-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Iajm6fp0Yvb2Vq0MiD5xzCiVilkQnUKZ9nzm4v9m5nVJDE8SouyDGieWSwwXihbd UCDgEQG4DFT5BuP0xIot7g== 0001213900-11-000502.txt : 20110203 0001213900-11-000502.hdr.sgml : 20110203 20110203172016 ACCESSION NUMBER: 0001213900-11-000502 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 32 CONFORMED PERIOD OF REPORT: 20110128 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Changes in Registrant's Certifying Accountant ITEM INFORMATION: Changes in Control of Registrant ITEM INFORMATION: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers ITEM INFORMATION: Change in Shell Company Status ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20110203 DATE AS OF CHANGE: 20110203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NewEra Technology Development Co., LTD CENTRAL INDEX KEY: 0001470701 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 460522277 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-53775 FILM NUMBER: 11571346 BUSINESS ADDRESS: STREET 1: 25-1303 DONGJIN CITY SUITE STREET 2: EAST DONGSHAN ROAD CITY: HUANINA, ANHUI PROVINCE STATE: F4 ZIP: 232001 BUSINESS PHONE: 21-610-10270 MAIL ADDRESS: STREET 1: 25-1303 DONGJIN CITY SUITE STREET 2: EAST DONGSHAN ROAD CITY: HUANINA, ANHUI PROVINCE STATE: F4 ZIP: 232001 8-K 1 f8k020111_neweratech.htm CURRENT REPORT f8k020111_neweratech.htm


SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
 
FORM 8-K
___________
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):   January 28, 2011

NEWERA TECHNOLOGY DEVELOPMENT CO., LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
 
Nevada
 
 000-53775
 
 46-0522277
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
 
(COMMISSION FILE NO.)
 
(IRS EMPLOYEE IDENTIFICATION NO.)
         
 
c/o Hunan Xiangmei Food Co, Ltd.
200 Taozhu Road, Wuxi Town
Qiyang County, Yongzhou City
Hunan Province, China
 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
 
(86) 746-3269-828
  (ISSUER TELEPHONE NUMBER)
 
25-1303 Dongjin City Suite
East Dongshan Road, Huainan, Anhui Province
P.R.C. 232001
 (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
 
––––––––––––––––
Copies to:
Richard I. Anslow, Esq.
Anslow + Jaclin,  LLP
195 Route 9 South, Suite 204
Manalapan, New Jersey 07726
(732) 409-1212
––––––––––––––––

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
1

 
 
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The statements contained in this Form 8-K that are not historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These include statements about the Registrant’s expectations, beliefs, intentions or strategies for the future, which are indicated by words or phrases such as “anticipate,” “expect,” “intend,” “plan,” “will,” “we believe,” “management believes” and similar words or phrases. The forward-looking statements are based on management’s current expectations and are subject to certain risks, uncertainties and assumptions. Our actual results could differ materially from results anticipated in these forward-looki ng statements. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements.

Item 1.01 Entry into a Material Definitive Agreement.

On January 28, 2011, we completed the acquisition of Grain Wealth Limited (“Grain Wealth”) and its subsidiaries, Qiyang Xiangmei Food Technical and Development Co., Ltd. and Hunan Xiangmei Food Co., Ltd. (“Xiangmei Food”), a frozen food producer in the People’s Republic of China, by means of a share exchange. Simultaneously with the acquisition, the Company completed a USD $3,782,393 private placement of its securities to four investors at $3.5769 per share.

On January 28, 2011, the (“Closing Date”), we entered into a Share Exchange Agreement (“Exchange Agreement”) by and among (i) us, (ii) Grain Wealth, (iii) the Grain Wealth shareholders, and (iv) our principal stockholders. Pursuant to the terms of the Exchange Agreement, Excel Deal International Limited, a company organized under the laws of the British Virgin Islands (“Excel”) and the other Grain Wealth shareholders transferred to us all of the shares of Grain Wealth in exchange for the issuance of 9,200,000 shares of the common stock of the Company as set forth in the Exchange Agreement, so that Excel and other minority shareholders of Grain Wealth shall own at least a majority of our outstanding shares (the “Share Exchange”). As a result of the Share Exchange, Grain Wealth became a who lly-owned subsidiary.
 
In connection with the closing of the Share Exchange, Zengxing Chen cancelled 700,000 shares of the Common Stock that he owned, and resigned from our board of directors (the “Board”) and all officer positions that he held. Accordingly, we appointed Taiping Zhou as the Chairman of the Board and Xiaohui Wu and Jiling Zhou as members of the Board, and we also appointed Taiping Zhou as our Chief Executive Officer.

The directors of the Company approved the Exchange Agreement and the transactions contemplated thereby. The directors of Grain Wealth also approved the Exchange Agreement and the transactions contemplated thereby.
 
As a result of the Exchange Agreement, the Company acquired 100% of the operations of Grain Wealth and its subsidiaries, the business and operations of which now constitute our primary business and operations. Specifically, as a result of the Exchange Agreement on January 28, 2011:
 
 
·
The Company acquired and now owns 100% of the issued and outstanding shares of capital stock of Grain Wealth, the British Virgin Islands holding company which owns and controls the Xiangmei Food agricultural business;

 
·
The Company issued 9,200,000 shares of its common stock to the Grain Wealth Shareholders;
 
 
·
Grain Wealth Shareholders were issued common stock of the Company constituting approximately 92% of the fully diluted outstanding shares of the Company prior to the issuance of the shares to the investors.

Immediately after the  Share Exchange, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with four investors (the “Investors”) for the issuance and sale in a private placement of shares of Common Stock, for aggregate gross proceeds of $3,782,393 at a per share purchase price of $3.5769 (the “Private Placement”). 
 
 
2

 
 
Copies of the Exchange Agreement and Purchase Agreement are filed as Exhibits 2.1 and 10.1, respectively, to this Form 8-K. The description of the transactions contemplated by these documents does not purport to be completed and is qualified in its entirety by reference to the full text of the documents filed as exhibits hereto and incorporated herein by reference.

This transaction is discussed more fully in Section 2.01 of this Current Report. The information therein is hereby incorporated into this Section 1.01 by reference.
 
Item 2.01 Completion of Acquisition or Disposition of Assets

As described in Item 1.01 above, on the Closing Date, we consummated the transactions contemplated by the Exchange Agreement, pursuant to which we acquired all of the issued and outstanding ordinary shares of Grain Wealth in exchange for the issuance in the aggregate of 9,200,000 shares of Common Stock to the Grain Wealth Shareholders resulting in Grain Wealth becoming our wholly owned subsidiary. As a result, we are now a holding company of Xiangmei Food, the operating subsidiary of Grain Wealth with a limited liability incorporated in the PRC and engaged in the sale and production of frozen foods in China.

BUSINESS

Overview

Prior to the Share Exchange, the Company was a development stage company intending to commence business operations by pursuing a merger, capital stock exchange, asset acquisition or other similar business combination with a company located in the People’s Republic of China (“China” or the “PRC”). The Company was incorporated in the State of Nevada on April 17, 2009 for the purpose of seeking investment opportunities in China. The Company’s common stock is currently not quoted on the over-the-counter market. Prior to the Share Exchange, the Company had not generated any revenue and accumulated a net loss of $110,959 for the period from inception to December 31, 2010.

References to “we,” “our,” “ours” and “us” refer to NewEra Technology Development Co., Ltd. and its wholly owned subsidiary Grain Wealth Limited.

Operating through our wholly-owned subsidiary, Qiyang County, Xiangmei Food Technical Research and Development Co., Ltd. located in Hunan Province of China, we are one of leading manufacturers and sellers of instant-frozen food, ice cream, glutinous rice flour and various other raw agricultural products in China. We plant, process and sell the products all across China. Through Xiangmei Food, our operations mainly include (i) planting and processing of the glutinous rice flour and other raw materials used in our major products,;and (ii) producing instant-frozen food and ice cream products within the Hunan region.

Our current corporate structure is set forth in the chart below:
 
CORPORATE STRUCTURE
 
 
 
3

 
 
Our goal is to become a worldwide supplier of instant-frozen foods and agricultural products. We have invested in our business by devoting resources to the construction of new industrial base, marketing and advertising our products, and recruiting qualified individuals. At present, we have two planting bases upon which we grow rice, black sesame and other agricultural raw materials used in our finished products. Our primary planting base occupies an area of 30,000 mu (or approximately 20,000,000 square meters) and our second base, which is under development, occupies an area of 80,000 mu (or approximately 53,330,000 square meters). We use organic fertilizer on our planting bases to ensure the generation of high quality agricultural products.

Industry Overview

Instant-frozen Food

The frozen food industry has been rapidly growing in China. The rapid growth can be attributed to governmental support and an increase in demand. Sales of frozen foods in China have steadily increased since 2006. Specifically, within the domestic frozen food industry, there has been an increase in demand for frozen dumplings, wontons, and glue pudding. These products are popular in the Chinese diet, as well as being affordable and easy to cook. We expect consumption of frozen foods in China to continue to increase. When compared to other regions of the world, the per capita consumption of frozen foods in China is relatively low. Therefore, we believe there is a very large room for growth in this industry in China.
 
Of the large instant-frozen food producers, approximately 20 are known nationally, four of which have captured the majority of the market share. The top four leading producers are San Quan, Si Nian, Long Feng, and Wan Zai Ma Tou, collectively capturing approximately 60% of the market share.

Market Overview

Frozen Food

Demands for some frozen foods vary by season. For example, March through August of each year is the peak season for ice cream sales while September through February is the peak season for sales of instant-frozen dumplings. The development of frozen food industry is further enhanced by the continuing development of refrigeration technologies. It is roughly estimated that currently around 20,000 Chinese enterprises are equipped with refrigeration facilities, most of which are capable of providing various refrigeration storage, transportation and distribution services. The export of instant-frozen products to the overseas markets, especially to the western and Asian-pacific markets, is feasible as a result of advances in refrigeration technologies and capacities.

The Chinese government has adopted a series of industrial guidance and policies which have significantly promoted the development of the frozen food industry in China. According to data from the China General Chamber of Commerce and the National Bureau of Statistics of China, the yield and sales in the industry of frozen rice and noodle for the two month period ended February 28, 2010 increased by 24% and 15%, respectively, as compared to the same period in the prior year.

Ice Cream Products

The per capita consumption of ice-cream in China is approximately 1.5 kg per year. This is much less than that consumed in other developed countries such as the United States which has a per capital consumption of ice-cream equal to 40 kg per year.

Ice-cram has become increasingly popular in China. Output of ice-cream between 2003 and 2007 increased by sixteen times and we expect the demand for ice-cream to increase as our population increases.
 
 
4

 

Our Products
 
We grow, manufacture, process and sell a variety of agricultural and frozen food products. Our major products include (i) instant-frozen food, (ii) ice cream products, (iii) glutinous rice flour, and (iv)agricultural raw materials, including black sesame, peanut, and cabbages.
 
· 
    Instant-frozen Food
· 
    Ice Cream Products
· 
    Glutinous Rice Flour
· 
    Agricultural Raw Materials
 
Set forth below is a list of our current products:

Category
Main Products
Instant-frozen Food
Frozen noodles; frozen dumplings (stuffed with meat, mushroom, sesame, peanut, and green vegetables); frozen glue puddings (stuffed with black sesame, peanut, mushroom and black glutinous rice)
Glutinous Rice Flour
Black glutinous rice; white glutinous rice; certificated pure glutinous rice flour
Pastry
Red bean bun; sesame bun;  cheese bun; pumpkin pie; potato pie; etc.
Ice Cream Products
Ice pops; cup-style ice cream; cone-style ice cream
Raw Agricultural Products
Peanut; sesame
 
 
●  Instant-frozen Food

Fast frozen food, also referred as instant-frozen food, is food that is stored, transported and sold under low temperature (usually around -0.3°F) after being processed through an instant freezing procedure. In general, there are five categories of instant-frozen foods.
 
We focus on the production of frozen noodles, frozen dumplings and frozen glue puddings. Our instant-frozen foods are processed through an instant freezing procedure which requires a temperature below -22°F that leads to an instant drop of the food’s core temperature to lower than -0.3°F. Foods processed through this procedure maintain their original color, favor and nutrition better than that of the regularly frozen foods. Over the years, we have developed three major frozen food series, and further dividing them into more than 30 varieties and over 110 different specifications.
 

 
 
 
5

 
 
 
●  Glutinous Rice Flour

Glutinous rice flour is a type of flour made from short-grained Asian rice that is especially sticky when cooked. It is commonly used as a sauce thickener or as a binding agent in baked goods at Asia. Glutinous rice flour is known for its ability to withstand both refrigeration and freezing with no breakdown of the product. As gluten-free flour, it is gaining popularity in the Western world, particularly for those who are required to maintain a wheat-free diet.

Our glutinous rice flour is grown and produced both for the production of our instant-frozen glue puddings and as an agricultural products for outside selling purposes.

 

 
●  Ice Cream Products

We manufacture a variety of ice cream products, including cup-style ice cream, cone-style ice cream, and ice pops. Over the years, our ice cream products have evolved into more than 40 categories with flavors ranging from cheese milk and fruit pudding to red bean and taros. In order to further explore our production capabilities in this area, we have signed an agreement with the intent to establish a manufacturing plant at the Wuxi Industrial Park of Qiyang County, based on which we decide to develop our “Xiangmei” series of ice cream into a national famous brand.

 

 
●  Agricultural Raw Materials

We retain local farmers to plant and grow various agricultural raw materials, including peanuts and sesame. This sector of our business is mainly conducted through two types of contractual arrangements. On the one hand, we lease planting lands from local farmers, provide them with seeds and fertilizers, hire them to conduct planting on the leased properties, and retrieve the final crops from the farmers at no costs. A copy of our form of Entrust Planting Agreement with local farmers is attached hereto as Exhibit 10.3, On the other hand, we enter into purchase orders with the farmers before planting. Pursuant to the orders, we provide them with seeds and fertilizers and commit to purchase back all the final crops at certain predetermined prices. A cop y of our form of Order and Planting Agreement with major suppliers is attached hereto as Exhibit 10.4.
 
 
6

 

 
Most of our leased planting lands are located in Qiyang County, Hunan Province. We also developed over 30,000 mu, or 20,000,000 square meters, of planting lands through purchase orders in the nearby Zhishan, Lengshuitan, Qidong, and Changning region. As of the date hereof, the total area of our affiliated planting basis reaches 80,000 mu, or 53,333,000 square meters.
 
 

 
Raw Materials for Our Products

The major raw material for our instant-frozen glue puddings is glutinous rice, and the auxiliary materials include sesame, peanut, sugar and oil. Among all the raw materials, glutinous rice is the key ingredient and it is self-supplied by us through cooperation with local farmers. Most of the auxiliary raw materials are also self-supplied, while sugar and other non-significant materials are purchased from outside suppliers.
 
The major raw material for our instant-frozen dumplings is flour, which is directly purchased from outside flour producers. The auxiliary materials such as shortening oil, glucose and cornstarch are purchased from provincial sales agents. In addition, we grow and supply major stuff materials for frozen dumplings in our planting basis, including raw taros, onions, cabbages and green onions.
 
All the raw materials are grown by ourselves or delivered to us by outside suppliers. Most of the purchase amounts are payable by checks or wire transfer. Set for below is a summary of our raw materials purchased from January to October, 2010:

Raw Materials Purchased From January To October, 2010

Raw Material
Quantity (kg)
Total Price
(RMB)
Total Price
($US)
White Sugar
694,450
3,300,772
499,098
Flour
2,574,204
6,943,776
1,049,940
Glucose
30,600
1,107,573.75
167,472
Molasses
134,400
294,599. 20
44,545.30
Glutinous rice flour
2,469,727
8,567,448.64
1,295,450
Paper box
2,896,475
3,368,836.88
509,389
Shortening oil
295,425
1,879,257.60
284,156
Internal packing bags
41,110,617 (units)
3,307,391.88
500,099
Wrapping paper
109,181
2,031,274.90
307,142
Flavoring essence
9,336
586,156.87
88,630.60
Total
50,324,415
20,847,941
3,152,340
 
 
7

 
 
Production and Processing Capacities

Through Xiangmei Food, our wholly-owned operation subsidiary which was mainly based on Yongzhou, Hunan Province, we have established four high-grade rice planting bases, and have entered into various cooperation agreements with a total number of 5,162 affiliated farmers. Since 2005, our planting bases have expanded to an area about 30,000 mu, or 20,000,000 square meters, with an annual glutinous rice production of 12,000 tons by our affiliated farmers. In the meantime, we purchase 8,000 tons of glutinous rice from northeast China each year to satisfy the diversity ingredient requirements of our products. At present, we are affiliated with 80,000 mu, or 53,333,000 square meters, of planting properties through contractual arrangement with local farmers. The category of our glutinous rice has increased from the sole “Biaosan” species in 2002 to currently five different standards.

Our manufacturing plants and related facilities cover an area of 12,000 square meters with an aggregate construction area of 16,800 square meters. We have a 1,684 square-meter glutinous rice flour workshop, a 1,071 square-meter glutinous rice preliminary processing plant, a 2,200 square-meter cold storage, a 1,043 square-meter glutinous rice warehouse, 4,900 square meters of administrative and dormitory facilities, as well as a 280 square-meter boiler room. We currently own 8 production lines, including one glutinous rice production line with daily processing capacity of 100 tons, one glutinous rice flour production line with daily processing capacity of 100 tons, two frozen food production lines with annual processing capacity of 25,000 tons each. The total annual processing capacity of our eight production lines combined is 60,0 00 tons. In addition, we also maintain a rice reserve of 20,000 tons in our warehouses.

Among all of our facilities, the 100-ton rice processing line is our key project. We conducted technological upgrades on this facility in 2004, after the debut of its prototype in late 1980s. Through the upgrade, we had particularly strengthened its capacities in rice husking, sand removing, categorizing and rice polishing. The qualification rate of our glutinous rice products has consistently maintained on a high level attributable to the introduction of these facilities.

Set forth below is a chart of our production capacity, actual production volume and sales of our major products in 2010:
 
Product
Production capacity(kg)
Actual Production(kg)
Sales(kg)
Glutinous rice
72,000,000
15,825,414
15,825,414
Sesame
355,500
355,171
355,171
Peanut
1,240,950
1,240,274
1,240,274
Instant-frozen pastry
3,600,000
2,745,203
2,739,797
Instant-frozen glue pudding
5,400,000
5,379,249
5,379,402
Instant-frozen dumpling
5,040,000
2,653,886
2,653,743
Ice cream
14,400,000
5,946,008
5,913,307
Total
102,036,450
34,145,205
34,107,108

Along with the sharp increase of demand, our existing production capability has been unable to satisfy the needs of the market. In order to break through this bottleneck, we established a new frozen food and ice cream manufacturing base in the Wuxi Industrial Park of Qiyang County where we decide to develop our frozen food and ice cream series into a national famous brand.
 
 
8

 
 
We moved into the Wuxi Industrial Park in 2010. Together with the construction of new manufacturing plants, warehouses and cold storage, we also purchased some of the most advanced and sophisticated facilities and equipments in China, including 2 automatic salt water tank ice cream production lines, 2 bottling lines, 3 color yarning lines and 2 section forming lines. Our newly-purchased equipments also include 40 automatic high-speed dumpling machines, 40 automatic high-speed glue pudding machines, 40 latest pastry machines, as well as 2 Nissan frozen spiral tunnel lines with daily production capacity of 100 tons each. These newly-acquired equipments have greatly lifted our production capacities and narrowed our requirements for land during our production process.

Suppliers and Customers

●  Major Suppliers

Besides certain agricultural raw materials that we grow and produce in our planting basis, we also purchase a variety of materials from outside suppliers, including sugar, flour, shortening oil, wrapping paper and flavoring essence, etc.

Set forth below is a list of our top five raw material suppliers and the categories of raw materials we purchased from each supplier in 2010:

Top Five Suppliers
 
Suppliers
 
Raw Materials Supplied
 
Percentage of Total Supply in 2010
Zhiming Wang
 
Fertilizer and Pesticides
   
19.24%
Guilin Yuegui Flour Industry Co., Ltd.
 
Flour
   
15.55%
Guangxi Jinxiudongda Sugar Manufacturing Co., Ltd.
 
White Sugar & Molasses
   
10.25%
Changsha Hengruifeng Packing Materials Co., Ltd.
 
Internal Packing Bags
   
7.08%
Hengyang Pengyang Food Packing & Printing Co., Ltd.
 
Internal Packing Bags
   
5.81%
       Total
       
57.94%
 
A copy of our form of Suppliers Agreement is attached hereto as Exhibit 10.5.

●  Major Customers

Our products are currently sold and distributed in Hunan, Guangxi, Guangdong, Zhejiang, and Henan provinces of China. We are also exploring markets in other parts of China
 
Set forth below is a list of our top five customers as of June 30, 2010:
 
Top Five Customers

Customers
 
Purchase Amount in
2010 (USD)
   
Percentage of Total Purchase Amount in 2010
 
Henan Shiyatianxia Food Company
  $
2,026,882
      7.80 %
Henan Yunhe Cailanzi Development Co., Ltd.
    1,700,300       6.54 %
Henan Zhengzhou Jiahe Frozen Food Co., Ltd.
    1,697,174       6.53 %
Wuzi Xinchao Frozen Food Factory
    1,590,482       6.12 %
Henan Jianong Food Co., Ltd.
    1,576,551       6.06 %
       Total
  $
8,951,389
     
33.05
%
 
A copy of our form of Agricultural Products Purchase Agreement is attached hereto as Exhibit 10.6.
 
 
9

 
 
Competitive Advantages

As a leading producer, manufacturer and supplier of frozen foods, ice cream, glutinous rice and other foods in China, our competitive strengths include:

Technology Advantage

We have proprietary manufacturing technologies that allow for better use of raw materials, higher yield rate and enhanced operational efficiency. Specifically, we possess 1 patent related to the production of water-milling glutinous rice flour and ice cream. Finally, we use enhanced technologies in our production process that allow for lower capital investment and enhanced operations efficiency.

Research & Development Advantage

Armed with a team of experienced engineers and technicians with state-of-the-art research and laboratory facilities, we are confident in our strong research and development capacities. Our research and development team includes experienced professors, and food engineers.

Hunan Xiangmei has a long-term cooperation with Hunan Agricultural University and Hunan College of Business, and therefore, with such an advantage in application of new technology, it can promptly transfer the achievement of research into production capacity and products. It also keeps introducing research and development personnel who will design the products for the company. In doing so, Hunan Xiangmei successfully ensures its research and development capacity and innovation skills.

Elite Workforce

Our management team, composed of industry experts with proven track records from China’s largest state-owned enterprises, provides us with excellent operating management and technical administration.

Pricing

We set our selling prices based upon our expected costs to manufacture and deliver our products to our customers with an increase for profits.
 
Intellectual Property

We own and utilize the trademarks, patents and domain name listed below. We continuously look to increase the number of our trademarks and patents where necessary to protect valuable intellectual property. We regard our trademarks and other intellectual property as valuable assets and believe that they have significant value in the marketing of our products. We vigorously protect our trademarks against infringement, including through the use of cease and desist letters, administrative proceedings and lawsuits.
 
We rely on trademark, patent and trade secret protection, non-disclosure agreements and licensing arrangements to establish, protect and enforce intellectual property rights in our logos, trade names and in the marketing of our products. In particular, we believe that our future success will largely depend on our ability to maintain and protect the “XIANGMEI” trademark. Despite our efforts to safeguard and maintain our intellectual property rights, we cannot be certain that we will be successful in this regard. Furthermore, we cannot be certain that our trademarks, products and promotional materials or other intellectual property rights do not or will not violate the intellectual property rights of others, that our intellectual property would be upheld if challenged or that we would, in such an event, not be prevented from using our trademarks or other intellectual property rights. Such claims, if proven, could materially and adversely affect our business, financial condition and results of operations. In addition, although any such claims may ultimately prove to be without merit, the necessary management attention to and legal costs associated with litigation or other resolution of future claims concerning trademarks and other intellectual property rights could materially and adversely affect our business, financial condition and results of operations.
 
