLHDVLDS!@:[ZB@#P#_AVI^SK_P!%&^/_`/XEA\0O_E[1_P`.U/V=?^BC?'__ M`,2P^(7_`,O:]_HH`\`_X=J?LZ_]%&^/_P#XEA\0O_E[1_P[4_9U_P"BC?'_ M`/\`$L/B%_\`+VO?Z*`/`/\`AVI^SK_T4;X__P#B6'Q"_P#E[1_P[4_9U_Z* M-\?_`/Q+#XA?_+VO?Z*`/`/^':G[.O\`T4;X_P#_`(EA\0O_`)>T?\.U/V=? M^BC?'_\`\2P^(7_R]KW^B@#P#_AVI^SK_P!%&^/_`/XEA\0O_E[1_P`.U/V= M?^BC?'__`,2P^(7_`,O:]_HH`\`_X=J?LZ_]%&^/_P#XEA\0O_E[1_P[4_9U M_P"BC?'_`/\`$L/B%_\`+VO?Z*`/`/\`AVI^SK_T4;X__P#B6'Q"_P#E[1_P M[4_9U_Z*-\?_`/Q+#XA?_+VO?Z*`/`/^':G[.O\`T4;X_P#_`(EA\0O_`)>T M?\.U/V=?^BC?'_\`\2P^(7_R]KW^B@#P#_AVI^SK_P!%&^/_`/XEA\0O_E[1 M_P`.U/V=?^BC?'__`,2P^(7_`,O:]_HH`\`_X=J?LZ_]%&^/_P#XEA\0O_E[ M1_P[4_9U_P"BC?'_`/\`$L/B%_\`+VO?Z*`/`/\`AVI^SK_T4;X__P#B6'Q" M_P#E[1_P[4_9U_Z*-\?_`/Q+#XA?_+VO?Z*`/`/^':G[.O\`T4;X_P#_`(EA M\0O_`)>T?\.U/V=?^BC?'_\`\2P^(7_R]KW^B@#`^%7PP\"_!'X7^&_@Q\+] L"&E^&?".@6>B^'=,%Q),+2QM8$@MX?,E9I'V1QHNYV9CC))))HK?HH`__]D_ ` end GRAPHIC 21 manufacturingprocess.jpg MANUFACTURING PROCESS begin 644 manufacturingprocess.jpg M_]C_X``02D9)1@`!`0$`8`!@``#_VP!#``@&!@<&!0@'!P<)"0@*#!0-#`L+ M#!D2$P\4'1H?'AT:'!P@)"XG("(L(QP<*#7J#A(6&AXB)BI*3E)66EYB9FJ*CI*6FIZBIJK*SM+6VM[BYNL+#Q,7& MQ\C)RM+3U-76U]C9VN'BX^3EYN?HZ>KQ\O/T]?;W^/GZ_\0`'P$``P$!`0$! M`0$!`0````````$"`P0%!@<("0H+_\0`M1$``@$"!`0#!`<%!`0``0)W``$" M`Q$$!2$Q!A)!40=A<1,B,H$(%$*1H;'!"2,S4O`58G+1"A8D-.$E\1<8&1HF M)R@I*C4V-S@Y.D-$149'2$E*4U155E=865IC9&5F9VAI:G-T=79W>'EZ@H.$ MA8:'B(F*DI.4E9:7F)F:HJ.DI::GJ*FJLK.TM;:WN+FZPL/$Q<;'R,G*TM/4 MU=;7V-G:XN/DY>;GZ.GJ\O/T]?;W^/GZ_]H`#`,!``(1`Q$`/P#W^BBN-U76 M?%7_``F%_RN/\`&@#K:*Y+'Q$_O>%_RN/\:,?$3^]X7_*X_P`: M`.MHKDL?$3^]X7_*X_QHQ\1/[WA?\KC_`!H`ZVBN2Q\1/[WA?\KC_&C'Q$_O M>%_RN/\`&@#K:*Y+'Q$_O>%_RN/\:1?^%AD_>\+$`\X%Q_C0!UU%%ORN/\:7'Q$_O>%_RN/\:`.MHKDL?$3^]X7_*X_P`::#\0ST;PO^*7`_K0 M!U]%%_RN/\`&@#K:*Y+'Q$_ MO>%_RN/\:,?$3^]X7_*X_P`:`.MHKDL?$3^]X7_*X_QHQ\1/[WA?\KC_`!H` MZVBN2Q\1/[WA?\KC_&C'Q$_O>%_RN/\`&@#K:*Y+'Q$_O>%_RN/\:,?$3^]X M7_*X_P`:`.MHKDL?$3^]X7_*X_QHQ\1/[WA?\KC_`!H`ZVBN2Q\1/[WA?\KC M_&C'Q$_O>%_RN/\`&@#K:*Y+'Q$_O>%_RN/\:,?$3^]X7_*X_P`:`.MHKDL? M$3^]X7_*X_QHQ\1/[WA?\KC_`!H`ZVBN2Q\1/[WA?\KC_&C'Q$_O>%_RN/\` M&@#K:*Y+'Q$_O>%_RN/\:,?$3^]X7_*X_P`:`.MHKDL?$3^]X7_*X_QHQ\1/ M[WA?\KC_`!H`ZVBN2Q\1/[WA?\KC_&D)^(0.-_A;IW%Q_C0!UU%%_RN/\:`.MHKDL?$3^]X7_`"N/\:/^+AX!#>%_RN/\ M:`.MHKD1_P`+#(R&\+'Z"X_QI%_RN/\`&@#K:*Y+'Q$_ MO>%_RN/\:,?$3^]X7_*X_P`:`.MHKDL?$3^]X7_*X_QHQ\1/[WA?\KC_`!H` MZVBN2Q\1/[WA?\KC_&C'Q$_O>%_RN/\`&@#K:*Y+'Q#_`+WA?_OFX_QI"?B$ M.K>&,GI\MP:`.NHKDL?$3^]X7_*X_P`:,?$3^]X7_*X_QH`ZVBN1_P"+A@C+ M>%^?]FX_QI"WQ"');POC@?=N#S0!U]%\+_`)7'^-&/B)_>\+_E\+_ M`)7'^-&/B)_>\+_E%^>!QN@C.?3[1S77UR0_P"2OG_L`C_THH`R_#EW MXY\0Z%!JL&KZ+;Q3M)LBDTZ1V0*[*`6$HS]WT%:GV#Q]_P!![0?_``5R?_'J M/AC_`,D]TSZS?^CGKK:`.2^P>/O^@]H/_@KD_P#CU'V#Q]_T'M!_\% MKK:HZMK%AH=BUYJ,_DP*0"VQF.3TX4$F@#`^P>/O^@]H/_@KD_\`CU'V#Q]_ MT'M!_P#!7)_\>K8T;Q)I/B".1],NC,(SAPT3QL/P8`UJ%@!D_P`J`.3^P>/O M^@]H/_@KD_\`CU'V#Q]_T'M!_P#!7)_\>KH=2U6RT?3YK^_G$%K"-TDC*2%' MKP*CGUS3+::PBEO(UDOWV6J\YE.">/P!ZT`87V#Q]_T'M!_\%H^P>/ MO^@]H/\`X*Y/_CU=4\J1XWMC<<#([TYF"]?Y4`A_"A+J"2YDMTD!EC`+ MKZ9H`YC[!X^_Z#V@_P#@KD_^/5GP^(M8T/Q?%I'B74=/G@N+)KF-K6T:'#K( MJ[>7;.=V?PKNPZG&#U&1Q5&ZT73[V[CN;NR@N)D4HKR("54G.!^(%`%Z,YC# M;MV><^U.ID:!$VJ``.@`QBGD@#).*``C((/0UPT%]XMU?7M5FS$CYR)%_OXZ=J[<2(03NX&/UKE/"1`\1^,R>G]JI_Z30T`:VCVN MN1"3^W+ZPNB2#']DM6AV_7+MFM900#DYYI>M%`",=JDXS@=*C%Q$N!UPP M-5=;.W0[YN#B%C@]^.E><:=I-YX;\.7&K6VAZ#IE\T:)!=V.Z1BK-R75E7V[ MF@#U%IE4;LC;SDYI3*NW((/&>3CBN)O_`!#-I^GW-E&R2)5\E=HR1@DD$YH`ZO[3"W"21NQZ* M'&30)P7(*,!MW;L<#V/H:\@\,VMO%';ZF=,\)+?)&\D=TMWNNS)S@E"N,_C6 MG/J7B0_88;WQ%`J3/;W;R"T50J,5_.">F*`/3S(J@$G&2`,]R:3SE MW$9&/7->0MX_\2K:ZUJ"VNV&WMKF0+)'"!:NA(3&)"[AN^Y1CMFMJ6\\11ZC M_9EOJUFE[=2PF6\^Q+\J%'8C;GYL$`#..IH`]'W?+G'X#F@'(Y&*\R3Q1K,L M6YM6L;.6UPGEO;K_`*8=VTE>3MQUJ+[!X^_ MZ#V@_P#@KD_^/4OB,Y\<>"_^OFZ_])GKK*`.2^P>/O\`H/:#_P""N3_X]1]@ M\??]![0?_!7)_P#'JZVB@#D6L_'JD#^WM`R>@_LR7G_R-0+/QZ3C^W]`R/33 M)/\`X]76$98<=*Y?4Y=8O]5FTS1;^#3C:*KO));B8N6&0,$C`(SS[4`1"T\> M]]?T#GIC3)?_`(]2_8O'I_YCVA?CIHG\4RZ,9/[4VRR)&BI'`R@S2= M\;B%'XFB\\>V-GI4&JBSNIK&0XEFB:';`1@$,2XR>?X@"7[%X^+8&O:# M[_\`$KE_^/4OV#Q]_P!![0?_``5R?_'JO:-XD35M0DMFTZ\M)%7>AN$0"5.S M*58\'GK6_0!R7V#Q]_T'M!_\%K+\17GC?PYX?N]9GUC19X[1?,DC33 MI%+KD9`)E./RKT&JE[86^H6TMM=6\BRRZ=-#'=E MT2.2:,NJ[G`Y4$9Z^M:Q=1W[9K)\2$'1FQVGAS_W\6@#*%AX]`P->T'_`,%< MG_QZC[!X^_Z#V@_^"N3_`./5UM8VH>*]$TK4([&]OA'<2$`*(G8#/J0"%_$B M@#+^P>/O^@]H/_@KD_\`CU'V#Q]_T'M!_P#!7)_\>KJU=74,IR#T(JO-J-K; MR>7)+B3*_(%)/S'`.`.F01GI0!SGV#Q]_P!![0?_``5R?_'J/L'C[_H/:#_X M*Y/_`(]76$@#)HR*`.3^P>/O^@]H/_@KD_\`CU'V#Q]_T'M!_P#!7)_\>K;T M[Q!I6K7%S;V-XDTMJVV50""/<9'(SQD9&15?4O%NAZ1J$=C?7XBN).B^6[`= MN6`(7\2*`,S[!X^_Z#V@_P#@KD_^/4?8/'W_`$'M!_\`!7)_\>KI[J[@LK.: M\N)!';PQM+)(>0JJ,D\>PI8+B*YMHKB%]\4RJZ,!]X$9!H`Y?[!X^_Z#V@_^ M"N3_`./4?8/'W_0>T'_P5R?_`!ZNIFGB@3?*X1YI(;B.XB\V(DIDCE2. MG'0T`(R*G!).T$9^[Z]ZCT6U\1Q74S:WJ>GW46T"-+2T:$JYX_*@!U-+@9/&T`Y)/2G5A^+`7\+ZD@5'/ ME\*Q.#D]#[4`:ZW"/_JRC\9.U@:42GG/?TKS33M&OM"M+0V.G:#H M.HZ@ZPBYL(C-NCV@DD,J\YYQS]:MW7BJ5M+MK5KJRGN&AN/M$8B#?,A7!9`? MEZYQ[T`>@&9<#!!).!@]331X81$G[0.I`/.&QR*`/4S( M%P6&T8Y)H,H50SX7UYZ5Y;J'B[6]&L=<^TZC:RW=OI%M>VDAMUC+/(S!P!GY M@,+],U)?:QJ[R:UIU_?*64@VJ111"-!YBX.]7+Y'<,HH`].$JX4Y'.<<^E)Y MAW`;&P>I]*\H\0^(=RO+RSBO9H+HVP5AMM/,&!VYX)[U;3Q+K\>I M/HUUJ]K$YAMKE=0>U"I$LV[,;+G'5.&SWH`].#[NQSWS3JP_"^H7&HZ1YUU( MLLOGR)O48&`<"MSM0!!+<1I=16S$>9*K,JGOMQG^=NMKD MOAC_`,D]TSZS?^CGKK:`"N8\6V%[?:=:06ES/!-]NA;[1;J&:$`G)P00<>_' M-=/44CI"C2.0L:C)-`'F5_97VG)J5MJ\6J:S/?O4EVSQR38CEBD:6/+,0V7 MVR$SSPF>&+=@O&,9;WQFK-M<0SP+/;R":)^5=3\IYH`X-;>^U/X67LEY8WC7 M>HJTC6I)=64UWI5PT6BW+VEH49F:X@\ICO!'S` MY"CGGFO6,N!N`+`CH>N:CAGBN/,$4HDV-M8JW*D=CZ4`>.Z7;3RW`N)]-UA; M)+B"ZMT#7GRLS!6+^82QQ@@C[N!NQ@U`(?%D5GXA=Y[G^T3:R+(D,-VQD<`D^JGL#0!YGKUB=*M;S31:ZK/9R7"+;N M)KF01N8F)8M&=^"V`1G:":H&TU&Y\'^9?)J-O=#R_,3R;DEV5MN,Q?O-N!U! MZ=:]9CN8;@GR90Q5BA`]1U%/#;\;3P#U';U%`&1X;DN+CPU9O

