10-12G/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1

FORM 10

GENERAL FORM FOR REGISTRATION OF SECURITIES

Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934

China Ginseng Holdings, Inc.

(Exact name of registrant as specified in its charter)

Nevada	20-3348253
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

64 Jie Fang Da Road Ji Yu Building A, Suite 1208 Changchun City, China	130022
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone (01186) 43185790039

SEC File Number:  000-54072

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

Securities to be registered pursuant to Section 12(g) of the Act:  Common Stock, $.001 par value

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.

Large accelerated filer o	Accelerated Filer                  o
Non-accelerated filer   o	Smaller reporting company x

Item 1. Business.

Organization

China Ginseng Holdings, Inc. was incorporated on June 24, 2004 in the State of Nevada.  We conduct business in China through the following subsidiaries:

Yanbian Huaxing Ginseng Industry Co. Limited (“Yanbian”) – Ginseng farming

· On November 24, 2004, we acquired a 55% interest in Yanbian Huaxing Ginseng Industry Co. Limited from Huaxing Ginseng Industry Co, Ltd. for $200,000.   Subsequently on September 23, 2005, we acquired the remaining 45% interest that we did not already own in Yanbian from Huaxing Ginseng $164,000.  The price was determined based upon the registered capital of the company of $364,000 in China.  In October 2005, in order to meet the requirement for foreign owned enterprise requirement, China Ginseng put in additional capital $250,000, therefore, the total assets and registered capital increased.  We received a certificate of approval issued by the Chinese government certifying Yanbian as a Foreign-Owned Enterprise wholly-owned by us.

Jilin Ganzhi Ginseng Products Co. Ltd. (“Ganzhi”) - Producing Ginseng juice sold in cans.

· On August 24, 2005, China Ginseng acquired a 100% interest in Jinlin Ganzhi Products Co. for $95,691 in cash and subsequently on September 26, 2007 and August 31, 2008 invested $50,000 and $20,000 respectively into the company.

Tonghua Linyuan Grape Planting Co. (“Tonghua”) – Growing grapes and producing wine

· On March 31, 2008, we completed our acquisition of the assets and assumed the liabilities of Tonghua Linyuan Grape Planting Co. for the issuance of 6,155,000 of our shares of common stock.  The price was determined by arm’s-length negotiations based upon the appraised net asset value of the company which at the time of acquisition was approximately $1,332,248.  China Ginseng signed the Tonghua acquisition agreement on April 12, 2007, but the transaction didn’t finalize until March 31, 2008.   We are obligated to pay back loans $292,942 to Ji’An Qingshi Credit Cooperatives (the debt carried from Tonghua Linyuan).  The loan is secured by assets of the company.  The default occurred on 2/4/2003,when the loan was due for repayment, before China Ginseng acquired Tonghua on 3/31/2008.  The Company is currently in default on the loan. and the lender has verbally agreed not to call the loan.  Interest was paid only through 2009 and has been accrued since then.  The lender, Ji’An Qingshi Credit Cooperative, has verbally agreed in March 2008, not to call the loan. The material terms for the verbal agreement are:  There is no due date for repayment of the loan; no interest payments are required; China Ginseng is to repay the loan at its own discretion when funds are available.  China Ginseng plans to repay the loan from Ji’An Qingshi Credit Cooperative with future profits.  Accordingly, we do not believe the default  presents any risks with respect to our business, operations and ownership of Tonghua.

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Jinlin Huamei Beverage Co. Ltd (“Huamei”) - Marketing of all of our products

· Jinlin Huamei was incorporated by us on October 19, 2005 as a foreign investment company in China.  We have invested an additional $200,000 in the capitalization of the company.

Our address is 64 Jie Fang Da Road, Ji Yu Building A, Suite 1208, Changchun City, China and our telephone number is (01186) 43185790029.  We maintain a website at www.chinaginsengs.com.  

Business

Previously, through Yanbian, our business involved the farming, processing, distribution and marketing of Asian and American Ginseng and related byproducts in the following varieties.

· Fresh Ginseng:  For pharmaceutical, health supplement, cosmetic industry and fresh consumption.

· Dry Ginseng:  Dried form.  For pharmaceutical and, health supplement  consumption.

· Ginseng Seeds:  Selling of ginseng seeds.

· Ginseng Seedling:  Selling of ginseng seedling.

We control through leases 3,705 acres of land approved by the Chinese government for Ginseng growing.

However, although we currently sell small amounts of these products, we reserve most of these products for use ourselves in the production of Ginseng juice sold in cans, which along with the future production and sale of wine which we will commence in the near future, has now become our primary business focus.

Through Ganzhi, we will produce two types of Ginseng juice sold in cans.

· Ganzhi Asian Ginseng Beverage

· Ganzhi American Ginseng Beverage

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We have stored fresh ginseng as a raw material in a rented refrigerated warehouse.  We purchased a production factory under a written contract dated March 2, 2010, with the first payment on June 24, 2010. We commenced production in August 2010.

Through Tonghua, we have been growing grapes and will be producing wine.  We have already grown and crushed the grapes from our vineyards and have the juice in reserve.  We have contracted for the production of the wine.  China Ginseng will provide Tonghua Jinyuanshan Winery with grape juice, bottling supplies and packaging supplies; China Ginseng pay Jinyuanshan Winery RMB 1 a bottle for processing red wine and RMB 1.5 a bottle for processing its wine.  We commenced production of wine in August 2010 but have not yet sold any wine. All of our products will be sold through Huamei.

We generated $736,651 and $1,297,575 in revenues for our fiscal years ended June 30, 2010 and 2009 respectively.  For the year ended June 30, 2010, our sales and principal customers were as follows:

	Yanbian		Tonghua		Percent of Total Revenues
Yisheng Foreign Trade Company	$	156,747.02				23	%
Wang Linqing	$	55,097.55				8	%
Heilongjian Mulin Forestry Bureau	$	56,192.14				8	%
Heilongjian YiKangYuan trade company	$	105,255.45				15	%
Wang Chunjiang	$	131,495.64				20	%
Xu Hong Yi	$	113,080.33				17	%
Others	$	60193.88				9	%
Total Ginseng Revenue	$	678,062				100	%
Shenyang Kang Da Fruit Wholesale Co.			$	58,589		100	%
TOTAL Grape Revenue			$	58,589		100	%

Total Revenue for the year ended 30, 2010  $736,651

We maintain a website at www.chinaginsengs.com.  Nothing on the website is part of this filing.

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Ginseng Business

Products and their Markets

We are not selling fresh ginseng from September 2010 onward.  We anticipate using all our fresh ginseng for the production of our ginseng beverages.  Thus we anticipate we will have only minor amounts, if any, dry ginseng available for sale in the future. Because we have changed our business focus and now do not sell any significant amounts of ginseng, we anticipate that our ginseng sales will be impacted because we will reserve most of the fresh ginseng for ginseng juice business, significantly reducing the amount of dry ginseng we will have available for sale in the future.

This shift is reflected in the significant decrease in revenues due to the significant decrease in the amount of dry ginseng we have for sale as well as a change in our major customers, as major customers for dry ginseng no longer make up a significant percentage of our sales.  We have not experienced any problems with customer retention; we simply do not now sell this product in any significant quantities at all.

Distribution Methods

We previously sold these products through oral agreements with distributors.

Sources and Availability of Raw Materials

Ginseng can only be cultivated under severely limited conditions demanding the almost perfect combination of terrain, altitude, and temperature.  The growth cycle requires 5-6 years and once harvested, the land can not be used again (for ginseng planting) for at least 25-30 years.  Suitable Ginseng farm land is so limited the major challenge of this industry is controlling what land is available and continually developing techniques to increase production per acre.

We control 1,500 hectares (3705 acres) of land resources for ginseng planting.  We have only developed about 3% of our land resources.

In addition to the 3,705 acres of land approved by the Chinese government specifically for ginseng growing and cultivation we control, the Company has executed agreements with a number of local farmers to grow, cultivate and harvest Ginseng utilizing the Company’s land grants.  The farming contracts commenced in January 2008.  In connection with these agreements, the Company (1) leases sections of the Ginseng land grants to the farmers at approximately $0.20 (1.5 RMB) per square meter, (2) provides the seeds and fertilizer to the farmers and clears the land of large debris. These costs are capitalized by the Company and included in the Ginseng Crop inventory, (3) pays the farmers a management fee of approximately $0.50 (4.00 RMB) per square meter and (4) the farmers are required to produce 2 kg of Ginseng for each square meter that they manage.  The company pays the farmers market price, meaning the price at which other non-affiliated purchasers purchase similar ginseng from other farmers, for their Ginseng.  If the harvest is below 2 kg per square meter, the difference will be deducted from the total payment for Ginseng purchased. If the harvest produces more than 2 kg per square meter, the Company pays a premium of $3.00 for every extra kilo.  In fiscal year 2009, we purchased approximately 72.5% of our needs from farmers with the price approximately 90% of current market price for every kilo. 

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The Company has recorded a receivable from the farmers for the rental income of the leased Ginseng land grants of $157,665 and $105,110 at June 30, 2010 and 2009, respectively.  The Company has also recorded a long-term payable-farmers for the management fee due to the farmers. The liability at June 30, 2010 and 2009 was $420,440 and $280,293, respectively.  The receivable and liability balances for the respective areas will be settled at harvest time when the Company purchases the harvest at the current market value for Ginseng.

With our own land and these agreements with the farmers, we believe we have sufficient supply for anticipated future needs for ginseng products of all of our subsidiaries.  We also believe we can negotiate additional agreements with other farmers in the area if we need additional supply.

Inventory

Almost all of our ginseng is currently reserved for use by us in the manufacture of ginseng juice.

Seasonality

This business was seasonal, with most customers placing orders in the first and fourth quarter in any year as our ginseng is harvested in autumn, after necessary processing procedures, it is be available for sale in winter.  However, as we no longer sell these products to any significant extent, seasonality is no longer an issue.

Ginseng Juice Sold in Cans

We intend to sell the following two products:

· Ganzhi Ginseng Beverage, Approval No. State Food & Drug Administration  G20090249

· Ganzhi American Ginseng Beverage, Approval No. State Food & Drug Administration G20090208

Our products’ main ingredients are juice extracted from fresh ginseng.  The subsidiary ingredients are xylitol, citric acid, steviosides, purified water.  It takes ginseng juice as the main material plus natural extracts like xylitol, citric acid and steviosides to produce what is referred to in the U.S. as “organic” fresh ginseng drinks, meaning grown with no chemical fertilizer or pesticides, with shelf-life of 18 months. Using xylitol instead of sugar has lowered calories.  Further, products made with xylitol do not cause such a sour taste.

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We anticipate our initial sales will only be in China. Our Ganzhi Ginseng beverage will cost approximately $2.21 per 1600 ml bottle and our fresh American ginseng beverage approximately $2.66 per 1600 ml bottle.  Although we have not yet sold our wine, we derived proposed pricing for our wine based on management’s knowledge of the market price of what it believes to be similar quality of wines.

The most important component of ginseng is ginsenoside.  Unlike the traditional method used by most of our competitors, as shown on the labels of their products, of making ginseng drinks using extraction of ginsenoside and then blending to form the final beverages, we squeeze out the natural juice from fresh ginseng for immediate use. However, direct squeezing needs fresh ginseng as a raw material, and preservation of fresh ginseng is very difficult. They rot very soon.  The harvest time concentrates in September and October, a fairly short period. After that, one can only buy dried ginseng from market such as sun-dried ginseng from which we cannot squeeze juice.  This is why we store our fresh ginseng in refrigerated warehouse space. We are currently renting a refrigerated warehouse (-20 C degree) to store all fresh ginseng inventory necessary for production of the ginseng beverages.  We currently have inventory to produce our products for three months after we commence production.

We own the production plant.  The plant is certified by the Chinese government as a Good Manufacturing Process facility, which is required for our production of these products.  Good Manufacturing Process standards cover organization and personnel, building and facilities, equipment, materials, hygiene and sanitation, validation, documentation, production management, quality management, production distribution and recall, complaints and adverse reactions report, and self-inspections.

Distribution Methods

There are 667 cities in China, we intend to recruit one general distributor for ginseng juice and one for wine in every city.  The city level distributor can recruit the second level distributors.  In some major cities, Jilin Huamei is planning to establish sales branch offices to facilitate the local sales.

Marketing method: Targeting high end retailers such as supermarkets, pharmacies, hotels, gift shops, entertainment centers, tourists attractions, airport and high speed trains, etc to carry our products.

Group Orders: We will aim for large enterprises, government organizations and institutions, they often place large quantities of orders to buy quality products and distribute the products to their employees as employee benefit.

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Although we are currently negotiating distribution and sales agreements as described above, as of the date of this filing we have binding agreements with the following distributors:

Ma Yan	Baotou City, Inner Mongolia
Liu Jianxia	Ordos City, Inner Mongolia
Gao Hong	Huhehaote City, Inner Mongolia
Li Hua	Autonomous Region, Inner Mongolia
Zhang Jiajiang	Zhenzhou City,  Henan Province
Li Zongfeng	Guangzhou City, Guangdong Province
Wang, Guijie	Liaoyuan City, Jilin Province
Wang, Quanwei	Diaobingshan City, Liaoning Province
Wang, Jianjun	Daqing City, Heilongjiang Province

 The agreements specify an exclusive territory, minimum purchase requirements, purchase price and other rights and obligations of the parties.  The form of distribution agreement is filed as an exhibit to this filing.

Sources and Availability of Raw Materials

We will obtain the ginseng for beverage production from the same sources as we previously obtained it for the sale or our ginseng, which is now a small part of our business in that most of our ginseng is reserved for our own use for juice production, that is from the land we control directly and under agreements with various farmers.

Seasonality

There is no seasonality for sale of ginseng beverages.

Wine

We intend to sell the following 3 kinds of wines at the following currently anticipated sale prices:

Bingqing ice wine	$	23.00
Pearl in the Snow (Red)	$	8.50
Linyuan Red	$	4.36

We anticipate that our sales initially will only be in China.

We anticipate that the wine will be produced by a third party from our grapes grown on 750 acres of land leased from a group of individual farmers, paying approximately $37.50 per acre a year for 15 years.  This lease expires on December 31, 2014.  We have a written agreement with Tonghua Jinyuanshan Winery, a third party, to produce our initial wine at a price of approximately $.15 - .20 per bottle.  Under the agreement, we provide them with grape juice, bottling supplies and packaging supplies and they produce and bottle the wine with the raw materials we supply.

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Production Methods

Wine is produced by fermenting crushed grapes using various types of yeast. Yeast consumes the sugars found in the grapes and converts them into alcohol. As of June 30, 2010, Tonghua has reserved 965 tons of grape juice for fermentation.  Last autumn we harvested 562.5 tons grapes in average, which can produce 281 tons of juice.  We let the juice ferment for 40 days then sealed it in barrels in December.

Distribution Methods

There are 667 cities in China, we intend to recruit one general distributor for ginseng juice and one for wine in every city.  The city level distributor can recruit the second level distributors.  In some major cities, Jilin Huamei is planning to establish sales branch offices to facilitate the local sales.

Marketing method: Targeting high end retailers such as supermarkets, pharmacies, hotels, gift shops, entertainment centers, tourists attractions, airport and high speed trains, etc to carry our products.

Group Orders: We will aim for large enterprises, government organizations and institutions, they often place large quantities of orders to buy quality products and distribute the products to their employees as employee benefit.

Although we are currently negotiating distribution and sales agreements as described above, as of the date of this filing we do not have any binding agreements with distributors.

Sources and Availability of Raw Materials

We anticipate that our production in the first year will be from our own grapes.  Thereafter, depending upon demand, we may purchase grapes from other suppliers.  We have no contracts, agreements or commitments with any third party suppliers for grapes.

Seasonality

Grapes are harvested in October, but wine has no seasonality.

Marketing Activities

All of our products will be sold by our subsidiary Huamei.  We do not anticipate that we will sell any of our products directly but only through distributors.

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Research and Development

We have had no research and development expenses in the past two years.

Intellectual Property

The drink formula for our ginseng beverages is a registered patent approved by the Chinese government.   This patent was issued on January 23, 2008 and expires 20 years after issuance.

We have a GMP Health Food Certificate for Jilin Ganzhi Beverage Company, Approval #077   issued on November 13, 2007  by Jilin Province Health Bureau.  This certification is valid for four years.  We cannot manufacture our products without this approval.

The Ganzhi Ginseng Beverage has approval No. SFDA  G20090249 issued by the State Food & Drug Administration on 05/31/2009 which is valid for five years.  We cannot sell our products without this approval.

The Ganzhi American Ginseng Beverage has approval No. SFDA G20090208 issued by the State Food & Drug Administration on 5/27/2009 which is valid for five years.

Because these products have SFDA approval, they can carry the following logo:

This logo means that we have secured the required SFDA approval for our products.

Regulatory Environment

China is transitioning from a planned economy to a market economy. While the Chinese government has pursued economic reforms since its adoption of the open-door policy in 1978, a large portion of the Chinese economy is still operating under five-year plans and annual state plans. Through these plans and other economic measures, such as control on foreign exchange, taxation and restrictions on foreign participation in the domestic market of various industries, the Chinese government exerts considerable direct and indirect influence on the economy. Many of the economic reforms carried out by the Chinese government are unprecedented or experimental, and are expected to be refined and improved. Other political, economic and social factors can also lead to further readjustment of such reforms. This refining and readjustment process may not necessarily have a positive effect on our operations or future business development. Our operating revenues may be reduced by changes in China's economic and social conditions as well as by changes in the policies of the Chinese government, such as changes in laws and regulations (or the official interpretation thereof), measures which may be introduced to control inflation, changes in the interest rate or method of taxation, and the imposition of additional restrictions on currency conversion.

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

We are subject to many general regulations governing business entities and their behavior in China and in any other jurisdiction in which we have operations. In particular, we are subject to laws and regulations covering food, dietary supplements and pharmaceutical products. Such regulations typically deal with licensing, approvals and permits. Specifically, these regulations concern Good Manufacturing Practices and SFDA approval as discussed above.  Any change in product licensing may make our products more or less available on the market. Such changes may have a positive or negative impact on the sale of our products and may directly impact the associated costs in compliance and our operational and financial viability. Such regulatory environment also covers any existing or potential trade barriers in the form of import tariff and taxes that may make it difficult for us to export our products to certain countries and regions, such as Japan, South Korea and Hong Kong, which would limit our international expansion.

Because we are a wholly foreign owned enterprise, we are subject to the law on foreign investment enterprises in China, and the foreign company provisions of the Company Law of China, which governs the conduct of our wholly owned subsidiary and its officers and directors. Additionally, we are also subject to varying degrees of regulations and permit system by the Chinese government.

Foreign Investment in PRC Operating Companies

The Foreign Investment Industrial Catalogue jointly issued by the Ministry of Commerce for the People’s Republic of China and the National Development and Reform Commission in 2007 classified various industries/business into three different categories: (i) encouraged for foreign investment; (ii) restricted to foreign investment; and (iii) prohibited from foreign investment. For any industry/business not covered by any of these three categories, they will be deemed industries/business permitted to have foreign investment. Except for those expressly provided restrictions, encouraged and permitted industries/business are usually 100% open to foreign investment and ownership. With regard to those industries/business restricted to or prohibited from foreign investment, there is always a limitation on foreign investment and ownership. The PRC Subsidiary’s business does not fall under the industry categories that are restricted to, or prohibited from foreign investment and is not subject to limitation on foreign investment and ownership.