 
10

 
 
The laws of certain foreign countries do not protect intellectual property rights to the same extent or in the same manner as do the laws of the PRC. Although we continue to implement protective measures and intend to defend our intellectual property rights vigorously, these efforts may not be successful or the costs associated with protecting our rights in certain jurisdictions may be prohibitive. From time to time we may discover products in the marketplace that are counterfeit reproductions of our products or that otherwise infringe upon intellectual property rights held by us. Actions taken by us to establish and protect our trademarks and other intellectual property rights may not be adequate to prevent imitation of our products by others or to prevent others from seeking to block sales of our products as violating trademarks and intellectual property rights. If we are unsuccessful in challenging a third party’s products on the basis of infringement of our intellectual property rights, continued sales of such products by that or any other third party could adversely impact the “XIANGMEI” brand, result in the shift of consumer preferences away from our products and generally have a material adverse effect on our business, financial condition and results of operations.
 
Trademarks
 
Through Xiangmei Food and its predecessor Qiyang Xiangmei Food Factory, we have registered the following trademark with the Trademark Office, State Administration for Industry and Commerce in the PRC:
 
No.
 
Registration No.
 
Trademark
 
Registrant
 
Item Category
 
Expiration Date
1
 
4193885
 
XIANGMEI
 (printed character trademark)
 
Qiyang Xiangmei Food Factory
 
Category No. 30 (Staple food):  Dumpling; glue pudding; ice cream; glutinous rice dumpling; flour and preparations made from cereals, bread, pastry and confectionery, ices; honey, treacle; yeast, baking-powder, salt, mustard; vinegar, sauces (condiments); spices; ice.
 
January 20, 2017
                     
2
 
 
 
6386980
 
XIANGMEI
 (graphic trademark)
 
Hunan Xiangmei Food Co., Ltd.
 
Category No. 30 (Staple food):  Dumpling; glue pudding; ice cream; glutinous rice dumpling; flour and preparations made from cereals, bread, pastry and confectionery, ices; honey, treacle; yeast, baking-powder, salt, mustard; vinegar, sauces (condiments); spices; ice.
 
March 27, 2020
 
We plan to file for extension with the Trademark Office of the above trademark before the expiration date.
 
Patents
 
Through Xiangmei Food, we have been granted the following design patent by the State Intellectual Property Office, or SIPO, of PRC. We enjoy a ten year protection period starting from the patent application date.
 
 
11

 
 
No.
 
Patent No.
 
Patent Name
 
Patent Owner
 
Application Date
 
Date of Grant
 
Type
1
 
ZL 2007 3 0280705.4.
 
Ice cream packing bag (“Seven Dwarfs” series)
 
Xiangmei Food
 
12/19/2007
 
02/18/2009
 
Design Patent
 
Domain Names
 
Xiangmei Food owns the domain name http://hnxmsp.com.
 
Legal Proceedings
 
We are currently not a party to any material legal or administrative proceedings and are not aware of any pending legal or administrative proceedings against us. We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business.
 
Property

●  Affiliated Planting Bases Through Contractual Arrangements

As described above, most of our leased planting lands are located in Qiyang County, Hunan Province. We also developed over 30,000 mu, or 20,000,000 square meters, of planting lands through purchase orders in the nearby Zhishan, Lengshuitan, Qidong, and Changning region. As of the date hereof, the total area of our affiliated planting basis reaches 80,000 mu, or 53,333,300 square meters.

Our primary planting base occupies an area of 30,000 mu (or approximately 20,000,000 square meters) and our second base, which is under development, occupies an area of 80,000 mu (or approximately 53,333,000 square meters).

We have acquired the state-granted use rights to land set forth in the table below.

Item
Address
Size
Function
1.
Qili Town, Qiyang County, Hunan Province, China
30,000 mu
Plant land
2.
Madu Town, Yangjiao Town and Babao Town, Qiyang County, Hunan Province, China
80,000 mu
Plant Land
 
 
Glutinous Rice Base
 
Black Sesame Base
 
A copy of our Property Lease Agreement is attached hereto as Exhibit 10.7.
 
 
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●  Wuxi Industrial Park

We obtained the land use right to 100 mu of property, or approximately 66,666 square meters, in the Wuxi Industrial Park of Qiyang County. We moved in this property in 2010 where we established various administrative and manufacturing facilities including standard industrial workshops, warehouses, cold storage, staff dormitory and other living facilities, staff café, recreational center, a multi-functional office building and an R&D center.
 
A copy of the Investment Agreement with Hunan Qiyang Industrial Zone Management Committee that allowed us to obtain the land use rights of 100mu is attached hereto as Exhibit 10.8.
 
Employees
 
Currently, we have 245 full-time employees. Set forth below is a breakdown of our employees in each position:

Workshop
Managers
Manufacture Workers
Instant-frozen dumpling
2
19
Instant-frozen glue pudding
2
33
Pastry and others
2
19
Ice cream
2
141
Glutinous rice
2
23
Total
10
235

We are in compliance with local prevailing wage, contractor licensing and insurance regulations, and have good relations with our employees.
 
As required by PRC regulations, we participate in various employee benefit plans that are organized by municipal and provincial governments, including pension, work-related injury benefits, maternity insurance, medical and unemployment benefit plans. We are required under PRC laws to make contributions to the employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government from time to time. Members of the retirement plan are entitled to a pension equal to a fixed proportion of the salary prevailing at the member’s retirement date.

Corporation Information

Our principal executive offices are located at 200 Taozhu Road, Qiyang County, Yongzhou City, Hunan Province, PRC, Tel: (011) 86-746-3269-828.
  
REGULATIONS
 
This section summarizes the principal laws, rules and regulations that currently affect our business activities in the PRC. We operate our business in the PRC under a legal regime governed by the State Council and several ministries and agencies under its authority, including but not limited to, the Ministry of Commerce People’s Republic of China (“MOFCOM”), the State Administration of Taxation (“SAT”), the State Administration of Foreign Exchange (“SAFE”), the China Securities Regulatory Commission (“CSRC”), the State Administration of Industry and Commerce (:SAIC”), the Ministry of Finance (“MOF”), the State Food & Drug Administration (“SFDA”), and the General Admini stration of Quality Supervision, Inspection and Quarantine (“AQSIQ”). From time to time, these government authorities issue regulations that apply to our business. Certain of these laws, rules and regulations, such as those relating to foreign currency exchange, taxation, dividend distribution, and regulation of foreign exchange in certain onshore and offshore transactions may affect our shareholders’ rights to receive dividends and other distributions from us.

Regulations on Food Safety
 
The PRC Food Safety Law became effective on June 1, 2009. The PRC Food Safety Law sets out the requirements and standards for food safety, production and business operations of food and food-related products and the relevant supervision and administrative measures to ensure food safety. The Implementing Rules of the PRC Food Safety Law, effective on July 20, 2009, specify the detailed measures for producers and business operators of food and food-related products to ensure food safety and related penalties. Pursuant to the Food Safety Law and its Implementing Rules, we must comply with the relevant requirements and standards for food safety. In addition, entities or individuals applying for production of new kinds of food-related products shall obtain pre-approval from the SFDA or its local counterparts.
 
 
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Regulations on the Administration of Production Licenses for Industrial Products of the PRC

The Regulations of the PRC on the Administration of Production Licenses for Industrial Products, which came into force on September 1, 2005, and Measures for the Implementation of the Regulation of the PRC on the Administration of Production License for Industrial Products, which came into effect on June 1, 2010, implement a production license system in respect of enterprises manufacturing important industrial products directly related to human health. Under the Catalog of Industrial Products under Production License Administration issued by AQSIQ on August 25, 2010, our foods as items for freezing drink and frozen foods. We have obtained the industrial production licenses for food products on July 7, 2010 and December 1, 2008, respectively.

Regulations on Patents

The National People’s Congress adopted the Patent Law of the PRC in 1984, as amended in 1992, 2000 and 2008, respectively, or the Patent Law. A patentable invention, utility model or design must meet three conditions: novelty, inventiveness and practical applicability. Patents cannot be granted for scientific discoveries, rules and methods for intellectual activities, methods used to diagnose or treat diseases, animal and plant breeds or substances obtained by means of nuclear transformation. The Patent Office under the State Council is responsible for receiving, examining and approving patent applications. A patent is valid for twenty years in the case of an invention and ten years in the case of a utility model or design, starting from the application date. A third-party user must obtain consent or a proper license from th e patent owner to use the patent except under certain specific circumstances provided by law. Otherwise, the use will constitute an infringement of the patent rights.

According to the Patent Law, an infringer shall be subject to various civil liabilities, which include ceasing the infringement and compensating the actual loss suffered by patent owners. If the actual loss suffered by the patent owner is difficult to calculate, the illegal income received by the infringer or a reasonable amount calculated with reference to the patent royalties (in the case that it is difficult to calculate the illegal income) shall be deemed as the actual loss. If damages cannot be established by any of the above methods, the court can decide the amount of the actual loss up to RMB 1,000,000 ($151,206). In addition, an infringer who counterfeits patents of third parties shall be subject to administrative penalties or criminal liabilities, if applicable.

Regulations on Trademarks

Registered trademarks are protected under the Trademark Law of the PRC adopted in 1982 and amended in 1993 and 2001, and the Implementation Rules for the PRC Trademark Law adopted in 2002. The PRC Trademark Office of the SAIC is responsible for the registration and administration of trademarks throughout the PRC. The PRC Trademark Law has adopted a “first-to-file” principle with respect to trademark registration. Where a trademark for which an application has been made is identical or similar to another trademark that has already been registered or been subject to a preliminary examination and approval for use on the same kind of or similar commodities or services, the application for registration of such trademark may be rejected. Any person applying for the registration of a trademark shall not prejudice others’ ; existing right of priority, nor shall any person register in advance a trademark that has already been used by another person and has already gained “sufficient degree of reputation” through that person’s use.

Upon receipt of an application, the PRC Trademark Office will make a public announcement if the relevant trademark passes the preliminary examination. Within three months after such public announcement, any person may file an objection against a trademark that has passed a preliminary examination. The PRC Trademark Office’s decisions on rejection, objection or cancellation of an application may be appealed to the PRC Trademark Review and Adjudication Board, whose decision may be further appealed through judicial proceedings. If no objection is filed within three months after the public announcement period or if the objection has been overruled, the PRC Trademark Office will approve the registration and issue a registration certificate, upon which the trademark is registered and effective for a renewable ten-year period, unle ss otherwise revoked. The SAIC and its local counterparts have the power to investigate and handle any infringement of the exclusive right to use a registered trademark. Infringement of a trademark’s exclusive right may be subject to administrative penalties, and civil or criminal liabilities, as applicable.
 
 
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Regulations on Labor Contract

On June 29, 2007, the PRC National People’s Congress enacted the Labor Contract Law, which became effective on January 1, 2008. The Implementing Rules were promulgated by the State Council and took effect on September 18, 2008. The Labor Contract Law formalizes, among others, employees’ rights concerning overtime hours, pensions and layoffs, the execution, performance, modification and termination of labor contracts, the clauses of labor contracts and the role of trade unions. In particular, it provides for specific standards and procedures for entering into non-fixed-term labor contracts with some of our sales professionals and staff. Either the employer or the applicable sales professional or staff may terminate the labor contract in circumstances as prescribed in the Labor Contract Law or if certain preconditions ar e fulfilled. In certain cases, the employer is required to pay a statutory severance upon the termination of a labor contract pursuant to the standards provided by the Labor Contract Law.

Regulations on Environmental Protection

The major environmental laws and regulations include the PRC Environmental Protection Law and other laws and regulations governing air pollution, environmental impact appraisals, pollutant discharge fees and licenses.

Regulations on Social Insurance and Housing Fund

The PRC governmental authorities have passed a variety of laws and regulations regarding social insurance and housing fund from time to time, such as the Regulation of Insurance for Labor Injury, the Regulation of Insurance for Unemployment, the Provisional Insurance Measures for Maternity of Employees, the Interim Provisions on Registration of Social Insurance, the Interim Regulation on the Collection and Payment of Social Insurance Premiums, Regulations on Management of Housing Fund and other related laws and regulations. Pursuant to these regulations, both our PRC subsidiaries have to obtain and renew the social insurance registration certificate and the housing fund certificate and make contributions to the relevant local social insurance and housing fund for our PRC employees. Failure to comply with such laws and regulations would subject our PRC subsidiaries to various fines and legal sanctions and supplemental contributions to the local social insurance and housing fund.

Regulations on Dividend Distributions

The principal laws, rules and regulations governing dividends paid by our PRC subsidiaries include the Company Law of the PRC (1993), as amended in 2006, the Wholly Foreign Owned Enterprise Law (1986), as amended in 2000, and the Wholly Foreign Owned Enterprise Law Implementing Rules (1990), as amended in 2001. Pursuant to these laws and rules, each of our PRC subsidiaries is required to allocate at least 10% of its after-tax profit each year to its statutory capital reserve fund until the accumulative amount of such reserve reaches 50% of its respective registered capital. Furthermore, each of our PRC subsidiaries may allocate its after-tax profits, the portion of which shall be determined by such subsidiary’s shareholders meeting, to its discretionary funds. Neither statutory nor discretionary reserves are distributable as cash dividends.

Regulations on PRC Taxation

The 2008 EIT Law and its Implementing Rules became effective on January 1, 2008. Under the 2008 EIT Law, enterprises are classified as “resident enterprises” and “non-resident enterprises.” Pursuant to the 2008 EIT Law and its Implementing Rules, enterprises established under the laws of foreign countries or regions whose “de facto management bodies” are located within China are considered resident enterprises and will generally be subject to enterprise income tax at the rate of 25% on its global income. According to the Implementing Rules, “de facto management body” refers to a managing body that in substance exercises overall management control over the production and business, personnel, accounting and assets of an enterprise. If we are considered as a PRC tax resident enterprise under the above definition, then our global income will be subject to PRC enterprise income tax at the rate of 25%.
 
 
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Pursuant to certain tax regulations that expired when the 2008 EIT Law and its Implementing Rules took effect, a foreign invested manufacturing enterprise with a scheduled operating term of more than ten years was exempt from income tax for two years starting from the first year that it began to make profit, and was entitled to a 50% reduction in the income tax rate for three years thereafter. Pursuant to the 2008 EIT Law, enterprises in the PRC are required to pay an income tax at a rate of 25% of their taxable income. However, enterprises entitled to the foregoing preferential tax rate may, pursuant to the provisions of the State Council, gradually transition to the uniform tax rate of 25%. For enterprises that have already started to enjoy such preferential tax treatment prior to the promulgation of the 2008 EIT Law, such treat ment continues to apply until its expiration. However, for enterprises that have not yet started to enjoy such preferential treatment by reason of not making any profits, the preferential period shall be counted from January 1, 2008.

The 2008 EIT Law and the Implementing Rules permit certain “high and new technology enterprises strongly supported by the state” that hold independent ownership of core intellectual property and simultaneously meet a list of other criteria, financial or non-financial, as stipulated in the Implementing Rules, to enjoy a reduced 15% enterprise income tax rate subject to certain new qualification criteria. The SAT, the Ministry of Science and Technology and the MOF jointly issued the Administrative Rules for the Certification of High and New Technology Enterprises delineating the specific criteria and procedures for the “high and new technology enterprises” certification on April 14, 2008.

Further, the Implementing Rules provide that, (i) if the enterprise that distributes dividends is domiciled in the PRC, or (ii) if gains are realized from transferring equity interests of enterprises domiciled in the PRC, then such dividends or capital gains are treated as China-sourced income. It is not clear how “domicile” may be interpreted under the 2008 EIT Law, and it may be interpreted as the jurisdiction where the enterprise is a tax resident. Therefore, if we are considered as a PRC tax resident enterprise for tax purposes, any dividends we pay to our overseas shareholders as well as gains realized by such shareholders from the transfer of our shares may be regarded as China-sourced income and as a result become subject to PRC withholding tax at a rate of 10% if such shareholders are considered as non-resident enterprises, and a rate of 20% if they are considered as non-resident individuals, in the absence of any applicable tax treaties that may reduce such rates. See “Risk Factors—Risks Relating to Doing Business in China—We may be treated as a resident enterprise for PRC enterprise income tax purposes; such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.”

Regulations on Loans between a Foreign Company and its PRC Subsidiaries

A loan made by foreign investors as shareholders in a foreign-invested enterprise is considered to be foreign debt in China and is subject to various PRC laws and regulations, including but not limited to, the Foreign Exchange Administration Regulation of 1996 and its amendments, the Interim Measures on Foreign Debts Administration of 2003, the Statistical Monitoring of Foreign Debts Tentative Provisions of 1987 and its implementing rules of 1998, the Administration Provisions on the Settlement, Sale and Payment of Foreign Exchange of 1996, and the Notice of the SAFE on Issues Related to Perfection of Foreign Debts Administration of 2005.

Under these laws and regulations, a shareholder loan in the form of foreign debt made to a Chinese subsidiary does not require the prior approval of the SAFE. However, such foreign debt must be registered with and recorded by the SAFE or its local counterparts in accordance with relevant PRC laws and regulations and shall not exceed statutory limit. Our PRC subsidiary, Xiangmei Food, can legally borrow foreign exchange loans up to its borrowing limits, which is defined as the difference between the amount of its ‘‘total investment’’ and ‘‘registered capital’’ as approved by the MOFCOM or its local counterparts. Interest payments, if any, on the loans are subject to a 10% withholding tax unless any such foreign shareholder’s jurisdiction of incorporation has a tax treaty with Ch ina that provides for a different withholding arrangement and relevant requirements are satisfied. In addition, if the amount of foreign exchange debt of WFOE exceeds its borrowing limit, we are required to apply to the relevant PRC authorities to increase the total investment amount and registered capital to allow the excess foreign exchange debt to be registered with the SAFE.
 
 
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Regulations on Foreign Currency Exchange

The primary regulations and rules governing foreign exchange in China are the PRC Foreign Exchange Administration Regulations of 1996 and its amendments in 2008, and the Administrative Rules on the Settlement, Sale and Payment of Foreign Exchange of 1996. According to these regulations and rules, the RMB is freely convertible for current account items, including without limitation, dividend distributions, interest payments and trade-related foreign exchange transactions. Capital account items such as direct investments, loans, securities investments and repatriation of investments are still subject to prior approval of and registration with the SAFE or its local counterparts. In addition, foreign-invested enterprises may only buy, sell and/or remit foreign currencies under current account transactions at banks with authority to co nduct foreign exchange business, by providing valid commercial documents, and for capital account transactions, pre-approval from the SAFE or its local counterparts is still required.

On August 29, 2008, the SAFE promulgated Circular 142, a notice regulating the conversion by foreign-invested enterprises of foreign currency into RMB. Circular 142 requires that the RMB funds obtained from the settlement of foreign currency-denominated registered capital of a foreign-invested enterprise may only be used for purposes within the business scope approved by the applicable governmental authority and may not be used for equity investments within the PRC unless otherwise provided for in the enterprise’s business scope. In addition, SAFE strengthened its oversight of the flow and use of the RMB capital converted from foreign currency-denominated registered capital of a foreign-invested enterprise. The use of such RMB capital may not be altered without SAFE’s approval, and may not in any case be used to repay RMB loans if the proceeds of such loans have not been used. Violations of Circular 142 will result in severe penalties, such as substantial fines.

Regulations Relating to Employee Stock Options

Pursuant to the Individual Foreign Exchange Rules and Circular 78, issued in January and March 2007, respectively, by the SAFE, PRC domestic individuals who are granted shares or share options by companies listed on overseas stock exchanges based on employee share holding plans or share option plans are required to register with the SAFE or its local counterparts.

According to Circular 78, if a PRC domestic individual participates in any employee share holding plan or share option plan of an overseas-listed company, a PRC domestic agent or the PRC subsidiary of such overseas-listed company shall, among others things, file, on behalf of such individual, an application with the SAFE to obtain approval for an annual quota with respect to the purchase of foreign exchange in connection with share holding or share option exercises as PRC domestic individuals may not directly use overseas funds to purchase shares or exercise share options. Concurrent with the filing of such application with the SAFE, the PRC subsidiary or the PRC domestic agent shall obtain approval from the SAFE to open a special foreign exchange account at a PRC domestic bank to hold the funds required in connection with the sha re purchase or option exercise, any returned principal or profits upon sales of shares, any dividends issued upon the shares and any other income or expenditures approved by the SAFE. The PRC subsidiary or the PRC domestic agent also is required to obtain approval from the SAFE to open an overseas special foreign exchange account at an overseas trust bank to hold overseas funds used in connection with any share purchase.

All proceeds obtained by PRC domestic individuals from sales of shares shall be fully repatriated back to the PRC after relevant overseas expenses are deducted. The foreign exchange proceeds from these sales can be converted into Renminbi or transferred to such individuals’ foreign exchange savings accounts after the proceeds have been repatriated back to the special foreign exchange account opened at the PRC domestic bank. If the share options are exercised in a cashless exercise, the PRC domestic individuals are required to repatriate the proceeds to the special foreign exchange account.

Although many issues relating to Circular 78 require further interpretation, we and our PRC employees who have been granted our share options will be subject to Circular 78 when our company becomes an overseas-listed company. If we or our PRC employees fail to comply with Circular 78, we and/or our PRC employees may face sanctions imposed by the foreign exchange authority or any other PRC government authorities. Such sanctions include, but are not limited to, penalties imposed on our company and executive officers and forfeiture of the proceeds received from the exercise of the share options.

In addition, the SAT has issued a number of circulars concerning employee share options. Under these circulars, our employees working in China who exercise our share options will be subject to PRC individual income tax. Our PRC subsidiaries have obligations to file documents related to employee share options with relevant tax authorities and withhold individual income taxes of those employees who exercise their share options. If our employees fail to pay and we fail to withhold their income taxes, we may face sanctions imposed by tax authorities or any other PRC government authorities.
 
 
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Regulations on Overseas Listing

On August 8, 2006, six PRC regulatory authorities, namely, the MOFCOM, the State Assets Supervision and Administration Commission, the SAT, the SAIC, the CSRC, and the SAFE, jointly adopted the M&A Regulations, which became effective on September 8, 2006, as amended on June 22, 2009, to regulate foreign investment in PRC domestic enterprises. The M&A Regulations contain provisions purporting, among other things, to require SPVs that are (1) formed for the purpose of overseas listing of equity interests in PRC companies via acquisition, and (2) controlled by PRC companies and/or individuals, to obtain the approval of the CSRC prior to the listing and trading of their securities on overseas stock exchanges. On September 21, 2006, the CSRC published the CSRC Procedures on its website, specifying the documents and materials th at SPVs are required to submit when seeking the CSRC approval for their listings outside of China. As of the date of this prospectus, the CSRC has not issued any definitive rule or interpretation concerning whether transactions such as this offering are subject to the M&A Regulations and the CSRC Procedures.

See “Risk Factors—Risks Related to Doing Business in China—Any requirement to obtain prior approval from the China Securities Regulatory Commission, or the CSRC, could delay this offering and a failure to obtain this approval, if required, could have a material and adverse effect on our business, operating results, reputation and trading price of our stocks.”


RISK FACTORS
 
Risks Related to Our Business

We are subject to general risks in the food industry, including risks relating to changes in consumer preference and economic conditions, any of which risks, if realized, could negatively impact our operating results and financial position.

The food industry, and the markets within the food industry in which we compete, are subject to various risks, including the following: evolving consumer preferences, nutritional and health-related concerns, federal, state and local food inspection and processing controls, consumer product liability claims, risks of product tampering, and the availability and expense of liability insurance. Product recalls are sometimes required in the food industry to withdraw contaminated or mislabeled products from the market. Additionally, the failure to identify and react appropriately to changes in consumer trends, demands and preferences could lead to, among other things, reduced demand and price reduction for our products. Further, we may be adversely affected by changes in domestic or foreign economic conditions, including infla tion or deflation, interest rates, availability of capital markets, consumer spending rates, and energy availability and costs (including fuel surcharges). These and other general risks related to the food industry, if realized by us, could have a significant adverse affect on demand for our products, as well as the costs and availability of raw materials, ingredients and packaging materials, thereby negatively affecting our operating results and financial position.