P(X-`'@=A\<[S1O%6H:9K4(O=-2]DB2XC7$J MKNP.!P0![5Z7X$O8+_5O%E[:LS03:FC*60J*2'RWBC:,?PE>,5-10!FG3;"2\>^-A:-T+G"RV[!77![$@_R MKAK#4+OP[HZ:FU]JVMW-U>)81VEYVA:X"!F./D)VG`QSG MVH`V#H6DF6:;/\`+,YMT+2#T)QSGWJXUG;EA(L$)<$,'V+GC@<_2N&E M\8:S#<3W@T9FBMK97N;,W(58R';+H^WYR>F,#.*[^"036\<@X#J#CTS0!S&L M>"[/5M5M[SSF@6,J3"D,;*Q!W<,1N3I_"173H`#C&"`!U[5)10`C?=/>J5[J MMI8.D4\C(S=,+FKU-9$8Y95/U%`&5_PDFF;O^/@GV\MJ\;\9_%_5O"WQ%D@M M'6ZT<0Q,ULZ`$$CYBK'G]:]X\F+_`)YI_P!\BN&U/X7:#KGC.3Q!JB-<,41$ MMCP@V]"<=.G';FNJP** M`.)\'Z3KMMJUS=:OYRQB,0P+.\3':#_#Y?1?3=\WK7;444`%%%%`%.\U.UL' M1;AV4N"1A2?Y54;Q#IQ``E?J/^69_K6LR*WWE!^HIIAC(_U:_D*`/#_B;\3] M4\*>*=._L2Y$EEY1,UK+'\C'/J>:Z;1_B3I'C?0&%K'-#>))")8'0E5/F+_' MC!_.M+Q1\,])\6^([75=6D/6(+BX,?F>18&XM[D#/RL=IV#GD\5Z M#BB@#QVXCU@-JCFTU=/$)6Y.VV,AM%@\MQ$$_@)QMX7YLU:LM$_L?6='NH8M M9-]=6%NLL[33.,@YE5\D@<'A?7..:]8Z44`>/RV^IZ3HUM?K/JJ3SV^+4TT7TD%LT'V*WOWE#AO(!VGS#N7)ZY] MZ[R\L[>]M)K>[B2:WE&'C?H14&CZ+IVB6?V;3;5+>$L7*J2V2>I)/)_&@#S_ M`,%/ZUH>()S;:W+!:1ZK M'VOB>XU'75O&9)YK.["1107+AH M#&_EQJ1^Y#?=[;J=:6OB=/$UE&\TMHZQ6_D-Y5RX%N(E#)\O[E26#??&[]*] MEHH`\CEL;6\TDEK'Q$5@N4EO4F,W^M&1E/XCR?X/EK5DT?4-1GFOKIM3\^%H MVMPDKH`CTUP."<`@\$T`>4>%;YY_%&EO-/?OJ=RUT+TN9/LD MNS&#$#\G`Q]WOG->F7VIVNG[%G[&> M67[1&T?$B@+@'(]STYKV#RH_^>:_E7'^-?A[IWC:\TQ]1D=;:Q9W:&$`-+G' M!/IQ0!S'A3XJ:?XWN=&L_LLMKJ*70:2/:3&V(VR0WU/0\UZQP6/'*US;:/8: M*NAV=A:16]O%=*L:H@!`\M^IZYKI%^^_U_I0`ZF/$DBLLB*RMU![T^B@"O)% M&QCWI'F/E25!V>X]*K0Z5I\,\URFFV<2)"H9P?[S8YK1P**`*-O86EI M)++:VT,+2X\PQJ%)(^GMFH/[*TE'GDBTNT$UXI29OLZYF7_;./F!]ZU<#THQ M0!F3Z787?E?:M/M)RB>6AE@5MH[C..%X''M20Z/I,,LUS%IEDDLS;II%@0/( MV?O$@!_RU>NL!;<02.M>;:CX8\0>&-&AMO#_B75 M3`DK*MLMI!)M#,6/.S/5CU-;7@0^(#'?_P!OWMW=/YJB'[3`D>U0#G&P`X@6:"2%^?-5E//8BK%1^7R3PZ4SRE/)8JKL(U4QGC/);( MZUZSY3@'$A)]^]+Y1S]\@8QM'I0!XK5S&W1WI0!Y5I>IWD=I) M(-=N;RV>_M=0U"*U6^?RK<-LJ36K][VP:?5]4CU7^T-/C M^SHS+"\+%!)N`^7/+9S@^V*]A*.T84L`<]0*RI?"VDSZZNKRVQ:[4A@WFN%+ M#HQ0':3P.2,T`;-%%%`!2$`C!&12T4`-,:DY(^GM7)^%&(\1>,\#_F*)T/\` MT[1?_6KKCTKSOQ+X?UG2Y[_5M`UW4H9=0N%EEMX;>*5-P14_B4GHHH`]#0[D M!QC/8TM>,E_B+GC6M8_\%L/_`,11O^(W_0:UG_P6P_\`Q%`'LU%>,[_B-_T& MM9_\%L/_`,11O^(W_0:UG_P6P_\`Q%`'LH4#IQ[5E2^'-/GL[6UD65HK6[2\ MB!D.1(K;ASZ9/2O+]_Q&_P"@UK/_`(+8?_B*-_Q&_P"@UK/_`(+8?_B*`/1D M\&:2FIRWQ%R[.[2+`\[&&-V&"R)T4^XK(O\`P(D.EE-'GE>[3"QM>WD@\MM?AIT/_`,11O^(V/^0UK&?^P;#_`/$4`=WH?A1+ M#1VAU`M+<3PF"9XY205))^\V"3R>:ZF&)88EC0':HP,FO'-_Q$W,1K.LX..N MG0\?^.4;_B-_T&M9_P#!;#_\10![-17C._XC?]!K6?\`P6P__$4;_B-_T&M9 M_P#!;#_\10![-3.GI6!XMT&75HK6^M=0N;*^TTRS6SP*K%F,;*00P(/!K*\!/XC>:].OWU[< MKM3RA=6J0X/.<;5&:`.XHHHH`****`"BBB@`HHHH`****`"BBB@`I",@@]Z6 MB@!-H'3TQCM6/XA(_L=Q@!A+#T'_`$T7IFMFLG6M+;6-+DL5O);-Y64BXB"L MZ,K!N-P([>E`&DSD$`9QSGI3E)+,#VKA_!B^(?[7U--;U*[O84'EP^?!&@X8 M\Y11GC%=PIR6]`<8H`=1110`@4+T&!Z"EHHH`****`"BBB@`HHHH`0`#G'/K M2T44`%(5!.32T4`8^LCR[C1SP0+T9+'G&Q^GZ5J(3P3W&<^O'Z51UK2Y=5M( MXH+^:QECD$B3PHC,"`1T8$=_2O+[H>/X;NXBCUW6I(TD(1UL(3N&>"?DH`]B MHKQG?\1O^@UK/_@MA_\`B*-_Q&_Z#6L_^"V'_P"(H`]FHKQG?\1O^@UK/_@M MA_\`B*-_Q&_Z#6L_^"V'_P"(H`]FHKQG?\1O^@UK/_@MA_\`B*K&Z^(_V\VB MZUJ_$/G9.G19QNQC[G6@#V^BO&=_Q%'`UK6!8N3M]`,]*T MO%ASXC\%GUU1S_Y+34`==1110`5R0_Y*^?\`L`C_`-**ZVN2'_)7S_V`1_Z4 M4`=2,Y;![^E*$^<,<%L8SBE3JWUIU`!1110`4444`%%%%`!1110`4444`%%% M%`!1110`4ULXPO\`/%.HH`1<[1GK2T44`%%%%`!1110`4444`%%%%`!1110` MUP2A`SGV.*`#R3P?KFG44`%%%%`#6SCCMS]::BL#R3Z\G-244`%%%%`!1110 M`4444`%%%%`!1110`4444`%%%%`!3,8&<9[CVI]%`#1G([>O'6A,]<8SSBG4 M4`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`#7!88&/Q&:4`@#)Y'I2T4 M`%%%%`!1110`5B[G_P"$T91]W^SU/_D4UM5CC_D?\`D*O_`.DTU==7)>+O^1D\&?\`85?_`-)I MJ`.MHHHH`*Y(?\E?/_8!'_I176UR)_Y*XQ!P?[`XR./]>:`.L3JWUIU,CZ$G MJ><$4^@`HHHH`****`"BBB@`HHHH`****`"BBHRS>9CMU/%`$E%-1MPY!'U% M.H`***B:4KECC:%S@]:`):*!R,T4`%%%%`!1110`4444`%%%%`!112$\@9P3 M0`M%-5\@9&">@IU`!1110`44A(&,GK30^3SQ@X^M`#Z***`"BBB@`HHHH`** M**`"BBB@`HHI@9LL<<#@>M`#Z*:N>A.?PIU`!113"S;EH(S0!!//%;Q/-+(L4:@9D8\5S@U MS2?^$L>0ZG9^3_9XY\X=?,/O70WMC#?V,]G.NZ*:,HP]`1CBOEN/X3:FWQ// MAEI)3:*//>X!/^HSQSZ]OK0!]5QNLD:NK!E89!'0BG5#:01VMG#;P_ZN)`B_ M0#%34`%%%%`!1136<+R<8[T`.KDO%W_(R>#/^PJ__I--75H21ANHZURGB[_D M9/!G_85?_P!)IJ`.MHHHH`*Y!PI^+AR"W_$B`QC(_P"/BNOKD6S_`,+<.#_S M`1Q_V\4`)X7/B#6/#UK?7NJO;W,F_?$+5`%Q(P'Z`5L?V=JW_0=?_P`!4K6& M!P!@?2EH`Q_[.U8C(UUS_P!NR4GV'52.-6J7D95(H@N6)QQG<.* MA?QYJ5U>&PL=%A:^6:,2QQZC%(JJQZDCOC/%`'5M9:JOWMJ4O]FZM_ MT'7_`/`5*U$&WY?S_P`:?0!D?V;JW_0=?_P%2N8U/Q+>>'/&MIIFH73WUGKQ$&-67A6`(&.E/J*` M@6T62!\@_E4NV_P#:OBB.*.=% MCCTS35FA4>C/Y;?CSQ0!V7V#5#_S'G_\!DH^P:KC/]NOCU^S1USMMXZGN]22 MTBT29H9KJYLK:X-U'^^FAWED(Q\H.PX-2:5XWN;IHFU#07T^RDD>#[5]K29` MRCMCJ"J4W[)J8(']NR<\C_`$5.>,_A^-<[:>/; M^\C@<^&+E%N9OLPW72G$AR4!]`=IR>W'K3K?Q[)<6C7,.B2RI:>8-2Q.J_8S M$Q5_^NG0D8Z@4`=$+'56`(UR0Y_Z=HZ!8ZH1N_MUPOJ;:,5S\?CA+&S>YNHY M9H'MY+JU="H:X"C<8U3&E:CHQBU"2ZAN+\17*"T'$7ER-U' M3E5Y]ZW]*U)=4T^*[^SS6^\$^5,N&7ZU:"N""68^O(H?H#N.,Y!SB@"2BBB@ M#F?$E_J$/B#PYIME="WCU">=)V\L.2JPLXQGIR!5X:9JP;/]NMT`_P"/5*R_ M$G_(\>"_^OFZ_P#29ZZR@#(_LW5O^@Z__@*E--CJH./[=?/I]FCK9KF?&M]< M:?X:EN+>>>WE,T:>=;1AY5#.`=BD'D:SK-A9:C=RC4[^RC1!$VM;+"0OD[ARJ@+C&#CGFK$'Q&@ MN)M+2/3H46^4_O)KZ.--V<;8R?\`6Y]5H`Z/[%JN[;_;DF?^O5*=]@U7_H.O MCKG[-'7%#XEIIFG0_P!KP017SO.3%+>I$HC25DR"WWFPO"CK6R?'5D;4W*6< MSQ#6%TM?F'S,4#>9C'3GI0!M_8-5_P"@Y)TSG[*E!L=5`S_;KD>UM'Q6%#XM MU*XM1>C1IEE:U:Y6S>\C5/*!&'9\?*2#G!JI?_$2XTWPW#K5]H(M;<9&.N10!U!L=5`_Y#DA.<8%K'FAK'55.#KDGIQ:QUS-MXQN0E MU=:C9W4:P32K#'"Z/YH"QD`X';>/S/I4LOC>YADM;.?P_-'K%S6SD6* MY,D:+*4#8RZ@\?0FM:LCQ(B@#C=8UQ=!N8K;4?$E MS'-*A=4CTPS':.I.Q3C\:OV,EQJ.[['XE,VU59BMJF`&&1V]*Y_QHMXFO12Q MR^(+='MV02:38BX#9QP^5;&/ZUB:GH_B6+2(TM+5A`IA6ZC\F0^?