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Regulation of Foreign Currency Exchange

Foreign currency exchange in the PRC is governed by a series of regulations, including the Foreign Currency Administrative Rules (1996), as amended, and the Administrative Regulations Regarding Settlement, Sale and Payment of Foreign Exchange (1996), as amended. Under these regulations, the Renminbi is freely convertible for trade and service-related foreign exchange transactions, but not for direct investment, loans or investments in securities outside the PRC without the prior approval of China’s State Administration of Foreign Exchange. Pursuant to the Administrative Regulations Regarding Settlement, Sale and Payment of Foreign Exchange (1996), Foreign Investment Entities may purchase foreign exchange without the approval of the State Administration of Foreign Exchange for trade and service-related foreign exchange transactions by providing commercial documents evidencing these transactions. They may also retain foreign exchange, subject to a cap approved by the State Administration of Foreign Exchange, to satisfy foreign exchange liabilities or to pay dividends. However, the relevant Chinese government authorities may limit or eliminate the ability of foreign investment entities to purchase and retain foreign currencies in the future. In addition, foreign exchange transactions for direct investment, loan and investment in securities outside the PRC are still subject to limitations and require approvals from the State Administration of Foreign Exchange.

On July 21, 2005, the PRC government changed its decade old policy of pegging its currency to the U.S. currency. Under that policy, the Renminbi is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. This change in policy has resulted in an approximate 21% appreciation of the Renminbi against the U.S. dollar between 2005 and 2008. However, the PRC government decided to repeg the Renminbi to U.S. Dollars in response to the financial crisis in 2008.  On June 19, 2010, China ended the peg of Renminbi to the U.S. Dollar which allowed a greater flexibility of its exchange rate.  There remains significant international pressure on the appreciation of the Renminbi against the U.S. Dollar.  To the extent any of our future revenues are denominated in currencies other than the United States dollar, we would be subject to increased risks relating to foreign currency exchange rate fluctuations which could have a material adverse affect on our financial condition and operating results since operating results are reported in United States dollars and significant changes in the exchange rate could materially impact our reported earnings.

Regulation of Foreign Investment Entities’ Dividend Distribution

The principal laws and regulations in the PRC governing distribution of dividends by foreign investment entities include:

(i)   The Sino-foreign Equity Joint Venture Law (1979), as amended, and the Regulations for the Implementation of the Sino-foreign Equity Joint Venture Law (1983), as amended;

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(ii)   The Sino-foreign Cooperative Enterprise Law (1988), as amended, and the Detailed Rules for the Implementation of the Sino-foreign Cooperative Enterprise Law (1995), as amended;

(iii)   The Foreign Investment Enterprise Law (1986), as amended, and the Regulations of Implementation of the Foreign Investment Enterprise Law (1990), as amended.

Under these regulations, foreign investment entities in the PRC may pay dividends only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, foreign-invested enterprises in the PRC are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds unless such reserve funds have reached 50% of their respective registered capital. These reserves are not distributable as cash dividends. The board of directors of a foreign investment entity has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation.

Regulation of a Foreign Currency’s Conversion into Renminbi and Investment by Foreign Investment Entities

On August 29, 2008, the State Administration of Foreign Exchange issued a Notice of the General Affairs Department of the State Administration of Foreign Exchange on the Relevant Operating Issues concerning the Improvement of the Administration of Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises or Notice 142, to further regulate the foreign exchange of foreign investment entities. According to the Notice 142, foreign investment entities shall obtain verification report from a local accounting firm before converting its registered capital of foreign currency into Renminbi, and the converted Renminbi shall be used for the business within its permitted business scope. The Notice 142 explicitly prohibits foreign investment entities from using Renminbi converted from foreign capital to make equity investments in the PRC, unless the domestic equity investment is within the approved business scope of the foreign investment entity and has been approved by the State Administration of Foreign Exchange in advance.

Regulation of Foreign Exchange in Certain Onshore and Offshore Transactions

In October 2005, the State Administration of Foreign Exchange issued the Notice on Issues Relating to the Administration of Foreign Exchange in Fund-raising and Return Investment Activities of Domestic Residents Conducted via Offshore Special Purpose Companies, or the State Administration of Foreign Exchange Notice 75, which became effective as of November 1, 2005, and was further supplemented by two implementation notices issued by the State Administration of Foreign Exchange on November 24, 2005 and May 29, 2007, respectively. The State Administration of Foreign Exchange Notice 75 states that PRC residents, whether natural or legal persons, must register with the relevant local State Administration of Foreign Exchange branch prior to establishing or taking control of an offshore entity established for the purpose of overseas equity financing involving onshore assets or equity interests held by them. The term “PRC legal person residents” as used in the State Administration of Foreign Exchange Notice 75 refers to those entities with legal person status or other economic organizations established within the territory of the PRC. The term “PRC natural person residents” as used in the State Administration of Foreign Exchange Notice 75 includes all PRC citizens and all other natural persons, including foreigners, who habitually reside in the PRC for economic benefit. The State Administration of Foreign Exchange implementation notice of November 24, 2005 further clarifies that the term “PRC natural person residents” as used under the State Administration of Foreign Exchange Notice 75 refers to those “PRC natural person residents” defined under the relevant PRC tax laws and those natural persons who hold any interests in domestic entities that are classified as “domestic-funding” interests.

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PRC residents are required to complete amended registrations with the local State Administration of Foreign Exchange branch upon: (i) injection of equity interests or assets of an onshore enterprise to the offshore entity, or (ii) subsequent overseas equity financing by such offshore entity. PRC residents are also required to complete amended registrations or filing with the local State Administration of Foreign Exchange branch within 30 days of any material change in the shareholding or capital of the offshore entity, such as changes in share capital, share transfers and long-term equity or debt investments and these changes do not relate to return investment activities. PRC residents who have already organized or gained control of offshore entities that have made onshore investments in the PRC before the State Administration of Foreign Exchange Notice 75 was promulgated must register their shareholdings in the offshore entities with the local State Administration of Foreign Exchange branch on or before March 31, 2006.

Under the State Administration of Foreign Exchange Notice 75, PRC residents are further required to repatriate into the PRC all of their dividends, profits or capital gains obtained from their shareholdings in the offshore entity within 180 days of their receipt of such dividends, profits or capital gains. The registration and filing procedures under the State Administration of Foreign Exchange Notice 75 are prerequisites for other approval and registration procedures necessary for capital inflow from the offshore entity, such as inbound investments or shareholders loans, or capital outflow to the offshore entity, such as the payment of profits or dividends, liquidating distributions, equity sale proceeds, or the return of funds upon a capital reduction.

Government Regulations Relating to Taxation

On March 16, 2007, the National People’s Congress, approved and promulgated the PRC Enterprise Income Tax Law. The PRC Enterprise Income Tax Law took effect on January 1, 2008. Under the PRC Enterprise Income Tax Law, foreign investment entities and domestic companies are subject to a uniform tax rate of 25%. The PRC Enterprise Income Tax Law provides a five-year transition period starting from its effective date for those enterprises which were established before the promulgation date of the PRC Enterprise Income Tax Law and which were entitled to a preferential lower tax rate under the then-effective tax laws or regulations.

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On December 26, 2007, the State Council issued a Notice on Implementing Transitional Measures for Enterprise Income Tax, providing that the enterprises that have been approved to enjoy a low tax rate prior to the promulgation of the PRC Enterprise Income Tax Law will be eligible for a five-year transition period since 1 January, 2008, during which time the tax rate will be increased step by step to the 25% unified tax rate set out in the PRC Enterprise Income Tax Law. From 1 January, 2008, for the enterprises whose applicable tax rate was 15% before the promulgation of the PRC Enterprise Income Tax Law , the tax rate will be increased to 18% for year 2008, 20% for year 2009, 22% for year 2010, 24% for year 2011, 25% for year 2012. For the enterprises whose applicable tax rate was 24%, the tax rate will be changed to 25% from January 1, 2008.

The PRC Enterprise Income Tax Law provides that an income tax rate of 20% may be applicable to dividends payable to non-PRC investors that are “non-resident enterprises”. Non-resident enterprises refer to enterprises which do not have an establishment or place of business in the PRC, or which have such establishment or place of business in the PRC but the relevant income is not effectively connected with the establishment or place of business, to the extent such dividends are derived from sources within the PRC. The income tax for non-resident enterprises shall be subject to withholding at the income source, with the payor acting as the obligatory withholder under the PRC Enterprise Income Tax Law, and therefor such income taxes generally called withholding tax in practice. The State Council of the PRC has reduced the withholding tax rate from 20% to 10% through the Implementation Rules of the PRC Enterprise Income Tax Law. It is currently unclear in what circumstances a source will be considered as located within the PRC. We are a U.S. holding company and substantially all of our income is derived from dividends we receive from our subsidiaries located in the PRC. Thus, if we are considered as a “non-resident enterprise” under the PRC Enterprise Income Tax Law and the dividends paid to us by our subsidiary in the PRC are considered income sourced within the PRC, such dividends may be subject to a 10% withholding tax.

Such income tax may be exempted or reduced by the State Council of the PRC or pursuant to a tax treaty between the PRC and the jurisdictions in which our non-PRC shareholders reside. For example, the 10% withholding tax is reduced to 5% pursuant to the Double Tax Avoidance Agreement Between Hong Kong and Mainland China if the beneficial owner in Hong Kong owns more than 25% of the registered capital in a company in the PRC.

The new tax law provides only a framework of the enterprise tax provisions, leaving many details on the definitions of numerous terms as well as the interpretation and specific applications of various provisions unclear and unspecified. Any increase in the combined company’s tax rate in the future could have a material adverse effect on its financial conditions and results of operations.

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Regulations of Overseas Investments and Listings

On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce of the People’s Republic of China, the China Securities Regulatory Commission, the State-owned Assets Supervision and Administration Commission of the State Council, the State Administration of Taxation, the State Administration for Industry and Commerce, and the State Administration of Foreign Exchange, jointly amended and released the Merger & Acquisition Rules, which became effective on September 8, 2006. This regulation, among other things, includes provisions that purport to require that an offshore special purpose vehicle formed for purposes of overseas listing of equity interest in PRC companies and controlled directly or indirectly by PRC companies or individuals obtain the approval of the China Securities Regulatory Commission prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange.

On September 21, 2006, the China Securities Regulatory Commission published on its official website procedures regarding its approval of overseas listings by special purpose vehicles. The China Securities Regulatory Commission approval procedures require the filing of a number of documents with China Securities Regulatory Commission and it would take several months to complete the approval process. The application of the Merger & Acquisition Rules with respect to overseas listings of special purpose vehicles remains unclear with no consensus currently existing among the leading PRC law firms regarding the scope of the applicability of the China Securities Regulatory Commission approval requirement.

Food Safety Law of the People’s Republic of China

The Food Safety Law of the People’s Republic of China as adopted at the 7th Session of the Standing Committee of the 11th National People’s Congress of the People’s Republic of China and effective on June 1, 2009, governs the food safety in food production and business operation activities. Pursuant to the Food Safety Law of the People’s Republic of China, food producers must establish an internal inspection and record system for raw materials and predelivery products, and food distributors must also establish internal systems to record and inspect food products procured from suppliers. In addition, any food addictives that are not in the approved government catalog must not be used and no food products can be sold inspection-free. 

Regulations on the Implementation of the Food Safety Law of the People’s Republic of China

The Regulations on the Implementation of the Food Safety Law of the People’s Republic of China as adopted at the 73rd Standing Committee Meeting of the State Council on July 8, 2009 and effective on July 20, 2009, are promulgated in accordance with the Food Safety Law of the People’s Republic of China. The Regulations require that the local People’s Government at or above the country level shall perform the responsibility specified in the Food Safety Law of the People’s Republic of China, improve the ability for supervision and administration of food safety, ensure supervision and administration of food safety; establish and improve the coordination mechanism between food safety regulatory authorities, integrate and improve the food safety information network, and realize the sharing of food safety and food inspection information and other technical resources.

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Law of the People’s Republic of China on Quality and Safety of Agricultural Products

The Law of the People’s Republic of China on Quality and Safety of Agricultural Products was adopted at the 21st Meeting of the Standing Committee of the Tenth National People’s Congress on April 29, 2006. This Law was enacted in order to ensure the quality and safety of agricultural products, maintain the health of the general public, and promote the development agriculture and rural economy. Pursuant to this Law, agricultural products distribution enterprises shall establish a sound system of inspection and acceptance for their purchases. In addition, agricultural products that fail to pass the inspection based on the quality and safety standards of agricultural products cannot be marketed.

Regulation on the Sale of Wine

The two most critical pieces of legislation are the wine standard (GB 15037) and the wine labelling law (GB 10344) both of which are administered by General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China which have the following requirements:

· The name of the product is mandatory in China. The words ‘grape wine’ should be sufficient. However, it is advisable to qualify this with ‘red’, ‘white’, ‘sparkling’, ‘semi-sparkling, ‘fortified’, ‘sweetened fortified’ etc. As wine can be considered to be made from a single raw material, it should be exempt from the requirement for ingredient listing. Nevertheless, sweeteners, preservatives and added color (legal in the case of fortified wine only) need to be declared.

· The alcohol format is prescribed in Chinese regulations. The alcohol statement should be in the form ‘Alcoholic strength xx.xpercent vol’. The tolerance between the actual and the stated alcohol is +/- 1.0percent.

· The volume statement must appear on the label. The statement must be on the same display panel as the word ‘wine’.

· A country of origin statement is mandatory. The date of bottling is required on Chinese labels.

· Wines with an alcohol content of 10 percent or less are required to include a minimum durability date. Wines over 10 percent alcohol are exempt from this requirement.

· The product type is mandatory for China. This can be indicated by the actual sugar content or by the category.

We are and anticipate that we will be in full compliance with these regulations and do not anticipate that they will have any significant impact on our business as such.

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Only SFDA is required for the sale of our juice. Penalties would be levied upon us if we fail to adhere to and maintain certain standards as specified above. Such failure has not occurred in the past, and we generally do not anticipate that it may occur in the future, but no assurance can be given in this regard.

There are no regulations that restrict sales of our products externally, and we do not need a certificate for export.  Each foreign country has different standards for importing our products; in the US for example requires FDA approval, which we do not have and thus do not export our products to the US.  The company has no short-term plans to expand its products export to countries outside China.

As noted above, we have all other necessary regulatory approvals to manufacture and sell our products in China.

Compliance with Environmental Law

We comply with the Environmental Protection Law of China and its local regulations. In addition to statutory and regulatory compliance, we actively ensure the environmental sustainability of our operations. Our costs of compliance with applicable environmental laws are minimal, since the manufacturing of our products generates very limited damages, if any, to the environment. Accordingly we had no expenditures for compliance with environmental law in 2009 and do not anticipate incurring any such costs in the future. Penalties would be levied upon us if we fail to adhere to and maintain certain standards. Such failure has not occurred in the past, and we generally do not anticipate that it may occur in the future, but no assurance can be given in this regard.

Competition

Ginseng

The market in China for ginseng is extremely competitive. Based upon management’s knowledge of the industry in China, we believe that there are more than four companies engaged in ginseng production in China.  The significant competition within the ginseng industry for planting land is compounded by the Chinese government’s recent promotion of forestation in state-owned forests.  This has dramatically reduced the woodland available for ginseng planting.

Our major competitors are Changbai Baoquan Mountain, Changbai Ni Li River, Ji An Ginseng and Antler Company & The First Fu Song Ginseng Farm.  Based upon its significant knowledge of the ginseng industry in China, management believes that we rank in the middle of these competitors, the larger of which in general have greater financial and personnel resources and have achieved greater market penetration than we have.  However, because there are no published statistics concerning our competitors, this is based solely upon management’s experience in the industry.

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The ranking is based on the size of ginseng planting area and shift to ginseng  drinks business will not affect company’s ranking.  We will generate revenues from the sales of ginseng drinks in the future which we believe will offset any loss of revenue due to the shift.

We believe we compete in this market based upon:

· Land Resources controlled directly or through arrangements with farmers

· Ginseng cultivation systems and techniques.

· Established Distribution Network

Ginseng Drinks

In the market there are about 10 kinds of ginseng drinks, most of them are imports from Korea. The prices of these products list from approximately $1 to $3 per bottle, most of them are sold by region agents without advertisements and promotion, so the sales of ginseng drinks are limited.  There hasn’t been a leading brand of this product appearing in the market yet.

As we have not yet commenced sales of these products, we will be a small competitor in the market.  Some of our competitors have greater financial and personnel resources and all have achieved greater market penetration than we have.

We believe we compete in this market based upon our production methods which all the production of our drinks is from fresh ginseng.

Wine

We will compete with domestic producers of wine as well as importers of wines from other countries. As we have not yet commenced sales of these products, we will be a small competitor in the market.  Some of our competitors have greater financial and personnel resources and all have achieved greater market penetration than we have.

Principal competitors also sell wine made from grapes grown in Changbai Mountains:

· Jilin Provincial Changbaishan Wine Holding Co., Ltd.

· Jilin Tianchi Wine Company Ltd.

· Tonghua Tianchi Wine Company Ltd,

The climate in Changbai Mountain is ideal for growing grapes because the significant temperature difference during day and night, it contributes to the accumulation of polyphenols and Flavonoids in grapes which improve the taste and quality of the wine; and the long cold winter, more than 160 days a year the temperature fall below -45 C  prevents any pest diseases.

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Based upon management’s knowledge of the industry, we believe that more than 100 wineries have opened since 1996 and there is an estimated 500 vineyards across China, which supply almost all of the wines consumed domestically.  For example, Great Wall Winery, one of the leading local brands in China, produces over 50,000 tons of wine each year from its three main production areas in North China. 

We believe we compete in this market based upon the fact that our wines are produced from grapes grown in Changbai Mountains which, based upon management’s knowledge of the industry, we believe to be regarded as a favorable growing region.

Employees

We have the following employees, the seasonal field workers of which are part time:

	Total		Chairman		Manager		Admin		Finance		Sales		Factory worker		Seasonal Field Worker
Jinlin Huamei		19		1		1		5		2	10
Yanbian Huaxing		166				1		2		2		3				158
Jilin Ganzhi		34				1		6		2		5		20
Tong Hua Linyuan		48				1		4		2		3				38
Total		256		1		4		16		8		11		20		196

We consider our relationship with our employees to be excellent.

Item 1A. Risk Factors.

Smaller reporting companies are not required to provide the information required by this item.

Item 2. Financial Information.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Company Overview

Our company, China Ginseng Holdings Inc., was incorporated on June 24, 2004 in the State of Nevada.  The company conducts business through its four wholly owned subsidiaries located in Northeast China.  Through leases, we control 3,705 acres of land approved by the Chinese government for ginseng planting and approximately 750 acres of grape vineyards which are harvested annually.

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Since our inception in 2004, we have been engaged in the business of farming, processing, distribution and marketing of fresh ginseng, dry ginseng, ginseng seeds, and seedlings.  In March 2008, we acquired Tonghua Linyuan Grape Planting Co, introducing wild mountain grapes to our existing ginseng farming business. Starting August 2010, China Ginseng has gradually shifted the business from farming to producing ginseng juice and wine with our crops as raw materials.

With the expansion of our planting area and the integration of our farming and beverage manufacturing business, we hope to build a world-class brand by taking advantage of our land resources, high-quality raw materials, patented product formula, unique manufacturing technology and growing distribution network.

The following discussion of our financial condition and operational results should be read in conjunction with our financial statements and related notes as well as other financial information included in this Form 10.

Critical Accounting Policies and Estimates

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  As such, in accordance with the use of accounting principles generally accepted in the United States of America, our actual realized results may differ from management’s initial estimates as reported.  The Company considers the following critical accounting policies to be critical:

Inventory

Inventory consists of fresh and dried Ginseng as well as crushed grapes and is stated at the lower of cost or market value.  Cost is determined using the First-In, First-Out (FIFO) Method.