We rely on the raw materials we produce for key ingredients in our finished product. In the event that our crops are not able to produce enough raw materials for us, we may have to purchase our raw materials from a third party, causing an increase in our cost of goods sold and a decrease in our profit margin.

We grow the raw materials necessary to produce our frozen foods. Historically, market prices for products we process have fluctuated in response to a number of factors, including changes in the Chinese government farm support programs, weather, and other conditions during the growing and harvesting seasons.

Our operating results are heavily dependent upon the prices paid for raw materials. The marketing of our value-added products does not lend itself to instantaneous changes in selling prices. Changes in selling prices are relatively infrequent and do not compare with the volatility of commodity markets. Fluctuations in significant cost structure components, such as ingredient commodities, have had a significant impact on profitability over the last two years. Future volatility of general price inflation or deflation and raw material cost and availability could adversely affect our financial results.
 
 
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We depend on our key management, the loss of which could negatively impact our operations.

Our executive officers and certain other key employees have been primarily responsible for the development and expansion of our business, and the loss of the services of one or more of these individuals could adversely effect us.  Our success will be dependent in part upon our continued ability to recruit, motivate, and retain qualified personnel. We can not assure you that we will be successful in this regard. We have no employment or non-competition agreements with key personnel.

We depend on our major customers and any loss of such customers could have a negative impact on our profitability.

We could suffer significant reductions in revenues and operating income if we lost one or more of our largest customers. The loss of any of these customers would be material to our operations and would adversely affect our profitability.

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

Risks Relating to Regulation of Our Business

Uncertainties with respect to the governing regulations could have a material and adverse effect on us.

There are substantial uncertainties regarding the interpretation and application of the PRC laws and regulations, including, but not limited to, the laws and regulations governing our business and our ownership of equity interest in Hunan Xiangmei Food Co., Ltd, a wholly foreign owned enterprise under the PRC laws. These laws and regulations are relatively new and may be subject to change, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness of newly enacted laws, regulations or amendments may be delayed, resulting in detrimental reliance by foreign investors. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively.
 
The PRC government has broad discretion in dealing with violations of laws and regulations, including levying fines, revoking business permits and other licenses and requiring actions necessary for compliance. In particular, licenses and permits issued or granted to the PRC subsidiary by relevant governmental bodies may be revoked at a later time by higher regulatory bodies. We cannot predict the effect of the interpretation of existing or new PRC laws or regulations on our businesses. We cannot assure you that our current ownership and operating structure would not be found in violation of any current or future PRC laws or regulations. As a result, we may be subject to sanctions, including fines, and could be required to restructure our operations or cease to provide certain services. In addition, any litigation in China may be p rotracted and result in substantial costs and diversion of resources and management attention. Any of these or similar actions could significantly disrupt our business operations or restrict us from conducting a substantial portion of our business operations, which could materially and adversely affect our business, financial condition and results of operations.
 
 
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Xiangmei Food will be subject to restrictions on dividend payments.

We may rely on dividends and other distributions from Xiangmei Food to provide us with cash flow and to meet our other obligations. Current regulations in the PRC would permit the PRC subsidiary to pay dividends to us only out of its accumulated distributable profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, Xiangmei Food will be required to set aside at least 10% (up to an aggregate amount equal to half of its registered capital) of its accumulated profits each year. Such cash reserve may not be distributed as cash dividends. In addition, if the PRC subsidiary incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments to us.

PRC regulations on loans and direct investments by overseas holding companies in PRC entities may delay or prevent us to make overseas loans or additional capital contributions to our PRC subsidiary.

Under the PRC laws, foreign investors may make loans to their PRC subsidiaries or foreign investors may make additional capital contributions to their PRC subsidiaries. Any loans to such PRC subsidiaries are subject to the PRC regulations and foreign exchange loan registrations, i.e. loans by foreign investors to their PRC subsidiaries to finance their activities cannot exceed statutory limits and must be registered with the SAFE, or its local branch. Foreign investors may also decide to finance their PRC subsidiaries by means of additional capital contributions. These capital contributions must be examined and approved by the MOFCOM, or its local branch in advance.

Under the PRC Enterprise Income Tax Law, we may be classified as a “resident enterprise” of China, and such classification would likely result in unfavorable tax consequences to us and our non-PRC stockholders.

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

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

Under the New EIT Law, an enterprise established outside of China with “de facto management bodies” within China is considered a “resident enterprise,” meaning that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules of the New EIT Law define de facto management as “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise. Because the New EIT Law and its implementing rules are new, no official interpretation or application of this new “resident enterprise” classification is available. Therefore, it is unclear how tax authorities will determine tax residency based on the facts of each case.
 
If the PRC tax authorities determine that we are “resident enterprises” for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we may be subject to the enterprise income tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise income tax reporting obligations. In our case, this would mean that income such as interest on offering proceeds and non-China source income would be subject to PRC enterprise income tax at a rate of 25%. Second, although under the New EIT Law and its implementing rules, dividends paid to us from our PRC subsidiaries would qualify as “tax-exempt income,” and we cannot guarantee that such dividends will not be subject to a 10% withholding tax, as the PRC foreign exchange control authorities, which enforce the with holding tax, have not yet issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income tax purposes. Finally, it is possible that “resident enterprise” classification could result in a situation in which a 10% withholding tax is imposed on dividends we pay to our non-PRC stockholders and with respect to gains derived by our non-PRC stockholders from transferring our shares. We are actively monitoring the possibility of “resident enterprise” treatment for the applicable tax years and are evaluating appropriate organizational changes to avoid this treatment, to the extent possible.
 
 
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If we were treated as a “resident enterprise” by PRC tax authorities, we would be subject to taxation in both the U.S. and China, and our PRC tax may not be credited against our U.S. tax.

Dividends we received from Xiangmei Food may be subject to PRC withholding tax.

The New EIT Law and the Implementation Rules of the New EIT Law provides that an income tax rate of 10% may be applicable to dividends payable to non-PRC investors that are “non-resident enterprises”, which (i) do not have an establishment or place of business in the PRC, or (ii) 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 payer acting as the obligatory withholder under the New EIT Law, and therefore such income taxes are generally called withholding tax in practice. It is currently unclear in what circumstances a source will be consider ed as located within the PRC. We are an offshore holding company. Thus, if we are considered as a “non-resident enterprise” under the New EIT 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.

In January 2009, the State Administration of Taxation, or SAT, promulgated the Provisional Measures for the Administration of Withholding of Enterprise Income Tax for Non-resident Enterprises (“Measures”), pursuant to which, the entities which have the direct obligation to make the following payment to a non-resident enterprise shall be the relevant tax withholders for such non-resident enterprise, and such payment includes: incomes from equity investment (including dividends and other return on investment), interests, rents, royalties, and incomes from assignment of property as well as other incomes subject to enterprise income tax received by non-resident enterprises in China. Further, the Measures provides that in case of equity transfer between two non-resident enterprises which occurs outside China, the non-reside nt enterprise which receives the equity transfer payment shall, by itself or engage an agent to, file tax declaration with the PRC tax authority located at place of the PRC company whose equity has been transferred, and the PRC company whose equity has been transferred shall assist the tax authorities to collect taxes from the relevant non-resident enterprise. However, it is unclear whether the Measures refer to the equity transfer by a non-resident enterprise which is a direct or an indirect shareholder of the said PRC company. Given these Measures, there is a possibility that Hunan Xiangmei Food Co., Ltd. may have an obligation to withhold income tax in respect of the dividends paid to non-resident enterprise investors.

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.
 
We face uncertainty from China’s Circular on Strengthening the Administration of Enterprise Income Tax on Non-Resident Enterprises' Share Transfer (Circular 698 that was released in December 2009 with retroactive effect from January 1, 2008.)

The Chinese State Administration of Taxation released a circular (“Circular 698”) on December 10, 2009 that addresses the transfer of shares by nonresident companies. Circular 698, which is effective retroactively to January 1, 2008, may have a significant impact on many companies that use offshore holding companies to invest in China. Pursuant to Circular 698, where the withholding agent does not withhold in accordance with laws or can’t perform the withholding obligation, the non-resident enterprises shall file tax declaration with the PRC tax authority located at place of the resident enterprise whose equity has been transferred, within seven days since the date of equity transfer provided under the contracts.
 
 
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Where a foreign investor indirectly transfers equity interests in a Chinese resident enterprise by selling the shares in an offshore holding company, and the latter is located in a country or jurisdiction where the effective tax burden is less than 12.5% or where the offshore income of his, her, or its residents is not taxable, the foreign investor is required to provide the tax authority in charge of that Chinese resident enterprise with the relevant information within 30 days of the transfers. Moreover, where a foreign investor indirectly transfers equity interests in a Chinese resident enterprise through an abuse of form of organization and there are no reasonable commercial purposes such that the corporate income tax liability is avoided, the PRC tax authority will have the power to re-assess the nature of the equity transfer in accordance with PRC’s “substance-over-form” principle and deny the existence of the offshore holding company that is used for tax planning purposes.

There is uncertainty as to the application of Circular 698. For example, while the term "indirectly transfer" is not defined, it is understood that the relevant PRC tax authorities have jurisdiction regarding requests for information over a wide range of foreign entities having no direct contact with China. Moreover, the relevant authority has not yet promulgated any formal provisions or formally declared or stated how to calculate the effective tax in the country or jurisdiction and to what extent and the process of the disclosure to the tax authority in charge of that Chinese resident enterprise. In addition, there are no formal declarations with regard to how to decide abuse of form of organization and reasonable commercial purpose, which can be utilized by us to balance if our company complies with the Circular 698. As a resul t, we may become at risk of being taxed under Circular 698 and we may be required to expend valuable resources to comply with Circular 698 or to establish that we should not be taxed under Circular 698, which could have a material adverse effect on our financial condition and results of operations.

Hunan Xiangmei Food Co., Ltd. is obligated to withhold and pay PRC individual income tax on behalf of our employees who are subject to PRC individual income tax. If we fail to withhold or pay such individual income tax in accordance with applicable PRC regulations, we may be subject to certain sanctions and other penalties and may become subject to liability under PRC laws.

Under PRC laws, Hunan Xiangmei Food Co., Ltd. is obligated to withhold and pay individual income tax on behalf of our employees who are subject to PRC individual income tax. If the PRC subsidiary fails to withhold and/or pay such individual income tax in accordance with PRC laws, it may be subject to certain sanctions and other penalties and may become subject to liability under PRC laws.

In addition, the SAT has issued several circulars concerning employee stock options. Under these circulars, our employees working in the PRC (which could include both PRC employees and expatriate employees subject to PRC individual income tax) who exercise stock options will be subject to PRC individual income tax. Our PRC subsidiary has obligations to file documents related to employee stock options with relevant tax authorities and withhold and pay individual income taxes for those employees who exercise their stock options. While tax authorities may advise us that our policy is compliant, they may change their policy, and we could be subject to sanctions.
  
Regulation of foreign currency’s conversion into RMB and investment by FIEs may adversely affect our PRC subsidiary’s direct investment in China

On August 29, 2008, SAFE 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 FIEs. According to the Notice 142, FIEs shall obtain a 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 FIEs from using RMB converted from foreign capital to make equity investments in the PRC, unless the domestic equity investm ent is within the approved business scope of the FIE and has been approved by SAFE in advance. In addition, SAFE strengthened its oversight over the flow and use of Renminbi funds converted from the foreign currency-dominated capital of a FIE. The use of such Renminbi may not be changed without approval from SAFE, and may not be used to repay Renminbi loans if the proceeds of such loans have not yet been used. Violations of Notice 142 may result in severe penalties, including substantial fines as set forth in the SAFE rules.
 
 
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Regulations of Overseas Investments and Listings may increase the administrative burden we face and create regulatory uncertainties.

On August 8, 2006, six PRC regulatory agencies, including the MOFCOM, the CSRC, the SASAC, SAT, the SAIC and the SAFE, amended and released the New M&A Rule, which took effect as of September 8, 2006. This regulation, among other things, includes provisions that purport to require that an offshore SPV 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 CSRC prior to the listing and trading of such SPV’s securities on an overseas stock exchange.
 
On September 21, 2006, CSRC published on its official website procedures regarding its approval of overseas listings by SPVs. CSRC approval procedures require the filing of a number of documents with CSRC and it would take several months to complete the approval process.
 
The application of the New M&A Rule with respect to overseas listings of SPVs remains unclear with no consensus currently existing among the leading PRC law firms regarding the scope of the applicability of CSRC approval requirement.
 
It is not clear whether the provisions in the new regulation regarding the offshore listing and trading of the securities of a SPV apply to an offshore company such as us which owns equity interest in Hunan Xiangmei Food Co., Ltd. We believe that the M&A Rules and CSRC approval are not required in the context of the share exchange under our transaction because (i) such share exchange is a purely foreign related transaction governed by foreign laws, not subject to the jurisdiction of PRC laws and regulations; (ii) we are not a SPV formed or controlled by PRC companies or PRC individuals; (iii) Hunan Xiangmei Food Co., Ltd. was established as a foreign investment enterprise by means of direct investment rather than by merger or acquisition of an existing PRC domestic company and it is not owned or controlled by PRC individuals o r entities; (iv) we are currently owned or substantively controlled by foreigners; and (v) there is no clear requirement in the New M&A Rule that would require an application to be submitted to the MOFCOM or CSRC for the approval of the listing and trading of our common stock on the U.S. security market. However, we cannot be certain that the relevant PRC government agencies, including CSRC, would reach the same conclusion, and we still cannot rule out the possibility that CSRC may deem that the transactions effected by the share exchange circumvented the M&A Rules, the PRC Securities Law and other rules and notices.

If CSRC or another PRC regulatory agency subsequently determines that CSRC’s approval is required for the transaction, we may face sanctions by CSRC or another PRC regulatory agency. If this happens, these regulatory agencies may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, delay or restrict the repatriation of the proceeds from this Offering into the PRC, restrict or prohibit payment or remittance of dividends to us or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our shares. CSRC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to delay or cancel the transaction.
 
The M&A Rules, along with foreign exchange regulations discussed in the above subsection, will be interpreted or implemented by the relevant government authorities in connection with our future offshore financings or acquisitions, and we cannot predict how they will affect our business development strategy.
  
Failure to comply with PRC laws and regulations relating to the environmental protection and safety in production requirements in China may result in severe penalties and liabilities.
 
The Chinese government has been adopting increasingly stringent regulations relating to the safety and environmental protection, and our business depends upon compliance with the aforesaid regulations and requirements. We are in the process of conducting as-build acceptance inspection and have to obtain relevant safety production permits and approvals from a variety of competent government authorities upon completion of aforesaid inspection. There is no assurance that we will obtain or renew all of such permits or approvals from relevant competent government authorities, which are subject to our fulfillment of the standards and requirements set out by the regulatory authorities. Our operations at our production facilities are subject to periodic checks by the relevant authorities in the PRC and they have the power to take action a gainst us, impose fines, withdraw or suspend our relevant licenses or activities or impose other penalties if we fail to comply with relevant regulations, in the event of which our business operations may be adversely affected. In addition, any change in the scope or application of these laws and regulations may limit our production capacity or increase our cost of operation and could therefore have an adverse effect on our business operations, financial condition and operating results. Our failure to comply with these laws and regulations could result in fines, penalties or legal proceedings. There can be no assurance that the Chinese government will not impose additional or stricter laws or regulations, compliance with which may cause us to incur significant capital expenditures, which it may not be able to pass on to our customers.
 
 
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Risks Associated With Doing Business in China

There are substantial risks associated with doing business in China, as set forth in the following risk factors.
 
Our operations and assets in China are subject to significant political and economic uncertainties.
 
Changes in PRC laws and regulations, or their interpretation, or the imposition of confiscatory taxation, restrictions on currency conversion, imports and sources of supply, devaluations of currency or the nationalization or other expropriation of private enterprises could have a material adverse effect on our business, results of operations and financial condition. Under its current leadership, the Chinese government has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization. There is no assurance, however, that the Chinese government will continue to pursue these policies, or that it will not significantly alter these policies from time to time without notice.
 
We derive all of our sales from China.

All of our sales are generated from China. We anticipate that sales of our products in China will continue to represent a substantial proportion of our total sales in the near future. Any significant decline in the condition of the PRC economy could adversely affect consumer demand of our products, among other things, which in turn would have a material adverse effect on our business and financial condition.
 
Currency fluctuations and restrictions on currency exchange may adversely affect our business, including limiting our ability to convert Chinese Renminbi into foreign currencies and, if Chinese Renminbi were to decline in value, reducing our revenue in U.S. dollar terms.

Our reporting currency is the U.S. dollar and our operations in China use their local currency as their functional currencies. Substantially all of our revenue and expenses are in Chinese Renminbi. We are subject to the effects of exchange rate fluctuations with respect to any of these currencies. For example, the value of the Renminbi depends to a large extent on Chinese government policies and China’s domestic and international economic and political developments, as well as supply and demand in the local market. Since 1994, the official exchange rate for the conversion of Renminbi to the U.S. dollar had generally been stable and the Renminbi had appreciated slightly against the U.S. dollar. However, on July 21, 2005, the Chinese government changed its policy of pegging the value of Chinese Renminbi to the U.S. dollar. Und er the new policy, Chinese Renminbi may fluctuate within a narrow and managed band against a basket of certain foreign currencies. As a result of this policy change, Chinese Renminbi appreciated approximately 0.09% against the U.S. dollar in 2009 and 3.35% in 2008. It is possible that the Chinese government could adopt a more flexible currency policy, which could result in more significant fluctuation of Chinese Renminbi against the U.S. dollar. We can offer no assurance that Chinese Renminbi will be stable against the U.S. dollar or any other foreign currency.
 
The income statements of our operations are translated into U.S. dollars at the average exchange rates in each applicable period. To the extent the U.S. dollar strengthens against foreign currencies, the translation of these foreign currency denominated transactions could result in reduced revenue, operating expenses and net income for our international operations. Similarly, to the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign currency denominated transactions could result in increased revenue, operating expenses and net income for our international operations. We are also exposed to foreign exchange rate fluctuations as we convert the financial statements of our foreign subsidiaries into U.S. dollars in consolidation. If there is a change in foreign currency exchange rates, the conve rsion of the foreign subsidiaries’ financial statements into U.S. dollars will lead to a translation gain or loss which is recorded as a component of other comprehensive income. In addition, we have certain assets and liabilities that are denominated in currencies other than the relevant entity’s functional currency. Changes in the functional currency value of these assets and liabilities create fluctuations that will lead to a transaction gain or loss. We have not entered into agreements or purchased instruments to hedge our exchange rate risks, although we may do so in the future. The availability and effectiveness of any hedging transaction may be limited and we may not be able to successfully hedge our exchange rate risks.
 
 
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Although Chinese governmental policies were introduced in 1996 to allow the convertibility of Chinese Renminbi into foreign currency for current account items, conversion of Chinese Renminbi into foreign exchange for capital items, such as foreign direct investment, loans or securities, requires the approval of SAFE which is under the authority of the People’s Bank of China. These approvals, however, do not guarantee the availability of foreign currency conversion. We cannot be sure that we will be able to obtain all required conversion approvals for our operations or that Chinese regulatory authorities will not impose greater restrictions on the convertibility of Chinese Renminbi in the future. Because a significant amount of our future revenue may be in the form of Chinese Renminbi, our inability to obtain the requisite ap provals or any future restrictions on currency exchanges could limit our ability to utilize revenue generated in Chinese Renminbi to fund our business activities outside of China, or to repay foreign currency obligations, including our debt obligations, which would have a material adverse effect on our financial condition and results of operations
 
We may have limited legal recourse under PRC laws if disputes arise under our contracts with third parties.
 
The Chinese government has enacted laws and regulations dealing with matters such as corporate organization and governance, foreign investment, commerce, taxation and trade. However, their experience in implementing, interpreting and enforcing these laws and regulations is limited, and our ability to enforce commercial claims or to resolve commercial disputes is unpredictable. If our new business ventures are unsuccessful, or other adverse circumstances arise from these transactions, we face the risk that the parties to these ventures may seek ways to terminate the transactions, or, may hinder or prevent us from accessing important information regarding the financial and business operations of these acquired companies. The resolution of these matters may be subject to the exercise of considerable discretion by agencies of the Chin ese government, and forces unrelated to the legal merits of a particular matter or dispute may influence their determination. Any rights we may have to specific performance, or to seek an injunction under PRC law, in either of these cases, are severely limited, and without a means of recourse by virtue of the Chinese legal system, we may be unable to prevent these situations from occurring. The occurrence of any such events could have a material adverse effect on our business, financial condition and results of operations.
 
Because our funds are held in banks in uninsured PRC bank accounts, the failure of any bank in which we deposit our funds could affect our ability to continue our business.

Funds on deposit at banks and other financial institutions in the PRC are often uninsured. A significant portion of our assets are in the form of cash deposited with banks in the PRC, and in the event of a bank failure, we may not have access to our funds on deposit. Depending upon the amount of money we maintain in a bank that fails, our inability to have access to our cash could impair our operations, and, if we are not able to access funds to pay our suppliers, employees and other creditors, we may be unable to continue in business.
 
Our business could be severely harmed if the Chinese government changes its policies, laws, regulations, tax structure or its current interpretations of its laws, rules and regulations, relating to our operations in China.

Our business is located in Hunan province, China and virtually all of our assets are located in China. We generate our sales revenue only from customers located in China. Our results of operations, financial state of affairs and future growth are, to a significant degree, subject to China’s economic, political and legal development and related uncertainties. Our operations and results could be materially affected by a number of factors, including, but not limited to

Changes in policies by the Chinese government resulting in changes in laws or regulations or the interpretation of laws or regulations,
changes in taxation,
changes in employment restrictions,
import duties, and
currency revaluation.
 
 
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Over the past several years, the Chinese government has pursued economic reform policies including the encouragement of private economic activities and greater economic decentralization. If the Chinese government does not continue to pursue its present policies that encourage foreign investment and operations in China, or if these policies are either not successful or are significantly altered, then our business could be harmed. Following the Chinese government’s policy of privatizing many state-owned enterprises, the Chinese government has attempted to augment its revenues through increased tax collection. It also exercises significant control over China’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferen tial treatment to particular industries or companies. Continued efforts to increase tax revenues could result in increased taxation expenses being incurred by us. Economic development may be limited as well by the imposition of austerity measures intended to reduce inflation, the inadequate development of infrastructure and the potential unavailability of adequate power and water supplies, transportation and communications. In addition, the Chinese government continues to play a significant role in regulating industry by imposing industrial policies.

Failure to comply with the U.S. foreign corrupt practices act and Chinese anti-corruption laws could subject us to penalties and other adverse consequences.

Our executive officers, employees and other agents may violate applicable law in connection with the marketing or sale of our products, including China’s anti-corruption laws and the U.S. Foreign Corrupt Practices Act, or the FCPA, which generally prohibits United States companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. In addition, we are required to maintain records that accurately and fairly represent our transactions and have an adequate system of internal accounting controls. Foreign companies, including some that may compete with us, are not subject to these prohibitions, and therefore may have a competitive advantage over us. The PRC also strictly prohibits bribery of government officials. However, corruption, extortion, bribery, pa y-offs, theft and other fraudulent practices occur from time-to-time in the PRC.
  
While we intend to implement measures to ensure compliance with the FCPA and China’s anti-corruption laws by all individuals involved with our company, our employees or other agents may engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations. In addition, our brand and reputation, our sales activities or our stock price could be adversely affected if we become the target of any negative publicity as a result of actions taken by our employees or other agents.