$(<9VQD/ MO!QD*0B_8=5R0- M#7G%UH&O7%EJ,Q&HS36NA1R:0(BF-@&(SMP&P=/ MCDG6]=]KR,S;F4.3P2,C'&#QQ0!V7]FZM_T'7_\``9*/[-U;_H.O_P"`J5JQ MG*YXZTZ@#(_L[5AS_;C'V-LE6[&"ZCLH$OI4FN`F)947;N/M5RDW#U%`"T49 M&<9YHSF@#+UJ:[C%C%:7`MWGN1&S^6'^7:Q/!^E,&GZJ2X&N/UX_T5.*=K)` MN=(_Z_1_Z`]:2$%F(.1F@#+_`+-U;_H.O_X"I2?8-5#;?[=?/7_CU2MBN=\4 M:K+HZV,Z-\C3L9(R0-R+$[$9]]HH`M&PU4`G^W7/L+:/FC^S]6X_XGDG/_3M M'Q6`_C2&:32X!;W$`NM/@U$/&RDJLCA0F"/FZ]J2_P#'TFDV$UYJ&BO:P,ZI M9RS7*JD[,2!O;I"./XJ`-XV6J?\`0=DY_P"G5*C.CWPOC=KK!^T>6(BWV5,E M)C$Z2E64X.U@-K^H..>*S=`UFYMH;Z_GN? M%%]'!;J[1ZIIZVX5<\NA"#VN/[8M8Z06&K'IKF1VT[@C@G,Z,DJ2,`2FW.I/!&)KUO/C4P(S$+V^? M[K?=]*`.@-GJ@_YCLF0<8^RIUH:PUC@C7G`7DXM(SD>E86G>/%O]4@MSI4T= MIXGY,9`(1CGVQ7:*"4[@XX]:`.:\,^()KMX].O[>X%^J,9 M+AX@B2[3U'YBHO%W_(R>#/\`L*O_`.DTU:USN_X2?32$+/6+U[I[J^M3*NRY2TF\M;E>FV08.X8X[4E_X1T_ M483#YMY:HTGFD6TWEL<`#:>#QA172X`.<#-&`01@8/6@#F+[PCI]]J"74D]Z MA2-8S#%+A'';>I!Y&.H-6!X4TY8X8_W^R(N<[_O%ASD]QS6_M7.<#([XHVC& M,#'6@#FXO!^G)K#:DSW9E(E4(\V8U$JJK[1CT1:I6?@#3+5-PO=3><*L8N7N M@K8P#U`I<"@`HHHH`*\7^+>I-I M7C/2KQ+66Y*:=+F.+K@31FO:*\F^(HS\1]%!&0=.E!^GG1T`<9H'Q@U_Q%X_ ML5%A_4#=X*\2G'`_<1D_GOJ[:>"?#UKK M%KK%GIT5K>P(2'MT";MPYSCK721H5`R?7B@#D#XZOL''@GQ+G_KWC_\`CE0> M!+N2^U7Q7MZU9O(X=XK6Z"QDCU7;TKI:* M`.1N/`>CWEO#;&6[`BN+BZ5XY=KAYPWF>.W%9VJ^`S=>'HM#2]NKZSD MFC=Y-0N?,:!4Z",!1Z5WP`'08I:`,5-`L5E\Q-ZD7"S\'C>HP,>W/2L=_`^E MRNX@DOXXGEFDFBBN=J7`DG>NQ*J1@@8^E+@'''2@#C-3\(PZ MA+HMM';QC3;*Y^U.[R8<%0-J!<KDOA6TN[^ZO+B[U"X,XVK'+*/ M+3D'Y`!QT[FNFVCT%+CG-`'/VGA>VM]:_M=]0U&ZG"E(TN90R1_0`#^=;J9W M9(&<=?\`ZU/H`QTH`1ONG->,?&;QWK'AO4=*TG29/(BO8Q-+*@_>GY\;5)X% M>SGIQ6!XD\(:%XJ@\K6-/AN6"[!+]V11G.`PY'K0!DV_CJ^^RPY\%^)7/EKE MO)C.>.N=]2?\)U>_]"1XE_[\1_\`Q===;P);6T4$0(CB0(H)SP!@5)0!YQ/X M@GUKQ]X0CFT'5=,\N>Z8/>QHJO\`Z.XP-K'GO7H]JD,/U%7Z3`]!0!CZ]HD.NV4-MZE'9QRM.;9+@;)6+!CN&WL1Q@UU^T9S@9] M:,#&,#'I0!R!\"Z4JK);7.H02([NDL,HWHKL79`2#\NXDX]Z6Z\":3-CRK#;CC)(KM, M#THP,YP,T`7^NK MNUN3Y2-&$K$GG)89_2NZUWPWH_B2V%OJVGV]VH! MVF1`63/4J>U3:5IMOHUE#I]G&8[6$;8U9RQQ^-`'._\`"=7W_0D>)?\`OQ'_ M`/%U4U'Q3=ZE:I:2>%]>M$DEAW3SQ(J)^\4]G/TKO:R/$O&C$#O/#_Z,6@#6 M&>]+110`4444`%%%%`!2-]T\9]J6B@")HU9=NT$8VD,,@CTK+TG0-+T*:4Z7 MIT%J)&/F&)>6[C)SZDULX'''3I00",$9%`#4.5ZYIU%%``U>HUFZQHFG:[:FTU.QANH".DB@E3ZC/2 M@#R_X8>/-3G\&P?;M'U[693-*7NX(D=3\QP.6%=A_P`)U>C_`)DGQ*?^W>/_ M`..5LZ!X:TWPUIAT_3(6AMO,,A5FW9).36P._2@#A)_%EWJ.K:+;OX7URR5K MX9EN8D5/N/P<,:[?@%0V3D\9[5GZS_Q\Z3_U^C_T!ZTU`#/CUH`=7-W7A&PN M=VL1G/0&5LG.2P`Y'TJA:^$(8HI;>;6]!SS0!R[>"=*9(HE:ZB@CWJMO%-A`K8^4\=!C M(],FH[_P-IVJZI+?75SJ"F8QLT*7&(MZ=&`QU(R">X)KK"`3D@9H"JHP%`&, M8`H`Y5_!>G3>:KWNH.'D26,O!].N)(G-W?P2HJI, MT5SC[0H)*B7CY^2?3K76;5_NC\J``.@`H`YRV\):1!):O&9LVVHRW\?[SCSI M`P?C'3YFXKHD!"\YS[G-+M7&,#'TI:`,J[_Y&73/^N$__LE8_B[_`)&3P9_V M%7_])IJV+O\`Y&73/^N$_P#[)6/XN_Y&3P9_V%7_`/2::@#K:***`"N2'_)7 MS_V`1_Z45UMX+N;U/05:#`KD;Y%P8M^<8_A/ MO7)CX;^()-3BOKS56OI8T\I6O+@R[4+AB!\H_NT`>HV_-O$>GR#(_"IJ;&FQ M`N>@`IU``>!FN1\)EAXC\8X&3_:R9^GV:&NN/((KB-=\#7,]U>W^BZSJEC>7 MLHEF6*]\N+<%"YV[3V44`=HKD]<`^GK3@O]*6B@`K%\2LW]AL5`+":#KQ M_P`M5K:K/U;28]9TV2QFFG@23:6DMI-C@@@C!^HH`O!BQ2$A$U"Y,NP9XQ\HYK46+QLJ@&?2B?4(PH`ZJBN6\OQM_SV MTK_OEJ/+\;?\]M*_[Y:@#J:*Y;R_&W_/;2O^^6H\OQM_SVTK_OEJ`.IHKEO+ M\;?\]M*_[Y:CR_&W_/;2O^^6H`ZFBN6\OQM_SVTK_OEJ/+\;?\]M*_[Y:@#J M:*Y;R_&W_/;2O^^6H\OQM_SVTK_OEJ`.H8A5).,#UIA8,1R-HYX-'-:T?5;V74=9O+^TD7$,=S#/^PJ__I--6_/:22:Q9W:E M?+ACE5LGG+;<8_(U@>+O^1D\&?\`85?_`-)IJ`.MHHHH`*Y(?\E?/_8!'_I1 M76UR0_Y*^?\`L`C_`-**`.K3JWUIU-3JWUIU`!1110`4ASD<9'>EHH`Y'X@* MK^&(U)#8NHCEAG^*NKXX(Z8P!C`KEO'\;GPLH'\-S$Q^FZNJD^Y^5`#AT&>M M%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`44 M44`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!111 M0`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%` M!1110`4444`%%%%`!7)>+O\`D9/!G_85?_TFFKK:Y+Q=_P`C)X,_["K_`/I- M-0!UM%%%`!7)#_DKY_[`(_\`2BNMKD&.WXNLW;^P.O\`V\4`=:G5OK3J:G?@ MC)IU`!1110`4UR1R,\9.!WIU-8$X`]:`.,\?:UIMMHD]I/>VZ7&Y#Y;3;6`S MUQ7366IV6J*S6-W#<;>"8GWJ#_C7D7Q[\(-?Z;9:WI]D\U[%)Y4S1QY+H>F1 M[?UKN?AEX9;PKX#T^S>#R[N1/.N`P^8.W)'X4`=G10.E%`!1110`444TE@PX MX]:`'44@S[?A2T`%%!X%-#'T]N*`'44@.1DC%+0`4444`%%%%`!1110`4444 M`%%%%`!12,2%RHR?2F;SWQU..U`$E%%,9RI(`R<9`[F@!]%,20N>4(X!Y&,> MU/H`****`"BBB@`HHHH`****`"BBB@`HJ,NP(XXYSP:=O&,\_E0`ZBD7)'-+ M0`444W>,GTH`=12`[AGG\1BEH`****`"BBB@`HHHH`****`"BBB@`HI&.U2? M3VS0&W=*`%HH'2B@`HI'8(I8@G'8#)II=@>5`R>*`'T5E:YX@L?#UDEWJ#R+ M&\RP*(HFE9G;[H"J"346F>)K/5Y$6VAOE#JS*;BREA!VD`CYU&#STZGDC@&@ M#:HJL;HI-%&\3[I20`JD@8Y))Z`8]:AFU:WM]2M=.DDQ=7<2C_[4N-@ZCO71"3*XQA_0B@"2BJEY?)86YN+DB.,,%Z$GG@=/ M>IA*21P,<=.>OMVH`EHJ%KE$E\IC^\/*J.I%2@Y)]J`%KDO%W_(R>#/^PJ__ M`*335UF0.I%Y\0ZUI1L(]`FL&2(BY>XD4"7"XQ"5))!/<@<5BV/A,WU^KS>'7L=`VA6T M^X*K^\7.Z5E4G(;('_`:`.D_X5UX,R!_9K9/;[9-_P#%TI^&_@T=--8\X.+R M;_XNN7/AJ_@N8X;C0;N\)CC32Y(I%0:7LX;,F=P!Z\`YQBJD/A+6Y)]0@N[: MXE,DL7VIEL8HDNU\W)_>"0L^!ZJ*`.MG^'_@B)XH)=.4/,3Y:/>3$/CKQO[9 MJ9_AUX.!+2:?U.!O!$\J)#I$#?ZGLGT"6QT`JI&EW&W`F7.Z7"DCYLKWYQ0!TX^ M&GA!AD:6Y'K]LFY_\?I?^%9>$?\`H%/_`.!D_P#\76GX6M)=/T&VM)HVB:(% M0C`#`SQTK:H`Y+_A67A'_H%/_P"!D_\`\77,7G]G>`/B'9Q:782^1=:7('B% MRQ&[SD^;YR>>OYUZI7DOQ&_Y*/H__8-D_P#1T=`'JT)+('/1P"!Z<5)4=O\` M\>T7^X/Y5)0`5YSIWA;1_$7BKQ;-JEF]R\&HI''_`*3(@`\B)NBL!U8UZ(KJ MP)5@0#@X/>N4\)''B/QGG_H*I_Z30T`)_P`*R\(?]`I__`N?_P"+I?\`A67A M'_H%/_X&3_\`Q==;10!P.M>"_!&A:<;VYT:[E3>L:QV\\\CNS'``4/SS5;1/ M#/@36VFC31+ZSN(<>9;WLL\,@!Z'!?H:ZCQ?IMQJND0VUL9%;[7"[O%)L=$# M@LRL.A`[USNO>&AINA/;V^EWFOM=S*MP]XPNI0H!V_?*@A2?7C/>@#0'PX\& MMC&FDY.!_ILW/_C]0VO@+P/>6Z3PV!:)RP5OMLP!()!_C]0:Y*V\.ZS;G1// MT*:]O8/W#FXMHI((HMX&%:XS7/#.H77AR+3=%\( MSVC0VQ^QW%Q!$\\;EB6!._\`=YSP5W8K9E\,:DMK?VUGHLL`,UPYVR@"X5FC M(YSW`;Y>GO0!TG_"N?!F`?[-.#T_TV;GZ?/2I\-?!\@)72WX.#_IDW'_`(_7 M,6OA$ZCJ6E1GPY-8^'OM\LCZ;.