Ginseng Crops

The Company uses the full absorption costing method to value its Ginseng crops.  Included in crop costs are seeds, labor, applicable overhead including depreciation, and supplies. Common costs are allocated in each period based upon the total number of hectors under cultivation during the period.

The carrying value of the Ginseng crops is reviewed on a regular basis for any impairment in value using management’s best estimate as to expected future market values, yields and costs to harvest.  Costs accumulated on the acres expected to be harvested during the next fiscal year have been classified as a current asset.

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Revenue Recognition

The Company’s primary source of revenue has been from the sale of fresh and dried Ginseng and in the year ended June 30, 2010, one bulk sale of crushed grapes.  Currently, the Company is processing the Ginseng and storing the stock for future juice production which it plans to commence in late 2010.  The grape harvest for 2009 has been crushed and the juice produced has been stored in storage tanks.  The Company plans to do the same for 2010. Ginseng is planted in the Spring (March) and Fall (September) of each year and is generally harvested in September.  It usually takes 6 years for a Ginseng root to mature, although, senior maturity can be 8 years.

Harvested Ginseng can be sold in two ways: (1) fresh Ginseng which can be sold immediately and stored in refrigerators for up to 3 years and (2) dried Ginseng which is processed and dried via sunlight and steam machines. Drying is a two month process.  Dried Ginseng can be stored up to 5 years. The Company has focused on selling dried Ginseng as it is more profitable than selling fresh Ginseng. The Company has also been storing fresh Ginseng for future juice manufacturing.

When the Company sells Ginseng, it receives orders prior to harvest.  For major customers, 20% to 30% is paid upon delivery as payment in advance.  The balance is billed after the customer incurs a lengthy inspection process which can take up to 60 days.  Until the customer finalizes its inspection and deems the shipment acceptable, the shipment is still the property of the Company.  Upon customer completion of inspection and approval, the sale is then recognized and the balance of the invoice price is sent to the Company. For smaller sales, the customers pick up the Ginseng from the Company, pay in cash at time of pick up and receive an invoice with appropriate sales tax applied and a cash acknowledgement. On these orders, revenue is recognized upon payment. The Company had one bulk sale of crushed grape juice and recognized the sale when the tanker left the vineyard.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable consist principally of trade receivables. When Ginseng is shipped to a customer, the customer is entitled to an inspection process which could take up to 60 days.  Upon completion of the inspection and approval process, the customer notifies the company and a sale is recorded.  The allowance for doubtful accounts represents management’s estimate of the amount of probable credit losses, determined by reviewing past due balances and other information.  Account balances are written off against the allowance if management determines the receivable is uncollectible.  The Company’s standard terms stipulate payment in 60 days and consider a receivable to be uncollectible after one appropriate collection efforts have been exhausted.

Vineyard Development Costs

Vineyard development costs consist primarily of the costs of the vines and expenditures related to labor and materials to prepare the land and construct vine trellises. The costs are capitalized within Property and Equipment. When the vineyard becomes commercially productive, annual amortization is recognized using the straight-line method over the estimated economic useful life of the vineyard, which is estimated to be 40 years. All of the company’s vineyards are considered commercially productive.  Amortization of vineyard development costs are included in capitalized crop costs that in turn are included in inventory costs and ultimately become a component of cost of goods sold.

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Income Taxes

The Company accounts for income taxes utilizing the liability method of accounting.  Under the liability method, deferred taxes are determined based on differences between financial statement and tax bases of assets and liabilities at enacted tax rates in effect in years in which differences are expected to reverse.

Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are expected to be realized.

Going Concern

As of June 30, 2009, the company had a working capital deficiency of $1,041,681. As of June 30, 2010, that amount had risen to $2,067,999. The report of our independent registered public accounting firm on the financial statements for the year ended June 30, 2010 includes an explanatory paragraph indicating substantial doubt as to our ability to continue as a going concern.  To address the company’s cash flow problems, management has taken a series of actions, including raising $591,902 as of June 30, 2010 in capital through a Regulation S private placement and is currently recruiting distributors for ginseng beverage and wine products.  Management believes that these actions will enable the Company to improve cash flow and move towards profitability in the coming year.  Since June 30, 2010, the Company has raised an additional $335,919 in cash through a Regulation S private placement.

Result of Operations

Year ended June 30, 2010 compared to Year ended June 30, 2009

Revenue

Products	June 30, 2010 Revenue		June 30, 2009 Revenue		2010-2009 Variance of Quantity		2010-2009 Variance of Unit Price			2010-2009 Dollar Variance
Ginseng (production)	$	105,166	$	137,149	(5,046	) kg		(0.063	)	$	(31,983	)
Ginseng (purchase)		274,796		792,527	(208,619	) kg		2.95			(517,731	)
Seeds and Seedlings		298,100		367,899	(11,179	) kg		(0.249	)		(69,799	)
Grape		58,589		-							58,589
Total	$	736,651	$	1,297,575						$	(560,924	)

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Our total revenue decreased from $1,297,575 for the year ended June 30, 2009 to $736,651 for the year ended June 30, 2010, a decrease of $560,924 or 43% of the revenue for the year ended June 30, 2009.

Our ginseng sales revenue from our own farming production for the year ended June 30, 2010 decreased $31,983 compared to the year ended June 30, 2009.  This was a reduction of 22.52% over the previous year. Starting in 2008, the Company decided to reserve fresh ginseng as a raw material for our ginseng juice production line. Since ginseng can continue growing for at least six years, we halted the harvest of the root except in cases where it was not adequate for juice production. (In some cases, rain can cause oxidization on the ginseng, making it unsuitable for beverage production.)

The last few years have seen significant fluctuations in the price of ginseng due to the global recession and local market conditions. Demand for ginseng exports declined in 2008, creating a significant oversupply in China. The price gradually recovered in 2009 after production fell in the nearby region of Heilongjian. In addition, the Chinese government restricted the amount of land available for ginseng farming. Land under our company’s control was not affected by the government restrictions. In 2010, oversupply in the domestic market again caused the price of ginseng to fall but not that much and we believe the government’s actions will lead to a reduced supply of ginseng in the long-term and that this price decline is temporary.

Part of our business is to purchase and resell ginseng based on orders we receive from our major customers. Our ginseng sales revenue from purchase and resale decreased from $792,527 for the year ended June 30, 2009 to $274,796 for the year ended June 30, 2010, a decline of $517,731 or 65%.  The reason for this decline is a decrease in orders we received.

In addition to ginseng root, we also produce seeds and seedlings. The demand for seeds and seedlings is determined by the needs of independent farmers. In 2010, the demand for seeds and seedlings was lower than in 2009. As a result of this decline, our revenue from the sale of seeds and seedlings decreased from $367,899 for the year ended June 30, 2009 to $298,100 for the year ended June 30, 2010.

The 2009-10 fluctuation in prices for ginseng, seeds and seedlings produced by the Company was in the normal range. The price increase for the resale of purchased ginseng was higher than normal because the quality of the 2010 product was substantially higher than in 2009.

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The company generated $58,589 in revenue from the sale of grapes for the year ended June 30, 2010. This was the first year the company sold grapes following the 2008 purchase of the vineyard.   The Company decided to sell the 2008 harvest to generate cash.

Cost of Goods Sold

	06/30/2010		Unit Price		Quantity/ Kilo		06/30/2009		Unit Price		Quantity/ Kilo
Ginseng (Farming)	$	108,791		6.027		18,049	$	236,442		10.411		22.710
Ginseng Purchase for Resale		209,089		4.616		45,286		656,725		2.585		253,905
Write down of Ginseng crops to net realizable value		408,970						6,200
Cost of Inventory Ganzhi		116,935
Grape Sale		58,589
Total	$	902,374					$	899,367

Our total cost of goods sold increased from $899,367 for the year ended June 30 to $902,374 for the year ended June 30, 2010, an increase of $3,007.  The following is a breakdown:

The total cost of ginseng production decreased from $236,442 for the year ended June 30, 2009 to $108,791 for the year ended June 30, 2010 resulting from a decrease in the quantity of ginseng harvested and a decline in the unit price.

Compared to 2009, more Ginseng was harvested from less acreage increasing the yield resulting in a cost reduction in 2010. The amount of ginseng harvested in 2010 decreased by 20% compared to 2009, while the harvest area decreased by 34% compared to 2009.

The harvest cost is based on the area of ginseng farmland harvested. It includes seeds, seedlings, plant sheds, woodland expenses, wages, fertilizer, pesticides, irrigation, transportation fees, and the building of pathways. These costs are capitalized to Ginseng crop inventory and are prorated to the cost of the harvest. The cost is calculated based on the planting area and quantities of ginseng being harvested.

Our cost of purchasing ginseng for resale in 2010 decreased substantially from $656,725 to $209,089 primarily because of reduced demand. At the same time, the quality of the ginseng increased in 2010 and, as a result, the unit price nearly doubled over the 2009 price.

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Although the costs of both growing and purchasing ginseng declined in 2010 by $575,287, the total costs for the two years are nearly identical. That is because other costs rose in 2010 with the company’s diversification. One new cost in 2010 was $58,589 for the production of grapes. Another new cost was $116,935 for Ganzhi inventory. During the year 2010, the Company disposed 18,1678 kg of unqualified ginseng from the refrigerated warehouse; however, we only sold 4,050 kg ginseng. This difference was due to (1) waste from obsolete ginseng, (ii) weight lost due to thawing (iii) loss from drying the ginseng.  As a result, we lost 14,117 kg ginseng at a cost of $116, 935.

The Company also saw a substantial increase in the write down of Ginseng crops to net realizable value, which increased from $6,200 for the year ended June 30, 2009 to $408,970 for the year ended June 30, 2010.  This increase primarily relates to the reduction of Ginseng harvested in 2010, combined with the additional capitalization of Ginseng crop costs in 2010, which resulted in an increase in the capitalized Ginseng determined to be impaired.

Selling General and Administration Expenses

Selling, general and administrative expenses were reduced from $ 303,378 for the year ended June 30, 2009 to $ 280,175 for the year ended June 30, 2010, a reduction of $23,203 or 7.6 %. The reduction is mainly from decrease in general administrative expenses and the reduced provisions for bad debts. We recovered $ 133,000 in receivables that were previously written off as uncollectible.  This was offset by an increase in other selling, general and administrative expenses, and an increase of approximately $76,000 in professional fees.

Depreciation and Amortization

Depreciation and amortization was $154,066 for the year ended June 30, 2010, compared to $141,066 for the year ended June 30, 2009, an increase of $13,000 or 9.2%.  This increase is primarily due to the additional depreciation expense on the building acquired on March 2, 2010 for $1,325,479.  Of the total depreciation and amortization, $116,732 and $115,662 was capitalized to Inventory and Ginseng Crops for the years ended June 30, 2010 and 2009, respectively.

Interest Expense

Our Interest expense decreased by $6,217, from $147,784 for the year ended June 30, 2009 to $141,567 for the year ended June 30, 2010, representing a 4.2% reduction.  Interest expense includes an amount for imputed interest relating to non-interest bearing loans to related parties aggregating $115,612 and $120,553 for the years ended June 30, 2010 and 2009, respectively.  The change in imputed interest is the primary reason for the decrease in interest expense.

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Income Tax Expense

Income tax expense for the year ended June 30, 2010 is $19,575, a decrease of $27,293 from $46,868 for the year ended June 30, 2009. This income tax expense relates to taxes payable in China by the Company’s subsidiary, Yanbian Huaxing.  The decrease in income tax expense is due to lower taxable income by Yanbian Huaxing in 2010.

Net Loss

The Net Loss for the year ended June 30, 2010 was $648,727; an increase of $526,099 compared to a net loss of $122,628 for the year ended June 30, 2009. The net loss is primarily due to the decline in revenues, the imputation of interest on related party loans and an increase in the write down of Ginseng crops to net realizable value

Discussion of Cash Flow

Cash flows results for the fiscal year ended June 30, 2010 and the fiscal year ended June 30, 2009 are summarized as following:

	June 30, 2010			June 30, 2009
Net cash used in operating activities	$	(442,247	)	$	(159,144	)
Net cash used in investing activities		(73,804	)		(542	)
Net cash provided by financial activities		671,270			156,584

Operating activities

Negative cash flows from operating activities increased by $283,103 for the year ended June 30,  2010 compared to June 30, 2009. This increase was primarily the result of an increased net loss of $526,099 in addition to a decrease in accounts payable of $678,513.  These amounts were offset by a decrease in accounts receivable of $365,033 and a decrease in inventory of $438,860. The decrease in accounts receivable was due to the Company being successful in collecting its’ 2009 outstanding receivables.  The Company utilized these collections, along with the cash flows from financing activities, to repay accounts payable which resulted in the accounts payable decrease.  The inventory decreased due to the sale of Ginseng held by Ganzhi in 2010 and an increase in Ginseng crops which were allowed for due to falling prices.

Investing activities

Cash flows used in investing activities increased was $73,804 for the year ended June 30, 2010.  On March 2, 2010, the Company entered into an agreement with Meihekou Hang Yilk Tax Warehousing Logistics, an auctioneer, to purchase office and warehouse facilities.  The purchase price was $1,325,479 (RMB 9,000,000).  On June 24, 2010, the Company made payment of $73,804 (RMB 500,000) leaving a balance of $1,251,675 (RMB 8,500,000) which was to be paid by June 30, 2010.  As at the date of this report, the final payment is in default and the seller has the right to repossess the property and obtain an amount equivalent to 6 months rental expense for using the premises.

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Financing activities

Our cash flows provided by financing activities aggregated $671,270 for the year ended June 30, 2010.   During the period March 2010 to June 30, 2010, the Company raised $591,902 from a Regulation S Private Placement to Chinese Nationals and during the year ended June 30, 2010 obtained additional related party loans of $79,368.

Cash flows provided by financing activities for the year ended June 30 2009 was $156,584, primarily from the proceeds of loans payable to related parties aggregating $156,584.

Year ended June 30, 2009 compared to Year ended June 30, 2008

Revenue

	Revenue 06/30/2009		Revenue 06/30/2008
Ginseng Production (Farming)	$	137,149	$	196,980
Ginseng Purchase & Resale		792,526		-
Seeds		46,094		-
Seedlings		321,806		-
Total Revenue	$	1,297,575	$	196,980

For the year ended June 30, 2008, we generated total revenue of $196,980 from the farming and sale ginseng roots. For the year ended June 30, 2009, we generated $137,149 from the sale of ginseng that we had grown, $792,526 in revenue from the purchase and resale of ginseng, $46,094 from the sale of seeds and $321,806 from the sale of seedlings.

Our total revenues for the year ended June 30, 2009 increased by $1,100,595 (or 559%) over the year ended June 30, 2008.  The increase was primarily due to the following reasons: (1) In 2009, the Company resumed the purchase and resale of ginseng, (2) In 2009, the Company also resumed the sale of seeds and seedlings, and (3) The increase in revenue from these activities more than offset a decline in revenue from the sale of farmed ginseng. This revenue declined because the company sold only the ginseng that was unsuitable for future juice production and held back Ginseng roots that will be used in manufacturing beverages.

There was a significant decline from 2008 to 2009 in the price of ginseng due to the global recession and local market conditions. Demand for herbal medicine exports declined in 2008, creating a significant oversupply in China. The price gradually recovered in 2009 after production fell in the nearby region of Heilongjian. In addition, the Chinese government restricted the amount of land available for ginseng farming. Land under our company’s control was not affected by the government restrictions.

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Cost of Goods Sold

Comparing the year ended June 30, 2008 to the year ended June 30, 2009, our cost of goods sold increased by $603,608, an increase of 259% in 2009.

For the year ended June 30, 2008, cost of goods sold stemmed from two major components – $167,332 for ginseng production (farming) cost and $65,277 for the write down of Ginseng crops to net realizable value.

For the year ended June 30, 2009, cost of goods sold had three components - $236,442 from ginseng production (farming) cost, $656,725 from ginseng purchase (outsourcing) cost and $6,200 from the write down of Ginseng crops to net realizable value.

The cost of ginseng inventory includes the capitalized costs incurred in planting and upkeep of the ginseng farmland.  The inventory value increases with the costs incurred from the initial planting of ginseng seeds in the first year to the year the ginseng is harvested.

The primary reason for the substantial increase in the cost of goods sold in 2009 was due to the fact that the company incurred no purchasing cost in 2008. The company didn’t purchase any ginseng from outside vendors in 2008; however, in 2009 we purchased ginseng at a cost of $656,725.

The harvest cost is based on the area of ginseng farmland harvested. It includes seeds, seedlings, plant sheds, woodland expenses, wages, fertilizer, pesticides, irrigation, transportation fees, and the building of pathways.  These costs were allocated (transferred) only when the harvest has occurred. The cost was calculated based on the planting area and quantities of ginseng being harvested.

We harvested 48,637 kg of fresh ginseng in the year ended June 30, 2008 and 22,410 kg in the year ended June 30, 2009. The cost of producing (farming) this ginseng increased $69,110.83 for the year ended June 30, 2009.  The reason we had $69,111 increase on cost of production in 2009 is because we capitalized more cost on less harvested Ginseng.

In 2009, we had a $6,200 loss from the write down of Ginseng crops to net realizable value.; in 2008, we had $124,881 in losses from the write down of Ginseng crops to net realizable value.. The primary reason for the change is the change in the market price change of ginseng. In 2008, the market price of ginseng dropped significantly because of the global economic crisis, which led to our loss on inventory falling price. In 2009, the market price increased, which led to the gain on inventory falling price.

The percentage of cost of goods sold as a percentage of revenues is 148% for the year ended June 30, 2008 and 69% for the year ended June 30, 2009.  Although the total cost of goods sold increased from 2008 to 2009, the cost of goods sold as a percentage of revenues decreased.  The major reason for the decrease in the ratio is the minimal cost of producing seeds and seedlings.  The company realized $367,899 in revenues from seeds and seedlings in addition to revenues from ginsengs sales in 2009. The company did not sell seeds and seedlings in 2008.

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Selling, General and Administrative Costs

Selling, general and administrative expenses were reduced from $364,826 for the year ended June 30, 2008 to $303,378 for the year ended June 30, 2009. That is a decrease of $61,448 or 17% for the year ended June 30, 2009 compared to the year ended June 30, 2008.  The principal reason for the decrease was due to a reduction in bad debts in 2009.

The company took on bad debts in 2008 when it acquired Tonghua Linyuan, which had had accrued bad debts in accounts receivable and other receivable.  These amounts were written off in 2008.

Depreciation and Amortization

Depreciation and amortization was $141,066 for the year ended June 30, 2009 compared to $55,192 for the year ended June 30, 2008, an increase of $84,943 or 156%.  The increase is primarily due to the costs being charged to inventory.  Of the total depreciation and amortization, $115,662 and $14,989 was capitalized to inventory and ginseng crops for the years ended June 30, 2009 and 2008, respectively.

Interest Expense

Our Interest expense increased by $80,267, from $67,517 for the year ended June 30, 2008 to $147,784 for the year ended June 30, 2009, representing a 119% increase.  Interest expense includes and amount for imputed interest relating to non-interest bearing loans to related parties aggregating $120,553 and $62,816 for the years ended June 30, 2009 and 2008, respectively.  The change in imputed interest is the primary reason for the decrease in interest expense.

Income Taxes

We are subject to income tax laws of the US, while our subsidiaries are subject to the income tax laws of China.  Various subsidiaries in China receive different income tax incentives under Chinese tax laws.  Income tax expenses for the year ended June 30, 2009 was $46,868 compared to zero the previous year.  In 2008, the Chinese subsidiaries operated at a loss so there were no tax costs. In 2009, Yanbian Huaxing operated at a profit, which was taxed at the statutory rate of 25%.