Changes in foreign exchange regulations in the PRC may affect our ability to pay dividends in foreign currency or conduct other foreign exchange business.

The Renminbi is not a freely convertible currency currently, and the restrictions on currency exchanges may limit our ability to use revenues generated in Renminbi to fund our business activities outside the PRC or to make dividends or other payments in United States dollars. The PRC government strictly regulates conversion of Renminbi into foreign currencies. Over the years, foreign exchange regulations in the PRC have significantly reduced the government’s control over routine foreign exchange transactions under current accounts. In the PRC, SAFE regulates the conversion of the Renminbi into foreign currencies. Pursuant to applicable PRC laws and regulations, foreign invested enterprises incorporated in the PRC are required to apply for “Foreign Exchange Registration Certificates.” Currently, conversion within the scope of the “current account” (e.g. remittance of foreign currencies for payment of dividends, etc.) can be effected without requiring the approval of SAFE. However, conversion of currency in the “capital account” (e.g. for capital items such as direct investments, loans, securities, etc.) still requires the approval of SAFE.
 
 
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The Chinese government exerts substantial influence over the manner in which we must conduct our business activities.

China only recently has permitted provincial and local economic autonomy and private economic activities, and, as a result, we are dependent on our relationship with the local government in the province in which we operate our business. Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of these jurisdictions may impose new, stricter regulations or interpretati ons of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties.

The implementation of the new PRC employment contract law and increase in the labor costs in China may hurt our business and profitability.

A new employment contract law became effective on January 1, 2008 in China. It imposes more stringent requirements on employers in relation to entry into fixed-term employment contracts, recruitment of temporary employees and dismissal of employees. In addition, under the newly promulgated Regulations on Paid Annual Leave for Employees, which also became effective on January 1, 2008, employees who have worked continuously for more than one year are entitled to a paid vacation ranging from 5 to 15 days, depending on the length of the employee’s service. Employees who waive such vacation entitlements at the request of the employer will be compensated for three times their normal daily salaries for each vacation day so waived. As a result of the new law and regulations, our labor costs may increase. There is no assurance t hat disputes, work stoppages or strikes will not arise in the future. Increases in the labor costs or future disputes with our employees could damage our business, financial condition or operating results.

According to PRC labor laws, the employer shall be responsible to deal with and pay social insurances and housing fund for all of its employees based on the actual salary of the employees. There is no guarantee that we and our subsidiaries will be able to comply with the relevant requirements. Failure to comply with the various PRC Labor Laws and regulation requirements described above could result in liability under PRC law.

Future inflation in China may inhibit our activity to conduct business in China.

In recent years, the Chinese economy has experienced periods of rapid expansion and high rates of inflation. These factors have led to the adoption by Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. High inflation may in the future cause Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our products.

We may have difficulty establishing adequate management, legal and financial controls in the PRC.
 
We may have difficulty in hiring and retaining a sufficient number of qualified employees to work in the PRC. As a result, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards. We may have difficulty establishing adequate management, legal and financial controls in the PRC.
  
You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China based on United States or other foreign laws against us and our management.

We conduct substantially all of our operations in China and substantially all of our assets are located in China. In addition, some of our directors and executive officers reside within China. As a result, it may not be possible to effect service of process within the United States or elsewhere outside China upon some of our directors and senior executive officers, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws. It would also be difficult for investors to bring an original lawsuit against us or our directors or executive officers before a Chinese court based on U.S. federal securities laws or otherwise. Moreover, China does not have treaties with the United States or many other countries providing for the reciprocal recognition and enforcement of judgment of courts.
 
 
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Because Chinese laws will govern almost all of our business’ material agreements, we may not be able to enforce our rights within the PRC or elsewhere, which could result in a significant loss of business, business opportunities or capital.

The Chinese legal system is similar to a civil law system based on written statutes. Unlike common law systems, it is a system in which decided legal cases have little precedential value. Although legislation in the PRC over the past 25 years has significantly improved the protection afforded to various forms of foreign investment and contractual arrangements in the PRC, these laws, regulations and legal requirements are relatively new. Due to the limited volume of published judicial decisions, their non-binding nature, the short history since their enactments, the discrete understanding of the judges or government agencies of the same legal provision, inconsistent professional abilities of the judicators, and the inclination to protect local interest in the court rooms, interpretation and enforcement of PRC laws and regulations i nvolve uncertainties, which could limit the legal protection available to us, and foreign investors, including you. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital and could have a material adverse impact on our business, prospects, financial condition, and results of operations. In addition, the PRC legal system is based in part on government policies and internal rules (some of which are not published on a timely basis or at all) that may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until some time after the violation. In addition, any litigation in the PRC, regardless of outcome, may be protracted and result in substantial costs and diversion of resources and management attention.

Risks Related to our Securities

Insiders have substantial control over us, and they could delay or prevent a change in our corporate control even if our other stockholders wanted it to occur.

Our executive officers, directors, and principal stockholders hold 9,200,000 shares of our common stock, representing approximately 92.00% of our Common Stock. Accordingly, these stockholders are able to control all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This could delay or prevent an outside party from acquiring or merging with us even if our other stockholders wanted it to occur.

There may not be sufficient liquidity in the market for our securities in order for investors to sell their securities.

There is currently only a limited public market for our Common Stock and there can be no assurance that a trading market will develop further or be maintained in the future.
 
The market price of our Common Stock may be volatile.

The market price of our Common Stock has been and will likely continue to be highly volatile, as is the stock market in general, and the market for OTC Bulletin Board quoted stocks in particular. Some of the factors that may materially affect the market price of our Common Stock are beyond our control, such as changes in financial estimates by industry and securities analysts, conditions or trends in the industry in which we operate or sales of our Common Stock. These factors may materially adversely affect the market price of our Common Stock, regardless of our performance. In addition, the public stock markets have experienced extreme price and trading volume volatility. This volatility has significantly affected the market prices of securities of many companies for reasons frequently unrelated to the operating performance of th e specific companies. These broad market fluctuations may adversely affect the market price of our Common Stock.
 
 
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Because we are becoming public by means of a reverse merger, it may not be able to attract the attention of major brokerage firms.

Since we became public through a “reverse merger,” the newly-issued common shares issued in connection with the “reverse merger” and the Private Placement are restricted shares, As a result, our common stock will continue to be very thinly traded after the reverse merger, until a considerable number of such shares are registered in an effective registration statement or become sellable under Rule 144. Therefore, securities analysts of major brokerage firms may not provide coverage of our Company since there is little incentive to brokerage firms to recommend the purchase of our Common Stock. No assurance can be given that brokerage firms will want to conduct any secondary offerings on behalf of the Company in the future.

When the registration statement required to be filed under the Registration Rights Agreement becomes effective, there will be a significant number of shares of Common Stock eligible for sale, which could depress the market price of such stock.

Following the effective date of the registration statement required to be filed under the Registration Rights Agreement, a large number of shares of Common Stock would become available for sale in the public market, which could harm the market price of the stock. Further, shares may be offered from time to time in the open market pursuant to Rule 144, and these sales may have a depressive effect as well. In general, a non-affiliate who has held restricted securities for a period of six (6) months may sell such securities into the market and an “affiliate” who has held restricted shares for a period of six (6) months may, upon filing a notification with the SEC on Form 144, sell Common Stock into the market in an amount equal to one percent (1%) of the outstanding shares.
 
Any market that develops in shares of our common stock will be subject to the penny stock regulations and restrictions, which could impair liquidity and make trading difficult.

SEC Rule 15g-9, as amended, establishes the definition of a "penny stock" as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions. The market price of the Common Stock is currently less than $5.00 per share and therefore may be a “penny stock.” This classification severely and adversely affects the market liquidity for our common stock.
 
For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person’s account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. To approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
 
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market which, in highlight form, sets forth:

 
·
the basis on which the broker or dealer made the suitability determination, and
     
 
·
that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Disclosure also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
 
 
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Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling stockholders or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if and when our securities become publicly traded. In addition, the liquidity for our securities may decrease, with a corresponding decrease in the price of our securities. Our shares, in all probability, will be subject to such penny stock rules for the foreseeable future and our shareholders will, in all likelihood, find it difficult to sell their securities.
 
The market for penny stocks has experienced numerous frauds and abuses which could adversely impact investors in our stock.

OTCBB securities are frequent targets of fraud or market manipulation, both because of their generally low prices and because OTCBB reporting requirements are less stringent than those of the stock exchanges or NASDAQ.

Patterns of fraud and abuse include:

·  
Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
 
·  
Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

·  
“Boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;
 
 ·  
Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

·  
Wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

Our management is aware of the abuses that have occurred historically in the penny stock market.

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

We have never paid any cash dividends on our Common Stock and do not anticipate paying any cash dividends on our Common Stock in the foreseeable future and any return on investment may be limited to the value of our Common Stock. We plan to retain any future earning to finance growth.
 

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
 
The following discussion of the financial condition and results of operation of Grain Wealth for the fiscal years ended June 30, 2010 and 2009, and for the three months ended September 30, 2010 and 2009 should be read in conjunction with the selected consolidated financial data, the financial statements and the notes to those statements that are included elsewhere in this Current Report on Form 8-K (“Form 8-K”). Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Cautionar y Notice Regarding Forward-Looking Statements and Business sections in this Form 8-K. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.
 
 
30

 
 
COMPANY OVERVIEW
 
Grain Wealth Limited is a limited liability company organized under the laws of the British Virgin Island (the “Grain Wealth”) on September 8, 2010. Grain Wealth owns 100% of the issued and outstanding capital stock of Qiyang County Xiangmei Food Technical Research and Development Co., Ltd., a wholly foreign-owned enterprise (“WFOE”) with limited liability incorporated under the People’s Republic of China (the “PRC”) on December 20, 2010. Qiyang Xiangmei Food Technical and Development Co., Ltd. has entered into a series of contractual agreements with the owner of Hunan Xiangmei Food Co., Ltd. (“Hunan Xiangmei”).

Hunan Xiangmei is a limited liability company formed under laws of the PRC on March 27, 2006, with a total registered capital of RMB 10 million (approximate to $1.2 million), contributed by two individual shareholders, Mr. Wu YaoTian and Mr. Zhou Taiping. On December 24, 2009, Mr. Wu YaoTian transferred all of his ownership interest to Mr. Zhou Taiping, the Chairman of Hunan Xiangmei, and Mr. Zhou became the sole owner of Hunan Xiangmei, which is engaged in the business of growing, processing and distributing glutinous rice and other consumer food products such as frozen stuffed dumplings and ice cream products in the PRC.

On December 23, 2010, Xiangmei Food entered into a series of contractual arrangements with Hunan Xiangmei. These contractual agreements require the pledge of Mr. Zhou’s equity interests in Hunan Xiangmei to Xiangmei Food. At any time during the agreement period, Xiangmei Food has exclusive rights to acquire any portion of the equity interests of Hunan Xiangmei. In addition, Xiangmei Food has sole discretion to appoint directors of Hunan Xiangmei and is entitled to certain management fees from Hunan Xiangmei. The contracts include the Voting Rights Agreement, Equity Pledge Agreement, Operating Agreement, Option Agreement and Consulting Services Agreement all attached hereto as Exhibits 10.11, 10.12, 10.13, 10.14 and 10.15, respectively.

Under these contractual arrangements, which obligate Xiangmei Food to absorb a majority of the risk of loss from Hunan Xiangmei’s activities and entitle it to receive a majority of its residual returns, Xiangmei Food has gained effective control over Hunan Xiangmei. Through these contractual arrangements, Xiangmei Food now holds the variable interests of Hunan Xiangmei, and Xiangmei Food becomes the primary beneficiary of Hunan Xiangmei. Based on these contractual arrangements, Hunan Xiangmei is considered as a Variable Interest Entity (“VIE”)  under ASC 810, "Consolidation of Variable Interest Entities, an Interpretation of ARB No.51", because the equity investor in Hunan Xiangmei no longer has the characteristics of a controlling financial interest. Accordingly, Hunan Xiangmei should be consolidated u nder ASC 810.
 
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
 
Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to bad debts, inventories, recovery of long-lived assets, income taxes, and the valuation of equity transactions. We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from o ther sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the financial statements.
 
While our significant accounting policies are more fully described in Note 1 to our consolidated financial statements for the year ended June 30, 2010, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis.
 
Variable Interest Entities
 
Pursuant to Financial Accounting Standards Board accounting standards, we are required to include in our consolidated financial statements the financial statements of variable interest entities (“VIEs”). The accounting standards require a VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIE’s residual returns. VIEs are those entities in which we, through contractual arrangements, bear the risk of, and enjoy the rewards normally associated with ownership of the entity, and therefore we are the primary beneficiary of the entity.
 
 
31

 
 
HuNan Xiangmei is considered a VIE, and we are the primary beneficiary. We conduct our operations in China through our indirect PRC subsidiary HuNan Xiangmei. On December 23, 2010, we entered into agreements with HuNan Xiangmei pursuant to which we shall receive 100% of HuNan Xiangmei’s net income. In accordance with these agreements, HuNan Xiangmei shall pay consulting fees equal to 100% of its net income to our wholly-owned subsidiary, Xiangmei Food.
 
The accounts of HuNan Xiangmei are consolidated in the accompanying financial statements. As a VIE, HuNan Xiangmei sales are included in our total sales, its income from operations is consolidated with our, and our net income includes all of HuNan Xiangmei’s net income, and its assets and liabilities are included in our consolidated balance sheet. The VIEs do not have any non-controlling interest and accordingly, did not subtract any net income in calculating the net income attributable to us. Because of the contractual arrangements, we have pecuniary interest in HuNan Xiangmei that requires consolidation of HuNan Xiangmei’s financial statements with our financial statements.
 
Accounts receivable
 
We have a policy of reserving for uncollectible accounts based on our best estimate of the amount of probable credit losses in our existing accounts receivable. We periodically review our accounts receivable and other receivables to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
 
As a basis for accurately estimating the likelihood of collection has been established, we consider a number of factors when determining reserves for uncollectable accounts. We believe that we use a reasonably reliable methodology to estimate the collectability of our accounts receivable. We review our allowances for doubtful accounts on at least a quarterly basis. We also consider whether the historical economic conditions are comparable to current economic conditions. If the financial condition of our customers or other parties that we have business relations with were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.
 
Inventories
 
Inventories, consisting of raw materials, work in process and finished goods related to our products are stated at the lower of cost or market utilizing the weighted average method. An allowance is established when management determines that certain inventories may not be saleable. If inventory costs exceed expected market value due to obsolescence or quantities in excess of expected demand, we will record additional reserves for the difference between the cost and the market value. These reserves are recorded based on estimates. We review inventory quantities on hand and on order and record, on a quarterly basis, a provision for excess and obsolete inventory, if necessary. If the results of the review determine that a write-down is necessary, we recognize a loss in the period in which the loss is identified, whether or not t he inventory is retained. Our inventory reserves establish a new cost basis for inventory and are not reversed until we sell or dispose of the related inventory. Such provisions are established based on historical usage, adjusted for known changes in demands for such products, or the estimated forecast of product demand and production requirements.
 
 
32

 
 
Property and equipment
 
Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using straight-line method over the estimated useful lives of the assets. The estimated useful lives of the assets are as follows:
 
   
Useful Life
Building and building improvements
 
5 – 30
 
Years
Manufacturing equipment
 
5-10
 
Years
Office equipment and furniture
 
5
 
Years
Vehicle
 
5
 
Years
 
The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition.
 
We examine the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. We recognize an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value.
 
Land use rights under capital lease
 
There is no private ownership of land in the PRC. All land in the PRC is owned by the government and cannot be sold to any individual or company. The government grants a land use right that permits the holder of the land use right to use the land for a specified period. Our land use rights were granted with a term of 50 years. Any transfer of the land use right requires government approval. We have recorded as an intangible asset under capital lease for the amount of the present value of total payment made to the leasor. The land use rights are amortized on the straight-line method over the lease terms.
 
Revenue recognition
 
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is reasonably assured. The Company recognizes revenues from the sale of glutinous products and other food upon shipment and transfer of title.
 
Income taxes
 
We are governed by the Income Tax Law of the PRC. Income taxes are accounted for pursuant to accounting standards, which is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. The charge for taxes is based on the results for the year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
 
 
33

 
 
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are recognized to the extent that it is probably that taxable profit will be available against which deductible temporary differences can be utilized.
 
Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
 
Deferred tax assets and liabilities are offset when they related to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
 
The Company is governed by the Income Tax Law of the People’s Republic of China. According to China State Administration to Taxation in Qiyang County in Hunan Province, from June 1, 2006 to December 24, 2009, the Company is foreign invested joint venture, which enjoyed income tax waiver in the first five years and half income tax waiver in the following three years. According to China State Administration to Taxation in Qiyang County ni Hunan Province, because the Company was awarded as a “Leading Agricultural Enterprise in Hunan Province” and invested in Qiyang Industrial Development Zone, starting from December 24, 2009, the Company continues to enjoy the income waiver. As a result, the Company had not incurred any income tax since its inception. All tax years since inception remain subject to examination by th e tax authorities.
 
Foreign currency translation
 
The reporting currency of the Company is the U.S. dollar. The functional currency of the Company is the local currency, the Chinese Renminbi (“RMB”). Results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exc hange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. All of the Company’s revenue transactions are transacted in the functional currency. The Company does not enter any material transaction in foreign currencies and accordingly, transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company.
 
RESULTS OF OPERATIONS
 
Results of Operations for the three months ended September 30, 2010 Compared to the three months ended September 30, 2009
 
The following tables set forth key components of our results of operations for the periods indicated, in dollars, and key components of our revenue for the period indicated, in dollars. The discussion following the table is based on these results.
 
 
34

 

GRAIN WEALTH LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
   
For the three months Ended
             
   
September 30,
             
   
2010
   
2009
   
Variance
   
%
 
                         
                         
NET REVENUES
  $ 7,523,433     $ 3,829,380     $ 3,694,053       96 %
COST OF REVENUES
    5,447,965       2,377,195       3,070,770       129 %
GROSS PROFIT
    2,075,468       1,452,185       623,283       43 %
      -                          
OPERATING EXPENSES:
    -                          
     Selling and marketing expenses
    245,660       204,507                  
     General and administrative expenses
    212,456       164,027       48,429       30 %
        Total Operating Expenses
    458,116       368,534       89,582       24 %
      -                          
INCOME FROM OPERATIONS
    1,617,352       1,083,651       533,701       49 %
                                 
OTHER (EXPENSE) INCOME:
                               
     Interest income
    -       -                  
     Interest expense
    (96,814 )     (80,336 )                
     Non-operational income
    14,749       20,359                  
        Total Other (Expense) Income
    (82,065 )     (59,977 )                
      -                          
INCOME BEFORE INCOME TAXES
    1,535,287       1,023,674       511,613       50 %
INCOME TAXES
    -       -                  
NET INCOME
  $ 1,535,287     $ 1,023,674       511,613       50 %
                                 
COMPREHENSIVE INCOME:
                               
      Net Income
  $ 1,535,287     $ 1,023,674       511,613       50 %
      Other Comprehensive Income:
                               
          Foreign currency translation gain
    265,884       10,144       255,740       2521 %
TOTAL COMPREHENSIVE INCOME
  $ 1,801,171     $ 1,033,818       767,353       74 %
                                 
BASIC AND DILUTED INCOME PER COMMON SHARE
  $ 153.53     $ 102.37     $ 51.16       50 %
                                 
BASIC AND DILUTED WEIGHTED AVERAGE COMMON
                         
SHARES OUTSTANDING
    10,000       10,000                  
                                 
 
 
35

 
 
Revenues. For the three months ended September 30, 2010, we had net revenues of $7,523,433, as compared to net revenues of $3,829,380 for the three months ended September 30, 2009, an increase of approximately 96%. The increase in net revenue was attributable to strong demand and increasing market prices.
 
 
Revenues by product line are as follows:
 
Sales Revenue
 
For the Three Months
   
For the Three Months
   
Increase
   
Percentage
 
ended September
ended September
(Decrease)
Change
30, 2010
30, 2009
   
Frozen Rice Dumplings
 
$
646,346
   
$
484,271
   
$
162,075
     
33.5
%
Frozen Dumplings
   
383,690
     
221,984
     
161,706
     
72.8
%
Frozen Pasta
   
271,794
     
184,267
     
87,527
 
 
47.5
%
Ice Cream
   
1,813,927
     
1,557,829
     
256,099
     
16.4
%
Sesame
   
842,165
     
148,352
     
693,813
     
467.7
%
Peanuts
   
1,904,413
     
365,793
     
1,538,619
     
420.6
%
Glutinous Rice
   
1,560,512
     
866,884
     
693,628
     
80.0
%
Glutinous Rice Grain
   
100,586
     
                    -
     
100,586
     
N/A
 
                                 
Total net revenues
 
$
7,523,433
   
$
3,829,380
   
$
3,694,053
     
96.5
%

 
36

 
 
The increase in revenues from the sale of frozen rice dumplings was mainly attributable to our substantial increase in sales volume, partially offset by unit sale price cut from the three months ended September 30, 2009 to the three months ended September 30, 2010. For the three months ended September 30, 2010, the average sales volume is approximately 675,141 kg, as compared to the sale volume of approximately 475,192 kg for the three months ended September 30, 2009, an increase of approximately 42%. The increase in sale volume was mainly attributable to increasing production capacity and temporary sales price cut. In addition to the existing production line, the Company added a new rice dumplings product line and a cooling tunnel in early 2010. During t he quarter ended September 30, 2009, in order to boost its frozen rice dumplings sales, the Company temporarily reduced its sales price of frozen rice dumplings. Because frozen rice dumplings are the main products the Company want to promote, it is the Company’s business strategy to first reduce its sales price to attract more order and then shifted back to the original sales prices. For the three months ended September 30, 2010, the average sales price per kilogram is approximately $0.96 per kilogram (kg), as compared to the sale price of approximately $1.02 per kg for the three months ended September 30, 2009, a decrease of approximately 7%.
 
The increase in revenues from the sale of frozen dumplings was attributable to our substantial increase in both sales prices and volume from the three months ended September 30, 2009 to the three months ended September 30, 2010. For the three months ended September 30, 2010, the average sales price per kilogram is approximately $1.39 per kilogram (kg), as compared to the sale price of approximately $1.05 per kg for the three months ended September 30, 2009, an increase of approximately 31%. The increase in sale price is a response to continually increasing cost of raw material such as meat and flour in China. For the three months ended September 30, 2010, the average sales volume is approximately 276,665 kg, as compared to the sale volume of approximately 211,246 kg for the three months ended September 30, 2009, an increase of approxim ately 32%. The increase in sale volume was attributable to sustained marketing efforts.
 
Frozen pasta mainly includes frozen steamed bread. The increase in revenues from the sale of frozen pasta was mainly attributable to our substantial increase both in sales prices and sales volume from the three months ended September 30, 2009 to the three months ended September 30, 2010. For the three months ended September 30, 2010, the average sales price per kilogram is approximately $ 1.07 per kilogram (kg), as compared to the sale price of approximately $0.83 per kg for the three months ended September 30, 2009, an increase of approximately 28%. The increase in sale price is a response to continually increasing cost of raw material such as flour in China. For the three months ended September 30, 2010, the average sales volume is approximately 255,156 kg, as compared to the sale volume of approximately 222,044 kg for the three mont hs ended September 30, 2009, an increase of approximately 15%. The increase in sale volume was attributable to continued market efforts.
 
The company produces and sells ice cream only in summer. The increase in revenues from the sale of ice cream was mainly attributable to our substantial increase in sales volume from the three months ended September 30, 2009 to the three months ended September 30, 2010, offset by slightly decreasing sales prices. For the three months ended September 30, 2010, the average sales volume is approximately 798,486 kg, as compared to the sale volume of approximately 668,768 kg for the three months ended September 30, 2009, an increase of approximately 19%. The increase in sale volume was attributable to sustained marketing efforts and more and more popular consumption of ice cream in China.
 