%`B'V=E+$*Q`#/T`)Z]J[7P+97VG>#K"TU M%'CN8A(A1R"57S&VCC_9VT`9]Q\+O"TL)6"UN;64%62:&\EWH00>-S$=NXKK M\,&)QD$9Y/>GT4`%9FO:-%KVD7&FSR2QPW``=HG*M@,#C/;.,5HLZ*RJS*"W MW03UIU`'(CX9^$V)+:4W//%Y/_\`%TO_``K+PC_T"W_\#)__`(NNMJ"\D>&R MFDBA>:14)6-,98^@SQ0!PEAX3\`:GJ%_8VFGR236+*DW^E3XR?0[^<=_2M$? M#GP60"-/X)P/]-FY_P#'ZP!X3U^PFBNKZ\GU)+V*2"[AM+:..1-XW;V?<-Y! M4+]&([UAR>'-![C8T6F2M`\?F"<7JSQ(HM^I;>H?@D$#Y,-U;'?&1UQ0!K:CX'\$:9IT]]-IW!E=,+R%)Z`4`4]/\'^!=41'M=) MN2C8(=KB<#D9_OU>/P[\%J%)TXC<2!_ILW;_`('64OAS5'T46KV;[C&%<-)G MC_&LK6M!LM#O+&*72PVC2SAIM/W*%NW$*@$[B%^1AN.2.G&>E`'6K\-O![,0 M-*D]C]KGY^GST_\`X5EX1_Z!3_\`@9/_`/%U-X`*'P;IQC5E0HQ56.<#<<)?MFA:9H[6[AX87_>M(6SM=AW MY].IKT>O&/A#_P`?=I_UPF_]&&@#V5,[?FZ_6G444`%8'BZSBOO#D]M<@F*: M2)6&XCK(O&5(/ZUN^8F_9O7?C.W/-97B7_D#G_KO#_Z,6@#('PR\)8^;2WS_ M`-?<_P#\72_\*R\(_P#0*?\`\#)__BZZVB@#DO\`A67A'_H%/_X&3_\`Q=9^ MD>"_`VN:9:-%KT7@^]\,0:+JEC MJ#+=>1J$GEB$,TCNAR')_B':@#'=3@\/7%O/H%S=6]Q-&C6,FG0HD3`-F=8Q*0Q)QN M)(/3BI;7PYJD>FVD.H^'I[Z\0[+.5`D<=B%;D_>RJMC(`!XX.*`-O6/"W@71 MH+9Y-$OKJ6Y/[FWM)IY97`&20H?H`>?2K>G^"/`NHV4=U#I[JK\;9+N964_W M2"_!]JN>*;>;[):-_8]]?M&I7SM.E"7,#E0-R%B!@]"<]JY36]$\1W[6$]S% M?3PJ0($-E#3%L#K@;Z@L/ M`_@N_B>1=%NH45]BM/<3H'^4'*Y?D,?=!![XQ7M:`B0\Y&`..@_"@#EO^%9>$?^@6 MX^EY/_\`%UTEK8PVEK';1[O*BP(PS$[0.G/4_C5FB@`HHIC2QHZ(\BJS_=4G M!;Z>M`&)XHL8-3BTZRND9[>:\59$#LFX;'/52#V%+HGA31O#\LTVEV9MI95" MR'SI),C.?XF-6-9_X^=)_P"OT?\`H#UI#J_^>U`')^.;*ZU*TT:"W\\.NL6K MO);`;X5!.7Y!''N*P?$OA_5SK6FVD5SJ]_:"PF2>=G`9R9HCABH`!V[L8`., MUWDFJZ=%/3T[8I`Z99.DF.@(W8[9H`\8L-*\6M-HKW'VF&_ M^QQ-#]OXE9UTF^MI!$RWD]P&*22;B$9+_4M:FU#4M22SFU M!W&G`H+>=-JXR"I8Y(YPPZ5E3>'1;6"3ZCI>I7T,SO)=0VIE:5K@'$;8#9VA M21QQWQ7I,5S;W4(E@N(YHF/RM&X8$^Q%/9<@$'G&/?'I0!Y,=(U4:N'U;3=3 MN[QKJV>SFB+&*&V4J65S]W=G=QC)J.VL_$BV.E:>MAJ27-AI]_#<2-E5D=F0 MIMW\(I2"Q7`)'WN3WH`\FCT6TENK:>TT'7;&TC$L-F M9ED>6)F4F0[-V54XQEB< M]6.:ZUU#9X"@]1CG.:DW'@D-GIB@"I<7874;:R:/=YZ.^[/0+C_&N?\`%HQX MD\&TU;%T0?$VFC/(@G_`/9*R/%W_(R>#/\`L*O_`.DTU`'6 MT444`%[NM1\5RWUF+.[?4T,MN9!)L/V>(8RO!Z9KK[33[2Q61;6 MWCA$CF1]BXW,3DD_C7-^$@/^$D\9^^JI_P"DT-`'6`Y`(I:**`"BBB@`HHHH M`****`"BBB@`HHHH`0]*YS7-6\0V-Y$FCZ`=7A:,EY1=QPA&STPQYXKI*0`# MH`*`/GSXQ:_XI?2-*-[HTFC,+IO*FAOED=S@<+L.:['X2:SXTU'3%M_$NG2K M9QQDP7L^4EDY&`P/7COWKTFXTZRNY89+BUBF>%BT9D4-L)[C/2K(``P.E`#4 MSE@1@#I3Z`,44`%)SCK2T'D8H`B2&.-V=(E5F/S$=ZEHH`Q0`4444`%4]2T^ MSU.V-O?6EM=0\'R[F,.F?7!%7*.M`$<,20HL<2K'$B@*B*`H'M4E&.YLKG1+SR<0QV]X)#)SWV&N_\`#GB/QMJ?AED\3:"T4(>$"^.(W/[Q?OQG MYC]5%>G3:%I=QJB:E/8PRWJ+M29UW%1Z#/2J_B4#^R,]_.A'_D1:`-=?NTM% M%`!1110`4444`%%%%`!1110!1N-.T^6]2^FLK9KJ(?N[AH`TB?1L9%7%QGCJ M1U]:=@44`!Z=,USVNZIKUA/`-&T(ZNC*WFL+J.'RSD8'S$9[UT-(`!T`%`'$ M?\)'X\[>!!_X,X?_`(JO*?C1K?BFY30_M^C/HTT.U?1 MU4;S1M-U&\M;N\LH9Y[4DP/(N3&3UQ^5`'D'@/7_`!U>RZ%:^(M*?Q'+%%>12$".WCV6JHZ MX<-CGC@Y/.>*]+?2]/EE,LEA:O(3DNT*DD_7%3&W@9-AAC*XQMVC&/2@#R5_ M&6OP:NUO;7"RPQ11J@EGMD$T90,9PA_>$\Y&/E/2M6\O];M([!&U@M=7\\0% MU]FB+(CDC8H`P<8SD^M>@G3[)I4E:S@,B#:CF,94>@/85(;:!B"84)4Y&5'' MTH`\NN/$^M6KBPNO$"V45LUVO]J30Q@7$D3`+"P(VAB"3QR=O%=!JTT6H>"] M-N-5O(H_,6*=GG3]PQP&_>#LI]ZU_$'A.RU]HWEGN+:1`R[K?8(+.\TZZL+2.&>5VCTEE:S MO92%VJA;(3H>!SZ5?CUW5YI['3K#Q2EXEU,OFZ@L$9-OE23'@#;GZ\\)AJ&JP MR':]K#.I@GGM5:/8I\N98_\`6$M@$Y&.>.*M7NNZUI>>>U>FM86;3-,UK`TK##.8P6(]":5[*UEDCDDMH7>,Y1F M0$H?8GI0!YE<^+=6CG62#5XYKFYF:";3=L>[3>N')'S-@@+SP2W%6+C5?$>C MSQ^?KINUAU.TM75[:-1)'.5!#$`;64L<8QQC->B_8;3S7E^RP^9)]]_+&6^I M[T-:PNP+0H0&#<@')'0GW%`&;.-OB;3ASGR)S@GIRE9?B[_D9/!G_85?_P!) MIJU)W1O$NF[65OW$YR#GNE9?B[_D9/!G_85?_P!)IJ`.MHHHH`*Y(?\`)7S_ M`-@$?^E%=;7)#_DKY_[`(_\`2B@#K`V2?8XH!R3P16;JMOJ=S#MTR\CM90QR MSQ[L\"L@:7XO_P"A@MOK]F'^%`'545RW]E^+_P#H8+;_`,!A_A1_9?B__H8+ M;_P&'^%`'4T5RW]E^+_^A@MO_`8?X4?V7XO_`.A@MO\`P&'^%`'4T5RW]E^+ M_P#H8+;_`,!A_A1_9?B__H8+;_P&'^%`'4T5RW]E^+_^A@MO_`8?X4?V7XO_ M`.A@MO\`P&'^%`'4T'IQUKEO[+\7_P#0P6W_`(##_"C^R_%__0P6W_@,/\*` M.DEN(H"HEECCW=-[`9]:\F^(,T4WQ%T'Q/XR62XAC)U1#AW`/_`![Q9_E7:5S?B3PK M%K-L5M4M8+B2022S-""S8XY.,]!B@#?CN89CB&1),=2C`X^M2UP>E>#=>T02 M#3M6M(1*V%;FG6UY#8)%J%RMQ<`Y,B# M;F@"]322#TX'4TZFEG M--_LOQ?_`-#!;?\`@,/\*`.IHKEO[+\7_P#0P6W_`(##_"C^R_%__0P6W_@, M/\*`.IHKEO[+\7_]#!;?^`P_PH_LOQ?_`-#!;?\`@,/\*`.IHKEO[+\7_P#0 MP6W_`(##_"C^R_%__0P6W_@,/\*`.IHKEO[+\7_]#!;?^`P_PH_LOQ?_`-#! M;?\`@,/\*`.IHKEO[+\7_P#0P6W_`(##_"C^R_%__0P6W_@,/\*`.DDN(X0O MFR1QDG`WN!FO'?A!S=6F"/\`43'_`,B&NNU+PCX@UE(X]0UFVE6-BZ?N,8)& M.U2>%_!5SX>U/[2US;R1B-D6..,J%SCI0!V@.>U+34!48P`.V*=0`5C>)I%7 M0W<]!-#U('_+1?6MFH9K:&XA$,\,=C@X^O- M35PUGX/UK2KVZN-+U*SMOM#EF'D9XSP/05?_`+*\7_\`0P6W_@,/\*`.JHKE MO[+\7_\`0P6W_@,/\*/[+\7_`/0P6W_@,/\`"@#J:*Y;^R_%_P#T,%M_X##_ M``H_LOQ?_P!#!;?^`P_PH`ZFBN6_LOQ?_P!#!;?^`P_PH_LOQ?\`]#!;?^`P M_P`*`.IHKEO[+\7_`/0P6W_@,/\`"C^R_%__`$,%M_X##_"@#J:*Y;^R_%__ M`$,%M_X##_"C^R_%_P#T,%M_X##_``H`ZAB0I(ZTC.`"?2N7.E>+\?\`(P6W M_@,*U-(L]7MTE_M:^BO"QRGEQ[-M`&M1110!CZ]*L,VDN[(B"^76JI)(753$? ME&>E`'>_;[/_`)^X/^_@H^WV?_/W!_W\%>>_\*SO?^?^T_[]&C_A6=[_`,_] MI_WZ-`'H7V^S_P"?N#_OX*0WUF?^7N#_`+^#_&O/O^%9WO\`S_VG_?HT?\*S MO?\`G_M/^_1H`]`-[9D_-=VY'8;U_P`:=]OL_P#G[@_[^#_&O/?^%9WO_/\` MVG_?HT?\*SO?^?\`M/\`OT:`/0OM]G_S]P?]_!1]OL_^?N#_`+^"O/?^%9WO M_/\`VG_?HT?\*SO?^?\`M/\`OT:`/0OM]G_S]P?]_!1]OL_^?N#_`+^"O/?^ M%9WO_/\`VG_?HT?\*SO?^?\`M/\`OT:`/0OM]G_S]P?]_!3/MMD9"QO+?&,8 M\Q:X#_A6=[_S_P!I_P!^C2?\*SOO!&>D79\6Q3+8W9G.[3DC(&QE.T`_-G=CG'7/:@# MT&BJZOMP7SDD#UR?Y"K%`!2;5)S@9ZT44`+1110`4444`%%%%`!1110`4444 M`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110` M4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1 M110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%% =%`!1110`4444`%(5![444``50,`#!]J6BB@#_]D_ ` end CORRESP 22 filename22.htm commentletter.htm