Net Income (Loss)

We had a net loss of $122,628 for the year ended June 30, 2009 and a net loss of $573,823 for the year ended June 30, 2008, a decrease of $451,195, or 79%.  The primary reason for the reduction in net loss was due to the fact that Ginseng market recovery andthe company diversified its products, thereby substantially increasing its revenues in 2009.

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Commitments and Contingencies

The company has employment contacts with key individuals including the President of the Company.  The total commitment per year is approximately $36,200 in 2009.

The Chinese government owns all the land in China, Currently, the Company has grants from the Chinese government for approximately 1,500 hectares of land (3,705 acres) to grow ginseng.  These grants are for twenty years and are set to expire in 2025. These grants can be renewed, although there is no assurance that the Chinese government will renew them in the future.

The Company is obligated to pay back a loan of $292,492 to Ji’An Credit Cooperatives (the debt carried from Tonghua Linyuan).  The loan was due for repayment on February 4, 2003.  The company is currently in default on the loan and the lender has verbally agreed not to call the loan.  Interest is currently being paid on the loan.

Item 3. Properties.

Our principal executive offices are located at 64 Jie Fang Da Road, Ji Yu Building A, Suite 1208, Changchun City, China 130022. The corporate headquarters occupy approximately 1,721 square feet and is on a one year lease.  The lease expires November 25, 2010.  Rent is $5,562 a year.

With respect to Properties identified below:

Tonghua office Address:	15 Huaqiao new villages, Mingan Road, Tonghua City, Jilin province, China
Refrigerated warehouse address:	Qinshi Village, Qinshi Town, Qingshi City
	Jilin province, China

We own free and clear the office building located in the city of Yanbian, which is approximately 4,519 square feet, and it is used for office/administrative purposes.

We also own free and clear in the City of Yanbian, China our processing center, which is consisted of 7,090 square feet of space; warehouse space of 1366 square feet; and seasonal worker dormitory of 688 square feet.  In the City of Yanbian, we also own the right to use the parcel of land (129,120 square feet approximately) where these facilities are located.  The land use right is for 30 years commencing November 2002 and there  is no rent required due to the preferential policies

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We rent refrigerated warehouse space on an as needed basis.  We pay approximately $.27 per cubic meter per day.  The refrigerated warehouse space is 160 cubic meters, which is not enough for our future refrigerated storage needs. We will need to more than double the space. Our current refrigerated storage space is sufficient to store 20 tons of fresh ginseng. Our future production plans call for the capacity to store up to 50 tons of fresh ginseng.  We are planning to build our own refrigerated warehouse in the future.  We plan to build this facility in June 2011 and anticipate that it will take two months to complete.  It will have 1,000 cubic meters storage space.

We rent approximately 1,507 square feet of office space for Tonghua from January 2007 to January 2022 for a monthly rent of approximately $148.

We have approval for Ermu Forestry’s approximately 2000 acres land from Ermu County Government, Tunhua City under a 20 year grant from the government which commenced June 15, 2000.  We have a land lease agreement between Heilongjiang Province Muling Forestry Bureau and Huaxing Ginseng Industry Co for providing 1,750 acres acres of forest to grow ginseng under a 20 year grant from the government which commenced on Jan 8, 2005. Our annual aggregate lease payments are approximately $91,500.

We do not intend to renovate, improve, or develop properties, except as set forth above.  We do not carry property or crop insurance on our land.

We have no policy with respect to investments in real estate or interests in real estate and no policy with respect to investments in real estate mortgages.  Further, we have no policy with respect to investments in securities of or interests in persons primarily engaged in real estate activities.

Item 4. Security Ownership of Certain Beneficial Owners and Management.

The following tables set forth the ownership of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding voting securities, our directors, our executive officers, and our executive officers and directors as a group.  To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted.  There are not any pending or anticipated arrangements that may cause a change in control.

The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown.

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Name and Address	Number of Shares of Common Stock		Percentage
Liu Jing 21 Minqing Street, Daoli District, Har’erbin, China		2,220,839		6.45	%
Wang Shuchun [1] No1, Building 6 Sun Village Century Living, West 3 Blvd. Kuancheng District Changchun City, China		2,513,749		7.30	%
Wang Lianhua [1] No1, Building 6 Sun Village Century Living, West 3 Blvd. Kuancheng District Changchun City, China		2,513,749		7.30	%
Ouyang, Qing 19-5-402 Tiantongyuanxisanqu Changping District Beijing, China		500,000		1.45	%

Sun, Hui 4 Yuhuangwei Longquan Street Dongchang District Tonghua, Jilin, China	150,000	.44	%
Zhang, Yingdong 703 Dongfeng St, Luyuan District, Changchun City, Jilin	30,000	.09	%
Zhang, Yuxiang 20-1-8 Yishou Rd Meihekou, Jilin China	35,000	0.1	%

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Liu Changzhen No 23-6 Hongqi Street, Zhaoyang District, Changchun City, China	550,000	1.60	%
Ren Ying Zhizhong Road, Nanguan District, Changchun City, Jilin, China	0	0
Cai Xiaohua 2605A Time Int’l Bldg 6 Shuguangxili Zhaoyang Dist, Beijing China	50,000	0.14	%
Song, Jiankun 502, 3-1- Wenhuiyuan Honglianancun Haiding District Beijing China	550,000	1.60	%
All officers and directors as a group [8 persons]	1,865,000	5.42	%

[1] Owned 1,963,749 in the name of Lianhua Wang and 550,000 shares in the name of Shuchun Wang, husband and wife.

This table is based upon information derived from our stock records. Applicable percentages are based upon 34,397,297 shares of common stock outstanding as of August 1, 2010.

Item 5. Directors and Executive Officers.

The board of directors elects our executive officers annually.  A majority vote of the directors who are in office is required to fill vacancies.  Each director shall be elected for the term of one year, and until his successor is elected and qualified, or until his earlier resignation or removal. Our directors and executive officers are as follows:

Name	Age	Position
Liu Changzhen	56	Chairman of the Board
Zhang Yindong	43	President
Ren Ying	50	Chief Financial Officer
Cai Xiaohua	32	Chief Marketing Officer
Zhang Yuxiang	63	General Manager of Jilin Province Ganzhi Ginseng Products Co., Ltd.; Director
Sun Hui	51	Director
Ouyang Quing	43	Director
Song Jiankun	47	Director

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Liu, Changzhen joined us as Chairman of the Board upon our formation in June 2004.  From August 1995 until joining us, he was Chairman and General Manager of Ginseng Group in Jilin Province, China.  As founder, he contributes to the Board his knowledge of the company and a deep understanding of all aspects of our business, products and markets, as well substantial experience developing corporate strategy, assessing emerging industry trends, and business operations.

Zhang Yindong joined us as President in February 2009.  From December 2004 to January 2009, he was Chief Operating Officer/Deputy General Manager of Germany Stabilus Co., Ltd, an auto parts manufacturing company.

Ren, Ying joined us as CFO in September 2005. From March 2001 to August 2005, she was CFO of Guofu Group Inc., a manufacturer and exporter of auto parts. In June 1980, she received a Bachelor Degree from Taxation (Revenue) College.

Cai Xiaohua joined us as Chief Marketing Officer in February 2008.  From February 2004 to December 2005, he was Sales Director of AstraZeneca Pharmaceuticals.  From January 2006 to March 2007, he was Sales Manager of Shanghai Pharmaceutical Group.  From April 2007 to January 2008, he was Sales Manager of Gaitianly Pharmaceutical Corporation  In 1965, he received an MBA fro Maastricht Management College in the Netherlands.

Zhang Yuxiang  joined us as General Manager of Jilin Ganzhi Ginseng Products Co., Ltd and Director in September 2005.  From March 2002 until our acquisition of Jilin Ganzhi, he was Chairman and General manager of Jilin Ganzhi.  He contributes to the Board his knowledge of the company and a deep understanding of the Jilin Ganzhi aspects of our business, products and markets, as well substantial experience developing corporate strategy, assessing emerging industry trends, and business operations.

Sun Hui joined us General Manager of Tonghua Linyuan Grape Planting Co., Ltd and Director.  From June 1998 until our acquisition of Tonghua Linyuan, he was General Manager of Tonghua Linyuan.  He contributes to the Board his knowledge of the company and a deep understanding of the Tonghua Linyuan aspects of our business, products and markets, as well substantial experience developing corporate strategy, assessing emerging industry trends, and business operations.

Ouyang Qing joined us as Director upon formation.  Since June 2005, she has been Chairman of the Board of Zhoanghui Daoming Investment and Management Co., Ltd.  From February 2002 to May 2005, she was director and deputy general manager at International Settlements Department of Head Office of CITIC Bank and International Finance Holding Investment Department of CITIC.  She brings to the Board extensive experience in assets management and financial and investment affairs.

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Song Jiankun joined us as Director upon formation in November 2005.  From December 2007 to date, he has been Chief Strategist at the China Ministry of Information Industry Research Institute.  From May 2005 to December 2007, he was a Researcher at China Development Strategy Studies Center.  From September 2001 to April 2005, he was in the PhD program in Management at Beijing Jialtong University and received his degree in April 2005.  He brings to the Board substantial educational experience as well as experience in business strategy and research.

Directors serve for a one-year term.  Our bylaws currently provide for a board of directors comprised of a minimum of one director.

Board Committees

We currently have no compensation committee or other board committee performing equivalent functions. Currently, all members of our board of directors participate in discussions concerning executive officer compensation.

Family Relationships

There are no family relationships among our officers or directors.

Legal Matters

No officer, director, or persons nominated for such positions, promoter or significant employee has been involved in the last ten years in any of the following:

· Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time,

· Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses),

· Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities,

· Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

· Having any government agency, administrative agency, or administrative court impose an administrative finding, order, decree, or sanction against them as a result of their involvement in any type of business, securities, or banking activity.

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· Being the subject of a pending administrative proceeding related to their involvement in any type of business, securities, or banking activity.

· Having any administrative proceeding been threatened against you related to their involvement in any type of business, securities, or banking activity.

Corporate Governance

Our Board of Directors has five directors and has not established Audit, Compensation, and Nominating or Governance Committees as standing committees. The Board does not have an executive committee or any committees performing a similar function. We are not currently listed on a national securities exchange or in an inter-dealer quotation system that has requirements that a majority of the board of directors be independent. The Board has determined that the two members of the Board are independent.

Item 6. Executive Compensation.

Summary Compensation Table

The table below summarizes all compensation awarded to, earned by, or paid to our Principal Executive Officer, our two most highly compensated executive officers other than our PEO who occupied such position at the end of our latest fiscal year and up to two additional executive officers who would have been included in the table below except for the fact that they were not executive officers at the end of our latest fiscal year, by us, or by any third party where the purpose of a transaction was to furnish compensation, for all services rendered in all capacities to us for the latest two fiscal years ended June 30, 2009 and 2010.

 SUMMARY COMPENSATION TABLE

Name and Principal Position (a)	Year (b)	Salary ($) (c)		Bonus ($) (d)	Stock Awards ($) (e)	Option Awards ($) (f)	NonEquity Incentive Plan Compensation ($) (g)	Nonqualified Deferred Compensation Earnings ($) (h)	All Other Compensation ($) (i)	Total ($) (j)
Liu Changzhen,	2009		8,782								8,782
Chairman of the Board	2010		8732								8,732
Zhang Yindong,	2009		13,173								13173
President	2010		13,173								13,173
Ying Ren,	2009		4,566								4,566
CFO	2010		4,566								4,566
Cai Xiaohua,	2009		17,564								17,564
Chief Marketing Officer	2010		17,574								17,564

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Summary Equity Awards Table

The following table sets forth certain information for our executive officers concerning unexercised options, stock that has not vested, and equity incentive plan awards as of June 30, 2010.

 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END JUNE 30, 2010

Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity Incentive Plan Awards:  Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($)	Equity Incentive Plan Awards: Number Of Unearned Shares, Units or Other Rights That Have Not Vested  (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Liu Changzhen, Chairman of the Board	0	0	0	0	0	0	0	0	0
Zhang Yindong, President	0	0	0	0	0	0	0	0	0
Ying Ren, CFO	0	0	0	0	0	0	0	0	0
Cai Xiaohua, Chief Marketing Officer	0	0	0	0	0	0	0	0	0

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Narrative disclosure to summary compensation and option tables

We have the following employment contracts:

Liu, Changzhen

· Contract Period: January 1, 2008 to January 1, 2011

· Job Description:  Chairman of the Board

· Remuneration:  $781.36 a month

Zhang, Yindong

· Contract Period: March 20, 2009 to March 20, 2012

· Job Description:  President

· Remuneration:  $1,463.70 a month

Ren, Ying

· Contract Period: January 1, 2008 to January 1, 2011

· Job Description:  Chief Financial Officer

· Remuneration:  $380.56  a month

Cai, Xiaohua

· Contract Period:  February 1, 2008 to February 1, 2011

· Job Description:  CMO (Chief Marketing Officer)

· Remuneration:  $1,463.70 a month

We do not plan on changing any compensation policies or agreement once you become a reporting company

At no time during the last fiscal year with respect to any person listed in the Table above was there:

· any outstanding option or other equity-based award repriced or otherwise materially modified (such as by extension of exercise periods, the change of vesting or forfeiture conditions, the change or elimination of applicable performance criteria, or the change of the bases upon which returns are determined;

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· any waiver or modification of any specified performance target, goal or condition to payout with respect to any amount included in non-stock incentive plan compensation or payouts;

any option or equity grant;

· any non-equity incentive plan award made to a named executive officer;

· any nonqualified deferred compensation plans including nonqualified defined contribution plans; or

· any payment for any item to be included under All Other Compensation (column (i)) in the Summary Compensation Table.

Board of Directors

Director Compensation for year ended June 30, 2010

Name	Fees earned or paid in cash$/Month		Stock awards		Option awards($)		Non-equity incentive plan compensation($)		Nonqualified deferred compensation earnings($)		All other compensation		Total($)
Liu, Changzheng		0		0		0		0		0		0		0
Zhang, YuXiang		0		0		0		0		0		0		0
Ouyang Qing		0		0		0		0		0		0		0
Song, Jiankun		0		0		0		0		0		0		0
Sun, Hui		0		0		0		0		0		0		0

We have no compensation arrangements (such as fees for retainer, committee service, service as chairman of the board or a committee, and meeting attendance) with directors.

Item 7. Certain Relationships and Related Transactions, and Director Independence.

The Company had been financing its operations from loans from individuals, principally residents of China, who are deemed to be related parties because of their ownership interest in the Company (shareholders).  The individuals have loaned the Company funds which are interest free, have no specific repayment date, and are unsecured.  The funds received are evidenced by receipt of cash acknowledgments.  At June 30, 2010 and June 30, 2009 funds borrowed to fund the current operations of the Company were $755,311 and $675,943, respectively.  In accordance with FASB ASC 835-30, the Company has inputed an interest charge of $115,612 and $120,552 which has been recorded in the financial statements for the years ended June 30, 2010 and 2009.

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At June 30, 2010 and 2009, the Company had receivables from related parties aggregating $23,475 and $12,874. These balances relate to unsettled travel advances. The amounts advanced by individual are as follows:

Individual	June 30, 2010		June 30, 2009
Chu Ming Kun	$	1,113	$	9,059
Melissa Chen		-		2,567
Liang Xiao Jie		19,161		-
Others under $2,000		3,181		1,248
	$	23,475	$	12,874

Director Independence

Our board of directors has determined that we have two board members that qualify as “independent” as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(15) of the NASDAQ Marketplace Rules.  Ouyang Qing and Song Jiankun are our independent directors.

Item 8. Legal Proceedings.

There are no pending or threatened lawsuits against us.

Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters.

Market Information

We received the symbol CSNG for trading our securities on the Pink Sheets on 12/21/05.  The last trade was $1.39 on 03/09/2007.  There has been no subsequent trading activity.

Options, Warrants, Convertible Securities

 We have the following warrants outstanding:  During the period August 2005 to October 2005, the Company issued 798,384 warrants in connection with a private placement.  The warrants vest immediately and are exercisable over a 5 year period.

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The following summarizes the warrants issued:

	Warrants Outstanding		Weighted Average Exercise Price
Balance, June 30, 2008		798,334	$	0.39
Granted		-		-
Exercised		-		-
Cancelled		-		-
Balance, June 30, 2009		798,334	$	0.39
Granted		-		-
Exercised		-		-
Cancelled		-		-
Balance, June 30, 2010		798,334	$	0.39

The fair value of the warrants at date of grant was $0.0245, which was computed using the Black-Scholes option pricing model based upon the weighted average assumptions of:

Risk free interest rate	4.80%
Volatility	16.79%
Expected life	2.5 years
Dividend yield	0%

At June 30, 2010 and 2009, the weighted average life of the above warrants was 2.22 years and 1.22 years, respectively.  The weighted average exercise price was $0.39 for all periods.

Our shares will be "penny stocks", as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of less than $5.00.  Thus, our shares will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.

Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer must make a special suitability determination regarding the purchaser and must receive the purchaser's written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt.

In addition, under the penny stock regulations, the broker-dealer is required to:

· Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;

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· Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;

· Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer's account, the account's value, and information regarding the limited market in penny stocks; and

· Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction, prior to conducting any penny stock transaction in the customer's account.

Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our Common Stock, which may affect the ability of selling shareholders or other holders to sell their shares in the secondary market, and have the effect of reducing the level of trading activity in the secondary market.  These additional sales practice and disclosure requirements could impede the sale of our securities, if our securities become publicly traded.  In addition, the liquidity for our securities may be decreased, with a corresponding decrease in the price of our securities.  Our shares in all probability will be subject to such penny stock rules and our shareholders will, in all likelihood, find it difficult to sell their securities.

OTC Bulletin Board Qualification for Quotation

To have our shares of Common Stock on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our Common Stock.  We have engaged in preliminary discussions with a FINRA Market Maker to file our application on Form 211 with FINRA, but as of the date of this Prospectus, no filing has been made.  Based upon our counsel's prior experience, we anticipate that after this registration statement is declared effective, it will take approximately 2 - 8 weeks for FINRA to issue a trading symbol and allow sales of our Common Stock under Rule 144.

Sales of Our Common Stock Under Rule 144.

There are 27,797,709 shares of our common stock held by non-affiliates and 6,599,588 shares held by affiliates Rule 144 of the Securities Act of 1933 defines as restricted securities.

25,418,959 of our shares held by non-affiliates are currently eligible for resale, however the remaining 2,378,750 shares held by non-affiliates and all shares held by affiliates will still be subject to the resale restrictions of Rule 144.  In general, persons holding restricted securities, including affiliates, must hold their shares for a period of at least six months, may not sell more than one percent of the total issued and outstanding shares in any 90-day period, and must resell the shares in an unsolicited brokerage transaction at the market price.  The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities.

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Holders

As of the date of this filing, we had 303 holders of record of our common stock.

Dividends

We have not declared any cash dividends on our common stock since our inception and do not anticipate paying such dividends in the foreseeable future.  We plan to retain any future earnings for use in our business.  Any decisions as to future payments of dividends will depend on our earnings and financial position and such other facts, as the board of directors deems relevant.

Reports to Shareholders

As a result of this filing, as required under Section 12(g) of the Securities Exchange Act of 1934, we will be required to file quarterly and annual reports with the SEC and will also be subject to the proxy rules of the SEC. In addition, our officers, directors and 10% stockholders will be required to submit reports to the SEC on their stock ownership and stock trading activity.

Where You Can Find Additional Information

We have filed with the Securities and Exchange Commission a registration statement on Form 10.  For further information about us and the shares of common stock to be sold in the offering, please refer to the registration statement and the exhibits and schedules thereto. The registration statement and exhibits may be inspected, without charge, and copies may be obtained at prescribed rates, at the SEC's Public Reference Room at 100 F St., Nashington, 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 registration statement and other information filed with the SEC are also available at the web site maintained by the SEC at http://www.sec.gov.