The Company cultivates glutinous rice, sesame and peanuts by itself. Every year, the Company leases farmland by signing contracts with local farmers. The Company then selects seeds, purchases fertilizers, makes improvements on the farmland, hires labor, and harvests glutinous rice by itself. The increase in revenues from the sale of glutinous rice was mainly attributable to our substantial increase in sales volume from the three months ended September 30, 2009 to the three months ended September 30, 2010. For the three months ended September 30, 2010, the average sales volume is approximately 3,206,295 kg, as compared to the sale volume of approximately 1,793,387 kg for the three months ended September 30, 2009, an increase of approximately 79%. The incre ase in sale volume is mainly attributable to increasing yield a result of leasing more farmland from local farmers. In fiscal 2010, the Company leased farmland of approximately 32,864 Chinese Acre, as compared with 26,563 in 2009.
 
 
37

 
 
Cost of sales. Cost of sales increased by $3,070,770, or 129%, from $2,377,195 for the three months ended September 30, 2009 to $5,447,965 for the three months ended September 30, 2010.
 
Gross profit and gross margin. Our gross profit was $2,075,468 for the three months ended September 30, 2010 as compared to $1,452,185 for to the three months ended September 30, 2009 representing gross margins of 28% and 38%, respectively. The decrease in our gross margin percentage was mainly attributable to sales discounts,, increasing costs and a larger proportion of sale of self-cultivated produce such as glutinous rice, sesame and peanuts, which usually have lower profit margin percentages.

Gross margin percentages by product line are as follows:
   
For the Three Months
September 30, 2010
   
For the Three Months
September 30, 2009
 
Frozen Rice Dumplings
    44 %     51 %
Frozen Dumplings
    52 %     43 %
Frozen Pasta
    43 %     42 %
Ice Cream
    46 %     53 %
Sesame
    19 %     21 %
Peanuts
    16 %     16 %
Glutinous Rice
    10 %     14 %
Glutinous Rice Grain
    8 %     N/A  
   
               
Overall gross profit %  
    28 %     38 %
 
Due to inflation in 2010 in China, the cost of agricultural raw material such as flour, glutinous rice powder, sugar, oil meat and vegetables, used in producing frozen foods as above all increased dramatically in 2010. The variances in gross profit margin percentages between fiscal 2010 and 2009 generally reflect the increase both in sale price and cost.
 
The gross profit margin percentage of frozen rice dumplings decreased to 51% for the three months ended September 30, 2010 from 44% for to the three months ended September 30, 2009. The Company reduced its sales price and experienced increasing cost of raw material.
 
 
38

 
 
The gross profit margin percentage of frozen dumplings increased to 52% for the three months ended September 30, 2010 from 43% for to the three months ended September 30, 2009. Although the cost of raw material increased, the Company was able to raise its sales price more quickly than its cost.
 
The gross profit margin percentage of ice cream decreased to 46% for the three months ended September 30, 2010 from 53% for to the three months ended September 30, 2009. De
 
The gross profit margin percentage of ice cream decreased to 10% for the three months ended September 30, 2010 from 14% for to the three months ended September 30, 2009. Although the cultivation cost including fertilizer and labor cost all increased due to inflation in China, the Company was unable to raise its sales price in its annual sale contract signed in early 2010.
 
All other products’ profit margin are generally consistent from the three months ended September 30, 2009 to the three months ended September 30, 2010.
 
Selling expenses. Selling expenses were $ 245,660 and $204,507 for the year ended June 30, 2010 and 2009 respectively. Selling expenses consisted of the following:
 
 
   
For the Three
Months Ended
   
For the Three
Months Ended
       
   
September 30, 2010
   
September 30, 2009
   
Increase/decrease
 
Shipping and handling
    159,182       140,546       13 %
Compensations and related benefits
    24,807       14,474       71 %
Advertising and promotion
    12,558       10,579       19 %
Depreciation
    7,932       6,911       15 %
Office expense
    12,181       9,411       29 %
Others
    29,000       22,587       28 %
Total
    245,660       204,507       20 %
selling expense as % of revenues
    3 %     5 %        

 
39

 
 
 
o
Shipping and handling increased by $18,636 or 13% due to the increase in our sales volume.
     
 
o
Compensation and related benefits increased by $10,333 or 71% due to an increase in salesperson travelling compensation.
 
 
o
Advertising and promotion expense increased by $ 1,979 or 19% which was attributed to the increased sales efforts in exploring the market.
     
 
o
Office expense increased by $2,770 or 29% due to expansion of sales team.
     
 
o
Other expense includes .
 
General and administrative expenses. General and administrative expenses amounted to $212,456 for the three months ended September 30, 2010, as compared to $164,027 for the same period in 2009, an increase of $48,429 or 30%. General and administrative expenses consisted of the following:
 
   
For the Three
 Months Ended
   
For the Three
Months Ended
       
   
September 30, 2010
   
September 30, 2009
   
Increase/decrease
 
Compensation and related benefits
    54,246       48,359       12 %
Depreciation
    68,258       50,767       34 %
Office expense
    12,895       9,218       40 %
Others
    77,057       55,682       38 %
Total
    212,456       164,027       30 %
 
 
o
Compensation and related benefits increased by $ 5,887 or 12% due to an increase in the number of employees
     
 
o
Depreciation expense increased by $ 17,491 or 34% due to the increase in fixed assets.
 
 
o
Office expense increased by $3,677 or 40% due to expansion of administration team.
 
 
o
Other general and administrative expenses increased by $ 21,375 or 38%. It mainly includes utilities, repairs, telecommunication, conference expense and certain low-value material. These expenses increased as the company grew.
 
Income from operations. For the three months ended September 30, 2010, income from operations was $1,617,352, as compared to $1,083,651 for the three months ended September 30, 2009, an increase of $533,701 or 49%.
 
 
40

 
 
Other income (expenses). For the three months ended September 30, 2010, other expense amounted to $82,065 as compared to other expenses of $59,977 for the same period in 2009. For the three months ended September 30, 2010 and 2009, other income (expense) included:
 
 
o
Interest expense increased by $16,478 or 21%. During the three months ended September 30, 2010, we incurred more interest due to more bank loans.
 
o
Non-operational income decreased by $5,610 or 28%.
 
Income tax expenseThe Company enjoyed income tax exemption as an agricultural related business.
 
Net income. As a result of the factors described above, our net income for the three months ended September 30, 2010 was $1,535,287, or $153.53 per share (basic and diluted). For the three months ended September 30, 2009, we had net income of $1,023,674 or $102.37 per share (basic and diluted).
 
Foreign currency translation gain. The functional currency of our subsidiaries operating in the PRC is the Chinese Yuan or Renminbi (“RMB”). The financial statements of our subsidiaries are translated to U.S. dollars using period end rates of exchange for assets and liabilities, and average rates of exchange (for the period) for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations. As a result of these translations, which are a non-cash adjustment, we reported a foreign currency translation gain of $265,884 for the three months ended September 30, 2010 as compared to $ 10,144 for the same period year 2009. This non-cash gain had the effect of increasing our reported c omprehensive income.
 
Comprehensive income. For the three months ended September 30, 2010, comprehensive income of $1,801,171 is derived from the sum of our net income of $1,535,287 plus foreign currency translation gains of $265,884.
 
LIQUIDITY AND CAPITAL RESOURCES
 
As of September 30, 2010, our balance of cash and cash equivalents was $3,571,209. As of June 30, 2010, our balance of cash and cash equivalents was $1,802,342.
 
 
 
 
41

 
 
The following summarizes the key components of the Company’s cash flows for the three months ended September 30, 2010 and 2009:
 
   
For the Three Months Ended
 
   
September 30,
   
September 30,
 
   
2010
   
2009
 
Net cash provided by operating activities
 
$
35,126
   
$
(1,716,213)
 
Cash flows used in investing activities
 
 
(20,542)
     
(153,547)
 
Cash flows provided (used) in financing activities
   
1,703,459
     
1,973,367
 
Net increase in cash and cash equivalents
 
$
1,768,867
   
$
105,306
 
 
The Company currently generates its cash flow through operations which it believes will be sufficient to sustain current level operations for at least the next twelve months.
 
In summary, our cash flows were:
 
 Net cash provided by operating activities increased in the three months ended September 30, 2010 by $1,751,339 to $35,126 from net cash used in operating activities of $1,716,213 for the three months ended September 30, 2009. These changes were mainly brought about by changes as follows: an increase in cash provided by advances from customers of $892,061,  a decrease in cash used for Cost of growing crops of $1,415,007, a decrease in cash provided by accounts receivable of $1,678,936. This was off-set by an increase in net income of $ 511,614 or an increase of 50% over the prior period ended September 30, 2009.
 
 Net cash used in investing activity decreased by $133,005 in the period ended September 30, 2010 compared to the same period ended in 2009 which is due to decrease in cash used for our acquisition of machinery and equipment.
 
Net cash provided by financing activities decreased by $269,908 to $1,703,459 in the period ended September 30, 2010 compared to $1,973,367 used in financing activities at the same period ended in 2009. This was due to a increase in cash provided by short-term loans of $972,582, offset by a decrease in cash proceeds from loan from related party of $1,242,490.
 
Working capital at September 30, 2010 was increased by $ 1,863,739 to $ 2,685,653 from $ 821,914 or 227% at September 30, 2009.
 
Results of Operations for the Year ended June 30, 2010 Compared to the Year ended June 30, 2009
 
The following tables set forth key components of our results of operations for the periods indicated, in dollars, and key components of our revenue for the period indicated, in dollars. The discussion following the table is based on these results.
 
 
42

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 
                         
   
For the Years Ended
             
   
June 30,
             
   
2010
   
2009
   
Variance
   
%
 
                         
NET REVENUES
  $ 25,098,672     $ 18,734,371     $ 6,364,301       34 %
COST OF REVENUES
    15,978,235       12,083,734       3,894,501       32 %
GROSS PROFIT
    9,120,437       6,650,637       2,469,800       37 %
                                 
OPERATING EXPENSES:
                               
     Selling and marketing expenses
    1,239,766       1,125,819                  
     General and administrative expenses
    967,548       761,331       206,217       27 %
        Total Operating Expenses
    2,207,314       1,887,150       320,164       17 %
                                 
INCOME FROM OPERATIONS
    6,913,123       4,763,487       2,149,636       45 %
                                 
OTHER (EXPENSE) INCOME:
                               
     Interest income
    5,334       5,604                  
     Interest expense
    (397,272 )     (463,397 )                
     Non-operational income
    166,935       85,414                  
        Total Other (Expense) Income
    (225,003 )     (372,379 )                
                                 
INCOME BEFORE INCOME TAXES
    6,688,120       4,391,108       2,297,012       52 %
INCOME TAXES
    -       -                  
NET INCOME
  $ 6,688,120     $ 4,391,108       2,297,012       52 %
                                 
COMPREHENSIVE INCOME:
                               
      Net Income
  $ 6,688,120     $ 4,391,108       2,297,012       52 %
      Other Comprehensive Income:
                               
          Foreign currency translation gain
    39,961       20,810       19,151       92 %
TOTAL COMPREHENSIVE INCOME
  $ 6,728,081     $ 4,411,918       2,316,163       52 %
                                 
 
 
43

 
 
Revenues. For the year ended June 30, 2010, we had net revenues of $25,098,672, as compared to net revenues of $18,734,371 for the year ended June 30, 2009, an increase of approximately 34%. The increase in net revenue was attributable to strong demand and increasing market prices.
 
Revenues by product line are as follows:
 
   
For the 
Year ended 
June 30, 2010
   
For the 
Year  Ended
June 30, 2009
   
Increase
(Decrease)
   
Percentage
Change
 
Frozen Rice Dumplings
 
$
5,907,076
   
$
4,340,404
   
$
1,566,672
     
36.1
%
Frozen Dumplings
   
2,947,368
     
1,965,649
     
981,719
     
49.9
%
Frozen Pasta
   
2,719,930
     
1,905,483
     
814,447
     
42.7
%
Ice Cream
   
3,848,626
     
2,788,307
     
1,060,319
     
38.0
%
Sesame
   
632,187
     
329,108
     
303,079
     
92.1
%
Peanuts
   
1,367,188
     
873,354
     
493,833
     
56.5
%
Glutinous Rice
   
7,676,297
     
6,532,067
     
1,144,230
     
17.5
%
                                 
Total net revenues
 
$
25,098,672
   
$
18,734,371
   
$
6,364,301
     
34.0
%
 
The increase in revenues from the sale of frozen rice dumplings was attributable to our substantial increase in both sales prices and volume from fiscal 2009 to 2010. For the year ended June 30, 2010, the average sales price per kilogram is approximately $1.1 per kilogram (kg), as compared to the sale price of approximately $0.94 per kg for the year ended June 30, 2009, an increase of approximately 17%. The increase in sale price is a response to continually increasing cost of raw material such as glutinous rice during fiscal 2010 in China. For the year ended June 30, 2010, the average sales volume is approximately 5,379,402 kg, as compared to the sale volume of approximately 4,636,229 kg for the year ended June 30, 2009, an increase of approximately 16%. The increase in sale volume was attributable to sustained marketing efforts and i ncreasing production capacity. In addition to the existing production line, the Company added a new rice dumplings product line and a cooling tunnel in fiscal 2010.
 
The increase in revenues from the sale of frozen dumplings was attributable to our substantial increase in both sales prices and volume from fiscal 2009 to 2010. For the year ended June 30, 2010, the average sales price per kilogram is approximately $1.11 per kilogram (kg), as compared to the sale price of approximately $0.85 per kg for the year ended June 30, 2009, an increase of approximately 31%. The increase in sale price is a response to continually increasing cost of raw material such as meat and flour during fiscal 2010 in China. For the year ended June 30, 2010, the average sales volume is approximately 2,653,743 kg, as compared to the sale volume of approximately 2,316,274 kg for the year ended June 30, 2009, an increase of approximately 15%. The increase in sale volume was attributable to sustained marketing efforts and incre asing production capacity. In fiscal 2010, the Company increased its production efficiency by replacing certain dumplings making machines with new ones.
 
Frozen pasta mainly includes frozen steamed bread. The increase in revenues from the sale of frozen pasta was mainly attributable to our substantial increase in sales volume from fiscal 2009 to 2010. For the year ended June 30, 2010, the average sales volume is approximately 2,739,797 kg, as compared to the sale volume of approximately 1,947,135 kg for the year ended June 30, 2009, an increase of approximately 41%. The increase in sale volume was attributable to continued market efforts.
 
 
44

 
 
The company produces and sells ice cream only in summer. The increase in revenues from the sale of ice cream was mainly attributable to our substantial increase in sales volume from fiscal 2009 to 2010. For the year ended June 30, 2010, the average sales volume is approximately 5,913,000 kg, as compared to the sale volume of approximately 4,339,000 kg for the year ended June 30, 2009, an increase of approximately 36%. The increase in sale volume was attributable to sustained marketing efforts and increasing production capacity. During fiscal 2010, the Company sales network extended further into Guangxi Province and rural areas.
 
The Company cultivates glutinous rice, sesame and peanuts by itself. Every year, the Company leases farmland by signing contracts with local farmers. During the year, the Company selects seeds, purchases fertilizers, makes improvements on the farmland, hires labor, and harvests glutinous rice by itself. The increase in revenues from the sale of glutinous rice was mainly attributable to our substantial increase in sales volume from fiscal 2009 to 2010. For the year ended June 30, 2010, the average sales volume is approximately 15,825,414 kg, as compared to the sale volume of approximately 13,782,317 kg for the year ended June 30, 2009, an increase of approximately 15%. The increase in sale volume is mainly attributable to increasing yield a result of leasing more farmland from local farmers. In fiscal 2010, the Company leased farmland o f approximately 32,864 Chinese Acre, as compared with 26,563 in 2009.
 
Cost of sales. Cost of sales increased by $ 3,894,501, or 32%, from $ 12,083,734 for the year ended June 30, 2009 to $ 15,978,235 for the year ended June 30, 2010.
 
Gross profit and gross margin. Our gross profit was $ 9,120,437 for year ended June 30, 2010 as compared to $6,650,637 for the year ended June 30, 2009 representing gross margins of 36% and 35%, respectively. The increase in our gross margin percentage was mainly attributable to the larger proportion of sale of processed frozen foods, which usually have higher profit margin percentages.
 
 
45

 
 
Gross margin percentages by product line are as follows:
 
   
For the Year ended
   
For the Year ended
 
   
June 30, 2010
   
June 30, 2009
 
Frozen Rice Dumplings
    52.3 %     50.4 %
Frozen Dumplings
    47.5 %     44.7 %
Frozen Pasta
    48.3 %     51.9 %
Ice Cream
    49.3 %     52.6 %
Sesame
    20.9 %     19.2 %
Peanuts
    18.2 %     20.4 %
Glutinous Rice
    13.5 %     13.6 %
   
               
Overall gross profit %  
    36.3 %     35.5 %
 
Due to inflation in fiscal 2010 in China, the cost of agricultural raw material such as flour, glutinous rice powder, sugar, oil meat and vegetables, used in producing frozen foods as above all increased dramatically in fiscal 2010. The variances in gross profit margin percentages between fiscal 2010 and 2009 reflect the increase both in sale price and cost.
 
The gross profit margin percentage of frozen rice dumplings and frozen dumplings increased to 52.7% and 48.3% for the year ended June 30, 2010 respectively, from 50.2% and 44.4% for the year ended June 30, 2009 respectively. The Company was able to raise sale prices of frozen rice dumplings and frozen dumplings at higher level than their cost increase.
 
The gross profit margin percentage of frozen pasta and ice cream decreased to 49.2% and 50.0% for the year ended June 30, 2010 respectively, from 51.6% and 52.4% for the year ended June 30, 2009 respectively. The decrease reflects higher cost increase in raw material compared with sale prices increase. In addition, the lower profit margin is part of marketing effort to increase sale volume.
 
Selling expenses. Selling expenses were $1,239,766 and $1,125,819 for the year ended June 30, 2010 and 2009 respectively. Selling expenses consisted of the following:
 
 
46

 
 
   
For the Year ended
   
For the Year ended
       
   
June 30, 2010
   
June 30, 2009
   
Increase/decrease
 
Shipping and handling
    715,910       658,877       9 %
Compensations and related benefits
    138,123       109,263       26 %
Advertising and promotion
    122,803       105,831       16 %
Depreciation
    28,380       24,867       14 %
Office expense
    82,388       68,042       21 %
Others
    152,162       158,938       -4 %
Total
    1,239,766       1,125,819       10 %
selling expense as % of revenues
    5 %     6 %        
 
 
o
Shipping and handling increased by $ 57,033 or 9% due to the increase in our sales volume.
     
 
o
Compensation and related benefits increased by $ 28,860 or 26% due to an increase in sales staff and an increase in staff travelling compensation.
 
 
o
Advertising and promotion expense increased by $16,971 or 16% which was attributed to the increased sales efforts in exploring the market.
     
 
o
Office expense increased by $14,346 or 21% due to expansion of sales team.
     
 
o
Other expense had a nominal variance.
 
General and administrative expenses. General and administrative expenses amounted to $967,548  for the year ended June 30, 2010, as compared to $761,331 for the same period in 2009, an increase of $ 206,218 or 27%. General and administrative expenses consisted of the following:
 
 
47

 

 
   
For the Year ended
   
For the Year ended
       
   
June 30, 2010
   
June 30, 2009
   
Increase/decrease
 
Compensation and related benefits
    258,003       189,537       36 %
Depreciation
    264,503       236,009       12 %
Office expense
    77,351       50,276       54 %
Others
    367,692       285,508       29 %
Total
    967,548       761,331       27 %
 
 
o
Compensation and related benefits increased by $68,466 or 36% due to an increase in sales staff and an increase in staff travelling compensation.
     
 
o
Depreciation expense increased by $28,493 or 12% due to the increase in fixed assets.
 
 
o
Office expense increased by $ 27,075 or 54% due to expansion of administration team.
 
 
o
Other general and administrative expenses increased by $ 82,184 or 29%. It mainly includes utilities, repairs, telecommunication, conference expense and certain low-value material. These expenses increased as the sales increased.
 
Income from operations. For the year ended June 30, 2010, income from operations was $ 6,913,123, as compared to $ 4,763,487 for the year ended June 30, 2009, an increase of $ 2,149,636 or 95%.
 
Other income (expenses). For the year ended June 30, 2010, other expense amounted to $225,003 as compared to other expenses of $372,379 for the same period in 2009. For the years ended June 30, 2010 and 2009, other income (expense) included:
 
 
o
Interest expense decreased by $66,125 or 14%. During the year ended June 30, 2010, we enjoyed lower interest rates, which reduced interest expense for the period.
     
 
o
Interest income decreased by $270 or 5%
 
Income tax expense. The Company enjoyed income tax exemption as an agricultural related business for the years ended June 30, 2010 and 2009.
 
Net income. As a result of the factors described above, our net income for the year ended June 30, 2010 was $6,688,120, or $668.81 per share (basic and diluted). For the year ended June 30, 2009, we had net income of $ $4,391,108 or $439.11 per share (basic and diluted).
 
 
48

 
 
Foreign currency translation gain. The functional currency of our subsidiaries operating in the PRC is the Chinese Yuan or Renminbi (“RMB”). The financial statements of our subsidiaries are translated to U.S. dollars using period end rates of exchange for assets and liabilities, and average rates of exchange (for the period) for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations. As a result of these translations, which are a non-cash adjustment, we reported a foreign currency translation gain of $39,961 for the year ended June 30, 2010 as compared to $20,810 for the same period year 2009. This non-cash gain had the effect of increasing our reported comprehensive in come.
 
Comprehensive income. For the year ended June 30, 2010, comprehensive income of $6,728,081 is derived from the sum of our net income of $6,688,120 plus foreign currency translation gains of $ 39,961.
 
LIQUIDITY AND CAPITAL RESOURCES
 
As of June 30, 2010, our balance of cash and cash equivalents was $ $1,802,342. As of June 30, 2009, our balance of cash and cash equivalents was $ $1,563,002.
 
The following summarizes the key components of the Company’s cash flows for the year ended June 30, 2010 and 2009:
 
   
For the Years Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
 
Net cash provided by operating activities
 
$
5,352,284
   
$
3,986,074
 
Cash flows used in investing activities
 
 
(6,058,334)
     
(3,450,230
)
Cash flows provided (used) in financing activities
   
936,128
     
(662,256
Net increase (decrease) in cash and cash equivalents
 
$
230,078
   
$
(126,412)
 
 
The Company currently generates its cash flow through operations which it believes will be sufficient to sustain current level operations for at least the next twelve months.
 
In summary, our cash flows were:
 
Net cash provided by operating activities increased in the year ended June 30, 2010 by $1,366,210 to $5,352,284 from net cash provided by operating activities of $3,986,074 for the year ended June 30, 2009, which represented a 34% increase over the prior year. These changes were mainly brought about by changes as follows: a decrease in cash provided by advances from customers of $1,182,456, an decrease in cash used for Cost of growing crops of $350,937, a decrease in cash provided by accounts receivable of $231,661 and increase in amortization of long-term prepayments of $223,820. This was off-set by an increase in net income of $2,297,012 or an increase of 52% over the prior period ended June 30, 2009.
 
 
49

 
 
Net cash used in investing activity increased by $2,608,104 in the period ended June 30, 2010 compared to the same period ended in 2009 which is due to decrease in cash used for our acquisition of machinery and equipment of $777,684, an increase in cash used for investments on farmland improvements of $3,210,264 and cash deposit made on land use rights of $175,524.
 
Net cash provided by financing activities increased by $1,598,384 to $ 936,128 in the period ended June 30, 2010 compared to $662,256 used in financing activities at the same period ended in 2009. This was due to a decrease in cash provided by short-term loans a decrease in cash used in repayment to related party of $2,976,723.
 
Working capital at June 30, 2010 decreased by $ 132,465 to $821,914 from $ 954,379 or 13.8% over the same period ended June 30, 2009.
 