 
October 6, 2008
 
BY EDGAR
 
Donna Levy, Esq.
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20002
 
 
Re:  SkyPeople Fruit Juice, Inc.
Amendment No. 2 to Registration Statement
on Form S-1
File No. 333-149896
Amendment No. 1 Filed: July 18, 2008
 
Dear Ms. Levy:
 
Reference is made to your comment letter, dated August 14, 2008 to our client, SkyPeople Fruit Juice, Inc. (the “Company”), relating to Amendment No. 1 to the subject registration statement (the “Comment Letter”). Set forth below are the comments contained in the Comment Letter followed by our response thereto:
 
General
 
1. You will expedite the review process if you address each portion of every numbered comment that appears in this letter. Provide complete responses and, where disclosure has changed, indicate precisely where in the marked version of the amendment we will find your responsive changes. Similarly, to minimize the likelihood that we will reissue comments, please make corresponding changes where applicable throughout your document. For example, we might comment on one section or example in the document, but our silence on similar or related disclosure elsewhere does not relieve you of the need to make similar revisions elsewhere as appropriate.

    The responses contained in this transmittal and response letter have been have been drafted in a manner designed to comply with the first two sentences of the comment. Where changes have been made in Amendment No. 2 to the subject registration statement (“Amendment No. 2”) in response to a comment in the Comment Letter or for other reasons, where appropriate, corresponding changes have been made throughout other portions of Amendment No. 2 which address the same subject matter.
 
-1-
2.  It does not appear that you have met the requirements of the Registration Rights Agreement entered into on February 26, 2008, which requires that the filing of a registration statement no later than March 30, 2008 and being declared effective at the latest 120 days thereafter. On page 10, you state that “our failure to meet this schedule and other timetables provided in the Registration Rights Agreement could result in the imposition of liquidated damages.” If you have incurred liquidated damages, please so state and quantify the amount of liquidated damages incurred to date.
 
The third paragraph of the subsection of the Prospectus Summary entitled “Registration Rights Agreement” on page 11 of the prospectus contained in Amendment No. 2 (the “Prospectus”) has been revised to state that the Company’s failure to meet the timetables provided for in the Registration Rights Agreement has resulted in the imposition of liquidated damages and a fourth paragraph has been added to the subsection on such page to quantify such liquidated damages.
 
3.  We note your response to our prior comment 6 and reissue it. We note that Barron Partners is a selling shareholder and owns 31.3% of your stock. In the related party transaction section, please disclose the material terms of the debt cancellation agreement with Barron, including disclosing all amounts due under the debt, the reasons that the debt was incurred, and how the debt cancellation and issuance of Series B Preferred stock was approved by you, and the value of the stock issued. File the agreement with Barron that evidences the cancellation of the debt and issuance of Series B Preferred stock.
 
Five paragraphs have been added to the section of the Prospectus entitled “Certain Relationships and Related Transactions” on page 65 of the Prospectus in order to disclose the requested information. The agreement regarding debt cancellation between the Company and Barron Partners was an oral agreement between the parties.
 
4.  We note your discussion on page 39 of a loan advanced to Hede, which was 80% owned by your CEO and 20% owned by a director of Shaanxi Tianren. We note that the outstanding amount was deducted from the purchase price of Huludao on June 10, 2008. We also note discussion on pages F-16 and F-32 of outstanding loans to related entities with common owners and directors. Tell us how you have complied with Section 13(k) of the Exchange Act.
 
A new risk factor entitled “We may have inadvertently violated Section 402 of the Sarbanes-Oxley Act of 2002 and Section 13(k) of the Exchange Act of 1934  as a result of advances we made to a company controlled by our Chairman of the Board and Chief Executive Officer and a director of one of our subsidiaries, as well as a distribution which one of our subsidiaries erroneously paid to such persons; as a result, we may be subject to civil and criminal sanctions which if imposed, could have a material adverse effect upon us.” has been added on pages 22 and 23 of the Prospectus to discuss the loans made to Hede as well as an erroneous dividend payment made by a subsidiary of the Company to its former shareholders, which has subsequently repaid but has been treated as a loan for accounting purposes and therefore which might also constitute a violation of Section 13(k) of the Exchange Act.

 
-2-
 

 
Prospectus Summary
 
Stock Purchase Agreement
 
Delivery of to 2,000,000 Additional Shares of Series B Preferred Stock from Escrow based on Pre-Tax Income and Pre-Tax Income per Share, page 9
 
5.  Update this discussion in light of your filing audited financial statements for the year ended December 31, 2007.
 
The subsection of the Prospectus Summary entitled “Delivery of up to 2,000,000 Additional Shares of Series B Preferred Stock from Escrow Based on Pre-Tax Income and Pre-Tax Income Per Share” on page 9 of the Prospectus has been revised to include statements that the Company’s pre-tax income for the year ended December 31, 2007 was RMB 68,939,855 and that therefore, there was no shortfall for such year and no Make Good Escrow Stock has been delivered to any investor out of the escrow.
 
Risk Factors, page 17
 
General
 
6. Several of your risk factors could apply to any company in your industry or situation. You should cite risks that are particularly relevant to you and your disclosure should make clear how they impact you specifically. Delete “boilerplate risks,” or revise them to explain how they specifically relate to your operations. For example, in the risk factors entitled “Potential environmental liability...,” on page 22, and “We may face obstacles from the communist system in the PRC” on page 26, explain how each of these risks specifically apply to your operations or else eliminate them.
 
The following risk factors which were set forth in the prospectus contained in the original registration statement and in Amendment No.1 thereto have been eliminated in Amendment No. 2 because the risks described therein are generic and not materially relevant to the Company: “If we are unable to successfully complete and integrate strategic acquisitions in a timely manner, our growth strategy may be adversely impacted”; “Potential environmental liability could have a material adverse effect on our operations and financial condition.”; and “We may face obstacles from the communist system in the PRC.”

 
-3-
 

 
7. Eliminate risk factors that repeat the same risks. For example, it appears that the following risk factors are describing similar risks:
 
 
a.
“If we are unable to successfully complete and integrate strategic acquisitions in a timely manner...,” on page 19 and “We may engage in future acquisitions...,” on page 20; and
     
 
b.
“We may not have adequate internal accounting controls...,” on page 21 and “We may have difficulty establishing adequate management, legal and financial controls...,” on page 27.
 
The risk factor entitled “If we are unable to successfully complete and integrate strategic acquisitions in a timely manner, our growth strategy may be adversely impacted” has been eliminated and certain information contained therein has been added to the risk factor entitled “We may engage in future acquisitions that could dilute the ownership interests of our stockholders, cause us to incur debt and assume contingent liabilities.” on pages 19 and 20 of the Prospectus. The risk factor entitled “We may have difficulty establishing adequate management, legal and financial controls in the PRC.” Has been eliminated and certain of the statements made in such risk factor have been added to the risk factor entitled “We may not have adequate internal accounting controls. While we have certain internal procedures in our budgeting, forecasting and in the management and allocation of funds, our internal controls may not be adequate.”
 
8. The captions to your risk factors must state the risk that is described in the narrative that follows, not merely state a fact. As examples only, revise the caption of the risk factors “We may not be able to effectively control and manage our growth,” on page 18, and “We depend on a concentration of customers,” on page 19.
 
The captions of the risk factor cited in the comment have been revised to specify the risk described in the narratives that follows. In addition, we have revised the titles of the following risk factors so that as revised they read as follows: “Our limited operating history may not serve as an adequate basis to judge our future prospects and results of operations and if we are not successful in addressing risks and difficulties we may likely encounter our business may be adversely affected” (page 17 of the Prospectus); “We do not have key man insurance on our Chairman and CEO, on whom we rely for the management of our business; the loss of the services of our Chairman or CEO could have a material adverse effect on our business (page 23 of the Prospectus); and “We may be adversely affected by changes in the international fruit juice market because of our dependence on the international market.” (page 24 of the Prospectus).
 
9. Ensure that you have discussed all of the risks that make this offering speculative or risky, We note for example your obligation to deliver shares from escrow under the Stock Purchase Agreement upon the happening of certain events and the subsequent dilution that could occur to existing shareholders and the various limitations on your ability to raise capital contained in the Stock Purchase Agreement and Series B Preferred Stock Designations.
 
A risk factor entitled “The release from escrow of Make Good Escrow Stock due to our failure to achieve certain financial targets in 2008 or 2009 would dilute the equity interests of existing stockholders” has been added on page 23 of the Prospectus. We believe that with the changes made in Amendment No. 2 to the registration Statement, all of the risks that make the offering discussed therein speculative or risky, have been discussed in the filing.
 
10. Please provide a risk factor discussing that you do not have an established policy and procedure for the review, approval, or ratification of any transaction with a related person. Discuss the terms of some of your related party transactions in the recent past, such as the zero-interest loan to Hede and other related entities with common owners and directors.
 
The Company has adoped a policy for the review and approval of transactions with related parties.  The policy is described in the section entitled "Certain Relationships and Related Transactions - Review, Approval or Ratification of Transactions with Related Persons" on pages 65 and 66 of the Prospectus.
-4-
 
“There are risks that the sale price of our products...,” page 19
 
11.  Discuss all of the material factors that influence the sales price of your concentrated fruit juice, as opposed to using the term “etc.”
 
We have revised the risk factor on page 20 of the Prospectus to include an additional factor affecting the sales prices of the Company’s products.
 
“Our officers, directors and their relatives control us...,” page 27
 
12.  Discuss in a separate risk factor your disclosure in the last sentence regarding the effect on the market price of your current ownership structure.
 
A risk factor entitled “Our current ownership structure may affect the market price of our Common Stock” has been added on page 28 of the Prospectus immediately following the risk factor cited in the comment to discuss the effect that the Company’s ownership structure may have on the liquidity and market price of the Company’s common stock.
 
Selling Stockholders, page 29
 
13.  We note your response to our prior comment 7. We also note that Barron Partners owns 31.3% of your stock and recently converted debt it held into stock. Please refer the reader to where you discuss this relationship elsewhere in the S-1.

The second paragraph of the section of the Prospectus entitled “Selling Stockholders” has been revised to state that Baron Partners beneficially owns approximately 31.3% of the Company’s Common Stock and to provide a cross-reference to the “Certain Relationships and Related Transactions” section of the Prospectus where the Company’s relationship with Barron Partners and certain transactions between Barron Partners and the Company are discussed.
 
14.  We note your response to our prior comment 8 and reissue it. Please identify the natural person who has power to vote or to dispose of the securities offered for resale by EOS Holdings LLC.
 
A sentence has been added to footnote (5) to the table contained in the section of the Prospectus entitled “Selling Stockholders” on page 31 of the Prospectus to identify the natural person who has power to vote or to dispose of the securities offered for resale by EOS Holdings LLC.
 
Management’s Discussion and  Analysis or Plan of Operation
 
Overview, page 34
 
15.  Add a footnote to your organizational chart that identifies the natural person who beneficially owns the remaining interest in Xi’an Tianren Modern Organic Agriculture Co., Ltd.
 
The organization charts in the sections of the Prospectus entitled “Our Corporate Structure” (page 15 of the Prospectus), “Management’s Discussion and Analysis or Plan of Operation” (page 36 of the Prospectus) and “Notes to Unaudited Consolidated Financial Statements (page F-6 of the Prospectus) have been revised by adding a footnote thereto stating that Xi’an Qinmei Food Co., Ltd., an entity not affiliated with the Company, owns the other 8.85% of the equity interests in such company. Andu Liu is the legal representative of Xi’an Qinmei Food Co., Ltd. and owns more than 50% of the outstanding equity interests of such company.
-5-
 
Three-month periods ended March 31 2008 and March 31, 2007
 
Results of Operations and Business Outlook, page 36
 
General
 
16.  Discuss the specific reasons for the changes in your various line items. For example, you state that the price of raw kiwi increased while the price of kiwi products remained constant, and that there was a decrease in the average selling price of apple juice. Explain why these trends occurred and discuss whether you expect them to continue, and, if so, the impact they will have on your results.

The “Results of Operations and Business Outlook” subsection of the section of the Prospectus entitled “Management’s Discussion and Analysis or Plan of Operation” has been updated to provide disclosure for the six month periods ended June 30, 2008 and June 30, 2007 rather than the three month periods ended March 31, 2008 and March 31, 2007 and to provide greater specificity as to reasons for changes in line items of the Company’s financial statements for such periods and the reasons certain trends have occurred and whether the Company expects such trends to continue as well as the impact that such trends may have on the Company’s future operating results.
 
Net Sales, page 37
 
17. We note your statement that the Liaoling province in China is “...famous for the excellent quality of its apples.” Supplementally, please provide us with independent support for this statement.
 
Although the Company believes that such statement is true, the statement has been deleted in Amendment No. 2 because the statement is subjective and the Company has not been able to find independent support for the statement. Additional information regarding apple production in Liaoning Province has been added on page 55 of the Prospectus and support for such statements is being transmitted to you under separate cover.
 
Liquidity Comparison, pages 40 and 43
 
18.  Please revise to discuss in more detail and quantify your short-term and long-term cash requirements. Your discussion should include the funds necessary to maintain current operations and any commitments for capital expenditures and other expenditures. Refer to Section IV of the Commission’s Interpretive Release on Managements Discussion and Analysis of Financial Condition and Results of Operations which is located on our website at: http://www.sec.gov/rules/interp/33­8350.htm.
 
The “Liquidity and Capital Resources” subsection of the “Management’s Discussion and Analysis of Financial Condition and Results of Operation” section of the prospectus on pages 43 and 48 of the Prospectus has been expanded to discuss short-term and long-term cash requirement, that are mainly for future capital expenditures.
 