Item 10. Recent Sales of Unregistered Securities.

On March 31, 2008, the Company issued 6,155,000 shares of its common stock to 159 non-U.S. citizens or residents to acquire Tonghua Linyuan Grape Planting Co., Limited.  The shares were valued at $0.22 per share aggregating $1,331,491.

The Company commenced on March 5, 2010 a private placement under Regulation S to non-U.S. citizens or residents whereby the Company is trying to sell 10,000,000 shares of its common stock at $0.25 per share. As of June 30, 2010, we have raised $591,902 for our business development from this placement in China. As of August 30, 2010, we raised an additional $335,919 from this placement in China, for a total of $927,821. Sales were made to 117 non-U.S. citizens or residents at $0.25 per share.

44

We relied upon Regulation S of the Securities Act of 1933, as amended for the above issuances to non US citizens or residents.

We believed that Regulation S was available because:

· None of these issuances involved underwriters, underwriting discounts or commissions;

· We placed Regulation S required restrictive legends on all certificates issued;

· No offers or sales of stock under the Regulation S offering were made to persons in the United States;

· No direct selling efforts of the Regulation S offering were made in the United States.

In connection with the above transactions, although some of the investors may have also been accredited, we provided the following to all investors:

· Access to all our books and records.

· Access to all material contracts and documents relating to our operations.

· The opportunity to obtain any additional information, to the extent we possessed such information, necessary to verify the accuracy of the information to which the investors were given access.

Prospective investors were invited to review at our offices at any reasonable hour, after reasonable advance notice, any materials available to us concerning our business. Prospective Investors were also invited to visit our offices.

Item 11. Description of Registrant’s Securities to be Registered.

The following description as a summary of the material terms of the provisions of our Articles of Incorporation and Bylaws.  The Articles of Incorporation and Bylaws have been filed as exhibits to the filing.

Common Stock

We are authorized to issue 50,000,000 shares of common stock with $0.001 par value per share. As of the date of this registration statement, there were 38,126,047 shares of common stock issued and outstanding held by 303 shareholders.

Each share of common stock entitles the holder to one vote, either in person or by proxy, at meetings of shareholders. The holders are not permitted to vote their shares cumulatively. Accordingly, the shareholders of our common stock who hold, in the aggregate, more than fifty percent of the total voting rights can elect all of our directors and, in such event, the holders of the remaining minority shares will not be able to elect any of the such directors. The vote of the holders of a majority of the issued and outstanding shares of common stock entitled to vote thereon is sufficient to authorize, affirm, ratify or consent to such act or action, except as otherwise provided by law.  Our directors are elected by a plurality vote as specified in Section 7 of our By-laws.

45

Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the board of directors out of funds legally available. We have not paid any dividends since our inception, and we presently anticipate that all earnings, if any, will be retained for development of our business. Any future disposition of dividends will be at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, operating and financial condition, capital requirements, and other factors.

Holders of our common stock have no preemptive rights or other subscription rights, conversion rights, redemption or sinking fund provisions. Upon our liquidation, dissolution or winding up, the holders of our common stock will be entitled to share ratably in the net assets legally available for distribution to shareholders after the payment of all of our debts and other liabilities. There are not any provisions in our Articles of Incorporation or our by-laws that would prevent or delay change in our control.

Item 12. Indemnification of Directors and Officers.

Our Bylaws provide, in pertinent part, that the corporation shall, to the maximum extent permitted by the Nevada General Corporation Law, indemnify each of its agents against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding arising by reason of the fact any such person is or was an agent of the corporation.  For purposes of this Section, an “agent” of the corporation includes any person who is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, or was a director, officer, employee, or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.

Under Nevada law, the determination of the rights of such indemnification and the amount thereof may be made, at the option of the person to be indemnified, by (1) order of the Court or administrative body or agency having jurisdiction over the matter for which indemnification is being sought; (2) resolution adopted by a majority of a quorum of our disinterested directors; (3) if there is no such quorum, resolution adopted by a majority of the committee of stockholders and disinterested directors of the Company; (4) resolution adopted by a majority of the quorum of directors entitled to vote at any meeting; or (5) Order of any Court having jurisdiction over the Company.  Such right of indemnification is not exclusive of any other right which such director or officer may have, and without limiting the generality of such statement, they are entitled to their respective rights of indemnification under any bylaws, agreement, vote of stockholders, provision of law, or otherwise in addition to their rights under our Bylaws.

With regard to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, 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 of the Corporation 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 a controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such case.

46

Item 13. Financial Statements and Supplementary Data.

Contents

Report of Independent Registered Public Accounting Firm	Page    F-1
Consolidated Balance Sheets as of June 30, 2010 and 2009 (Restated)	F-2
Consolidated Statements of Operations for the Years Ended June 30, 2010 and 2009 (Restated)	F-3
Consolidated Statements of Cash Flows for the Years Ended June 30, 2010 and 2009 (Restated)	F-4
Consolidated Statements of Stockholders’ Equity and Comprehensive Loss for the Years Ended June 30, 2010 and 2009 (Restated)	F-6
Notes to Consolidated Financial Statements	F-7

47

MEYLER & COMPANY, LLC

CERTIFIED PUBLIC ACCOUNTANTS

ONE ARIN PARK

1715 HIGHWAY 35

MIDDLETOWN, NJ 07748

Report of Independent Registered Public Accounting Firm

To the Board of Directors

China Ginseng Holdings, Inc. and Subsidiaries

Changchun City, China

We have audited the accompanying consolidated balance sheets of China Ginseng Holdings, Inc. and Subsidiaries as of June 30, 2010 and 2009 (Restated) and the related consolidated statements of operations, stockholders’ equity and comprehensive loss, and cash flows for each of the years in the two-year period ended June 30, 2010 (2009 Restated).  China Ginseng Holdings, Inc. and Subsidiaries management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances but not for the 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 China Ginseng Holdings, Inc. and Subsidiaries as of June 30, 2010 and 2009 (Restated), and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2010 (2009 Restated) in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note B to the consolidated financial statements, the Company has incurred an accumulated deficit of $1,727,592 since inception, and there are existing uncertain conditions the Company faces relative to its’ ability to obtain working capital and operate successfully. These conditions raise substantial doubt about its’ ability to continue as a going concern.  Management’s plans regarding these matters are also described in Note B.  The consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.

As discussed in Note A to the consolidated financial statements, the Company has restated its 2009 Consolidated Financial Statements.

/s/ Meyler & Company, LLC

Middletown, NJ

November 10, 2010

F - 1

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	June 30,
	2010			2009
				(Restated)
CURRENT ASSETS
Cash	$	171,111		$	10,227
Accounts receivable- net of allowance for bad debts of $9,471 and $126,685 at June 30, 2010 and 2009, respectively		45,245			162,214
Inventory		1,119,542			1,152,285
Ginseng crops, current portion		308,764			240,859
Due from related parties		23,475			12,874
Prepaid expenses		30,503			49,888
Total Current Assets		1,698,640			1,628,347
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $847,435 and $690,010 at June 30, 2010 and 2009, respectively		2,563,317			1,381,247
OTHER ASSETS
Ginseng crops, non-current portion		3,527,967			3,601,953
Intangible assets-patents, net of accumulated amortization of $7,230 and $5,547 at June 30, 2010 and 2009, respectively		9,225			10,723
Receivable from farmers		157,665			105,110
Deferred income tax asset		130,189			51,147
Total Assets	$	8,087,003		$	6,778,527
CURRENT LIABILITIES
Loan payable to financial institution	$	294,512		$	292,744
Note payable – building purchase		1,251,675
Notes payable – related parties		755,311			675,943
Accounts payable		887,945			1,447,781
Accrued expenses		350,652			120,845
Taxes payable		205,758			112,054
Payments received in advance		20,786			20,661
Total Current Liabilities		3,766,639			2,670,028
LONG-TERM PAYABLE – Farmers		420,440			280,293
Total Liabilities		4,187,079			2,950,321
COMMITMENTS AND CONTINGENCIES (Note P)
STOCKHOLDERS’ EQUITY
Common stock, $0.001 par value, 50,000,000 shares authorized; 36,776,047 and 34,397,297 shares issued and outstanding at June 30, 2010 And 2009, respectively		36,777			34,398
Additional paid-in capital		5,125,683			4,420,548
Accumulated deficit		(1,727,592	)		(1,078,865	)
Accumulated other comprehensive income		465,056			452,125
Total Stockholders’ Equity		3,899,924			3,828,206
Total Liabilities and Stockholders’ Equity	$	8,087,003		$	6,778,527

See accompanying notes to consolidated financial statements.

F - 2

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Years Ended
	June 30,
	2010			2009
				(Restated)
REVENUE	$	736,651		$	1,297,575
COSTS AND EXPENSES
Cost of goods sold		902,374			899,367
Selling, general and administrative expenses		280,175			303,378
Depreciation and amortization		37,334			25,403
Total Costs and Expenses		1,219,883			1,228,148
INCOME (LOSS) FROM OPERATIONS		(483,232	)		69,427
NON OPERATING INCOME (EXPENSE)
Other income		-			2,597
Other expenses		(4,353	)		-
Interest expense		(141,567	)		(147,784	)
Net Other Income (Expense)		(145,920	)		(145,187	)
LOSS BEFORE INCOME TAXES		(629,152	)		(75,760	)
PROVISION FOR INCOME TAXES		19,575			46,868
NET LOSS	$	(648,727	)	$	(122,628	)
NET LOSS PER COMMON SHARE
Basic	$	(0.02	)	$	(0.00	)
Diluted	$	(0.02	)	$	(0.00	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING –
Basic		34,659,752			34,397,297
Diluted		34,659,752			34,397,297

See accompanying notes to consolidated financial statements.

F - 3

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Years Ended
	June 30,
	2010			2009
				(Restated)
Cash Flows from Operating Activities:
Net loss	$	(648,727	)	$	(122,628	)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization		154,066			141,066
Imputed interest		115,612			120,553
Changes in assets and liabilities:
(Increase) decrease in accounts receivable		166,857			(198,176	)
(Increase) decrease in inventory		38,824			(400,036	)
(Increase) decrease in prepaid expense		(30,503	)
(Increase) decrease in due from related parties		(10,601	)		(12,592	)
(Increase) decrease in receivable from farmers		(52,555	)		(52,555	)
(Increase) decrease in payable to farmers		140,147			140,147
(Increase) decrease in deferred income tax		(79,042	)
Increase (decrease) in accounts payable		(559,836	)		118,677
Increase (decrease) in taxes payable		93,704			42,419
Increase (decrease) in accrued expenses		229,807			63,981
Net cash provided by (used in) operating activities		(442,247	)		(159,144	)
Cash Flows from Investing Activities:
Purchase of property and equipment		(73,804	)		(542	)
Net cash provided by (used in) investing activities		(73,804	)		(542	)
Cash Flows from Financing Activities:
Proceeds from sale of common stock for cash		591,902
Proceeds from loans payable to related parties		336,259			301,576
Repaymens of loans payable to related parties		(256,891	)		(145,192	)
Net cash provided by (used in) financing activities		671,270			156,584
Effect of exchange rate on cash		5,665			(3,309	)
Increase (decrease) in cash		160,884			(6,411	)
Cash at beginning of period		10,227			16,638
Cash at end of period	$	171,111		$	10,227

See accompanying notes to consolidated financial statements.

F - 4

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Years Ended
	June 30,
	2010			2009
				(Restated)
Supplemental Disclosure of Cash Flow
Information:
Cash paid for:
Interest		-		$	20,500
Income taxes		-			-
Non-cash disclosures
Property and equipment		(1,251,675	)		-
Note payable-building purchase		1,251,675			-

See accompanying notes to consolidated financial statements.

F - 5

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE LOSS

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009 (Restated)

										Accumulated
					Additional					Other		Total
	Common Stock				Paid-in		Accumulated			Comprehensive		Stockholders'
	Shares		Amount		Capital		Deficit			Income		Equity
Balance, June 30,2008		34,397,297	$	34,398	$	4,299,995	$	(956,237	)	$	437,196	$	3,815,352
Imputed interest for related party loans						120,553							120,553
Net loss for the year ended June 30, 2009		-		-		-		(122,628	)		-		(122,628	)
Translation adjustment		-		-		-		-			14,929		14,929
Total comprehensive loss		-		-		-		-			-		(107,699	)
Balance, June 30, 2009 (Restated)		34,397,297		34,398		4,420,548		(1,078,865	)		452,125		3,828,206
Issuance of private placement shares for cash at $0.2488 per share		2,378,750		2,379		589,523		-			-		591,902
Imputed interest for related party loans						115,612							115,612
Net loss for the year ended June 30, 2010		-		-		-		(648,727	)		-		(648,727	)
Translation adjustment		-		-		-		-			12,931		12,931
Total comprehensive loss		-		-		-		-					(635,796	)
Balance, June 30, 2010		36,776,047	$	36,777	$	5,125,683	$	(1,727,592	)	$	465,056	$	3,899,924

See accompanying notes to consolidated financial statements.

F - 6

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009

NOTE A – RESTATEMENTS

The Company’s financial statements for the nine months ended March 31, 2010 and 2009 and for the years ended June 30, 2009 and 2008 have been restated.  The effects of the restatements are presented in the following table:

	Nine Months Ended						Nine Months Ended						Year Ended						Year Ended
	March 31, 2010						March 31, 2009						June 30, 2009						June 30, 2008
	As			As			As			As			As			As			As			As
	Reported			Restated			Reported			Restated			Reported			Restated			Reported			Restated
Receivable from farmers(4)		-			-			-			-			-		$	105,110			-		$	52,555
Long-term payable- farmers(4)		-			-			-			-			-			280,293			-			140,146
Property and equipment, net(5)	$	1,411,978		$	1,294,696			-			-		$	1,498,529			1,381,247		$	1,630,894			1,513,612
Ginseng crops,
Non-current portion(4)(5)		-			-			-			-			3,549,575			3,601,953			3,266,919			3,294,856
Additional paid-in capital (1)(2)(5)		4,243,566			4,384,382			-			-			4,243,566			4,420,548			4,243,566			4,299,995
Retained earnings(1)(2)(5)		(758,347	)		(1,016,445	)		-			-			(661,796	)		(1,078,865	)		(722,872	)		(956,237	)
Cost of sales		253,690			301,107		$	879,356		$	926,719			836,216			899,367			232,609			292,263
Interest expense(1)		(15,361	)		(96,289	)		(27,478	)		(11,865	)		(27,231	)		(147,784	)		(4,701	)		(67,517	)
Net income (loss)(1)		(96,551	)		(224,896	)		114,069			(17,681	)		61,076			(122,628	)		(451,353	)		(573,823	)
Earnings per share(3)		-			-		$	(0.01	)	$	(0.00	)	$	(0.01	)	$	(0.00	)		-			-

Notes  (1)  Recognition of imputed interest for respective periods and additional inventory impairments

(2) Recording of imputed interest prior to June 30, 2007 of $45,640

(3) Recalculation of earnings per share

(4) Recording of farmer land lease receivable and management fee payable – See note G to financial statements

(5) Adjustment for negative goodwill relating to the acquisition of Yanbian Huaxing

NOTE B – NATURE OF BUSINESS, PRESENTATION AND GOING CONCERN

China Ginseng Holdings, Inc. and Subsidiaries (the “Company”), was incorporated under the laws of Nevada on June 24, 2004.

On November 24, 2004, the Company acquired 55% of Yanbian Huaxing Ginseng Industry Co. Limited (“Yanbian Huaxing”), which is located in China and, is in the business of farming, processing, distribution, and marketing of Asian Ginseng.  In 2010, the Company ceased marketing Ginseng and is presently utilizing the harvest to produce a Ginseng beverage.  On November 24, 2005, the Company acquired the remaining 45% interest in Yanbian Huaxing.

Yanbian Huaxing controls, through 20 year leases granted by the Chinese Government, approximately 1,500 hectors (3,705 acres) of land used to grow Ginseng.  The Company had no operations prior to November 24, 2004. These leases expire through the year 2024.

On August 24, 2005, the Company acquired Jilin Ganzhi Ginseng Produce Co. Limited, whose principal business is the manufacture of Ginseng drinks.

On October 19, 2005, the Company incorporated a new company, Jilin Huamei Beverage Co. Limited (“Jilin Huamei”).  To date, Jilin Huamei has not had any significant operations.

F - 7

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009

NOTE B – NATURE OF BUSINESS, PRESENTATION AND GOING CONCERN (CONTINUED)

On March 31, 2008 the Company acquired Tonghua Linyuan Grape Planting Co. Limited (“Tonghua Linyuan”) whose principal activity is the growing, cultivation and harvesting of a grape vineyard. The Company plans to produce wine and grape juice but to date has not commenced production. As of June 30, 2010, Tonghua Linyuan leased 750 acres of land on which the grape vines are planted. The lease expires on December 31, 2014. The Company anticipates that the lease will be renewed.

Going Concern

As indicated in the accompanying financial statements, the Company has accumulated deficits of $1,727,592 and $1,078,865 at June 30, 2010 and 2009, respectively, and there are existing uncertain conditions the Company foresees relating to its ability to obtain working capital and operate successfully.  At June 30, 2010, the Company had a negative working capital of $2,067,999. Management’s plans include the raising of capital through the equity markets to fund future operations and the generating of revenue through its businesses. Failure to raise adequate capital and generate adequate sales revenues could result in the Company having to curtail or cease operations.

Additionally, even if the Company does raise sufficient capital to support its operating expenses and generate adequate revenues, there can be no assurances that the revenues will be sufficient to enable it to develop business to a level where it will generate profits and cash flows from operations.  These matters raise substantial doubt about the Company’s ability to continue as a going concern.  However, the accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.  These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Consolidated Financial Statements

The financial statements include the accounts and activities of China Ginseng Holdings, Inc. and its wholly-owned subsidiaries, Yanbian Huaxing Ginseng Co. Limited, Jilin Huamei Beverage Co. Limited, Jilin Ganzhi Ginseng Products Co. Limited, and Tonghua Linyuan Grape Planting Co. Limited.  All intercompany transactions have been eliminated in consolidation.

NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Effective July 1, 2009, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 105-10 Generally Accepted Accounting Principles-Overall (“ASC 105-10”). ASC 105-10 establishes the FASB Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied to nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP for SEC registrants.  All guidance contained in the Codification carries an equal level of authority.  The Codification superseded all existing non-SEC accounting and reporting standards.  All other non-grandfathered, non-SEC accounting literature not included in the codification is non-authoritative.  The FASB will not issue new standards in the form of Statements, FASB Positions or Emerging Issue Task Force Abstracts.  Instead, it will issue Accounting Standards Updates (“ASUs”).  The FASB will not consider ASUs as authoritative in their own right.  ASUs will serve only to update the Codification, provide background information about the guidance and provide the basis for conclusions on the change(s) in the Codification.  References made to FASB guidance throughout this document have been updated for the Codification.

F - 8

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009

NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Use of Estimates

The preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Foreign Currency Translation

The Company considers the Chinese Yuan Renminbi to be its functional currency.  The Company does not have any material transactions in foreign currencies other than the Chinese Yuan Renminbi. Assets and liabilities were translated into US dollars at period-end exchange rates.  Statement of operations amounts were translated using the average rate during the period.  Gains and losses resulting from translating foreign currency financial statements are included in accumulated other comprehensive income, a separate component of stockholders’ equity.

Cash Equivalents

For purposes of reporting cash flows, cash equivalents include investment instruments purchased with an original maturity of three months or less.  There were no cash equivalents at June 30, 2010 and 2009.

Inventory

Inventory consists of fresh and dried Ginseng as well as crushed grapes and is stated at the lower of cost or market value.  Cost is determined using the First-In, First-Out (FIFO) Method.