DESCRIPTION OF SECURITIES

Authorized Capital Stock

We have 110,000,000 shares of authorized capital stock, consisting of 100,000,000 shares of Common Stock, par value $0.001, and 10,000,000 shares of the Company’s Preferred Stock, par value $0.001. The following summary description relating to the Company’s capital stock does not purport to be complete.

Common Stock

Immediately prior to the Share Exchange, we had 1,000,000 shares of our Common Stock issued and outstanding and following the closing of the Share Exchange, we had 11,057,450 shares of our Common Stock issued and outstanding. Holders of Common Stock are entitled to cast one vote for each share on all matters submitted to a vote of shareholders, including the election of directors. The holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared by the Board out of funds legally available therefore. See “Dividend Policy.” Such holders do not have any preemptive or other rights to subscribe for additional shares. All holders of Common Stock are entitled to share ratably in any assets for distribution to shareholders upon the liquidation, dissolution or winding up of the Company. Ther e are no conversion, redemption or sinking fund provisions applicable to the Common Stock. All outstanding shares of Common Stock are fully paid and nonassessable.

Preferred Stock

The Board is authorized, without further action by the shareholders, to issue, from time to time, up to 10,000,000 shares of preferred stock in one or more classes or series. Similarly, the Board will be authorized to fix or alter the designations, powers, preferences, and the number of shares which constitute each such class or series of preferred stock. Such designations, powers or preferences may include, without limitation, dividend rights (and whether dividends are cumulative), conversion rights, if any, voting rights (including the number of votes, if any, per share), redemption rights (including sinking fund provisions, if any), and liquidation preferences of any unissued shares or wholly unissued series of preferred stock. As of the date hereof, the Board has not designated any classes of our Preferred Stock.

The EduChina-US Warrants

As of the date hereof, there are 105,745 warrants issued and outstanding to EduChina-US International Limited. The Warrants will, by its principal terms,
 
 
50

 
 
(a)
entitle the holder to purchase one (1) share of Common Stock;
(b)
be exercisable at any time after the issuance and shall expire on the date that is five (5) years following the original issuance date;
(c) 
be exercisable, in whole or in part, at the exercise price of $4.29 per share; and
(d) 
be exercised only for cash.
 
A copy of the EduChina-US Warrant is attached hereto as Exhibit 4.1.
 
Market Price of and Dividends on Common Equity and Other Shareholder Matters
 
Market Information

Our Common Stock is not quoted on any national exchange or over-the-counter quotation system. No public market currently exists for shares of our Common Stock and there can be no assurance that an active market will develop.

Holders of Common Stock

As of January 28, 2011, there were of record approximately 12 holders of our Common Stock.
 
Dividend Policy
 
We have not paid cash dividends on any class of common equity since formation and we do not anticipate paying any dividends on our outstanding Common Stock in the foreseeable future. We plan to retain any earnings to finance the development of the business and for general corporate purposes.
 
Future cash dividends, if any, will be at the discretion of our board of directors and will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors as our board of directors may deem relevant. We can pay dividends only out of our profits or other distributable reserves and dividends or distribution will only be paid or made if we are able to pay our debts as they fall due in the ordinary course of business.
 
Indemnification of Directors and Officers
 
Our officers and directors are indemnified as provided by the Nevada Revised Statutes (‘NRS”) and our bylaws.
 
Under the NRS, director immunity from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically limited by a company’s articles of incorporation that is not the case with our articles of incorporation. Excepted from that immunity are: 
 
(1)  a willful failure to deal fairly with the company or its shareholders in connection with a matter in which the director has a material conflict of interest;
 
(2)  a violation of criminal law (unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful);
 
(3)  a transaction from which the director derived an improper personal profit; and
 
(4)  willful misconduct.
 
Our Articles of Incorporation permits us to indemnify our officers and directors to the fullest extent authorized or permitted by law in connection with any proceeding arising by reason of the fact any person is or was our officer or director. Notwithstanding this indemnity, a director shall be liable to the extent provided by law for any liability incurred by him by his own fraud or willful default.
 
 
51

 
 
Our bylaws provide that we will indemnify our directors and officers to the fullest extent not prohibited by Nevada law. Our bylaws provide that we will advance all expenses incurred to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was our director or officer, or is or was serving at our request as a director or executive officer of another company, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request. This advance of expenses is to be made upon receipt of an undertaking by or on behalf of such person to repay said amounts should it be ultimately determined that the perso n was not entitled to be indemnified under our bylaws or otherwise.

Principal Stockholders
 
The following table sets forth certain information regarding beneficial ownership of our Common Stock as of January 28, 2011 by (i) each person (or group of affiliated persons) who is known by us to own more than five percent (5%) of the outstanding shares of our Common Stock, (ii) each director, executive officer and director nominee, and (iii) all of our directors, executive officers and director nominees as a group. As of January 28, 2011, after the closing of the Share Exchange, we had 11,057,450 shares of Common Stock issued and outstanding.
 
Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. Unless otherwise noted, the principal address of each of the stockholders, directors and officers listed below is 200 Taozhu Road, Wuxi Town, Qiyang Count, Yongzhou City, Hunan Province, China. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock that such person has the right to acquire within 60 days of January 28, 2011. For purposes of computing the percentage of outstanding shares of our common stock held by each person or group of persons named above, any shares that such person or persons has the right to acquire within 60 days of Janu ary 28, 2011 is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership.
 
Name of Beneficial Owner
 
Amount
(number
of shares)
   
Percentage of Outstanding Shares of Common Stock
* 
             
Excel Deal International Limited(1)
   
6,296,480
     
56.94
%
Tiaping Zhou(2)
   
0
     
0
%
Geniusland International Capital Limited(3)
   
990,840
     
8.96
%
Suzhou Sike Zeshang Investments (4)
   
840,817
     
7.60
%
 
* Based upon 11,057,450 shares of Common Stock issued and outstanding after the closing of the Share Exchange on January 28, 2011.
 
(1) Excel Deal International Limited is owned by Lucy Xia (subject to the Call Option Agreement described in Footnote 2 and the discussion below).
 
(2) Taiping Zhou was appointed chairman of our board of directors and our chief executive officer at the closing of the Share Exchange. Pursuant to a call option agreement, Mr. Taiping Zhou, our Chairman and Chief Executive Officer will have an option, subject to certain vesting periods, to acquire from Ms. Lucy Xia, the current sole shareholder of Excel Deal International Limited, up to 100% over a three year vesting period, of Excel Deal International Limited equity, which, upon exercise, would entitle Mr. Zhou to own 100% of the equity of Excel Deal International Limited. Accordingly, upon exercise of such option, Mr. Zhou will indirectly (through his ownership of Excel Deal International Limited) own and control 6,296,480 shares of our Common Stock.

(3) Geniusland International Capital Limited has an address of P.O. Box 957, Offshore Incorporations Center, Road Town, Tortola, British Virgin Islands. Shike Zhu has beneficial ownership and voting and dispositive control of the shares.
 
 
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(4) Suzhou Sike Zeshang Investments has an address of Team 4, Shuangyang Village, Zhenze Town, Wujing, Jiangsu, China. Yuhua Chen has beneficial ownership and voting and dispositive control of the shares.
 
Call Option Agreement

The sole shareholder of Excel Deal International Limited has entered into a certain Call Option Agreement whereby the sole shareholder has agreed to transfer their interests to another beneficiary, subject to a three year vesting period.

Ms. Lucy Xia, the sole shareholder of Excel Deal International Limited, entered into a Call Option Agreement with Taiping Zhou dated January 15, 2011. Pursuant to the Call Option Agreement, Ms. Xia has granted to Mr. Zhou an option to acquire all of the shares of Excel Deal International Limited over the next three years with the following milestones:

-  
34% of the shares shall vest on January 30, 2012;
-  
33% of the shares shall vest on January 30, 2013; and
-  
34% of the Shares shall vest on January 30, 2014.

A copy of the Call Option Agreement between Lucy Xia and Taiping Zhou is attached hereto as Exhibit 10.3.
 
Item 3.02 Unregistered Sales of Equity Securities

In connection with the Exchange Agreement, January 28, 2011 we issued an aggregate of 9,200,000 shares of our Common Stock to the Grain Wealth Shareholders. We received in exchange from the Grain Wealth Shareholders 10,000 shares of Grain Wealth, representing 100% of the issued and outstanding shares of Grain Wealth. As a result of the Share Exchange, we are now the holding company of Xiangmei Food, the operating subsidiary of Grain Wealth with a limited liability incorporated in the PRC and engaged in the sale and production of frozen foods in China. The issuance of such securities was exempt from registration pursuant to Section 4(2) of, and Regulation D and/or Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”).
 
 As more fully described in Item 1.01 above, on January 28, 2011, simultaneous with the Share Exchange, we consummated a Private Placement for the issuance and sale of shares of Common Stock, consisting of an aggregate of 1,057,450 shares of Common Stock for aggregate gross proceeds of approximately $3.8 million. The issuance of such securities was exempt from registration pursuant to Section 4(2) of, and Regulation D and/or Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”)
 
As consideration pursuant to a consulting agreement with EduChina-US International Limited, we issued a warrant for the purchase of 105,745 shares of our Common Stock at an exercise price of $4.29. The term of such Warrant commenced on January 28, 2011 and expires at 6:00 p.m., Eastern Time, on January 28, 2016. The issuance of the Shares and the placement agent warrants pursuant to the Private Placement were exempt from registration pursuant to Section 4(2) of, and Regulation D and/or Regulation S promulgated under the Securities Act.

As compensation for legal services rendered in connection with the Exchange Agreement, we issued an aggregate of 200,000 shares of our Common Stock to Anslow & Jaclin. The issuance of such securities was exempt from registration pursuant to Section 4(2) of, and Regulation D and/or Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

As compensation for services rendered in connection with the Exchange Agreement, we issued an aggregate of 300,000 shares of our Common Stock to HHM International, Inc. The issuance of such securities was exempt from registration pursuant to Section 4(2) of, and Regulation D and/or Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”).
 
 
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Item 4.01   Changes in Registrant’s Certifying Accountant

On January 28, 2011, our board of directors (the “Board of Directors”) dismissed Patrizio & Zhao, LLC (“Patrizio”) as our independent registered public accounting firm, and engaged a new independent registered public accounting firm, Friedman, LLP, Certified Public Accountants, (“Friedman”), to serve as the Company’s independent auditor. Pursuant to Item 304(a) of Regulation S-K under the Securities Act of 1933, as amended, and under the Securities Exchange Act of 1934, as amended, the Company reports as follows:
 
(a)
(i) 
Patrizio was dismissed as our independent registered public accounting firm effective on January 28, 2011;
 
(ii)
for the two most recent fiscal years ended June 30, 2010, Patrizio’s report on the financial statements did not contain any adverse opinions or disclaimers of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles, other than for a going concern;
  
(iii)
the dismissal of Patrizio and engagement of Friedman were approved by our Company’s Board of Directors;
 
(iv)
we did not have any disagreements with Patrizio relating to any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure for the audited financials for the fiscal years ended June 30, 2010 and 2009, and subsequent interim periods ended September 30, 2010 and December 31, 2010 and through the date of dismissal, which disagreements, if not resolved to the satisfaction of Patrizio, would have caused it to make reference to the subject matter of the disagreements in connection with its reports; and
 
(v)
during our fiscal years ended June 30, 2010 and 2009, and subsequent interim periods ended September 30, 2010 and December 31, 2010 and through the date of dismissal, the Company did not experience any reportable events.
(b)
 (i)
On January 28, 2011, we engaged Friedman LLP (“Friedman”) to serve as our independent registered public accounting firm
 
(ii)
prior to engaging Friedman, we had not consulted Friedman regarding the application of accounting principles to a specified transaction, completed or proposed, the type of audit opinion that might be rendered on its financial statements or a reportable event, nor did we consult with Friedman regarding any disagreements with its prior auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the prior auditor, would have caused it to make a reference to the subject matter of the disagreements in connection with its reports; and
(c)
(iii)
we did not have any disagreements with Friedman, and therefore did not discuss any past disagreements with Friedman.
 
 
We requested that Patrizio furnish us with a letter addressed to the SEC stating whether it agrees with the statements made by us regarding Patrizio. That letter is attached hereto as Exhibit 16.1.
 
Item 5.01 Changes In Control of the Registrant
 
At the closing of the Share Exchange, we acquired 10,000 ordinary shares of Grain Wealth, representing all of the issued and outstanding shares of Grain Wealth, in exchange for the issuance in the aggregate of 9,200,000 shares of our Common Stock which represents approximately 92.00% of our shares of Common Stock issued and outstanding (without giving effect to the Private Placement).
 
 
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Other than the transactions and agreements disclosed in this Form 8-K, we know of no other arrangements which may result in a change in control.
 
Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.
 
As of the closing of the Share Exchange, Mr. Zengxing Chen resigned as the Chairman of the Board of Directors, Chief Executive Officer, Chief Financial Officer, President and Secretary, effective immediately. Our Board of Directors appointed Taiping Zhou to serve as President and Chief Executive Officer effective immediately at the closing of the Share Exchange.
 
Prior to the consummation of the Share Exchange, our Board of Directors was comprised of one director, Mr. Chen. Effective at the closing of the Share Exchange, Mr. Chen resigned from his position as Chairman and appointed Mr. Taiping Zhou to serve as Chairman of our Board and appointed Xiaohui Wu and Jiling Zhou as members of the Board of Directors.

Set forth below is information regarding our current directors, executive officers and director nominee.

Name
Age
Position
Taiping Zhou
58
Chairman of the Board of Directors and President and Chief Executive Officer
Xiaohui Wu
38
Director
Jiling Zhou
29
Director
 
Taiping Zhou, Chairman of the Board, President and Chief Executive Officer
Mr. Zhou has been a self-employed businessman since 1981. In 2004, he founded Xiangmei Food and has been the Company’s Chairman since inception. He has earned many honors, including the Deputy to the People’s Congress of Yongzhou National Outstanding Farmer and the Outstanding Entrepreneur of Yongzhou. He is currently pursuing an EMBA degree at Tsinghua University of China.

Xiaohui Wu, Director
From 1996 to 2006, Mr. Wu worked for the Ministry of Foreign Affairs of China. In 2006, he began working with Genesis Equity Partners, LLC and Geniusland International Capital Limited to consult with companies looking to go public on US exchanges. He has successfully advised CWS and CJJD in their listing on the Nasdaq marketplace.

Jiling Zhou, Director
Mr. Zhou is the son of Taiping Zhou and has worked for Xiangmei Food since 2004. Between 2004 and 2008, Mr. Zhou learned the business by working as a factory worker, workshop supervisor, manager of the purchase department and vice general manager of the Company. In December 2008, he became a President and executive officer of Xiangmei Food. He holds a bachelor’s degree and is currently pursuing an MBA degree.

Family Relationships

Taiping Zhou and Jiling Zhou are father and son.

Employment Agreements

We have entered into employment agreements with both Taiping Zhou and Jiling Zhao. A copy of their employment agreements are attached hereto as Exhibits 10.9 and 10.10, respectively.

Xiaohui Wu has not entered into an employment agreement as of today's date, we are currently negotiating the terms of his empolyment.
 
 
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Board of Directors

All directors hold office until the next annual meeting of shareholders and until their successors have been duly elected and qualified. Officers are elected by and serve at the discretion of the Board.
 
 Our directors are reimbursed for expenses incurred by them in connection with attending Board meetings, but they do not receive any other compensation for serving on the Board.

Executive Compensation
 
Our officer and director have not received any cash remuneration since inception.

The following table sets forth all cash compensation paid by us, as well as certain other compensation paid or accrued in 2010, to each of the following named executive officers.
 
Summary Compensation of Named Executive Officers
 
Name and Principal Position
   
Fiscal
Year
   
Salary
($)
   
Bonus
($)
   
Option
Awards
($)
   
All Other
Compensation ($)
   
Total
($)
 
                                       
Taiping Zhou,                                      
(President, Chief Executive Officer, Chief Financial Officer)
   
2010
     
21,454
     
0
     
0
     
0
     
21,454
 
 
                                               
Xiaohui Wu,                                                
(Director)
   
2010
     
10,000
     
0
     
0
     
0
     
10,000
 
 
                                               
Jiling Zhou,                                                
(Director)
   
2010
     
12,727
     
0
     
0
     
0
     
12,727
 
 
Outstanding Equity Awards at the End of the Fiscal Year

We do not have any equity compensation plans and therefore no equity awards are outstanding as of our year fiscal year end.
 
Director Compensation
 
Our directors are reimbursed for expenses incurred by them in connection with attending Board of Directors’ meetings. They do not receive any other compensation for serving on the Board of Directors, but may participate in our incentive compensation program, once such a program is established.
  
Director Independence and Board Committees

We do not have any independent directors and our board of directors is in the process of searching for suitable candidates. Our board of directors does not have any committees, as companies whose securities are not traded on a national exchange are not required to have board committees. However, we do anticipate that in the future we will appoint independent directors on our board and expect to form the appropriate board committees.
 
Item 5.06 Change in Shell Company Status.
 
As described in Item 1.01 of this Form 8-K, on January 28, 2011, we entered into the Exchange Agreement and consummated the Share Exchange, pursuant to which we acquired all of the issued and outstanding ordinary shares of Grain Wealth in exchange for the issuance of 9,200,000 shares of Common Stock to the Grain Wealth Shareholders. As a result of the Share Exchange, Xiangmei Food, the operating subsidiary of Grain Wealth, became our wholly-owned operating subsidiary and we are no longer a shell company as that term is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended.
 
 
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Item 9.01 Financial Statements and Exhibits.
 
Reference is made to the reverse take-over transaction under the Exchange Agreement, as described in Item 1.01. As a result of the closing of the Share Exchange, our primary operations consist of the business and operations of Xiangmei Food, which are conducted by Grain Wealth. In the Share Exchange, we are the accounting acquiree and Grain Wealth is the accounting acquiror. Accordingly, we are presenting the financial statements of Grain Wealth Limited and subsidiaries.
 
 
(a) 
Financial statements of business acquired.
 
 
(i)
Audited consolidated financial statements of Grain Wealth Limited and subsidiaries as of and for the years ended June 30, 2010, and 2009 and related notes thereto are attached hereto as Exhibit 99.1. 
 
 
(ii)
Unaudited condensed consolidated financial statements of Grain Wealth Limited and subsidiaries as of and for the three months ended September 30, 2010 and 2009, and related notes thereto are attached hereto as Exhibit 99.2.
  
 
(b)
Pro forma financial information.
 
Unaudited pro forma condensed consolidated financial statements and related notes thereto are attached hereto as Exhibit 99.3.
     
 
(c)
Shell company transactions.
 
None.
 
 
(d) 
Exhibits.
 
 
Exhibit No.
 
Description
 
2.1
 
Share Exchange Agreement dated January 28, 2011
 
4.1
 
Warrant issued to EduChina-US
 
10.1
 
Securities Purchase Agreement dated January 28, 2011 
 
10.2
 
Call Option Agreement between Lucy Xia and Taiping Zhou 
 
10.3
 
Hunan Xiangmei Food Co., Ltd. Form of Entrust Planting Agreement with local farmers
 
10.4
 
Hunan Xiangmei Food Co., Ltd. Form of Glutinous Rice Order and Planting Agreement with Suppliers
 
10.5
 
Hunan Xiangmei Food Co., Ltd. Form of Raw Material Suppliers Agreement
 
10.6
 
Agricultural Products Purchase Agreement between Hunan Xiangmei Food and Henan Yunhe Cailanzi
 
10.7
 
Property Lease Agreement
 
10.8
 
Investment Agreement between Hunan Xiangmei Food Co., Ltd. and Hunan Qiyang Industrial Zone Management Committee
 
10.9
 
Employment Agreement with Taiping Zhou
 
10.10
 
Employment Agreement with Jiling Zhou
  10.11   Voting Rights Proxy
  10.12   Equity Pledge Agreement
  10.13   Operating Agreement
  10.14   Option Agreement
  10.15   Consulting Services Agreement
 
16.1
 
Letter from Patrizio & Zhao, LLC, dated January 28, 2011.
 
99.1
 
Audited consolidated financial statements of Grain Wealth Limited and its subsidiaries as of June 30, 2010 and 2009.
 
99.2
 
Unaudited condensed consolidated financial statements of Grain Wealth Limited and its subsidiaries as of September 30, 2010 and 2009.
 
99.3
 
Unaudited pro forma financial statements and related notes thereto.

 
 
57

 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

NewEra Technology Development Co., Limited
   
By:
/s/ Zhou Taiping
Name:
Zhou Taiping
Title:
Chief Executive Officer
Dated:
February 3, 2011
 
 
 

 
58

EX-2.1 2 f8k020111ex2i_neweratech.htm SHARE EXCHANGE AGREEMENT f8k020111ex2i_neweratech.htm
Exhibit 2.1
 

 
SHARE EXCHANGE AGREEMENT
 
by and among
 
NEWERA TECHNOLOGY DEVELOPMENT CO., LTD.,
a Nevada Company

and

GRAIN WEALTH LIMITED,
a British Virgin Islands Company

and

THE SHAREHOLDERS OF GRAIN WEALTH LIMITED
LISTED ON EXHIBIT A

 
Dated as of January 28, 2011
 
 
1

 
 
SHARE EXCHANGE AGREEMENT

THIS SHARE EXCHANGE AGREEMENT (this “Agreement”), dated as of January 28, 2011, is by and among NewEra Technology Development Co., Ltd., a Nevada corporation (“NewEra”), Grain Wealth Limited, a British Virgin Islands company (“Grain Wealth”), and the shareholders of Grain Wealth identified on Exhibit A hereto (together referred to herein as the “Grain Wealth Shareholders,” each a “Grain Wealth Shareholder”). Each party to this Agreement is individually referred to herein as a “Party” and collectively, as the “Parties.”
 
PREMISES

WHEREAS, NewEra is a publicly held corporation organized under the laws of the state of Nevada with no significant operations;

WHEREAS,  Chen Zhengxing (the “Principal Shareholder”) is currently the Principal Shareholder of NewEra owning, directly or indirectly, 1,000,000 shares of NewEra Common Stock (as defined in Section 2.2 below), representing approximately 100% of the issued and outstanding NewEra Common Stock as of the date hereof;

WHEREAS, Grain Wealth is a limited liability company organized under the laws of the British Virgin Islands with 10,000 shares of common stock issued and outstanding (the “Grain Wealth Shares”), all of which are owned, directly or indirectly, by Grain Wealth Shareholders set forth on Exhibit A.  Grain Wealth owns 100% of the issued and outstanding capital stock of Qiyang County Xiangmei Food Technical Research and Development Co., Ltd. (“Xiangmei Food”), a wholly foreign owned enterprise with limited liability incorporated under the People’s Rep ublic of China (the “PRC”).  Xiangmei Food has entered into control agreements with all of the owners of Hunan Xiangmei Co., Ltd. (“Hunan Xiangmei”), which agreements allow Xiangmei Food to control Hunan Xiangmei;

WHEREAS, NewEra agrees to acquire 100% of the issued and outstanding capital stock of Grain Wealth in exchange for the issuance of 9,200,000 shares of NewEra Common Stock (the “Exchange”), representing approximately 92% of the shares outstanding of NewEra at the Closing of the Share Exchange and each Grain Wealth Shareholder agrees to exchange its shares of Grain Wealth on the terms described herein; and
 
WHEREAS, such Exchange shall close simultaneously with an offering (the “Offering”) pursuant to a Securities Purchase Agreement (the “Purchase Agreement”) by and among NewEra and named Investors (the “Investors”) therein in connection with a private placement of approximately $3,782,393 (the “Offering Amount”).