19.  We note your mention of loan facilities on pages 38, 40, 42 and 43. Describe the material terms of these facilities and file the agreements as exhibits. Specify the use of proceeds from the facilities.
 
The “Liquidity and Capital Resources” subsection of the “Management’s Discussion and Analysis of Financial Condition and Results of Operation” section of the prospectus on pages 43, 47 and 48 of the Prospectus has been expanded to discuss the material terms of the loan facilities and the use of proceeds from the facilities.

 
-6-
 

 
20. Provide the information on your liquidity and capital resources as required by Item 303(a)(1) and (2) of Regulation S-K. Discuss your historical sources of cash and your expected sources in the future. Finally discuss any contractual limits or other impacts on your ability to raise capital, such as those contained in the Stock Purchase Agreement and in the terms of the Series B Convertible Preferred Stock discussed on pages 7, 8, 9 and 13.
 
The “Liquidity and Capital Resources” subsection of the “Management’s Discussion and Analysis of Financial Condition and Results of Operation” section of the Prospectus on pages 43 and 48 of the Prospectus has been expanded to provide the requested information.
 
21. Discuss the impact the increase in your accounts receivable during the first quarter of 2008 has, and will have, on your cash flow and, consequently, your results. Explain why the turnover rate increased during the first quarter of 2008 compared to fiscal year 2007 given your statement on page 43 that you usually require 100% advance payment for all direct export sales, and if you expect this trend to continue.
 
The “Financial Condition” subsections of the “Management’s Discussion and Analysis or Financial Condition and Results of Operation” section of the Prospectus on pages 42 and 46 of the Prospectus have been expanded to provide the requested information. The collection of accounts receivable improved in the second quarter of 2008. The change in cash flow created a cash inflow of $4,767,805 in the first quarter of 2008 compared to a cash inflow of  $663,311 in the same period of 2007. The Company’s accounts receivable varies in different quarters due to the seasonality of its business.
 
22.  You discuss on page 41 the “non-squeeze season between August and February or March of the following year”. In other places in the document, you state that “the period between each August through February or March is our squeeze season.” Please revise for consistency.
 
The Prospectus has been revised to consistently state that the non-squeeze season is from August to February or March of the following year.
 
Critical Accounting Policies, page 44
 
23.  Please revise to disclose what specific estimates are made by management in preparing your financial statements. Refer to Section V of the Commission’s Interpretive Release on Management’s Discussion and Analysis of Financial Condition and Results of Operations which is located on our website at: http://www.seegov/rules/interp/33-8350.htm.
 
The “Critical Accounting Policies -Estimates” subsection of the “Management’s Discussion and Analysis or Financial Condition and Results of Operation” section of the Prospectus on page 50 of the Prospectus has been revised to disclose the specific estimates made by management in preparing the Company’s financial statements.

 
-7-
 

 
Business, page 48 General
 
24. Ensure that you have provided all of the information required by Item 101 of Regulation S-K. As one example only, discuss in this section the seasonality of your business.
 
A new subsection called “Seasonality” has been added to the “Business” section on page 54 of the Prospectus to discuss seasonality. We believe that all of the other information required by Item 101 of Regulation S-K is contained in the Prospectus.
 
Industry and Principal Markets
 
General, page 49
 
25.  Supplementally, provide us with independent support for your assertions on the fruit juice market worldwide. As examples only, we note that you make assertions regarding:
 
 
•
global sales of fruit juice in 2006;
 
•
estimations of annual consumption in Asia and Africa in 2020;
 
•
European consumption increases in the past ten years; and
 
•
information on the size of the Chinese market.
 
If you provide us with third party documents in response to this comment, you can expedite our review process by marking by highlighting or other means those portions of the document(s) that support the various assertions that appear in your document.
 
We have revised the subsection Global Market to incorporate market information which is based upon authoritative sources. Such information is being sent to you under separate cover.
 
26.  Supplementally, please provide us with a copy of the data from the U.S. Ministry of Agriculture that you refer to. State where the investor may obtain a copy of the data, and if it is available for free or for a nominal price.
 
We are sending to you under separate cover a copy of the data from the U.S. Department of Agriculture. The information is also available at the following link: http://www.fas.usda.gov/htp/2007%20Apples.pdf
 
Marketing, page 50

 
-8-
 

 
27.  Discuss the exact nature of the “permission” you have from the PRC to directly sell various fruit juices to foreign customers. In addition, explain in better detail the statement on page 55 that “Shaanxi Tianren enjoys the government supporting policies relating to the construction of our bases, purchasing of raw materials, purchasing of equipment, export of our products, interest discounts on Treasury bond loans and income tax reduction.”
 
The first sentence of the “Marketing” subsection of the “Business” section on page 55 of the Prospectus has been revised to set forth the nature of the permission granted to the Company to directly sell various fruit juices to foreign customers.” Paragraph (8) – “Policy Advantages” of the “Competitive Advantages” subsection of the “Business” section on page 59 of the Prospectus has been revised to state facts supporting the proposition that Shaanxi Tianren enjoys government support.
 
Customers, page 53
 
28.  Discuss the material terms of your agreements with your customers, including length, supply requirements, and payment terms.
 
A paragraph has been added to the end of the “Customers” subsection of the “Business” section on page 59 of the Prospectus to discuss the material terms of standard agreements with customers. As stated therein the Company’s contracts with customers generally do not include length and supply requirements.
 
Competition, page 53
 
29.  State the basis for your belief that you can transport and store your products at a relatively lower cost than many of your competitors.
 
The paragraph immediately following the table in the “Competition” subsection of the “Business” section on page 58 of the Prospectus has been revised to state the basis of the Company’s belief that it can transport and store its products at a relatively lower cost than many of its competitors.
 
Intellectual Property, page 55
 
30.  Discuss the importance of your patents to your business.
 
A sentence has been added to the end of the “Intellectual Property – Patents” subsection of the “Business” section on page 60 of the Prospectus to state the Company’s belief that such patents give it a competitive advantage. In addition, the section has been revised to include additional information concerning the patented processes.
 
Certain Relationships and Related Party Transactions, page 60

 
-9-
 

 
31. Ensure that you have provided all of the information required by Item 404(d) of Regulation S-K. We note for example, the disclosure of related party transactions in Note 12 on page F-16 and Note 12 on page F-35.
 
Additional disclosure has been added to the “Certain Relationships and Related Party Transactions” section on pages 64 and 65 of the Prospectus to disclose additional information required by Item 404(d) of Regulation S-K.
 
32.  Ensure that you have provided all of the information required by Item 404(c) of Regulation S-K (refer to Item 404(c)(2) of Regulation S-K) in regard to any promoter. As one example only, in regard to the purchase of Huluado Wonder Fruit Co., Ltd. from Hede, state the price Hede paid for the company if it was acquired by Hede within two years of its sale to you. Also, update the disclosure in this section, in light of your purchase of Wonder Fruit and your disclosure on page 39.
 
Additional disclosure has been added to the “Certain Relationships and Related Party Transactions” section on pages 64 and 65 of the Prospectus to disclose additional information regarding the purchase of Huludao Wonder by Hede and the Company’s subsequent purchase from Hede of such company.
 
33.  Ensure that you have filed as an exhibit all the agreements referred to in this section.  We note for example, that it does not appear that you have filed the May 31, 2008 Stock Transfer Agreement with Hede.
 
Certain additional agreements are being filed as exhibits to the registration statement in response to the comment. Please note that the Stock Transfer Agreement was filed as an exhibit to the Company’s Current Report on Form 8-K filed on June 5, 2008 and such exhibit is being incorporated by reference in the registration statement.
 
34.  State whether the agreements discussed in this section are on terms obtainable from third parties. Discuss how the purchase of Wonder Fruit was approved by you and how the purchase price was determined.
 
Additional disclosure has been added to the “Certain Relationships and Related Party Transactions” section on pages 64 and 65 of the Prospectus to disclose the requested information.
 
Directors and Executive Officers, page 61
 
35.  We note your response to our prior comment 10. Please fill in the gap in Ms. Yan’s biography between July 2005 and when she joined the company. Provide the month she joined the company.
 
The description of Xiaoqin Yan’s business experience in the last five years in the “Directors and Executive Officers” section on page 66 of the Prospectus has been revised to fill in the gap between June 2005 and when she joined the Company in January 2006.

 
-10-
 

 
Director and Officer Compensation
 
Compensation of Officers, page 63
 
36.  You state that your executives are compensated by Shaanxi Tianren, but also indicate that your CEO has not received any compensation for his services for the past two years. Please explain why.
 
Both statements are true. All executives, other than the CEO, have been compensated by Shaanxi Tianren and the Company plans to continue to have Shaanxi Tianren rather thn the parent company compensate such executives.  The Company’s Chief Executive Officer has not received compensation from the Company or any of its subsidiaries in the last two years.
 
Description of Our Securities, page 63
 
37.  Please specify the vote required by security holders to take action, including the election of directors and describe, or cross reference to where you do describe, the anti-takeover provisions of your charter, by-laws and contracts. Refer to Item 202(a)(1) and (5) of Regulation S-K.
 
A sentence has been added after the first sentence of the subsection “Common Stock” in the “Description of our Securities” section on page 68 of the Prospectus to specify the vote required by security holders to take action. A new subsection called “Undesignated Preferred Stock” has been added to the section on page __ of the Prospectus which states that such stock could be used to discourage takeover proposals. The Company does not believe that there are other provisions in its charter, by-laws or contracts which have anti-takeover effects.
 
Consolidated Statements of Operations and Comprehensive Income, Unaudited, page F-4
 
38.  Based on the disclosure on page 38, it appears that you have reported all depreciation and amortization expense as an operating expense and hence, excluded depreciation and amortization expense from gross margin. To avoid placing undue emphasis on “cash flow,” depreciation and amortization should not be positioned in the income statement in a manner which results in reporting a figure for income before depreciation; we refer you to SAB Topic 11:B. Therefore, please revise your presentation here and on page F-20 to comply with this guidance.
 

 
-11-
 

 
Depreciation expense included in general and administration expenses for the six months ended June 30, 2008 and 2007 was $170,829 and $30,098, respectively. Depreciation expense included in cost of sales for the periods ended June 30, 2008 and 2007 was $692,062 and $384,841, respectively. Amortization expense was $68,726 and $36,026 for the six months ended June 30, 2008 and 2007, respectively. Please refer to “Property, Plant and Equipment” in note 2 “Summary of Significant Account Polices” on page F-9.
 
Depreciation expense included in general and administration expenses for the years ended December 31, 2007 and 2006 was $188,100 and $162,123, respectively. Depreciation expense included in cost of sales for the years ended December 31, 2007 and 2006 was $1,138,102 and $1,314,552, respectively. Amortization expense was $128,544 and $63,799 for fiscal years 2008 and 2007, respectively. Please refer to “Property, Plant and Equipment” in note 2 “Summary of Significant Account Polices” on page F-32.
 
Note 2. Summary of Significant Accounting Policies Consolidation, page F-6
 
39. Please provide your complete analysis in accordance with paragraph 5 of FIN 46(R) supporting your conclusion that Huludao Wonder Fruit Co (“Huludao”) is a variable interest entity. In addition, clarify how you determined that you are the primary beneficiary of Huludao.
 
Set forth below is the analysis based on which the Company determined that Huludao Wonder was a variable interest entity which was required to be consolidated:
 
Facts:
 
Huludao Wonder was acquired by Hede on or about May 31, 2007.
 
Shaanxi Tianren began leasing Huludao Wonder’s facilities from Hede on July 1, 2007.
 
Shaanxi Tianren and Hede are under common control; they share a controlling owner.
 
Shaanxi Tianren advanced Hede the funds necessary to acquire Huludao Wonder.
 
Shaanxi Tianren participated significantly in the design of the above transactions.
 
Discussion and Analysis:
 
FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities an interpretation of ARB No. 51, (“FIN46R”) addresses consolidation by business enterprises of variable interest entities, which have one or more of the following characteristics:

 
-12-
 

 

 
1.
The equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support provided by any parties, including the equity holders.
     
 
2.
The equity investors lack one or more of the following essential characteristics of a controlling financial interest:
     
     
a.
The direct or indirect ability to make decisions about the entity’s activities through voting rights or similar rights.
         
     
b.
The obligation to absorb the expected losses of the entity.
         
     
c.
The right to receive the expected residual returns of the entity.
         
 
3.
The equity investors have voting rights that are not proportionate to their economic interests, and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest.
 
Paragraph 4 states that “with the following exceptions, this Interpretation applies to all entities:” and 4(h) gives the only exception that may apply. “An entity that is deemed to be a business under the definition in Appendix C need not be evaluated by a reporting enterprise to determine if the entity is a variable interest entity under the requirements of this Interpretation unless one or more of the following conditions exist:
 
 
1.
The reporting enterprise, its related parties, or both participated significantly in the design or redesign of the entity.
     
 
2.
The entity is designed so that substantially all of its activities either involve or are conducted on behalf of the reporting enterprise and its related parties.
     
 
3.
The reporting enterprise and its related parties provide more than half of the total of the equity, subordinated debt, and other forms of subordinated financial support to the entity based on an analysis of the fair values of the interests in the entity.
     