Ginseng Crops

The Company uses the full absorption costing method to value its Ginseng crops.  Included in crop costs are seeds, labor, applicable overhead including depreciation, and supplies. Common costs are allocated in each period based upon the total number of hectors under cultivation during the period.

The carrying value of the Ginseng crops is reviewed on a regular basis for any impairment in value using management’s best estimate as to expected future market values, yields and costs to harvest.  Costs accumulated on the acres expected to be harvested during the next fiscal year have been classified as a current asset.

Revenue Recognition

The Company’s primary source of revenue has been from the sale of fresh and dried Ginseng and in the year ended June 30, 2010, one bulk sale of crushed grapes.  Currently, the Company is processing the Ginseng and storing the stock for future juice production which it plans to commence in the later part of 2010.  The grape harvest for 2009 has been crushed and the juice produced has been stored in storage tanks.  The Company plans to do the same for 2010. Ginseng is planted in the Spring (March) and Fall (September) of each year and is generally harvested in September.  It usually takes 6 years for a Ginseng root to mature, although, senior maturity can be 8 years.

F - 9

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009

NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition (Continued)

Harvested Ginseng can be sold in two ways: (1) fresh Ginseng which can be sold immediately and stored in refrigerators for up to 3 years and (2) dried Ginseng which is processed and dried via sunlight and steam machines. Drying is a two month process.  Dried Ginseng can be stored up to 5 years. The Company has focused on selling dried Ginseng as it is more profitable than selling fresh Ginseng. The Company has also been storing fresh Ginseng for future juice manufacturing.

When the Company sells Ginseng, it receives orders prior to harvest.  For major customers, 20% to 30% is paid upon delivery as payment in advance.  The balance is billed after the customer incurs a lengthy inspection process which can take up to 60 days.  Until the customer finalizes its inspection and deems the shipment acceptable, the shipment is still the property of the Company.  Upon customer completion of inspection and approval, the sale is then recorded and the balance of the invoice price is sent to the Company. For smaller sales, the customers pick up the Ginseng from the Company, pay in cash at time of pick up and receive an invoice with appropriate sales tax applied and a cash acknowledgement. On these orders, revenue is recognized upon payment. The Company had one bulk sale of crushed grape juice and recognized the sale when the tanker left the vineyard.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable consist principally of trade receivables. When Ginseng is shipped to a customer, the customer is entitled to an inspection process which could take up to 60 days.  Upon completion of the inspection and approval process, the customer notifies the company and a sale is recorded. Receivables from sales are based upon contracted prices. The Company provides an allowance for doubtful accounts which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions.  Normal trade receivables are due 60 days after the date of sale.  Trade receivables past due more than 120 days are considered delinquent. Delinquent receivables are written off based upon individual credit evaluation and specific circumstances of the customer. The allowance for doubtful accounts was $9,471 and $126,685 at June 30, 2010 and June 30, 2009, respectively.

Property and Equipment

Property and equipment is recorded at cost and is depreciated using the straight line method over the estimated useful lives of the respective assets, as follows:

Biological assets – vineyard	40 years
Buildings and improvements	6 - 40 years
Machinery and equipment	5 - 15 years
Motor vehicles	5 - 10 years
Office equipment	5 - 10 years

Routine maintenance, repairs and replacement costs are expensed as incurred and improvements that extend the useful life of the assets are capitalized.  When equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recognized in operations.

F - 10

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009

NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Vineyard Development Costs

Vineyard development costs consist primarily of the costs of the vines and expenditures related to labor and materials to prepare the land and construct vine trellises. The costs are capitalized within Property and Equipment. When the vineyard becomes commercially productive, annual amortization is recognized using the straight-line method over the estimated economic useful life of the vineyard, which is estimated to be 40 years. All of the company’s vineyards are considered commercially productive.

Amortization of vineyard development costs are included in capitalized crop costs that in turn are included in inventory costs and ultimately become a component of cost of goods sold. For the year ending June 30, 2010 and 2009, approximately $29,961 and $26,626, respectively, was amortized into inventory costs.

Net Loss Per Common Share

The Company computes per share amounts in accordance with ASC Topic 260 Earnings per Share (EPS) which requires presentation of basic and diluted EPS.  Basic EPS is computed by dividing the income (loss) available to Common Stockholders by the weighted-average number of common shares outstanding for the period.  Diluted EPS is based on the weighted-average number of shares of Common Stock and Common Stock equivalents outstanding during the periods. Diluted EPS is not presented as it would be antidilutive.

Stock Based Compensation

The Company accounts for stock issued for services in accordance with Topic ASC 718 Compensation-Stock Compensation (formerly SFAS No. 123R “Share Based Payments). All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.  Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based upon the fair value of the equity instruments issued.

Comprehensive Income

The Company follows ASC 220-10, Reporting Comprehensive Income, (formerly SFAS No. 130). ASC 220-10 requires the reporting of comprehensive income in addition to net income from operations. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of information that historically has not been recognized in the calculation of net income.

Fair Value of Financial Instruments

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the immediate or short-term maturity of these financial instruments.

F - 11

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009

NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes

The Company accounts for income taxes utilizing the liability method of accounting.  Under the liability method, deferred taxes are determined based on differences between financial statement and tax bases of assets and liabilities at enacted tax rates in effect in years in which differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are expected to be realized.

Uncertainty in Income Taxes

The Company follows ASC 740-10 Accounting for Uncertainty in Income Taxes (“ASC 740-10”).  This interpretation requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach.  ASC 740-10 is effective for fiscal years beginning after December 15, 2006.  Management has adopted ASC 740-10 for 2009, evaluates their tax positions on an annual basis, and has determined that as of June 30, 2010, no additional accrual for income taxes other than the foreign, federal and state provisions and related interest and estimated penalty accruals are considered necessary.

Impairment of Long-Lived Assets

Long-lived assets, primarily property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable.  For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and estimated fair value.

Fair Value Measurements

In September 2006, ASC issued 820, Fair Value Measurements.  ASC 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosure about fair value measurements.

In February 2007, ASC issued 825-10 The Fair Value Option for Financial Assets and Financial Liabilities-Including an Amendment of ASC 320-10, (“ASC 825-10”) which permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates.  A business entity is required to report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date.

Recent Accounting Pronouncements

In January 2010, the FASB issued Accounting Standards Update 2010-02, Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary. This amendment to Topic 810 clarifies, but does not change, the scope of current US GAAP. It clarifies the decrease in ownership provisions of Subtopic 810-10 and removes the potential conflict between guidance in that Subtopic and asset derecognition and gain or loss recognition guidance that may exist in other US GAAP.  An entity is required to follow the amended guidance beginning in the period that it first adopts FAS 160 (now included in Subtopic 810-10).  For those entities that have already adopted FAS  160, the amendments are effective at the beginning of the first interim or annual reporting period ending on or after December 15, 2009. The amendments should be applied retrospectively to the first period that an entity adopted FAS 160.  The adoption of the provisions of ASU 2010-02 did not have a material effect on the financial position, results of operations or cash flows of the Company.

F - 12

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009

NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements (Continued)

In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This amendment to Topic 505 clarifies the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock when a limit on the amount of cash that will be distributed is not a stock dividend for purposes of applying Topics 505 and 260 effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a retrospective basis. The adoption of ASU 2010-01 did not have a material effect on the financial position, results of operations or cash flows of the Company.

In September 2009, the FASB issued Update No. 2009-13, Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging Issues Task Force (ASU 2009-13). It updates the existing multiple-element revenue arrangements guidance currently included under ASC 605-25, which originated primarily from the guidance in EITF Issue No. 00-21, Revenue Arrangements with Multiple Deliverables (EITF 00-21). The revised guidance primarily provides two significant changes: 1) eliminates the need for objective and reliable evidence of the fair value for the undelivered element in order for a delivered item to be treated as a separate unit of accounting, and 2) eliminates the residual method to allocate the arrangement consideration. In addition, the guidance also expands the disclosure requirements for revenue recognition. ASU 2009-13 will be effective for the first annual reporting period beginning on or after June 15, 2010, with early adoption permitted provided that the revised guidance is retroactively applied to the beginning of the year of adoption. The Company does not expect these changes to have a material impact on its’ financial statements.

Effective July 1, 2009, the Company adopted FASB ASU No. 2009-05, Fair Value Measurements and Disclosures (Topic 820) (“ASU 2009-05”). ASU 2009-05 provided amendments to ASC 820-10, Fair Value Measurements and Disclosures – Overall, for the fair value measurement of liabilities. ASU 2009-05 provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using certain techniques. ASU 2009-05 also clarifies that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of a liability. ASU 2009-05 also clarifies that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. Adoption of ASU 2009-05 did not have a material impact on the Company’s financial statements.

 

F - 13

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009

NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements (Continued)

Effective June 30, 2009, the Company adopted three accounting standard updates which were intended to provide additional application guidance and enhanced disclosures regarding fair value measurements and impairments of securities. They also provide additional guidelines for estimating fair value in accordance with fair value accounting. The first update, as codified in ASC 820-10-65, provides additional guidelines for estimating fair value in accordance with fair value accounting. The second accounting update, as codified in ASC 320-10-65, changes accounting requirements for other-than-temporary-impairment (OTTI) for debt securities by replacing the current requirement that a holder have the positive intent and ability to hold an impaired security to recovery in order to conclude an impairment was temporary with a requirement that an entity conclude it does not intend to sell an impaired security and it will not be required to sell the security before the recovery of its amortized cost basis. The third accounting update, as codified in ASC 825-10-65, increases the frequency of fair value disclosures. These updates were effective for fiscal years and interim periods ended after June 15, 2009. The adoption of these accounting updates did not have a material impact on the Company’s financial statements.

Effective June 30, 2009, the Company adopted a new accounting standard for subsequent events, as codified in ASC 855-10. The update modifies the names of the two types of subsequent events either as recognized subsequent events (previously referred to in practice as Type I subsequent events) or non-recognized subsequent events (previously referred to in practice as Type II subsequent events). In addition, the standard modifies the definition of subsequent events to refer to events or transactions that occur after the balance sheet date, but before the financial statements are issued (for public entities) or available to be issued (for nonpublic entities). The update did not result in significant changes in the practice of subsequent event disclosures, and therefore the adoption did not have a material impact on the Company’s financial statements.

Effective January 1, 2009, the Company adopted an accounting standard update regarding the determination of the useful life of intangible assets. As codified in ASC 350-30-35, this update amends the factors considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under intangibles accounting. It also requires a consistent approach between the useful life of a recognized intangible asset under prior business combination accounting and the period of expected cash flows used to measure the fair value of an asset under the new business combinations accounting (as currently codified under ASC 850). The update also requires enhanced disclosures when an intangible asset’s expected future cash flows are affected by an entity’s intent and/or Company’s financial statements.

Effective January 1, 2009, the Company adopted a new accounting standard update regarding business combinations. As codified under ASC 805, this update requires an entity to recognize the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair value on the acquisition date. It further requires that acquisition-related costs be recognized separately from the acquisition and expensed as incurred; that restructuring costs generally be expensed in periods subsequent to the acquisition date; and that changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period be recognized as a component of provision for taxes. The adoption did not have a material impact on the Company’s financial statements.

F - 14

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009

NOTE D - PROPERTY AND EQUIPMENT

Property and equipment is comprised of the following at:

	June 30,
	2010		2009
Buildings and improvements	$	1,539,557	$	212,264
Vineyards		1,128,355		1,121,583
Machinery and equipment		657,766		653,819
Motor vehicles		60,519		60,156
Office equipment		24,555		23,435
		3,410,752		2,071,257
Less accumulated depreciation		847,435		690,010
	$	2,563,317	$	1,381,247

Reference is made to Note I - Note Payable – Building Purchase

Total Depreciation was $152,424 and $139,425 for the years ended June 30, 2010 and 2009, respectively.   Depreciation is recorded in the financial statements as follows:

	June 30,
	2010		2009
Depreciation expense	$	35,692	$	23,763
Capitalized inventory		116,690		104,001
Capitalized Ginseng crops		42		11,661
	$	152,424	$	139,425

Depreciation expense is included within Deprecation and amortization on the consolidated Statements of Operations.  Capitalized Inventory and Ginseng Crops are included within the respective balances on the consolidated Balance Sheets.

NOTE E –INVENTORY

Inventory is comprised of the following at:

	June 30,
	2010		2009
Fresh and dried harvested Ginseng	$	13,290	$	139,016
Raw materials		1,064,359		943,038
Operating supplies		41,893		70,231
	$	1,119,542	$	1,152,285

At June 30, 2010 and 2009 there were no shipments of Ginseng at customer locations awaiting inspection and approval that may be subject to invoicing.

NOTE F – GINSENG CROPS

The Company’s business, prior to June 30, 2009, was primarily to harvest and sell fresh and dried Ginseng.  The growth period takes approximately 6 years before harvest can commence and up to 8 years for improved harvest and seedling yields.  The Company is changing its business model to utilize the harvested Ginseng to manufacture Ginseng juice and other Ginseng beverages.  It plans to commence the juice operation in August 2010.  The Company plants selected areas each year and tracks the costs expended each year by planting area.  The Chinese government owns all the land in China. See Note P-Commitments and Contingencies.

F - 15

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009

NOTE F – GINSENG CROPS (CONTINUED)

Currently, the Company has land grants from the Chinese government for approximately 1,500 hectors of land (approximately 3,705 acres) to grow Ginseng which were awarded in April and May 2004.  These grants are for 20 years and the management of the Company believes that the grants will be renewed as the grants expire in different areas.  However, there are no assurances that the Chinese government will continue to renew these grants in the future. The planting of new Ginseng is dependent upon the Company’s cash flow and its ability to raise working capital.

During the past 5 years, the Company has planted approximately 518,000 square meters of land which represents approximately 3% of the total land grants.  The Company plans to plant over the next 5 years 420,000 square meters of Ginseng (2011-100,000 square meters, 2012-100,000 square meters, 2013-100,000 square meters, 2014-100,000 square meters and 2015-20,000 square meters).  At June 30, 2010, the Company has 208,182 square meters of Ginseng available for harvest and plans to harvest 11,132 square meters in 2010; 54,833 square meters in 2011 and 65,800 square meters in 2012 based upon their anticipated Ginseng feed stock requirements to produce the Ginseng juice beverages.

An analysis of Ginseng crop costs is as follows for each of the applicable periods. :

	June 30,
	2010			2009
Beginning Crop Costs	$	3,842,812		$	3,584,142
Capitalized costs during year:
Fertilizer		-			9,269
Scaffolding		66,448			-
Drying costs		-			98,845
Field clearing and cultivation		48,061			10,986
Seedlings		-			5,058
Irrigation		-			54,996
Labor including farmer net costs		512,488			320,023
Freight		-			-
Depreciation		42			11,661
Other		1,026			(9,526	)
		628,065			501,312
Less:
Cost of crops harvested		(225,176	)		(236,442	)
Adjustment to Ginseng crop write-downs for crops sold		(408,970	)		(6,200	)
		(634,146	)		(242,642	)
Ending Crop Costs		3,836,731			3,842,812
Less: Current portion		308,764			240,859
Non-Current Portion of Crop Costs	$	3,527,967		$	3,601,953

The cost of harvest is calculated by reference to the planting area and the detailed costs maintained for each planting area.  Based upon the square meters planted by area, a square meter cost is calculated and applied to the square meters harvested, rendering a cost of harvest.

For each financial reporting period, the Ginseng crop harvested is valued at net realizable value.  If the net realizable value is lower than carrying value, a write down is made for the difference.

F - 16

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009

NOTE G – AGREEMENTS WITH FARMERS

The Company has executed agreements with a number of local farmers to grow, cultivate and harvest Ginseng utilizing the Company’s land grants.  The farming contracts commenced in January 2008.  In connection with these agreements, the Company (1) leases sections of the Ginseng land grants to the farmers at approximately $0.20 (1.5 RMB) per square meter per year, (2) provides the seeds and fertilizer to the farmers and clears the land of large debris. These costs are capitalized by the Company and included in the Ginseng Crop inventory, (3) pays the farmers a management fee of approximately $0.50 (4.00 RMB) per square meter per year and (4) the farmers are required to produce 2 kg of Ginseng for each square meter that they manage.  The company pays the farmers market price for their Ginseng.  If the harvest is below 2 kg per square meter, the difference will be deducted from the total payment for Ginseng purchased. If the harvest produces more than 2 kg per square meter, the Company pays a premium of $3.00 for every extra kilo.

The Company has recorded a receivable from the farmers for the rental income of the leased Ginseng land grants of $157,665 and $105,110 at June 30, 2010 and 2009, respectively.  The Company has also recorded a long-term payable-farmers for the management fee due to the farmers. The liability at June 30, 2010 and 2009 was $420,440 and $280,293, respectively.  The receivable and liability balances for the respective areas will be settled at harvest time when the Company purchases the harvest at the current market value for Ginseng.

NOTE H – INTANGIBLE ASSETS

Intangible assets consist of the patent rights for Ginseng drinks. The cost and related amortization is as follows:

	June 30,
	2010			2008
Cost	$	16,455		$	16,270
Less accumulated amortization		(7,230	)		(5,547	)
	$	9,225		$	10,723

Amortization expense was $1,642 and $1,641 for the years ended June 30, 2010 and 2009, respectively.

NOTE I – LOAN PAYABLE TO FINANCIAL INSTITUTION

In 2002, the Company’s subsidiary, Tonghua Linyuan Grape Co. Limited, borrowed 2,000,000 RMB from Ji’an Farmer’s Credit Union at an interest rate of 7% per annum with a maturity date of April 1, 2004. The loan is secured by the Company’s property and equipment with carrying values of $76,938 and $76,477 at June 30, 2010 and 2009, respectively, and currently is in default. Interest has been paid on the loan through June 30, 2009 and accrued in subsequent periods. The loan balance at, June 30, 2010 and June 30, 2009 is $294,512 and $292,744, respectively.

NOTE J – NOTE PAYABLE – BUILDING PURCHASE

On March 2, 2010, the Company entered into an agreement with Meihekou Hang Yilk Tax Warehousing Logistics, an auctioneer, to purchase office and warehouse facilities.  The purchase price was $1,325,479 (RMB 9,000,000).  On June 24, 2010, the Company made payment of $73,804 (RMB 500,000) leaving a balance of $1,251,675 (RMB 8,500,000) which was to be paid by June 30, 2010.  As at the date of this report, the final payment has not been made in accordance with the agreement and the seller has the right to repossess the property and obtain an amount equivalent to 6 months rental expense for using the premises.

F - 17

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009

NOTE K - RELATED PARTY TRANSACTIONS

The Company had been financing its operations from loans from individuals, principally residents of China, who are deemed to be related parties because of their ownership interest in the Company (shareholders).  The individuals have loaned the Company funds which are interest free, have no specific repayment date, and are unsecured.  The funds received are evidenced by receipt of cash acknowledgments.  At June 30, 2010 and June 30, 2009 funds borrowed to fund the current operations of the Company were $755,311 and $675,943, respectively.  In accordance with FASB ASC 835-30, the Company has imputed an interest charge of $115,612 and $120,553.

At June 30, 2010 and 2009, the Company had receivables from related parties aggregating $23,475 and $12,874. These balances relate to unsettled travel advances.

NOTE L - STOCKHOLDERS’ EQUITY

The Company, through an informal private placement under Registration S to Chinese national investors, is attempting to sell 10,000,000 shares of its common stock at $0.25 per share.  During the period April 1, 2010 to June 30, 2010, the Company sold 2,378,750 shares and received $591,902 in cash.  As of this report date, the shares have not yet been issued but have been reflected in the accompanying financial statements as though they were issued.  See also Note S – Subsequent Events relating to additional sales of common stock.