WHEREAS, the parties hereto intend for this transaction to constitute a tax-free reorganization pursuant to the provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
 

 
AGREEMENT
 

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and intending to be legally bound hereby, the Parties agree as follows:
 
 
2

 
 
ARTICLE I
REPRESENTATIONS AND WARRANTIES
OF GRAIN WEALTH

As an inducement to, and to obtain the reliance of, NewEra, and except as set forth in the corresponding disclosure schedules delivered by Grain Wealth in connection with this Agreement (the “Grain Wealth Schedules”), Grain Wealth represents and warrants, as of the date hereof and as of the Closing Date (defined in Section 4.2”), as defined below, as follows:
 

1.1 Organization. Grain Wealth is a corporation duly organized, validly existing, and in good standing under the laws of British Virgin Islands and has the corporate power and is duly authorized under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in all material respects as it is now being conducted.  Included in Schedule 1.1 of the Grain Wealth Schedules are complete and correct copies of the articles of association (such documents, or other equivalent corporate organizational documents, the “Organizational Documents”) of Grain Wealth as in effect on the date hereof. The execution and delivery of this Agreement does not, and the consummation of the Transactions (as defined in Section 1.4) will not, violate any provision of Grain Wealth’s Organizational Documents. Grain Wealth has full power, authority, and legal right and has taken all action required by law, its Organizational Documents, or otherwise to authorize the execution and delivery of this Agreement and to consummate the Transactions.

1.2 Capitalization.  Grain Wealth has authorized capital stock consisting of 50,000 ordinary shares with no par value (the “Grain Wealth Common Stock”), all of which are currently issued and outstanding, and have not been or, with respect to Grain Wealth Shares, will not be transferred in violation of any rights of third parties. The Grain Wealth Shares are not subject to any preemptive or subscription right, any voting trust agreement or other contract, agreement, arrangement, option, warrant, call, commitment or other right of any character obligating or entitli ng Grain Wealth to issue, sell, redeem or purchase any of its securities, and there is no outstanding security of any kind convertible into or exchangeable for Grain Wealth Common Stock. All of the Grain Wealth Shares are owned of record and beneficially by the Grain Wealth Shareholders free and clear of any liens, claims, encumbrances, or restrictions of any kind.
 
1.3 Subsidiaries and Predecessor Corporations. Except as set forth in Schedule 1.3 of the Grain Wealth Schedules, Grain Wealth does not have any predecessor corporation(s) or subsidiaries, and does not own, beneficially or of record, any shares of any other corporation.  Hereinafter, the term “Grain Wealth” also includes those subsidiaries set forth in Schedule 1.3 of the Grain Wealth Schedules.
 
1.4 Authority; Execution and Delivery; Enforceability of Agreement. Grain Wealth has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby (the “Transactions”). The execution and delivery by Grain Wealth of this Agreement and the consummation by Grain Wealth of the Transactions have been duly authorized and approved by the board of directors of Grain Wealth and no other corporate proceedings on the part of Grain Wealth are necessary to authorize this Agreement and the Transactions. When execu ted and delivered, this Agreement will be enforceable against Grain Wealth in accordance with its terms.
 
1.5 No Conflict with Other Instruments. The execution of this Agreement and the consummation of the Transactions will not result in the material breach of any term or provision of, constitute a default under, or terminate, accelerate or modify the terms of, any indenture, mortgage, deed of trust, or other material agreement, or instrument to which Grain Wealth is a party or to which any of its assets, properties or operations are subject.
 
 
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1.6 Taxes.
 
(a) Grain Wealth has timely filed, or has caused to be timely filed on its behalf, all tax returns required to be filed by it, and all such tax returns are true, complete and accurate, except to the extent any failure to file or any inaccuracies in any filed tax returns, individually or in the aggregate, have not had and would not reasonably be expected to have a material adverse effect on Grain Wealth. All taxes shown to be due on such tax returns, or otherwise owed, have been timely paid, except to the extent that any failure to pay, individually or in the aggregate, has not had and would not reasonably be expected to have a material adverse effect on Grain Wealth.  There are no unpaid taxes in any ma terial amount claimed to be due by the taxing authority of any jurisdiction, and the officers of Grain Wealth know of no basis for any such claim.
 
(b) The Grain Wealth Financial Statements (as defined in Section 1.15 hereof) reflect an adequate reserve for all taxes payable by Grain Wealth and its Subsidiaries (in addition to any reserve for deferred taxes to reflect timing differences between book and tax items) for all taxable periods and portions thereof through the date of such financial statements. No deficiency with respect to any taxes has been proposed, asserted or assessed against Grain Wealth or any of its subsidiaries, and no requests for waivers of the time to assess any such taxes are pending, except to the extent any such deficiency or request for waiver, individually or in the a ggregate, has not had and would not reasonably be expected to have a material adverse effect on Grain Wealth.
 
1.7           Absence of Certain Changes or Events. Since the date of the most recent Grain Wealth Balance Sheet (defined in Section 1.15):
 
(a)  There has not been any material adverse change in the business, operations, properties, assets or condition (financial or otherwise) of Grain Wealth;
 
(b)  Except as required by this Agreement, Grain Wealth has not (i) amended its Organizational Documents; (ii) declared or made, or agreed to declare or make any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii) made any material change in its method of management, operation or accounting; (iv) entered into any transactions or agreements; or (v) made any increase in or adoption of any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement, made to, for or with its officers, directors, or employees; and
 
(c)  Except as required by this Agreement, Grain Wealth has not (i) granted or agreed to grant any options, warrants, or other rights for its stock, bonds, or other corporate securities calling for the issuance thereof; (ii) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent); (iii) sold or transferred, or agreed to sell or transfer, any of its assets, properties, or rights, or canceled, or agreed to cancel, any debts or claims; or (iv) issued, delivered or agreed to issue or deliver, any stocks, bonds or other corporate securities including debentures (whether authorized and unissued or held as treasury stock).
 
1.8   Litigation. There is no claim, dispute, action, suit, proceeding or investigation pending or to the knowledge of Grain Wealth after reasonable investigation, threatened by or against Grain Wealth or any of its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind. Grain Wealth does not have any knowledge of any material default on its part with respect to any judgment, order, injunction, decree, award, rule, or regulation of any court, arbitrator, or governmental agency or instrumentality or of any circumstances which, after reasona ble investigation, would result in the discovery of such a default.
 
 
4

 
 
1.9  Compliance with Applicable Laws. To the best of its knowledge, Grain Wealth has conducted its business and operations in compliance with all applicable laws, including those relating to occupational health and safety and the environment, except for instances of noncompliance that, individually and in the aggregate, have not had and would not reasonably be expected to have a material adverse effect on Grain Wealth.  Grain Wealth has not received any written communication during the past two years from a governmental entity that alleges that Grain Wealth is not in compliance in any material respect with any applicable law.
 
1.10 Brokers’ Fees. Except as set forth in Schedule 1.10, no broker, investment banker, financial advisor or other person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Grain Wealth.
 
1.11 Contracts.
 
(a) All “material” contracts, agreements, franchises, license agreements, debt instruments or other commitments to which Grain Wealth is a party or by which it or any of its assets, products, technology, or properties are bound other than those incurred in the ordinary course of business are set forth in Schedule 1.11 of the Grain Wealth Schedules. A “material” contract, agreement, franchise, license agreement, debt instrument or commitment is one which would be required to be disclosed in connection with a current report on Form 8-K by Grain Wealth if Grain Wealth were a registrant subject to Rule 13a-1 and Rule 13a-11 of th e Securities Exchange Act of 1934, as amended (the “Exchange Act”);
 
(b) All contracts, agreements, franchises, license agreements, and other commitments to which Grain Wealth is a party or by which its properties are bound and which are material to the operations of Grain Wealth taken as a whole are valid and enforceable by Grain Wealth in all respects, except as limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefore may be brought (collectively, “Bank ruptcy and Equity Exceptions”); and
 
(c) Except as included or described in Schedule 1.11 of the Grain Wealth Schedules, Grain Wealth is not a party to any oral or written (i) contract for the employment of any officer or employee; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension benefit or retirement plan, (iii) agreement, contract, or indenture relating to the borrowing of money, (iv) guaranty of any obligation; (vi) collective bargaining agreement; or (vii) agreement with any present or former officer or director of Grain Wealth.
 
1.12  Title to Properties. Except as disclosed in Schedule 1.12, Grain Wealth does not own any real property.
 
1.13 Intellectual Property.
 
Except as disclosed in Schedule 1.13, Grain Wealth does not own, nor is validly licensed nor otherwise has the right to use, any Grain Wealth property rights. No claims are pending or, to the knowledge of Grain Wealth, threatened that Grain Wealth is infringing or otherwise adversely affecting the rights of any person with regard to any Intellectual Property Right.
 
1.14  Insurance. Except as disclosed in Schedule 1.14, Grain Wealth does not currently maintain any form of insurance.
 
 
5

 
 
1.15  Financial Statements.
 
(a) Included in Schedule 1.15 of the Grain Wealth Schedules are the audited balance sheets of Grain Wealth, as of June 30, 2010 (the “Grain Wealth Balance Sheets”) and the related audited statements of operations, stockholders’ equity and cash flows for the fiscal years ended June 30, 2010 and June 30, 2009, together with the notes to such financial statements and the opinion of Friedman LLP, independent certified public accountants (the financial statements referred to herein collectively, the “Grain Wea lth Financial Statements”).
 
(b) The Grain Wealth Financial Statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) consistently applied throughout the periods involved. The Grain Wealth Balance Sheets are true and accurate and fairly present, as of their respective dates, the financial condition of Grain Wealth. As of the date of the Grain Wealth Balance Sheets, except as and to the extent reflected or reserved against therein, Grain Wealth had no liabilities or obligations (absolute or contingent) which should be reflected in the Grain Wealth Balance Sheets or the notes thereto prepared in accordance with GAAP, and all assets reflected therein are properly reported and fa irly present the value of the assets of Grain Wealth, in accordance with GAAP. The statements of operations, stockholders’ equity and cash flows included in the Grain Wealth Financial Statements reflect fairly the information required to be set forth therein by GAAP.
 
(c) Grain Wealth has no liabilities with respect to the payment of any federal, state, county, local or other taxes (including any deficiencies, interest or penalties), except for taxes accrued but not yet due and payable.
 
(d) Grain Wealth has timely filed all state, federal or local income and/or franchise tax returns required to be filed by it from inception to the date hereof.  Each such income tax return reflects the taxes due for the period covered thereby, except for amounts which, in the aggregate, are immaterial.
 
(e) All of Grain Wealth’s assets are reflected on the Grain Wealth Financial Statements, and, except as set forth in the Grain Wealth Schedules or the Grain Wealth Financial Statements, Grain Wealth has no material liabilities, direct or indirect, matured or unmatured, contingent or otherwise.
 
1.16 Transactions with Affiliates and Employees.
 
Except as set forth in Schedule 1.16 of the Grain Wealth Schedules, none of the officers or directors of Grain Wealth and, to the knowledge of Grain Wealth, none of the employees of Grain Wealth is presently a party to any transaction with Grain Wealth or any of its subsidiaries (other than for services as employees, officers and directors), including any Contract or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of Grain Wealth, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.
 
1.17 Investment Company.
 
Grain Wealth is not, and is not an affiliate of, and immediately following the Closing will not have become, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
 
1.18 Foreign Corrupt Practices.
 
Neither Grain Wealth, nor, to Grain Wealth’s knowledge, any director, officer, agent, employee or other person acting on behalf of Grain Wealth, in the course of its actions for, or on behalf of, Grain Wealth (a) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (c) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (d) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.
 
 
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1.19      Sarbanes-Oxley; Disclose Controls. Grain Wealth will be in compliance in all material respects with all of the provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it after the Exchange. Grain Wealth shall establish disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) for Grain Wealth and design such disclosure controls and procedure to ensure that material information relating to Grain Wealth is made known to the certifying officers by others within those entities.
 
1.20           Approval of Agreement. The board of directors of Grain Wealth has authorized the execution and delivery of this Agreement by Grain Wealth and has approved this Agreement and the Transactions.
 
1.21           Valid Obligation. This Agreement and all agreements and other documents executed by Grain Wealth in connection herewith constitute valid and binding obligations of Grain Wealth, enforceable in accordance with their respective terms, except as may be limited by Bankruptcy and Equity Exceptions.
 

ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF NEWERA

As an inducement to, and to obtain the reliance of Grain Wealth, and except as set forth in the corresponding disclosure schedules delivered by NewEra in connection with this Agreement (the “NewEra Schedules”), NewEra represents and warrants, as of the date hereof and as of the Closing Date (defined in Section 4.2 ”), as defined below, as follows:
 
2.1           Organization
 
NewEra is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada and has the corporate power and is duly authorized under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in all material respects as it is now being conducted.  Included in Schedule 2.1 of the NewEra Disclosure Schedules are complete and correct copies of the Organizational Documents of NewEra as in effect on the date hereof. The execution and delivery of this Agreement does not, and the consummation of the Transactions will not, violate any provision of NewEra’s Organizational Documents. NewEra has full power, authority, and legal right and has taken all action required by law, i ts Organizational Documents, or otherwise to authorize the execution and delivery of this Agreement and to consummate the Transactions.
 
2.2           Capitalization.  The authorized capital stock of NewEra consists of 10,000,000 shares of common stock, par value $0.001 per share (“NewEra Common Stock”), of which 1,000,000 shares are issued and outstanding immediately prior to the consummation of the Transaction, 0 shares of which have been registered for resale with the U.S. Securities and Exchange Commission (“SEC”) pursuant to an effective registration statement.  All issued and outstanding shares of NewEra Common Stock are legally issued, fully paid, non-assessable and no t issued in violation of the preemptive or other rights of any person.
 
2.3   Subsidiaries and Predecessor Corporations.  Except as set forth in Schedule 2.3 of the NewEra Schedules, NewEra does not have any predecessor corporation(s), no subsidiaries, and does not own, beneficially or of record, any shares of any other corporation.
 
 
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2.4      Financial Statements.
 
(a)  Copies of (a) the audited balance sheet of NewEra as of June 30, 2010 and the related audited statements of operations, stockholders’ equity and cash flows for the fiscal year ended June 30, 2010, together with the notes to such statements and the opinion of Patrizio & Zhao, LLP, independent certified public accountants, and (b) the unaudited balance sheet of NewEra as of December 31, 2010 (together with the balance sheets of NewEra as of December 31, 2010, the “NewEra Balance Sheets”) and the related unaudited statements of operations, stockholders’ equity and cash flows for the six-month period ended December 31, 2010 (the financial statements referred to in (a) and (b) collectively, the “NewEra Financial Statements”) have been filed with the SEC.
 
(b)  The NewEra Financial Statements have been prepared in accordance with GAAP consistently applied throughout the periods involved. The NewEra Balance Sheets are true and accurate and fairly present as of their respective dates the financial condition of NewEra.  As of the respective dates of the NewEra Balance Sheets, except as and to the extent reflected or reserved against therein, NewEra had no liabilities or obligations (absolute or contingent) which should be reflected in the NewEra Balance Sheets or the notes thereto prepared in accordance with GAAP, and all assets reflected therein are properly reported and fairly present the value of the assets of NewEra, in accordance with GAAP. The statements of operations, stockholders’ equity and cash flows i n the NewEra Financial Statements reflect fairly the information required to be set forth therein by GAAP.
 
(c)  NewEra has no liabilities with respect to the payment of any federal, state, county, local or other taxes (including any deficiencies, interest or penalties), except for taxes accrued but not yet due and payable.
 
(d)  NewEra has timely filed all state, federal or local income and/or franchise tax returns required to be filed by it from inception to the date hereof.  Each such income tax return reflects the taxes due for the period covered thereby, except for amounts which, in the aggregate, are immaterial.
 
(e)  All of NewEra’s assets are reflected on the NewEra Financial Statements, and, except as set forth in the NewEra Schedules or the NewEra Financial Statements, NewEra has no material liabilities, direct or indirect, matured or unmatured, contingent or otherwise.
 
(f)   NewEra shall have no liabilities on the Closing Date (as defined in Section 4.2).
 
2.5       Information.  The information concerning NewEra set forth in this Agreement and the NewEra Schedules is complete and accurate in all material respects and does not contain any untrue statements of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading.
 
2.6      Options or Warrants.  There are no existing options, warrants, calls, or commitments of any character relating to the authorized and unissued capital stock of NewEra (including, but not limited to, the NewEra Common Stock).
 
2.7    Absence of Certain Changes or Events.  Since the date of the most recent NewEra Balance Sheet:
 
(a)  There has not been any material adverse change in the business, operations, properties, assets or condition (financial or otherwise) of NewEra;
 
 
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(b)  Except as required by this Agreement, NewEra has not (i) amended its Organizational Documents; (ii) declared or made, or agreed to declare or make any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii) made any material change in its method of management, operation or accounting; (iv) entered into any transactions or agreements; or (v) made any increase in or adoption of any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement, made to, for or with its officers, directors, or employees; and
 
(c)  Except as required by this Agreement, NewEra has not (i) granted or agreed to grant any options, warrants, or other rights for its stock, bonds, or other corporate securities calling for the issuance thereof; (ii) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent); (iii) sold or transferred, or agreed to sell or transfer, any of its assets, properties, or rights, or canceled, or agreed to cancel, any debts or claims; or (iv) issued, delivered or agreed to issue or deliver, any stock, bonds or other corporate securities including debentures (whether authorized and unissued or held as treasury stock).
 
           2.8   Litigation and Proceedings.  There are no actions, suits, proceedings or investigations pending or, to the knowledge of NewEra after reasonable investigation, threatened by or against NewEra or affecting NewEra or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind.  NewEra does not have any knowledge of any default on its part with respect to any judgment, order, writ, injunction, decree, award, rule or regulation of any court, arbitrator, or governmental agency or instrumenta lity or any circumstance which after reasonable investigation would result in the discovery of such default.
 
2.9       Contracts.  Except as set forth in Schedule 2.9 of the NewEra Schedules, NewEra is not a party to, and neither it nor any of its assets, products, technology and properties are bound by:
 
(a) any contract, agreement, franchise, license, debt instrument, or other commitment, whether such agreement is in writing or oral;
 
(b) any charter or other corporate restriction, except as set forth in the Organizational Documents of NewEra;
 
(c) any judgment, order, writ,  injunction, decree, or award; or
 
(d) any oral or written (i) contract for the employment of any officer or employee; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension benefit or retirement plan, (iii) agreement, contract, or indenture relating to the borrowing of money, (iv) guaranty of any obligation, (vi) collective bargaining agreement; or (vii) agreement with any present or former officer or director of NewEra.
 
2.10   No Conflict With Other Instruments.  The execution of this Agreement and the consummation of the Transactions will not result in the breach of any term or provision of, constitute a default under, or terminate, accelerate or modify the terms of, any indenture, mortgage, deed of trust, or other material agreement or instrument to which NewEra is a party or to which any of its assets, properties or operations are subject.
 
2.11       Compliance With Laws and Regulations.  To the best of its knowledge, NewEra has complied with all applicable statutes and regulations of any federal, state, or other applicable governmental entity or agency thereof.  This compliance includes, but is not limited to, the filing of all reports to date with federal and state securities authorities.
 
 
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2.12     Approval of Agreement.  The board of directors of NewEra has authorized the execution and delivery of this Agreement by NewEra and has approved this Agreement and the Transactions.
 
2.13     Material Transactions or Affiliations.  Except for this Agreement and the Contemplated Transactions, there exists no contract, agreement or arrangement between NewEra and any predecessor and any person who was at the time of such contract, agreement or arrangement an officer, director, or person owning of record or known by NewEra to own beneficially, five percent (5%) or more of the issued and outstanding NewEra Common Stock and which is to be performed in whole or in part after the date hereof or was entered into not more than three (3) years prior to the date hereof.  Neither any officer, director, nor five percent (5%) stockho lder of NewEra has, or has had since inception of NewEra, any known interest, direct or indirect, in any such transaction with NewEra which was material to the business of NewEra.  NewEra has no commitment, whether written or oral, to lend any funds to, borrow any money from, or enter into any other transaction with, any such affiliated person.
 
2.14    Bank Accounts; Power of Attorney.  Set forth in Schedule 2.14 of  the NewEra Schedules is a true and complete list of (a) all accounts with banks, money market mutual funds or securities or other financial institutions maintained by NewEra within the past twelve (12) months, the account numbers thereof, and all persons authorized to sign or act on behalf of NewEra, (b) all safe deposit boxes and other similar custodial arrangements maintained by NewEra within the past twelve (12) months, (c) the check ledger for the last twelve (12) months, (d) the names of all persons holding powers of attorney from NewEra or who are otherwise authorized to act on behalf of N ewEra with respect to any matter, other than its officers and directors, and a summary of the terms of such powers or authorizations, and (e) a list of all the current officers and directors of NewEra.
 
2.15   Valid Obligation.  This Agreement and all agreements and other documents executed by NewEra in connection herewith constitute the valid and binding obligations of NewEra, enforceable in accordance with their respective terms, except as may be limited by Bankruptcy and Equity Exceptions.
 
2.16   Exchange Act Compliance.  NewEra has timely filed all reports, statements, and other information required to be filed by it under the Exchange Act, the common shares have been registered under Section 12(g) of the Exchange Act, and NewEra is in compliance with all of the requirements under, and imposed by, Section 12(g) of the Exchange Act, except were a failure to so comply is not reasonably likely to have a Material Adverse Effect on NewEra.
 
2.17   Shell Company.  NewEra has at all times been a “shell company” as defined in Rule 12b-2 of the Exchange Act.
 
2.18   SEC Filings; Financial Statements.
 
 (a) NewEra has made available to Grain Wealth a correct and complete copy, or there has been available on EDGAR, copies of each report, registration statement and definitive proxy statement filed by NewEra with the SEC for the 36 months prior to the date of this Agreement (the “NewEra SEC Reports”), which, to NewEra’s knowledge, are all the forms, reports and documents filed by NewEra with the SEC for the 36 months prior to the date of this Agreement. As of their respective dates, to NewEra’s knowledge, the NewEra SEC Reports: (i) were prepared in accordance and complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applic able to such NewEra SEC Reports, and (ii) did not at the time they were filed (and if amended or superseded by a filing prior to the date of this Agreement then on the date of such filing and as so amended or superceded) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
 
 
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(b) Each set of financial statements (including, in each case, any related notes thereto) contained in the NewEra SEC Reports comply as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with U.S. GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, do not contain footnotes as permitted by Form 10-Q promulgated under the Exchange Act) and each fairly presents in all material respects the financial position of NewEra at the respective dates thereof and the results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal adjustments which were not or are not ex pected to have a Material Adverse Effect on NewEra taken as a whole.

 
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE GRAIN WEALTH SHAREHOLDERS

 
Each Grain Wealth Shareholder hereby represents and warrants, severally and not jointly, to NewEra as follows:
 
3.1  Good Title. The Grain Wealth Shareholders are the record and beneficial owners, and have good title to their Grain Wealth Common Stock, with the right and authority to sell and deliver such Grain Wealth Common Stock, and upon consummation of the transactions contemplated herein, NewEra will acquire from the Grain Wealth Shareholders good and marketable title of such Grain Wealth Common Stock, free and clear of all liens expecting only such restrictions upon future transfers by NewEra, if any, as may be imposed by applicable law.
 
3.2  Power and Authority. The Grain Wealth Shareholders have the legal power, capacity and authority to execute and deliver this Agreement to consummate the transactions contemplated by this Agreement, and to perform their obligations under this Agreement.  All acts required to be taken by the Grain Wealth Shareholders to enter into this Agreement and to carry out the Transactions have been properly taken.  This Agreement constitutes a legal, valid and binding obligation of the Grain Wealth Shareholders, enforceable against the Grain Wealth Shareholders in accordance with the terms hereof.
 
3.3  No Conflicts.  The execution and delivery of this Agreement by the Grain Wealth Shareholders and the performance by the Grain Wealth Shareholders of their obligations hereunder in accordance with the terms hereof: (a) will not require the consent of any third party or governmental entity under any laws; (b) will not violate any laws applicable to the Grain Wealth Shareholders and (c) will not violate or breach any contractual obligation to which the Grain Wealth Shareholders are a party.
 