 
4.
The activities of the entity are primarily related to securitizations or other forms of asset-backed financings or single-lessee leasing arrangements.
 
Huludao Wonder’s relationship with Shaanxi Tianren falls within the scope of FIN46R because at least one of the four criteria is met, disallowing the exception from scope. Shaanxi Tianren participated significantly in arranging the transaction; substantially all of Huludao Wonder’s activities are conducted on behalf of Shaanxi Tianren; when advances to Hede for the purchase of Huludao Wonder are considered, Shaanxi Tianren provided more than half of the financial support of Huludao Wonder; and Shaanxi Tianren and Huludao Wonder are engaged in a single-lessee leasing arrangement.
 
Paragraph 5 defines a Variable Interest Entity (“VIE”) subject to consolidation as one which by design, the conditions in a, b, or c exist:
 

 
-13-
 

 

 
 
a)
The total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support provided by any parties, including equity holders. For this purpose, the total equity investment at risk:
     
     
1.
Includes only equity investments in the entity that participate significantly in profits and losses even if those investments do not carry voting rights.
         
     
2.
Does not include equity interests that the entity issued in exchange for subordinated interests in other variable interest entities.
         
     
3.
Does not include amounts provided to the equity investor directly or indirectly by the entity or by other parties involved with the entity, unless the provided is a parent subsidiary, or affiliate of the investor that is required to be included in the same set of consolidated financial statements as the investor.
         
     
4.
Does not include amounts financed for the equity investor (for example, by loans or guarantees of loans) directly by the entity or by other parties involved with the entity, unless that party is a parent, subsidiary, or affiliate of the investor that is required to be included in the same set of consolidated financial statements as the investor.
         
 
b)
As a group the holders of the equity investment at risk lack any one of the following three characteristics of a controlling financial interest:
     
     
1.
The direct or indirect ability through voting rights or similar rights to make decisions about an entity’s activities that have a significant effect on the success of the entity. The investors do not have that ability through voting rights or similar rights if no owners hold voting rights or similar rights.
         
     
2.
The obligation to absorb the expected loss of the entity. The investor or investors do not have that obligation if they are directly or indirectly protected from the expected losses or are guaranteed a return by the entity itself or by other parties involved with the entity.
         
     
3.
The right to receive the expected residual returns of the entity. The investors do not have that right if their return is capped by the entity’s governing documents or arrangements with other variable interest holders or the entity.
         
 
c)
The equity investors as a group also are considered to lack characteristic (b)(1) if (i) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both and (ii) substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. For purposes of applying this requirement, enterprises shall consider each party’s obligations to absorb expected losses and rights to receive expected residual returns related to all of that party’s interests in the entity and not only to its equity investment at risk.

 
-14-
 

 
For purposes of this discussion Huludao Wonder is the “entity”, Hede is the “investor” and Shaanxi Tianren is the “enterprise”. Condition (a) exists because Hede’s investment is not sufficient to finance Huludao Wonder’s activities without the support of Shaanxi Tianren’s advances to Hede. Condition (b) may exist because of the expectation and assumption that Shaanxi Tianren will absorb the losses of and receive the expected residual returns of Huludao Wonder. It appears that Huludao Wonder is a VIE subject to consolidation. Paragraph 15 explains that the enterprise that consolidates a VIE is called the primary beneficiary of that entity. There appear to be only two beneficiaries of Huludao Wonder: Hede and Shaanxi Tianren. Shaanxi Tianren will absorb a majority of Huludao Wonder’s expected losses and receive a majority of its expected residual returns, and is therefore determined to be the primary beneficiary. Even if Hede and Shaanxi Tianren were determined to be equal beneficiaries, paragraph 16 states that “for purposes of determining whether it is the primary beneficiary of a variable interest entity, an enterprise with a variable interest shall treat variable interests in that same entity held by its related parties as its own interests.” Consequently, Hede’s variable interests are added to those of Shaanxi Tianren, resulting in Shaanxi Tianren holding 100% of the variable interests.
 
Conclusion:
 
Shaanxi Tianren is required to consolidate Huludao Wonder.
 
Paragraph 19 states that “The primary beneficiary of a variable interest entity that is under common control with the primary beneficiary shall initially measure the assets, liabilities, and non-controlling interests of the variable interest entity at the amounts at which they are carried in the accounts of the enterprise that controls the variable interest entity (or would be carried if the enterprise issued financial statements prepared in conformity with generally accepted accounting principles).”
 
40. We note your disclosure on page F-7 which states the initial measurement of the Huludao assets and liabilities was at fair value. Tell us your consideration of paragraph 19 of FIN 46(R) when determining that it is appropriate to initially measure the assets and liabilities at fair value, and why Huludao would not be considered under common control at the time of initial measurement.
 
Yongke Xue, the Chairman of the Board and Chief Executive Officer of the Company, owns 80% of the equity interest of Hede. Xiaoqin Yan, a director of Shaanxi Tianren, owns the remaining 20% of Hede. According to FASB 57, Shaanxi Tianren and Hede are considered entities under common control. Shaanxi Tianren and Huludao Wonder are also considered entities under common control after Huludao Wonder was acquired by Hede.
 
According to FIN46(R) paragraph 19, if the primary beneficiary of a variable interest entity is under common control with the variable interest entity, the primary beneficiary shall initially measure the assets, liabilities, and non-controlling interests of the variable interest entity at the amounts at which they are carried in the accounts of the enterprise that controls the variable interest entity (or would be carried if the enterprise issued financial statements prepared in conformity with generally accepted accounting principles).

 
-15-
 

 
41.  We note your Chairman and CEO has an 80% equity interest in Hede, and a director of your subsidiary, Shaanxi Tianren, has the remaining 20% equity interest, We understand Huludao Wonder Fruit Co. (Huludao) is a subsidiary of Hede, and note that Shaanxi Tianren loaned Hede approximately $3.7 million to purchase ..Huludao. Please clarify whether Hede is a variable interest entity pursuant to paragraph 5 of FIN 46(R); provide your complete analysis. In addition, explain whether Hede is also an entity under common control. In addition, tell us if Hede has additional subsidiaries in addition to Huludao.
 
FASB Interpretation No. 46 (R) Consolidation of Variable Interest Entity (Revised December 2003), an interpretation of APB 51, addresses consolidation by business enterprises of variable interest entities, which have one or more of the following characteristics:
 
1. The equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support provided by any parties, including the equity holders.
 
2. The equity investors lack one or more of the following essential characteristics of a controlling financial interest:
 
a. The direct or indirect ability to make decisions about the entity’s activities through voting rights or similar rights.
 
b. The obligation to absorb the expected losses of the entity.
 
c. The right to receive the expected residual returns of the entity.
 
3. The equity investors have voting rights that are not proportionate to their economic interests, and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest.
 
FIN 46 (R) requires that an enterprise’s consolidated financial statements include subsidiaries in which the enterprise has a controlling financial interest. That requirement usually has been applied to subsidiaries in which an enterprise has a majority voting interest.  According to ARB 51, an enterprise that consolidates a variable interest entity is the primary beneficiary of the variable interest entity. The primary beneficiary of a variable interest entity is the party that absorbs a majority of the entity’s expected losses, receives a majority of its expected residual returns, or both, as a result of holding variable interests, which are the ownership, contractual, or other pecuniary interests in an entity that change with changes in the fair value of the entity’s net assets excluding variable interests.

 
-16-
 

 
Hede is also an entity under common control with Shaanxi Tianren. It was set up in February 2006 by Mr. Yongke Xue, the Chief Executive Officer, and one of the Company’s directors, Ms. Xiaoqing Yan, of Shaanxi Tianren. It was set up under the policies and regulations for venture capital investment companies (“VCIC”) in China. A VCIC invests in equity interests in high-tech start-up companies. It is authorized to engage in investment businesses and other businesses pre-approved by the responsible government authorities, and to provide consultation regarding venture capital investment and management consultation to unlisted high technology businesses. Mr. Yongke Xue and Ms. Xioaqin Yan have limited liability for Hede. Although Mr. Yongke Xue also has shares in Shaanxi Tianren, Shaanxi Tianren is a separate entity from Hede. It is not a beneficiary of Hede, and has no financial interest in it. Hede can stand alone and can absorb its own loss. Hede currently has no subsidiaries. Prior to its sale of Huludao Wonder to Shaanxi Tianren, Huludao Wonder was a subsidiary of Hede.
 
On June 2, 2007, Shaanxi Tianren entered into a lease agreement with Shaanxi Hede Investment Management  Co., Ltd. (“Hede pursuant to which Shaanxi Tianren, for a term of one year and for a monthly lease payment of RMB 300,000, leased all the assets and operating facilities of Huludao Wonder, which is wholly-owned by Hede. This lease arrangement (the “Huludao Wonder Lease”) resulted in the combination of Huludao Wonder’s operating results with those of Shaanxi Tianren on the date of the lease and forward.
 
On June 5, 2007, Shaanxi Tianren loaned to Hede RMB 7 million (approximately $958,300 based on the exchange rate as of December 31, 2007) pursuant to a Loan Agreement entered into by the parties on June 5, 2007. The entire principal of the loan was due on June 5, 2008. The proceeds of such loan (as well an aggregate of RMB 3,000,000 received as a prepayment of rent and a security deposit on the Huludao Wonder Lease) were used by Hede to pay a portion of the purchase price for its acquisition of Huludao Wonder.
 
On August 1, 2007 Shaanxi Tianren loaned to Hede RMB 20 million (approximately $2,738,001 based on the exchange rate as of December 31, 2007) pursuant to a loan agreement entered into by the parties on such date. The loan was due on August 1, 2008. The loan agreement provides that no interest shall accrue on the outstanding amount of the loan, but if Hede does not pay the outstanding loan when due, then it shall be required to pay in addition to the principal of the loan liquidated damages at the rate of 2% of the loan amount per day. Before August 27, 2007, the total amount of RMB 20 million in cash was transferred to Hede.
 
In December 2007, Shaanxi Tianren made additional advances aggregating RMB 4,544,043 (approximately $622,080 based on the exchange rate as of December 31, 2007) to Hede. These advances were unsecured and bore no interest. These advances also had no fixed payment terms. The proceeds of these advances were transferred to Huludao Wonder directly on behalf of Hede for the purchase price of Huludao Wonder.
 
In January 2008, Shaanxi Tianren paid rental expense of RMB 11,038 (approximately $1,609 based on the exchange rate as of June 30, 2008) to the landlord of Hede’s office space on behalf of Hede.

 
-17-
 

 
In May 2008, Shaanxi Tianren paid to Hede an aggregate amount of RMB 1,500,000 (approximately $218,688 based on the exchange rate as of June 30, 2008) of rent for the period from January to May 2008 pursuant to the Huludao Wonder Lease. The total payment of RMB 1,500,000 was in cash and was transferred to Huludao Wonder directly on behalf of Hede to pay a portion of the purchase price of Huludao Wonder. In the same month, Shaanxi Tianren assumed Hede’s obligation of RMB 18,000,000 (approximately $2,624,251 based on the exchange rate of June 30, 2008) for the balance of the purchase price for Huludao Wonder.
 
From the details of the transactions above, it is clear that all the advances from Shaanxi Tianren to Hede is for Hede to acquire Huludao Wonder. Shaanxi Tianren is and has not been not involved in any other business of Hede and has no financial interest in Hede. Shaanxi Tianren’s investment consists of the majority of the investment in Huludao Wonder. It pays Hede a monthly lease fee and it assumes the majority of the risk.
 
According to FIN 46 (R), an enterprise that consolidates a variable interest entity is the primary beneficiary of the variable interest entity. As Shaanxi Tianren does not absorb any of Hede’s expected returns or losses, it is not considered the primary beneficiary of Hede. Therefore, Hede is not a variable interest entity of Shaanxi Tianren pursuant to paragraph 5 of FIN 46(R) and, accordingly, Shaanxi Tianren is not required to consolidate Hede.
 
Accounts Receivable, page F-9
 
42.  We note in your Financial Condition disclosure on page 39 that your accounts receivable turnover has increased from 88 days for the fiscal year 2007 to 109 days for the first quarter of fiscal 2008. We also note your allowance for bad debt at December 31, 2007 was $0 and your accounts receivable balance has increased $2.9 million in the first quarter of fiscal 2008 to $12.1 million. Please clarify why collection of your receivables has slowed down and how you have evaluated these factors when determining that your receivables are collectable. In addition, tell us and disclose the amount of your allowance for bad debt at March 31, 2008.
 
At June 30, 2008, the accounts receivable balance decreased by $4,332,242 from the balance at December 31, 2007 due primarily to an improvement in accounts receivable collections in the second quarter of fiscal 2008.  The accounts receivable turnover was 79 days for the six months ended June 30, 2008, compared with 88 days for fiscal year 2007. The decrease in the accounts receivable turnover was due primarily to improvement in collections in Shaanxi Tianren. As a result of the improved collections in the second quarter the Company does not believe that the second sentence of the comment is applicable any longer. The Company has not experienced any significant difficulty in collecting its accounts receivable in the past and is not aware of any financial difficulties being experienced by its major customers. The allowance for bad debts as of June 30, 2008 was zero.