NOTE M - WARRANT AGREEMENT

During the period August 2005 to October 2005, the Company issued 798,384 warrants in connection with a private placement.  The warrants vest immediately and are exercisable over a 5 year period.

The following summarizes the warrants issued in connection with the Company’s private placement:

	Warrants		Weighted Average
	Outstanding		Exercise Price
Balance, June 30, 2008		798,334	$	0.39
Granted		-		-
Exercised		-		-
Cancelled		-		-
Balance, June 30, 2009		798,334	$	0.39
Granted		-		-
Exercised		-		-
Cancelled		-		-
Balance, June 30, 2010		798,334	$	0.39

F - 18

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009

NOTE M - WARRANT AGREEMENT (CONTINUED)

The fair value of the warrants at date of grant was $0.0245, which was computed using the Black-Scholes option pricing model based upon the weighted average assumptions of:

Risk free interest rate		4.80	%
Volatility		16.79	%
Expected life	2.5 years
Dividend yield		0	%

At June 30, 2010 and 2009, the weighted average life of the above warrants was 0.22 years and 1.22 years, respectively.  The weighted average exercise price was $0.39 for all periods.

NOTE N – PROVISION FOR INCOME TAXES

Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income  taxes are measured based on the tax rates expected to be in effect in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.

Deferred tax assets consist of the following at:

	June 30,
	2010			2009
Timing difference related to inventory provisions	$	130,189		$	51,147
Net operating losses		350,000			233,150
Valuation allowance		(350,000	)		(233,150	)
Deferred tax asset	$	130,189		$	51,147

The deferred tax asset is the result of an inventory provision and related reserve of $843,000 (RMB 4,248,000 of which 2,130,310 RMB was recorded in 2010 and 2,117,776 RMB was recorded in 2009).  Under Chinese tax laws, the Company is not entitled to a deduction for the provision until the inventory is completely discarded. Accordingly, the liability has been recorded offset by a deferred tax asset representing a timing difference.

The Company has a net operating loss carry forward as follows:

	June 30,
	2010		2009
International (China)	$	949,600	$	676,100
United States		378,000		256,500
	$	1,327,600	$	932,600

The operating losses are available to offset future taxable income. The foreign (China) net operating loss carryforwards can only be carried forward for five years and will commence expiring in the year 2013.  The Company does not file a consolidated tax return in China. Therefore, the profitability of the individual Chinese companies will determine the utilization of the carryforward losses. The U.S. carryforward losses are available to offset future taxable income for the succeeding 20 years and commence expiring in the year 2027.

F - 19

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009

NOTE N – PROVISION FOR INCOME TAXES (CONTINUED)

The components of income before taxes are as follows:

	For the Year Ended
	June 30,
	2009			2008
United States	$	(121,472	)	$	(135,163	)
International (China)		(507,680	)		59,403
	$	(629,152	)	$	(75,760	)

The provision for income taxes consists of the following:

	For the Year Ended
	June 30,
	2010		2009
United States		-		-
International (China)	$	19,575	$	46,868
	$	19,575	$	46,868

A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and Federal statutory rate for the years ended June 30, 2010 and 2009, respectively, are as follows:

	June 30,
	2010			2009
Federal statutory rate		(34.0	)%		(34.0	)%
State income taxes, net of federal benefit		3.3			3.3
Valuation allowance		61.3			65.1
Earnings taxed at other than United States statutory rate		9.0			9.0
Effective tax rate		39.6	%		43.4	%

NOTE O – FAIR VALUE MEASUREMENTS

The Company follows ASC 820 which defines fair value, provides a consistent framework for measuring fair value under generally accepted accounting principles and expands fair value financial statement disclosure requirements.  ASC 820’s valuation techniques are based on observable and unobservable inputs.  Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions.

ASC 820 classifies these inputs into the following hierarchy:

Level 1 inputs: Quoted prices for identical instruments in active markets.

Level 2 inputs:  Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 inputs:  Instruments with primarily unobservable value drivers.

F - 20

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009

NOTE P – COMMITMENTS AND CONTINGENCIES

The Company has a three year employment contract with the Chief Executive Officer expiring on January 1, 2011 aggregating $8,782 per year.

The Company has a three contract with the Chief Financial Officer and the Chief Marketing Officer expiring on February 11, 2011 aggregating $22,131 per year.

The Company has a three year employment contract with a staff accountant expiring on March 1, 2012 aggregating $3,162 per year.

The Company has a three year employment contract with five office employees expiring on January 1, 2011 aggregating $15,458 per year.

The Company has a three year employment contract with the President of the Company expiring on March 20, 2012 aggregating $17,564 per year.

The Company has a one year lease for its corporate offices in China aggregating $5,572 of which one half was due on signing on November 25, 2009 and the remaining balance to be paid on May 1, 2010.

The Company has a lease for office facilities related to its Tonghua Linyuan Grape Co. Limited facilities aggregating $1,760 per year.  The lease expires January 1, 2022.

The Chinese government owns all the land in China. Currently, the Company has grants from the Chinese government for approximately 1,500 hectors of land (3,705 acres) to grow Ginseng. These grants are for 20 years. There is no assurance that the Chinese government will continue to renew these grants in the future.

The Company has a 15 year lease with the Representative of Group One Farmer, Si’An City, Qingshi, Qingshi Town, Qingshi Village, China to lease 750 acres to grow and harvest grapes.  The lease expires December 31, 2014. The annual lease fee is 187,500 RMB or approximately $29,600 per year to lease the acreage.  The Company believes that the lease will be renewed.

Rent expense for the year ended June 30, 2010 and 2009, respectively was $10,646 and $1,752, respectively.

NOTE Q – CONCENTRATIONS

In the year ended June 30, 2010, one customers accounted for 23% of revenues and a three other customers accounted for approximately 50% of revenues.

In the year ended June 30, 2009, one customer accounted for approximately 44% of revenues and two other customers accounted for approximately 22% of revenues.

Additionally, one customer accounted for 53% and 59% of accounts receivable for the years ended June 30, 2010 and 2009, respectively.

F - 21

CHINA GINSENG HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009

NOTE R – OPERATING SEGMENTS

The Company presently organizes its business into two reportable farming segments: (1) the cultivation and harvest of Ginseng for the production of Ginseng beverages and (2) the cultivation and harvest of grapes for the eventual production of wine and grape juice.

The Company’s reportable business segments are strategic business units that offer different products.  Each segment is managed separately because they require different productions techniques and market to different classes of customers.

Year ended June 30, 2010:

	Parent Company			Ginseng			Wine			Total
Revenues	$	-		$	678,062		$	58,589		$	736,651
Net loss		(369,897	)		(205,753	)		(73,077	)		(648,727	)
Total Assets		146,604			5,783,064			2,157,335			8,087,003
Other significant items:
Depreciation and amortization		62			23,640			13,632			37,334
Interest expense		115,612			-			25,955			141,567
Expenditures for assets		-			1,325,479						1,325,479
Year ended June 30, 2009
	Parent Company			Ginseng			Wine			Total
Revenues	$	-		$	1,297,575			-		$	1,297,575
Net income (loss)		(255,716	)		195,739			(62,651	)		(122,628	)
Total Assets		44,549			4,578,191			2,155,787			6,778,527
Other significant items:
Depreciation and amortization		-			24,328			1,075			25,403
Interest expense		120,553			95			27,136			147,784
Expenditures for assets		-			542			-			542

The interest expense of $115,612 and $120,553 for the years ended June 30, 2010 and 2009, respectively, represents the imputed interest on shareholders loans.

NOTE S – SUBSEQUENT EVENTS

The Company has an informal private placement under Registration S agreement whereby the Company is trying to sell 10,000,000 shares of its common stock at $0.25 per share. Since July 1, 2010 to October 31, 2010, the Company has sold an additional 1,343,676 shares at $0.25 per share totaling $335,919 received in cash.

Subsequent events were assessed through November 10, 2010, the date the financial statements and accompanying registration statements were filed with the Securities and Exchange Commission.

F - 22

Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None

Item 15. Financial Statements and Exhibits.

(a) List separately all financial statements filed as part of the registration statement.

Financial Statements as of June 30, 2010 and 2009, and the results of operations and cash flows for the years ended June 30, 2010 and 2009

(b) Exhibits

Item 2

1. Yanbian Huaxing Ginseng Industry Co. Ltd Acquisition Agreement

2. Meihekou City Ginseng Company, Ltd. [now known as Jilin Ganzhi Ginseng Products Co. Ltd.] Acquisition Agreement

3.  Tonghua Linyuan Grape Planting Co. Acquisition Agreement

Item 3

1  Articles of Incorporation of China Ginseng Holdings, Inc.

2  By-laws of China Ginseng Holdings, Inc.

48

Item 4

1  Form of common stock Certificate of the China Ginseng Holdings, Inc. (1)

Item 10

1  Employment Agrement – Ren

2  Employment Agrement – Liu

3  Employment Agrement - Zhang

4  Employment Agrement - Cai

5  Form of Farmer Agreement *

6  Land Rental Agreement

7  Ermu Forestry approval

8  Drink formula for our ginseng beverages registered patent

9  GMP Health Food Certificate for Jilin Ganzhi Beverage Company

10  Ganzhi Ginseng Beverage approval No. SFDA  G20090249

11 Ganzhi American Ginseng Beverage approval No. SFDA G20090208

12 Certificate of Approval issued by the Chinese government certifying Yanbian as a Foreign-Owned Enterprise *

13 Production Agreement with Tonghua *

14 Form of Ginseng Distribution Agreement *

15 Loan Agreement with Ji’An Qingshi Credit Cooperatives *

16 Purchase Contract for Juice Production Factory *

Item 21

1  Governing Documents - Jinlin Huamei Beverage Co. Ltd

2  Governing Documents - Jilin Ganzhi Ginseng Products Co. Ltd. (“Ganzhi”)

3  Governing Documents - Tonghua Linyuan Grape Planting Co.

4  Governing Documents - Yanbian Huaxing Ginseng Industry Co. Limited

* filed herewith

49

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

	China Ginseng Holdings, Inc.
Date:  November 9, 2010	By:	/s/  Liu Changzhen
		Liu Changzhen, Chairman of the Board

50

EX-10.5

Ginseng Planting Agreement

Party A: Yanbian Huaxing Ginseng Planting Co. Ltd.

Party B: ____________________________________

1. Managing planting area 85,240 square meter

2. Contracting period is three years (from April 1, 2010 to December 31, 2012)

3. Party A provides planting land, seeds and seedlings with a fee.  Contracting fee for every square meter is 10 RMB, seeds and seedling is based on the current market price.  Based on the planting area, party A shall pay Party B land management fee 4 RMB per square meter every year

4. Party B produces 2 kg fresh ginseng for every square meter; Party A pays for ginseng harvest based on the market price.  Party A pays Party B 20 RMB per kilo for any excess quantities above 2kg/square meter.

5. Party B agrees to follow party A’s production standard in pest control; fertilizer, field management and  90% survival rate of returning the ginseng land to forest after harvest.

6. If during the contract terms, should any incontrollable natural disasters such as storm, hail or flood occur, the loss will be born by Party A, other manmade loss shall also be born by Party A.

7. The ownership of planting right is part of party A’s liquid assets, party B can not change crop items without Party A’s prior approval.  After the contract is expired, the planting right is still owned by party A.

8. Land management fee and fresh ginseng harvest reimbursement to party B will be calculated every year. And the land using cost and seeds/seedling charges will be deducted from the total payment.

9. If any items not being covered in the agreement, both parties can negotiate the terms.  This contract is executed in two copies, each party keeps one copy.

Party A:  Yanbian Huaxing Ginseng Planting Co., Ltd.

Party B:

Date: April 1, 2010

EX-10.12

Certificate of Approval

For Establishment of Enterprises

with Foreign Investment in the People’s Republic of China

Approval Number:  Jifuyan zi 2003 No 0058

Code for Import and Export Enterprise: 220075360027

Date of Approval: 2003

Date of Issue: September 22, 2005

Certificate Number: 2200002940

Name of Enterprise: Yanbian Huaxing Ginseng Industry Co., Ltd.

Address: Ermu County, Dunhua City, Jilin Province

Type of Business: Enterprise with Foreign Investment

Duration of Operation: 20 years

Total Investment: $364,000

Registered: $364,000

Business Scope: Ginseng Planting and Processing

Name of Investors: China Ginseng Holdings, Inc.

Place of Registration: USA

Capital Contribution: $364,000

EX-10.13

Production Agreement

Party A: Tonghua Linyuan Grape Planting Co, Ltd

Party B: Tonghua Jinyuanshan Winery

Party B agrees to produce mountain grape wines for Party A. Both parties have reached the following terms based on the mutually beneficial principles:

1. Product Names:  Pearl in Snow Wine; Ice Wine.

2. Prior to production, Party A shall provide production guidelines and obtain approval from the city inspection department.

3. Party A shall notify the supervision department a week in advance for every batch of production.

4. Party A shall supply all the production materials including bottling and packaging and other related materials. If it is necessary for Party B to supply other materials, the terms will be negotiated separately.

5. Party A shall  assign technical and inspection personnel to monitor the production and quality. Party B shall deliver the products according to Party A’s production standard. All products must meet state standards.

6. Product s Health Standard: Party B must meet health standards set by the State.

7. Products quality: Party B must meet the quality standard set by Party A, in accordance with  QB/1982-94 grape wine production standard requirement.

8. Confidentiality Clause: Party A provides production related technical information. Party B is required to keep the information confidential.  The rights to the products logo and packaging designs are owned by Party A. Party B cannot use them for its own purposes.

9. Products Safekeeping: After final inspection of the products, products can be kept temporarily at Party B’s facility for up to one month. Party A must ship out the products within one month.

10. Product defect allowance: Party B is allowed to have  5% wine production defect rate; 0.3% on labeling and packaging; and 0.5% on bottles. If the bottle damage was caused by delivery, Party B will not be responsible for the damage.

11. Processing fee and calculation:  Party A pays Party B RMB 1 per bottle for bottling Pearl in the Snow wine, and RMB 1.50 per bottle for bottling Ice Wine.

12. Party A provides Party B the information on ingredient contents, origin of the raw materials and their sales region.

13. Production Preparation: Party A shall provide all the raw materials, packaging materials and the quantity of production to Party B 10 days in advance of production.

14. Duration of this Contract: This contract is valid from May 20, 2009 to May 19, 2012. If there is any dispute beyond negotiation, it will be mediated by the local arbitration authority.

15. This contract will be effective after both parties have pressed their seals on two copies. Each party has possession of one copy. Each copy has the same force of law.

16. Party A subcontracts Party B to produce under Party B’s National Industrial Production permit.  Party A shall name Party B on its labels (after city quality inspection’s approval).

17. If there are any taxes incurred by Party B for processing Party A’s wines, Party A is liable for paying these taxes.

EX-10.14

JILIN HUAMEI BEVERAGE CO.,LTD

PRODUCT DISTRIBUTION AGREEMENT (Ginseng beverage)

No.：JLHM-                 

Party A: JILIN HUAMEI BEVERAGE CO., LTD (hereinafter called “Party A”)

Party B:                                                                      (hereinafter called “Party B”)

Products: Ganzhi American Ginseng beverage and Ganzhi Ginseng Beverage (including packaging cans, labels, packing cases and additional description materials in cases) listed in this agreement hereto are produced by Jilin Ganzhi Ginseng products Co., Ltd.

Exclusive distributor sales: distributors are only allowed to enjoy the exclusive selling rights in the territory granted herein and as well as the marketing channels. Distributors shall not sell products out of the territory and non-designated marketing channels. Meanwhile, any other natural person, legal person or organization, including Party A, shall not sell products in the territory of this agreement.

JILIN HUAMEI BEVERAGE CO., LTD.: The wholly-owned subsidiaries of China Ginseng Holdings, Inc. is also the global distributor of Jilin Ganzhi Ginseng products Co., Ltd.

Chapter 1 Distributor Market authorization and limitation

1. Party A authorize Party B to be the exclusive distributor in the territory of .

2. Party A authorize Party B to sell in the channels of selling in real shops, promotion and team buying. For guaranteeing the unified pricing system and the fair competition among agents, Party B is not allowed to sell goods by means of E-commerce (to sell on the internet ) and ________________selling channel

3. The distribution agreement have draw up for a duration of years only, from  to .

4. Party B may apply for an renewing application to sign a new agency agreement prior to its expiration  in case that Party B could run lawfully and be up to standard of Party A.

5. Party B shall only enter into sales agreement with their buyers in the name of his own company (individual), but can not sign any agreements on behalf of Party A. The selling price fixed by Party B and buyer should be as per the unified retail prices across the country stipulated by Party A.

6. Party A reserves the sales right out of the granted territory and channels.

Chapter 2 Rights and obligations of Party A

1. Party A guarantees the quality of the goods is entirely consistent with the standards for relevant State food production, safety and hygiene and agrees to bear Party B’s loss caused by quality problems.

2. Before the first supply, Party A shall provide Party B with the copy of business license and production license.

3. Party A is required to show Quality Inspection Report for corresponding batch for each supply.

4. Party A has the right to establish and adjust the rules and regulations for market development, product selling and pricing system according to their own development strategy.

5. Party A has the authority to supervise and regulate the business activities during the agency period. About the illegal activities in the operation, Party A will give it a warning, a reprimand, disqualification, termination of the agreement and so on based on the seriousness of the circumstances.

6. Party A agrees to support products publicity and marketing provided that the plan will not affect the Party A’s website.

7. Party A will supply the technical detail information of the relevant products to Party A on request in order to provide technical support for Party B’s marketing activities.

Chapter 3 Rights and obligations of Party B

1. Party B accepts the authorization from Party A, and has the right to commence business operations in the territory specified by Party A.

2. Party B is obliged to supply the legal business license, copy of tax Registration Certificate and all the formalities related to signing with Party A.

3. Party B is obliged to protect the enterprise image, goodwill and brand with Party A.

4. Party B shall supply the monthly report of selling activities in writing to Party A which should describe the sales data, activities, sales analysis and plans in details.

2

5. Party B shall guarantee the bilateral long-term benefits in the business activities, transregional commodity supply is not allowed.

6. If any of products are not fit for distribution in selling regions within three months, Party B has the right to exchange products in order to meet the market demand.

7. Party B is obliged to carry out marketing activities according to national written approval, including; without limitation to; ads, promotion, news report and other forms. Furthermore, Party B shall take full responsibility for the dispute, tort and illegal incidents caused by false propaganda by itself.

8. Party B shall fill in <distributors registration application form> in accordance with actual situation, and provide Party A with written notice for record keeping when there are any changes in the form.

9. Party B understands that the appointed sales of products are subject to policies, laws and regulations of the State and promises to have all the required qualifications of sales itself. Further more, Party B shall have obtained all the relevant approvals and operate their business strictly in accordance with laws. Party B shall be liable for full compensation if their operations that went against rules led to joint loss of Party A.

10. Signing this agreement does not mean Party B can represent Party A or exercise authority or undertake obligation in the name of Party A, otherwise, Party A will have right to hold Party B’s accountable.

Chapter 4 Party B’s target and assessment criteria

1. Party B shall possess the local business license, permanent work place and appropriate warehouse for goods.

2. Party B’s firstpayment for purchases shall be  RMB(￥            yuan), annual sales can not be less than RMB  yuan. (￥            yuan ).

3. The business activities and the performance of pricing system of the secondary distributors developing locally are supervised and regulated by Party B.

Chapter 5 Order, transport and delivery

1. Party B places an order to Party A in writing. and faxes it to Party A with the product type, quantity, official seal and customer’s signature and address etc.  Party A shall make a reply to confirm after receive the order.