 
-18-
 

 
Revenue Recognition, page F-9
 
43.  We note your disclosure on page 36 which states that more than 70% of your products are exported either through distributors or to end-users. Please revise your disclosure in the footnotes to your financial statements to clarify your revenue recognition accounting policy to clarify whether you recognize revenue upon delivery to the distributor or end customer. In addition, clarify the total percentage of revenue that is exported through distributors.
 
The Revenue Recognition subsections of the "Management's Discussion and Analysis and Results of Operations" section of the Prospectus on page 50 of the Prospectus as well as Note 2 to the Consolidated Financial Statements as of December 31, 2007 and for the years ended December 31, 2007 and December 31, 2006 on page F-31 of the Prospectus and Note 2 to Consolidated Financial Statements as of June 30, 2008 and for the six months ended June 30, 2008 and June 30, 2007 on page F-8 of the Prospectus have been so revised.
 
44.  If you recognize revenue upon delivery to resellers, please clarify how you have  determined the fee for products is fixed and determinable pursuant to the guidance in SAB Topic 13. Please clarify the following specific comments as part of your response:
 
 
·
Please clarify how you have evaluated your distributors’ business practices, such as their operating history, competitive pressures. Tell us the names of your primary distributors.
     
   
The Company’s primary distributors are Export Packers Co., Ltd. (Canada), Shaanxi Jiedong Trade Co., Ltd. (China), Dalian Jack Foods Trading Co., Ltd. (China), Golden Dragon Trading Gmbh (DenMark) and Shaanxi Zhongdian Import& Export Co., Ltd (China).
     
 
The Company generally establishes its business relation with overseas customers through some well-known business websites, such as www.alibaba.com, and through some international exhibitions held in Europe, Italy, Russia, etc.  Most of their basic information will be provided by these websites or the host of the exhibition.
   
 
In order to guarantee the safety of the transaction, the Company checks the basic information with the local business agencies on the customers’ side.  Sometimes the Company will also consult the PRC Embassy to get more information on the customer.
   
 
Most of the Company’s domestic customers are owned by the PRC Government. The Company usually gets its information from local government agencies.
   
 
·
Explain whether the terms of the agreement require the distributor to pay you after you deliver the product to them or whether the distributor is obligated to pay as and if the sales are made to end customers. If the terms require the distributor to pay after you deliver the product to them, and are not contingent on resale to the end customer, explain how your collection history supports the terms of the agreement. In this respect, explain whether you generally receive payment before or after the distributor sells the product to the end customer.
     
   
As disclosed under “Revenue Recognition” on page 50 of the Prospectus, the Company’s general sales agreement requires distributors to pay it after the Company delivers the products to such distributors, which is not contingent on resale to end customers. The Company’s credit terms for distributors with good credit history are from 30 days to 90 days. For new customers, the Company usually requires 100% advance payment for direct export sales. The Company’s payment terms with distributors are not determined by the distributor’s resale to the end customer.
     
 
·
Explain how you have evaluated your distributors are financially secure, noting such factors as whether they are established in the market or new distributors and are properly capitalized, when determining that they have the ability to honor a commitment to make fixed and determinable payments prior to collecting cash from their customers.

 
-19-
 


 
Before the Company signs the sales contract with an overseas customer, it will ask them to provide us a Letter of Credit from a local bank to guarantee the payment of the transaction.
   
 
Most of the Company’s domestic customers are owned by the PRC Government. The Company usually gets its financial information from the local banks or local government agencies. The Company can also get their export information and history from the Xi’an Customs District of the People’s Republic of China.
   
 
·
Please clarify if you are required to rebate or credit a portion of the original fee if you subsequently reduce the price of your product and the distributor still has rights with respect to that product; that is whether you offer price protection.
     
   
As disclosed under “Revenue Recognition” on page 50 of the Prospectus, we are not required to rebate or credit a portion of the original fee if we subsequently reduce the price of our product and the distributor still has right with respect to that product.

 
-20-
 

 
45.  We also note the customer has a right of return for a few days, but no provision has been made for returnable goods. Tell us and disclose how management concluded the amount of potential returns to be insignificant. Please revise your disclosure to be more specific on how many days a customer has a right of return. In addition, tell us the amount of returns you have received in each period reported in your filing.
 
The Revenue Recognition section of the "Management's Discussion and Analysis and Results of Operations" section of the Prospectus on page 50 of the Prospectus as well as Note 2 to the Consolidated Financial Statements as of December 31, 2007 and for the years ended December 31, 2007 and December 31, 2006 on page  F-32 of the Prospectus and Note 2 to Consolidated Financial Statements as of June 30, 2008 and for the six months ended June 30, 2008 and June 30, 2007 on page F-8 of the Prospectus have been revised to address these issues. The Company has no history of returned products during the periods covered by the financial statements included in the registration statement.
 
46.  We note that you receive advances from your customers. Please revise your accounting policy to clarify why you receive these advances and how you account for the advances.
 
Customer advances are recorded as unearned revenue, which is a current liability. The Revenue Recognition subsections of Note 2 to the Consolidated Financial Statements as of December 31, 2007 and for the years ended December 31, 2007 and December 31, 2006 on page F-32 of the Prospectus and Note 2 to Consolidated Financial Statements as of June 30, 2008 and for the six months ended June 30, 2008 and June 30, 2007 on page F-8 of the Prospectus have been so revised.
 
Minority Interest in Subsidiary, page F-10
 
47.  Your disclosure indicates that your minority interest represents the minority shareholders’ proportionate share of the equity in Shaanxi Tianren and Xi’an Tianren. However, it also appears that you have included the consolidated net assets of Huludao as a minority interest as of March 31, 2008. Please clarify why you believe it is appropriate to classify the net assets of a VIE that you consolidate as minority interest.
 
INITIAL MEASUREMENT OF VIE - According to FIN46(R) paragraph 19, If the primary beneficiary of a variable interest entity is under common control with the variable interest entity, the primary beneficiary shall initially measure the assets, liabilities, and noncontrolling interests of the variable interest entity at the amounts at which they are carried in the accounts of the enterprise that controls the variable interest entity (or would be carried if the enterprise issued financial statements prepared in conformity with generally accepted accounting principles).”
 
According EITF 02-5, Shaanxi Tianren and Huludao Wonder are considered entities under common control.

 
-21-
 

 
According to FIN46(R) paragraph 19, the Company has initially measured the assets and liabilities, and non-controlling interests of the VIEs at their book value as of June 1, 2008. The book value is approximate to Huludao Wonder’s fair value of assets and liabilities at the time of acquisition during May 2008. All the assets and liabilities on the initial measurement date of VIE are consolidated with Shaanxi Tianren and the equity of Huludao Wonder is presented as minority interest :VIE.
 
ACCOUNTING AFTER INITIAL MEASUREMENT OF VIE – Subsequent accounting for the assets, liabilities of a consolidated variable interest entity are accounted for as if the entity were consolidated based on voting interests and the usual accounting rules for which the VIE operates are applied as they would be to a consolidated subsidiary as follows:
 
 
●
Carrying amounts of the VIE are consolidated into the financial statements of Shaanxi Tianren as the primary beneficiary.
     
 
●
Inter-company transactions and balances, such as revenues and costs, receivables and payables between or among the Primary Beneficiary and the VIE(s) are eliminated in their entirety
     
 
●
There is no direct ownership interest by the Primary Beneficiary in the VIE and equity of the VIE is eliminated with an offsetting credit to minority interest
 
Note 4. Convertible Preferred Stock, page F-12
 
48.  Please revise to disclose how you applied EITF 98-5 and 00-27 when allocating fair value between the Series B Convertible Preferred Stock and the warrants. In addition, tell us how you evaluated this guidance when determining the Series A and Series B Convertible Preferred Stock did not contain a beneficial conversion option.
 
In accounting for the issuance of Series B Convertible Preferred Stock with detached warrants the Company relied on the guidance in AcSec Technical Practice Aid dated December 2006. Flowchart #2: Issuer’s Accounting for Financial Instruments with Embedded Conversion Options requires that the Company begin by determining the nature of the host contract and identifying all embedded features, including the embedded conversion option, which may require separate accounting as derivatives under FASB Statement No. 133. The Company determined that the economic characteristics and risks of the embedded conversion option clearly and closely related to the host contract and therefore the embedded conversion option was not separated from the host contract and accounted for as a derivative instrument.
 
The provisions of FASB Statement No. 150 contained no provisions that would cause the Series B Convertible Preferred Stock to be recorded as a liability and application of the provisions of EITF 00-19 led to the determination that both the preferred stock and the warrants were to be classified as permanent equity. The amount of proceeds attributed to warrants was reduced for the amount attributed to Series B Convertible Preferred Stock and credited to permanent equity, resulting in offsetting debits and credits to permanent equity regardless of the amount attributed to the warrants.

 
-22-
 

 
At the time of issuance of both the Series A and Series B Convertible Preferred Stock, there was no active trading market for the Company’s common stock. The Series A stock issued was mandatorily convertible, voting, participating, and was only issued as preferred stock because the Company lacked a sufficient number of authorized and unissued common shares to satisfy the negotiated share exchange transaction through the issuance of common stock. The Series A stock was not determined to be “in-the-money” at the commitment date so no beneficial conversion feature was determined to be present under the guidance of EITF 98-5.
 
As to the Series B Convertible Preferred Stock, the purchasing investors negotiated their purchase price based on the number of common shares and warrants that they would eventually receive. The Company assumed for purposes of applying EITF 00-27 that the same number of warrants would have been issued whether the investors received common stock or convertible preferred stock. In fact, the Company believes the primary reason for the investors taking preferred stock rather than common stock was the 4.9% limitation which may lighten the investors’ reporting requirements. Since there was no active trading market for the common stock, the fair value of common stock was determined to be the purchase price less the amount allocated to the warrants assumed to be issued along with a common stock purchase. The effective conversion amount according to EITF 00-27 is the preferred stock purchase price less the amount allocated to the warrants. The amount allocated to the warrants is the same whether common stock was issued or whether preferred stock was issued. Therefore, the effective conversion amount is exactly equal to the fair value of the common stock to be converted for, given a 1 for 1 conversion ratio. No beneficial conversion feature was determined to be present in the Series B Convertible Preferred Stock under the guidance of EITF 98-5 and 00-27.
 
According the AcSEC Technical Practice Aid, “for convertible instruments that do not require separation of the embedded conversion option under FASB Statement No. 133 and do not contain a beneficial conversion feature, the guidance in APB 14 applies. Under APB Opinion No. 14, no portion of the proceeds from the issuance of convertible instruments is allocated to the conversion option.” The Company believes it has fully complied with applicable GAAP in accounting for the issuance of its Series A and B Convertible Preferred Stock and warrants.
 
Notes to Financial Statements, page F-16
 
49.  Please clarify the tables in Note 12 beginning on page F-16, For example, it is unclear whether the third table, which starts with the $22,177 loan with An Do Liu, shows loan to or from the related parties. It would also aid the reader to consistently connote loans to a related party with a parenthesis.

 
-23-
 

 
Note 11 (formerly, Note 12) of the Notes to Consolidated Financial Statements as of June 30, 2008 and for the six months ended June 30, 2008 and June 30, 2007 has been so revised.
 
Report of Independent Registered Public Accounting Firm, page  F-19
 
50.  We note that your audit report was signed by an audit firm based in Utah and your corporate offices are located in China. We also note that you conduct your operations in China, your revenues are generated in China and all of your assets are located in China. Please tell us where the majority of audit work was conducted and bow you concluded that it is appropriate to have an audit report issued by an auditor licensed in Utah.
 
The Company’s U.S. audit firm, Child, Van Wagner & Bradshaw PLLC, used no other audit firm to assist in the audit. The Company’s U.S. auditor does a great deal of audit work in Asia, and its auditors were personally on site in China to perform the audit field work. Its on-site audit team consisted of its full-time Mandarin speaking audit senior manager from Utah, and its contract employees from Hong Kong. In addition to the audit staff on-site, the engagement partner visited and toured the facilities, met with management, and reviewed the on-site audit work being performed. Management’s understanding is that most of the auditor’s upper level reviews and final clean-up were performed in the U.S., but the majority of required audit procedures were performed in China.
 
Note 10. Contingencies, page F-35
 
51.   We note you do not carry any property or casualty insurance, nor have any accruals recorded for potential liabilities due to lack of insurance. Tell us and disclose how management has concluded chances of such an obligation arising are remote.
 
The Company has not, historically, carried any property or casualty insurance and has never incurred property damage or incurred casualty losses. Management feels the chances of such an obligation arising are remote. Accordingly, no amount has been accrued for any liability that could arise from a lack of insurance. Note 10 has been so revised.
 
Exhibits
 
Exhibit 5.1
 
52.   Counsel must opine on whether the shares to be sold by the selling shareholders will, when sold, be legally issued, fully paid and non-assessable. Please obtain and file a revised opinion of counsel.

A revised opinion is being filed with Amendment No. 2 to the registration statement.
 
 
Very truly yours,
  
     
 
/s/ Darren Ofsink
  
     
 
Darren Ofsink
  
 



 -----END PRIVACY-ENHANCED MESSAGE-----