3

2. Party A shall execute the term of COD (Cash On Delivery), the payment of goods shall be remitted directly to Party A’s named account from Party B. Party B may not hand the cash or checks without payable to company’s name to Party A’s salesmen. Party B shall bear all the consequences arising therefrom.

3. Party A shall deliver goods within 7 working days from the date that received the order and payment was made in full.

4. The long-distance freight of goods to Party B’s city of territory is to be borne by Party A, insurance and local short-haul freight are to be borne by Party B.

Chapter 6 Product quality and acceptance

1. The acceptance shall be done on the day and on the spot when and where Party B receives Party A’s goods. If goods are damaged in transit, Party B shall be responsible for lodging a claim with the carrier, and Party A assists in resolution.

2. Party B shall notify Party A within 10 days and issue a written term paper in case of intrinsic quality issue. Party A issues letter of suggestion according to the nature of quality issue. Party B stops selling in accordance with the suggestion, and transports goods back to Party A for exchange, the expenses shall be borne by Party A.

Chapter 7 Purchase price and award rules of Party B

1. Purchase price: Ganzhi Ginseng Beverage: RMB/Can. Ganzhi American Ginseng Beverage:

  RMB/Can.

2. Award rules: The principle of award shall be the accumulative purchase amount, if the total purchase amount for a year (January 1 to December 31) reaches:

A. Over 500 thousand—1 million RMB, Party B will receive year-end rebate of one percent of the total purchase amount, in addition, take part in the overseas travel once for one person to Singapore, Malaysia and Thailand organized by Company.

B. Over 1 million—3 million RMB, rebate of 1.5 percent of the total purchase amount, in addition, take part in the travel once for two persons to Singapore, Malaysia and Thailand.

C. Over 3 million RMB, rebate of 2 percent, and take part in the travel once for three persons to Singapore, Malaysia and Thailand.

4

Chapter 8 Disqualification of Distributors

1. The sales of the commodity of Party B shall not less than _______ RMB within 6 months of the signing of the agreement, or Party A has right to disqualify distributor’s qualifications. (Definition of sales is based on the definition of agency purchase price. )

2.If Party B tampers with products pricing system，or against carrying out Party A’s sales and promotion plans.

3. If Party B contravenes or doesn’t fulfill the provisions of this agreement, or creates adverse effects on Party A.

4. If Party B isn’t in negotiations with Party A and takes the unilateral decision to pull out.

5. Party B is called a correction by the government departments or is revoked the business license

Chapter 9 Coming into force, release and liability for breach of agreement

1. The Agreement will have two copies, All are of equal validity. Agreements will come into force from the date both parties signature and stamp.

2. In the event of a breach of any of the provisions of this Agreement by one party, the other party does not get satisfactory reply during ten days from the time making accusations in writing, aggrieved party has the right to release the agreement by one side only and pursue the direct and indirect loss, damage and expenses (including, without limitation, attorney fee, arbitration or legal fee, financial expenses and travel expenses etc.) from responsible party.

3. If the delivery of commodities cannot be finished according to the required time and quality, Party A has to pay 0.1% of settling price of the planned delivery quantity for Party B for each succeeding day, and that will be deduct by Party B from the payment unless responsibility doesn’t rest with Party A or force majeure.

4. Upon termination of the agreement, Party B can not use Party A’s name, trademark and logo etc., the exclusive intellectual property rights for the operational activities under any name or by any means, otherwise, Party A will pursue the financial responsibilities and legal liabilities.

5. In the event any dispute arises in connection with this agreement or arises from the execution of this agreement, the Parties shall attempt in the first instance to resolve such dispute through friendly consultations. If the negotiation fails, any party has the right to submit the dispute for arbitration to Changchun Arbitration Commission.

5

Chapter 10 Other items

1. If Party B does not remit the first batch of purchases in seven days after underwriting the agreement, that will result in an automatic invalidity of this agreement. Party A shall issue a valid < commission of authority > to Party B on the receipt of the first purchase money so that Party B carries out the work.

2. For issues not stipulated in this agreement, both parties may sign a supplement agreement after multiple negotiation if both can reach a consensus. Both supplement agreement and formal version are of equal validity.

3. The Agreement will have two copies. Each party shall keep one.

4. This agreement will come into force after both parties placed signatures and stamps.

Party A: JILIN HUAMEI BEVERAGE CO., LTD.(Seal)	Party B:	(Seal)
Legal representative: Liu Chang-Zhen	Legal representative
Representative:	Representative:
Date:	Date:

6

EX-10.15

China Rural Credit Cooperatives

 Loan Agreement

Ref#: Nongxindijiezi (2002) 1

Lender: Ji’An City Qingshi Credit Cooperatives

Borrower: JI’An City Linyuan Grape Planting Co. Ltd.

Mortgagor: Ji’An City Linyuan Grape Planting Co., Ltd.

Mutually agreed by Lender, Borrower and Mortgagor, this loan agreement was drafted in accordance with State related lending laws.

The lender agrees to issue a loan to the borrower under the following terms:

1. Type of Loan: Short Term Agriculture Loan

2. Loan Purpose: Planting

3. Loan Amount: 2,000,000 RMB

4. Loan Period:  From February 4, 2002 to February 4, 2003                         Repayment date is February 4, 2003

5. Interest Rate: 6.325% annually

6. Payment Terms: Pay interest when the company is generating profit

II. Borrower agrees to use his disposable property (appraisal value 4,000,000 RMB) as a collateral which provides a guarantee to the Lender.

When Borrower could not pay back the loan, Lender has the right to pledge, sale or dispose the collaterals and pay off the loan amount from the proceeds.

The collateral coverage includes principal, interest and administrative fee.

The collateral period is established from the day of the pledge until all the loan amount has been paid off.

Mortgagor:  Tonghua Yuanlin Grape Planting Co. Ltd.

Legal Representative: Qiu Ping

Address: Qingshi Town, Ji’An City

Agent: Qiu, Ping

Address: Dongchang District, Tonghua City

Phone Number: 0431-88630861

Zip Code: 13400

Date: February 4, 2002

Mortgagee: Ji’An Qingshi Credit Cooperatives

Legal Representative: Cui Yulin

Address:  Qingshi Town, Ji’An City

Agent: Sun Xiaohong

Address: Qingshi Town, Ji’An City

Phone Number: 13756093256

Zip Code: 134000

Date:  February 4, 2002

EX-10.16

Agreements

Party A: Meihekou City Hengyide Warehouse Logistics Co., Ltd.

Party B: Ganzhi Ginseng Products Co Ltd & China Ginseng Holding Inc

As per negotiation between Party A and B in relation to the premise located in the address of a PRC company named in Tonghua Diyuan Grape Wine Co., Ltd., it is agreed as follow:

1) Party A and B shall go to the PRC auction company Jilin Mingshi Auction Co. Ltd. together to apply for the change of the purchaser’s name from Party A to Party B. The application fee is borne by Party B.

2) All details/content of the location, land area and facilities that to be acquired originally by Party A are remain unchanged. The consideration of RMB 9,000,000 and the agency commission that to be originally paid by Party A are remain unchanged and shall be paid by Party B to Party A.

3) Payment method: This agreement is become effective upon date of signing, Party B shall pay Party A of RMB 500,000 before 20 March 2010, the remaining balance shall be repaid in full before end of June 2010.

4) The consideration of RMB 9,000,000 is calculated with the bank’s lending rate, and shall be paid by Party B to Party A.

5) Party A is agreed to waive the rental expenses incurred by Party B for using the premise for the period from Jan to Feb 2010.

6) If the remaining balance is not settled within June 2010, Party A has the right to repossess the premise and confiscate the deposit paid to Party A. And Party B is liable to compensate Party A for an amount equivalent to 6 month’s rental expenses for using the premise.

7) Both parties shall obey the terms set out in this agreement. This agreement comes into force promptly after the representatives of both parties sign and put on the seal.

8) This agreement is made in 2 copies, both parties hold one.

Meihekou Hengyide Warehouse Logistics Co., Ltd. (with company seal)

Legal Representative: (signature)

Jilin Ganzhi Ginseng Products Co., Ltd (with company seal)

Legal Representative: Zhang Yuxiang

China Ginseng Holdings Inc. (with company seal)

Legal Representative: Liu Changzhen

EX-21

Exhibit 21

Jinlin Huamei Beverage Co. Ltd

Jilin Ganzhi Ginseng Products Co. Ltd.

Linyuan Grape Planting Co.

Yanbian Huaxing Ginseng Industry Co. Limited

CORRESP

WILLIAMS LAW GROUP, P.A.

2503 W. Gardner Ct.

Tampa FL 33611

Phone:  813-831-9348

Fax:  813-832-5284

e-mail:  wmslaw@tampabay.rr.com

November 9, 2010

Shehzad Niazi

United States Securities and Exchange Commission

Division of Corporation Finance

100 F. St., N.E.

Washington, D.C. 20549-7010

Re:	China Ginseng Holdings, Inc.
	Registration Statement on Form 10 Amendment No. 1. File No. 000-54072

Dear Mr. Niazi:

We have filed on EDGAR the above Amendment No. 1 and the related response table attached hereto.

Thank you for your consideration.

Sincerely,

/s/ MICHAEL T. WILLIAMS, ESQ.

Michael T. Williams, Esq.

Comment Number	Response
1.	Telephone number corrected. Revised to: 01186 432 85790039
2.	Revised: In October 2005, in order to meet the requirement for foreign owned enterprise requirement, China Ginseng put in additional capital $250,000, therefore, the total asset and registered capital increased.
3.	The price was based upon registered capital as now disclosed.
4.	China Ginseng signed the Tonghua acquisition agreement on April 12, 2007, but the transaction didn’t finalize until March 31, 2008
5.	We have provided additional disclosure here and in MDA as to the debt carried over, the default and why it doesn’t present any risks to our business or operations.
6.	We have conformed the number of acres to 3,705 and the spelling of hectares throughout.
7.	Disclosure revised throughout to indicate all business operational.
8.	Filed as exhibit.
9.	The date and terms of the acquisition are described and the agreement is filed as an exhibit.
10.	Additional disclosure of funds being raised through a Regulation S offering added throughout.
11.	Terms of contracting for production of wine disclosed.  The agreement is oral.
12.	Website disclosed.
13.	We have revised disclosure to indicate “dry” rather than “white” ginseng.  We have discussed how our operations will be impacted by our juice business.
14.	Disclosure changed to China only.
15.	We have agreements with distributors.  Please see revised disclosure and form of agreement filed as Exhibit 10.14
16.	There is no problem with customer retention.  Reason for change in customer mix discussed.
17.	The terms of these agreements is now disclosed.
18.	Disclosure revised and clarified.
19.	Disclosure eliminated.
20.	Proposed distribution methods for drink and wine business disclosed.
21.	GMP standards disclosed.
22.	Additional disclosure, including operations to date, disclosed.  Prices are current anticipated sale prices.
23.	Party and terms disclosed.
24.	Rental of land from farmers and other terms of business disclosed.
25.	Significance disclosed.
26.	Disclosure concerning these regulations and potential effects on our business disclosed.
27.	Disclosure concerning these regulations and potential effects on our business disclosed.
28.	Basis for belief and significance of business shift disclosed.
29.	Competitors in Changbai Mountains region and favorable aspects of region disclosed.

2

30.	Employees now listed.
31.	Reflected in MD&A
32.	Revised in MD&A
33.	(I) Harvest year and how it relates to our fiscal year Ginseng's growing cycle is from April to September, six months a year.  Normally we sow the seed in April and harvest in September and October. Ginseng seeds are obtained after the blossom in Autumn, the seed can be sowed in September or next Spring, it takes 10 days to germinate and the growing cycle for seedling is 10 days, Grape growing cycle is from April to September, six months a year.  Planted in April and harvest in September. (ii) The volume of product harvested each period per acre: For ginseng, every hectare can harvest 18 to 20 kg ginseng; for grapes, every acre can produce 1500 kg grapes (iii)  The area of land planted:  As of June 2010, the planting area for ginseng is 443830 square meter, the planting area for grapes is 750 acres Please see Revenue Recognition section in MDA
34.	Provided in MD&A
35.	Before 2008, we didn’t start any ginseng juice related operations, we sale ginseng every year as our major products, therefore, we have had long term customers buying ginseng from us, but since 2008 we have started reserving the raw materials for future ginseng juice production, we can no longer meet the quantity requirement for our long term customers. Currently we have different customer base, they buy smaller quantities and have no specific buying terms.
36.	Please see the updated MD&A
37.	Please see the updated MD&A
38.	Please see the updated MD&A
39.	Please see the updated MD&A
40.	Please see the updated MD&A
41.	The default occurred on 2/4/2003 before China Ginseng acquired Tonghua on 3/31/2008. The lender, Ji’An Qingshi Credit Cooperative, has verbally agreed in March, 2008, not to call the loan.

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	The material terms for the verbal agreement are:  There is no due date for repayment of the loan; no interest payments are required; China Ginseng is to repay the loan at its own discretion when  funds are available. By the end of 2010, the company intends to recruit distributors who will estimate the quantity of wine they can sell.  The quantity of wine produced will be based on the distributors’ estimated orders.  China Ginseng plans to repay the loan from Ji’An Qingshi Credit Cooperative with future profits The original loan agreement will be filed as an exhibit
42.	Already disclosed The terms have changed over the years. Yanbian provides the land, seeds and seedlings to farmers and pays the farmers a planting (management) fee approximately $.60 per square meter every year.  The farmers are required to turn in 2kg of fresh ginseng per square meter they undertake.  Yanbian pays farmers market price for their ginseng determined by negotiation with the farmers and the prevailing prices at which similar farmers sell their products to other buyers at the time.  If the harvest is below 2kg per square meter, the difference will be deducted from the total payment for the ginseng purchased on a pro rata basis.  If the harvest produces more than 2kg per square meter, Yanbian pays $3.00 for every extra kilo.
43.	Although we had negative working capital and very limited cash on hand as of the nine months ended March 31, 2010, we project that we will have sufficient funds to meet all the company’s needs. As of June 30, 2010, we have raised $594,687.50 for our business development from private placement in China. As of August 30, 2010, we raised an additional $333,133.78 from private placement in China, for a total of $927,821.28 in additional working capital. Meanwhile, we plan to recruit 300 domestic distributors for Ginseng juice and 100 domestic distributors  for wine over the next 12 months. When we sign contracts with distributors, we will require cash deposits from them for the juice and wine that we supply. The amount of the cash deposit will be based on the estimated sales for each distributor’s territory. If China Ginseng is not able to obtain the needed sources of liquidity, it can sell a portion of its inventory of raw ginseng or grape juice to finance its continuing operation.
44.	Revised disclosure on item 10
45.	Revised  in MD&A
46.	Revised in MD&A
47.	Revised  in MD&A
48.	Address, rental area history and adequacy and future plans disclosed.
49.	Address disclosed.
50.	Scrivner error fixed to be consistent with monthly salary $731.85, annual salary $8,782
51.	No such plans, as disclosed.
52.	Requested disclosure provided.
53.	Requested disclosure provided.
54.	Names of independent directors provided.
55.	The bases and dates for the Regulation S exemption have been added.

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56.	Please see responses to accounting comments below
57.	Please see responses to accounting comments below
58.	Please see responses to accounting comments below
59.	Please see responses to accounting comments below
60.	Please see responses to accounting comments below
61.	Please see responses to accounting comments below
62.	Please see responses to accounting comments below
63.	Please see responses to accounting comments below
64.	Please see responses to accounting comments below
65.	Please see responses to accounting comments below
66.	Please see responses to accounting comments below
67.	Please see responses to accounting comments below
68.	Please see responses to accounting comments below
69.	Exhibit 21 added.

Response to SEC Accounting comments

56.  Financial statements have been updated in accordance with Rule 8-08 of Regulation S-X

57.  The Company has calculated the imputed interest on the related party loans under FASB ASC 835-30 and accordingly has restated the appropriate periods.  See Note A to the financial statements.

58.  The earnings per share amounts as presented have been corrected.  Please see Note A to the financial statements.

59.  Financial statements were revised.

60.  The Company has defined two segments of business under FASB 280-10-50.  See Note P to the financial statements-Operating Segments.

61. On November 24, 2004, the Company purchased a 55% interest in Yanbian Hauxing Ginseng Industry Co. (hereafter referred to as “Yanbian”) for $200,000.  The fair value of the assets was $482,282.  An analysis of the transaction is as follows:

			Minority
	Ginseng		Interest
	55%		45%		Total
Fair value of assets	$	265,255	$	217,027	$	482,282
Purchase price		200,000
Negative goodwill	$	65,255

Subsequent to the acquisition of the 55% interest in Yanbian, earnings accrued to the minority shareholder as follows: (1) $270,000 for the period subsequent to the acquisition date of November 24, 2004 to June 30, 2005 and (2) $42,547 for the period July 1, 2005 to the date the Company acquired the minority interest (remaining 45% of Yanbian) on September 23, 2005.

Since the acquisition of the remaining 45% (minority interest acquisition happened within 10 months of the purchase of the original 55% interest) the Company utilized the original appraised value of the assets.  In reviewing the assets acquired, property, plant and equipment represented 40% of the assets. Included in the assets acquired was cash of $111,010 which represented 23% of the assets acquired, and supplies inventory of $163,385 or 34%.  These assets accounted for approximately 97% of the assets acquired and the Company concluded that the original appraisal value at September 23, 2005 was not significantly different than that at November 24, 2004.

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The original minority interest at appraised value aggregated $217,027.  The Company paid an additional $165,000 for the assets resulting in  $52,027 of negative goodwill.

In total, negative goodwill for the acquisitions is $117,282 ($65,255 on the 55% purchase and $52,027 on the 45% purchase.)

The investment by China Ginseng to purchase Yanbian 100% is $365,000 ($200,000 to purchase 55% and $165,000 represented by a note payable to the minority shareholder  to purchase 45% interest.  The total investment on the corporate books, China Ginseng Holdings, Inc., is $615,000, which includes an additional capital contribution of $250,000 made by the company subsequent to the acquisition of the minority shareholder interest.

The Company erroneously credited the negative goodwill on the initial purchase to earnings.  Under FASB 141, the negative goodwill of $65,255 should have been credited to the property, plant and equipment acquired.

Subsequent to the acquisition of the remaining 45% interest in Yanbian,  the minority shareholder forgave  the note of $165,000 and forgave the liability of the earnings attributable to the minority shareholder.  These transactions resulted in a charge to the minority shareholder loan account of $165,000 and a charge to the minority shareholder liability for the earnings attributable to the minority shareholder of $312,547, with the offsetting credit to additional paid in capital.  The original credit to additional paid in capital was overstated by $52,027, representing the negative goodwill created on the acquisition of the 45% interest.

Accordingly, the following entries have been recorded on the books of the Company: (1) Restatement  adjustment to reverse the earnings adjustment of $65,255 and reducing the property, plant and equipment for the negative goodwill of $65,255 and (2) reversal of the overstatement of the minority shareholder contribution of $52,027, which will be credited to property, plant and equipment representing the negative goodwill adjustment.

No restatement has been made for the reduction in depreciation expense since the estimated amount of $2,950 per year was not deemed significant.

62.  The inconsistencies in the disclosure have been reconciled.

63.  The revenue recognition policy has been amended to describe the policy relating to the single crushed grape sale.  See Note C to the Financial Statements-Revenue Recognition.

64.  The points noted in this comment question have been addressed in the Revenue recognition policy.  Comments/sentences have been added to the policy.  See Note C to the Financial Statements-Revenue Recognition

65.  See Note C to the Financial Statements- Accounts Receivable and Allowance for Doubtful Accounts.

66.  See Note C to the Financial Statements- Accounts Receivable and Allowance for Doubtful Accounts.

67.  Additional disclosure provided.  See Note  F to the Financial Statements

68.  Additional disclosure provided.  See Note F to the Financial Statements.

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