3.4  Finder’s Fee.  The Grain Wealth Shareholders represents and warrants that it has not created any obligation for any finder’s, investment banker’s or broker’s fee in connection with the Transactions.
 
3.5  Purchase Entirely for Own Account.  The Exchange Shares (as defined in Section 4.1) proposed to be acquired by the Grain Wealth Shareholders hereunder will be acquired for investment for their own accounts, and not with a view to the resale or distribution of any part thereof, and the Grain Wealth Shareholders have no present intention of selling or otherwise distributing the NewEra Shares, except in compliance with applicable securities laws.
 
 
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3.6  Sophistication.  Each Grain Wealth Shareholder is a sophisticated investor, as described in Rule 506(b)(2)(ii) promulgated under the Securities Act and has such experience in business and financial matters such that each is capable of evaluating the merits and risks of an investment in NewEra.
 
3.7  Information. Each Grain Wealth Shareholder has carefully reviewed such information as such Grain Wealth Shareholder deemed necessary to evaluate an investment in NewEra Common Stock. To the full satisfaction of each Grain Wealth Shareholder, it has been furnished with all materials that it has requested relating to NewEra and the issuance of NewEra Shares hereunder, and each NewEra Shareholder has been afforded the opportunity to ask questions of representatives of NewEra to obtain any information necessary to verify the accuracy of any representations or information made or given to such Grain Wealth Shareholder. Notwithstanding the following, nothing herein shall derogate from or otherwise modify the repres entations and warranties of NewEra set forth in this Agreement, on which each Grain Wealth Shareholder has relied in making an exchange of the Grain Wealth Common Stock for NewEra Shares.
 
3.8  Restricted SecuritiesEach Grain Wealth Shareholder understands that the Exchange Shares are characterized as “restricted securities” under the Securities Act inasmuch as this Agreement contemplates that, if acquired by a Grain Wealth Shareholder pursuant hereto, Exchange Shares would be acquired in a transaction not involving a public offering. The issuance of Exchange Shares hereunder have not been registered under the Securities Act or the securities laws of any state of the U.S. and that the issuance of the Exchange Shares is being effected in reliance upon an exemption from registration afforded either under Section 4(2) of the Securities Act fo r transactions by an issuer not involving a public offering or Regulation S for offers and sales of securities outside the United States. Each Grain Wealth Shareholder further acknowledges that if the Exchange Shares are issued to such Grain Wealth Shareholder in accordance with the provisions of this Agreement, such Exchange Shares may not be resold without registration under the Securities Act or the existence of an exemption therefrom. Each Grain Wealth Shareholder represents that it is familiar with Rule 144 promulgated under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

3.9  Acquisition of Exchange Shares for Investment.

(a) Each Grain Wealth Shareholder is acquiring the Exchange Shares for investment for such Grain Wealth Shareholder’s own account and not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and each Grain Wealth Shareholder has no present intention of selling, granting any participation in, or otherwise distributing the same.  Each Grain Wealth Shareholder further represents that he or she does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Exchange Shares.
 
(b) Each Grain Wealth Shareholder represents and warrants that it: (i) can bear the economic risk of its respective investments, and (ii) possesses such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment in NewEra and its securities.
 
 
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(c) Each Grain Wealth Shareholder who is not a “U.S. Person” as defined in Rule 902(k) of Regulation S of the Securities Act (“Regulation S”) (each a “Non-U.S. Shareholder”) understands that the Exchange Shares are not registered under the Securities Act and that the issuance thereof to such Grain Wealth Shareholders is intended to be exempt from registration under the Securities Act pursuant to Regulation S.  Each Non-U.S. Shareholder has no intention of becoming a U.S. Person.  At the time of the origination of contact concernin g this Agreement and the date of the execution and delivery of this Agreement, each Non-U.S. Shareholder was outside of the United States.  Each certificate representing the Exchange Shares shall be endorsed with the following legends, in addition to any other legend required to be placed thereon by applicable federal or state securities laws:
 
“THE SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT.”
 
“TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”

(d) Each Grain Wealth Shareholder who is a “U.S. Person” as defined in Rule 902(k) of Regulation S (each a “U.S. Shareholder”) understands that the Exchange Shares are not registered under the Securities Act and that the issuance thereof to such Grain Wealth Shareholders is intended to be exempt from registration under the Securities Act pursuant to Regulation D promulgated thereunder (“Regulation D”).  Each U.S. Shareholder represents and warrants that he is an “accredited investor” as such term is defined in Rule 501 of Regula tion D or, if not an accredited investor, that such Grain Wealth Shareholders otherwise meets the suitability requirements of Regulation D and Section 4(2) of the Securities Act (“Section 4(2)”). Each U.S. Shareholder agrees to provide documentation to NewEra prior to Closing as may be requested by NewEra to confirm compliance with Regulation D and/or Section 4(2), including, without limitation, a letter of investment intent or similar representation letter and a completed investor questionnaire. Each certificate representing the Exchange Shares issued to such Grain Wealth Shareholders shall be endorsed with the following legends, in addition to any other legend required to be placed thereon by applicable federal or state securities laws:
 
“THIS SECURITY HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.”
 
“TRANSFER OF THESE SECURITIES IS PROHIBITED UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT WITH RESPECT TO SUCH SECURITY SHALL THEN BE IN EFFECT AND SUCH TRANSFER HAS BEEN QUALIFIED UNDER ALL APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS, OR AN EXEMPTION THEREFROM SHALL BE AVAILABLE UNDER THE ACT AND SUCH LAWS.”
 
 
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(e) Each Grain Wealth Shareholder acknowledges that neither the SEC, nor the securities regulatory body of any state or other jurisdiction, has received, considered or passed upon the accuracy or adequacy of the information and representations made in this Agreement.
 
(f) Each Grain Wealth Shareholder acknowledges that it has carefully reviewed such information as it has deemed necessary to evaluate an investment in NewEra and its securities, and with respect to each U.S. Shareholder, that all information required to be disclosed to such Grain Wealth Shareholder under Regulation D has been furnished to such Grain Wealth Shareholder by NewEra.  To the full satisfaction of each Grain Wealth Shareholder, he has been furnished all materials that he has requested relating to NewEra and the issuance of the Exchange Shares hereunder, and each Grain Wealth Shareholder has been afforded the opportunity to ask questions of NewEra’s representatives to obtain any informati on necessary to verify the accuracy of any representations or information made or given to the Grain Wealth Shareholders. Notwithstanding the foregoing, nothing herein shall derogate from or otherwise modify the representations and warranties of NewEra set forth in this Agreement, on which each of the Grain Wealth Shareholders have relied in making an exchange of its shares Grain Wealth for the Exchange Shares.
 
(g) Each Grain Wealth Shareholder understands that the Exchange Shares may not be sold, transferred, or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Exchange Shares or any available exemption from registration under the Securities Act, the Exchange Shares may have to be held indefinitely.  Each Grain Wealth Shareholder further acknowledges that the Exchange Shares may not be sold pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of Rule 144 are satisfied (including, without limitation, NewEra’s compliance with the reporting requirements under the Securities Exchange Act of 1934, as amended (“Exchange Act”)).
 
(h)  Each Grain Wealth Shareholder agrees that, notwithstanding anything contained herein to the contrary, the warranties, representations, agreements and covenants of such Grain Wealth Shareholder under this Section 3.10 shall survive the Closing.
 
3.10    Additional Legend; Consent. Additionally, the Exchange Shares will bear any legend required by the “blue sky” laws of any state to the extent such laws are applicable to the securities represented by the certificate so legended. Each Grain Wealth Shareholder consents to NewEra making a notation on its records or giving instructions to any transfer agent of Exchange Shares in order to implement the restrictions on transfer of the Exchange Shares.
 
ARTICLE IV
PLAN OF EXCHANGE

4.1   Exchange Grain Wealth Common Stock for NewEra Common Stock. On the terms and subject to the conditions set forth in this Agreement, on the Closing Date and after the consummation of the transaction contemplated herein, the Grain Wealth Shareholders shall assign, transfer and deliver to NewEra, free and clear of all liens, pledges, encumbrances, charges, restrictions or known claims of any kind, nature, or description, all of the shares of Grain Wealth Shares held by the Grain Wealth Shareholders; the objective of such Exchange being the acquisition by NewEra of not less than 100% of the issued and outstanding Grain Wealth Common Stock.  In exchange for the transfer of such securities by the Grain Wealth Shareholders, NewEra shall issue to the Grain Wealth Shareholders 9,200,000 shares of NewEra Common Stock, representing approximately 92% of the total issued and outstanding NewEra Common Stock (the “Exchange Shares”).  At the closing of the transactions described in this Section 4.1 (the “Closing”), the Grain Wealth Shareholders shall, upon surrender of their certificates representing the Grain Wealth Common Stock to NewEra or its registrar or transfer agent, be entitled to receive a certificate or certificates evidencing its interest in the NewEra Shares.  Upon consummation of the Transactions, all of the shares of capital stock of Grain Wealth shall be held by NewEra.
 
 
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4.2 Closing and Actions at Closing.  The closing of the Transactions shall take place at the offices of Anslow & Jaclin, LLP, 195 Route 9 South, Suite 204, Manalapan, NJ, 07726 commencing at 9:00 a.m. local time on the second business day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the Exchange (other than conditions with respect to actions that the respective parties will take at Closing) or such other date and time as the Parties may mutually determine (the “Closing Date”).
 
4.3 Cancellation of Certain Shares of NewEra Common Stock.  At the Closing, the Principal Shareholder of NewEra shall, deliver to NewEra, and NewEra shall be caused to be cancelled, 700,000 shares of NewEra restricted Common Stock held by the Principal Shareholder.
 
4.4  Anti-Dilution.  The NewEra Shares issuable upon exchange pursuant to Section 4.1 shall be appropriately adjusted to take into account any other stock split, stock dividend, reverse stock split, recapitalization, or similar change in the NewEra Common Stock which may occur, other than share cancellation described in Section 4.3, between the date of the execution of this Agreement and the Closing Date, as to the NewEra Shares.
 
4.5   Termination.  This Agreement may be terminated by the board of directors of NewEra or Grain Wealth only in the event that NewEra or Grain Wealth do not meet the conditions precedent set forth in Articles VI and VII hereof.  If this Agreement is terminated pursuant this Section 4.5, this Agreement shall be of no further force or effect, and no obligation, right or liability shall arise hereunder.
 
ARTICLE V
SPECIAL COVENANTS
 
5.1      Access to Properties and Records.  NewEra and Grain Wealth will each afford to the officers and authorized representatives of the other party full access to the properties, books and records of NewEra or Grain Wealth, as the case may be, in order that each party may have a full opportunity to make such reasonable investigation as it shall desire to make of the affairs of the other party, and each party will furnish to the other party such additional financial and operating data and other information as to the business and properties of NewEra or Grain Wealth, as the case may be, as the other party shall from time to time reasonably req uest.  Without limiting the foregoing, as soon as practicable after the end of each fiscal quarter (and in any event through the last fiscal quarter prior to the Closing Date), each party shall provide the other party with quarterly internally prepared and unaudited financial statements.
 
 5.2  Delivery of Books and Records.  At the Closing, Grain Wealth shall deliver to NewEra the originals of the corporate minute books, books of account, contracts, records, and all other books or documents of Grain Wealth now or then in the possession of Grain Wealth or its representatives. NewEra shall deliver to Grain Wealth the originals of the corporate minute books, books of account, contracts, records, and all other books or documents of NewEra now or then in the possession of NewEra or its representatives.
 
5.3  Third Party Consents and Certificates.  NewEra and Grain Wealth agree to cooperate with each other in order to obtain any required third party consents to this Agreement and the Transactions.
 
5.4  NewEra Shareholder Meeting.  NewEra shall promptly call a special meeting of stockholders to be held on or prior to the Closing Date, at which meeting the shareholders of NewEra shall be requested to approve, and the board of directors of NewEra shall recommend the approval of, the terms of this Agreement, the Transactions, and such other matters as shall require stockholder approval hereunder.  In addition, NewEra shall promptly file with the SEC all necessary disclosure statements required by federal securities laws.
 
 
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5.5  Designation of Officers and Directors. On the Closing Date, and in compliance with Rule 14F-1 of the General Rules and Regulations promulgated under the Exchange Act, NewEra shall accept the resignation of the Principal Shareholder from the board of directors of NewEra (the “NewEra Board”) and appoint Taiping Zhou, Xiaohui Wu and Jiling Zhou as the NewEra Board of Directors. In addition, effective on the Closing Date, NewEra shall accept the resignation of the Principal Shareholder from all officer positions he holds at NewEra and shall appoint Tiaping Zhou as the Chief Executive Officer and Jiling Zhou as the Secretary effective as of the date hereof.
 
5.6  Change of Company Name.  Within 30 days following the Closing Date, NewEra shall approve to change its company name from NewEra to China New Greenfood Company, Ltd., or such other name as Grain Wealth requests.
 
5.7  Change of Auditor. On the Closing Date, NewEra shall dismiss Patrizio & Zhao, LLP as its certified independent auditor (“Auditor”) and appoint Friedman, LLP as its new Auditor.
 
5.9  Actions Prior to Closing
 
(a) From and after the date of this Agreement until the Closing Date and except as set forth in the NewEra Schedules or Grain Wealth Schedules or as permitted or contemplated by this Agreement, NewEra (subject to paragraph (b) below) and Grain Wealth respectively, will each:
 
(i)  
carry on its business in substantially the same manner as it has heretofore;
 
(ii)  
maintain and keep its properties in states of good repair and condition as at present, except for depreciation due to ordinary wear and tear and damage due to casualty;
 
(iii)  
 maintain in full force and effect insurance comparable in amount and in scope of coverage to that now maintained by it;
 
(iv)  
perform in all material respects all of its obligations under any material contracts, leases, and instruments relating to or affecting its assets, properties, and business;
 
(v)  
use its best efforts to maintain and preserve intact its business organization, to retain its key employees, and to maintain its relationship with its material suppliers and customers; and
 
(vi)  
fully comply with and perform in all material respects all obligations and duties imposed on it by all federal and state laws and all rules, regulations, and orders imposed by federal or state governmental authorities.
 
(b) From and after the date of this Agreement until the Closing Date, neither NewEra nor Grain Wealth will:
 
 
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(i)  
 make any changes in their Organizational Documents, including any change of name, except as contemplated by this Agreement;
 
(ii)  
take any action described in Section 1.07, in the case of Grain Wealth, or in Section 2.07, in the case of NewEra (all except as permitted therein or as disclosed in the Grain Wealth Schedules or NewEra Schedules, as applicable);
 
(iii)  
 enter into or amend any contract, agreement, or other instrument of any of the types described in the Grain Wealth Schedules or NewEra Schedules, except that a party may enter into or amend any contract, agreement, or other instrument in the ordinary course of business involving the sale of goods or services; or
 
(iv)  
 sell any assets or discontinue any operations, sell any shares of capital stock or conduct any similar transactions other than in the ordinary course of business.
 
5.10  The Acquisition of NewEra Common Stock.  NewEra and Grain Wealth understand and agree that the consummation of the Transactions, including the issuance of the NewEra Common Stock to Grain Wealth Shareholders in exchange for the Grain Wealth Common Stock as contemplated herein, constitutes the offer and sale of securities under the Securities Act of 1933, as amended (the “Securities Act”) and applicable state statutes. NewEra and Grain Wealth agree that such transactions shall be consummated in reliance on exemptions from the registration and prospectus delivery requirements of such statutes, which depend, among other items, on the circumstances under which such securities are acquired.
 
(a) In connection with the Transactions, NewEra and Grain Wealth shall each file, with the assistance of the other party and their respective legal counsel, such notices, applications, reports, or other instruments as may be deemed by them to be necessary or appropriate in an effort to document reliance on such exemptions, and the appropriate regulatory authority in the states where the stockholders of Grain Wealth reside unless an exemption requiring no filing is available in such jurisdiction, all to the extent and in the manner as may be deemed by such party to be appropriate.
 
(b) In order to more fully document reliance on the exemptions from registration as provided herein, Grain Wealth, the Grain Wealth Shareholders, and NewEra shall execute and deliver to the other party, at or prior to the Closing, such further letters of representation, acknowledgment, suitability, or the like as Grain Wealth or NewEra and their respective counsel may reasonably request in connection with reliance on exemptions from registration under such securities laws.
 
(c) The Grain Wealth Shareholders acknowledge that the basis for relying on exemptions from registration or qualifications are factual, depending on the conduct of the various parties, and that no legal opinion or other assurance will be required or given to the effect that the Transactions are in fact exempt from registration or qualification.
 
5.11  Sales of Securities Under Rule 144, If Applicable.
 
(a)   NewEra will use its best efforts to at all times satisfy the current public information requirements of Rule 144 promulgated under the Securities Act so that its stockholders can sell restricted securities that have been held for one (1) year or more or such other restricted period as required by Rule 144 as it is from time to time amended.
 
 
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(b)   Upon being informed in writing by any person holding restricted stock of NewEra that such person intends to sell any shares under Rule 144 promulgated under the Securities Act (including any rule adopted in substitution or replacement thereof), NewEra will certify in writing to such person that it is compliance with Rule 144 current public information requirement to enable such person to sell such person’s restricted stock under Rule 144, as may be applicable under the circumstances.
 
(c)   If any certificate representing any such restricted stock is presented to NewEra’s transfer agent for registration or transfer in connection with any sales theretofore made under Rule 144, provided such certificate is duly endorsed for transfer by the appropriate person(s) or accompanied by a separate stock power duly executed by the appropriate person(s), in each case with reasonable assurances that such endorsements are genuine and effective and is accompanied by a legal opinion that such transfer has complied with the requirements of Rule 144, as the case may be, NewEra will promptly instruct its transfer agent to register such transfer and to issue one or more new certificates representing such shares to the transferee and, if appropriate unde r the provisions of Rule 144, as the case may be, free of any stop transfer order or restrictive legend.
 
(d)  This Section 5.11 shall survive the Closing of this Agreement for a period of two (2) years.
 
5.12        Indemnification.
 
(a)   Grain Wealth hereby agrees to indemnify NewEra and each of the officers, agents and directors of NewEra as of the date of execution of this Agreement against any loss, liability, claim, damage, or expense (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever) (“Loss”), to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentations made under Article I.  The indemnification provided for in this paragraph shall survive the Closing and consummation of Transactions and termin ation of this Agreement for one (1) year following the Closing.
 
(b)  The Grain Wealth Shareholders, agree to indemnify NewEra and each of the officers, agents and directors of NewEra as of the date of execution of this Agreement against any Loss, to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentations made under Article III.  The indemnification provided for in this paragraph shall survive the Closing and consummation of the Contemplated Transactions and termination of this Agreement for one (1) year following the Closing.
 
(c)  NewEra hereby agrees to indemnify Grain Wealth and each of the officers, agents, and directors of Grain Wealth and the Grain Wealth Shareholders as of the date of execution of this Agreement against any Loss to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentation made under Article II.  The indemnification provided for in this paragraph shall survive the Closing and consummation of the Contemplated Transactions and termination of this Agreement for one (1) year following the Closing.
 
 
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS
OF NEWERA
 
The obligations of NewEra under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions:
 
 
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6.1  Accuracy of Representations and Performance of Covenants.  The representations and warranties made by Grain Wealth and the Grain Wealth Shareholders in this Agreement were true when made and shall be true on the Closing Date with the same force and effect as if such representations and warranties were made on and as of the Closing Date.  Grain Wealth shall have performed or complied with all covenants and conditions required by this Agreement to be performed or complied with by Grain Wealth prior to or at the Closing.
 
6.2  Officer’s Certificate.  NewEra shall have been furnished with a certificate dated the Closing Date and signed by a director of Grain Wealth, certifying that: (a) no litigation, proceeding, investigation, or inquiry is pending, or to the best knowledge of Grain Wealth, threatened, which might result in an action to enjoin or prevent the consummation of the Contemplated Transactions, or, to the extent not disclosed in the Grain Wealth Schedules, by or against Grain Wealth, which might result in any material adverse change in any of the assets, properties, business, or operations of Grain Wealth, and (b) the conditions set forth in Sections 6.1, 6.4 and 6.5 have been satisfied.
 
6.3  Good Standing.  NewEra shall have received a certificate of good standing in the British Virgin Islands, dated as of a date within 10 days of the Closing Date certifying that Grain Wealth is in good standing as a corporation in the British Virgin Islands.
 
6.4  No Governmental Prohibition.  No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits the consummation of the Transactions.
 
6.5  Consents.  All consents, approvals, waivers or amendments pursuant to all contracts, licenses, permits, trademarks and other intangibles in connection with the Transactions, or for the continued operation of Grain Wealth after the Closing Date on the basis as presently operated shall have been obtained.
 
6.6  Other Items.   NewEra shall have received such further opinions, documents, certificates or instruments relating to the Transactions as NewEra may reasonably request.
 
 
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF GRAIN WEALTH
AND THE GRAIN WEALTH STOCKHOLDERS
 
The obligations of Grain Wealth and the Grain Wealth Shareholders under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions:
 
7.1   Accuracy of Representations and Performance of Covenants.  The representations and warranties made by NewEra in this Agreement and by the Principal Shareholder in the Indemnity Agreement to be delivered on the Closing Date (the “Indemnity Agreement”) were true when made and shall be true on the Closing Date with the same force and effect as if such representations and warranties were made on and as of the Closing Date.  Each of NewEra and the Principal Shareholder shall have performed and complied with all covenants and conditions required by this Agreement and the In demnity Agreement to be performed or complied with by NewEra and the Principal Shareholder (as the case may be) prior to or at the Closing.
 
7.2    Officer’s Certificate.  Grain Wealth shall have been furnished with a certificate dated the Closing Date and signed by a duly authorized officer of NewEra, certifying that: (a) no litigation, proceeding, investigation or inquiry is pending, or to the best knowledge of NewEra threatened, which might result in an action to enjoin or prevent the consummation of the Transactions, or, to the extent not disclosed in the NewEra Schedules, by or against NewEra, which might result in any material adverse change in any of the assets, properties or operations of NewEra, and (b) the conditions set forth in Sections 7.1, 7.4, and 7.5 have been satisfied.
 
 
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7.3    Good Standing.  Grain Wealth shall have received a certificate of good standing from the Secretary of State of the State of Nevada, dated as of a date within ten (10) days prior to the Closing Date, certifying that NewEra is in good standing as a corporation in the State of Nevada and has filed all tax returns required to have been filed by it to date and has paid all taxes reported as due thereon.
 
7.4   No Governmental Prohibition.  No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits the consummation of the Transactions.
 
7.5   Consents.  All consents, approvals, waivers or amendments pursuant to all contracts, licenses, permits, trademarks and other intangibles in connection with the Transactions, or for the continued operation of NewEra after the Closing Date on the basis as presently operated shall have been obtained.
 
7.6   Other Items.  Grain Wealth and the Grain Wealth Shareholders shall have received further opinions, documents, certificates, or instruments relating to the Transactions as Grain Wealth and the Grain Wealth Shareholders may reasonably request.
 
 
ARTICLE VIII
MISCELLANEOUS
 
8.1  Brokers. Except as set forth in the NewEra Schedules and Grain Wealth Schedules, NewEra and Grain Wealth agree that there were no finders or brokers involved in bringing the parties together or who were instrumental in the negotiation or execution of this Agreement or consummation of the Transactions.  NewEra and Grain Wealth each agree to indemnify the other party against any claim by any third person other than those described above for any commission, brokerage, or finder’s fee arising from the Contemplated Transactions based on any alleged agreement or understanding between the indemnifying party and such third person, whether express or implied from the actions of the indemnifying party.
 
8.2  Governing Law.  This Agreement shall be governed by, enforced, and construed under and in accordance with the laws of the United States of America and, with respect to the matters of state law, with the laws of the State of Nevada.  Venue for all matters shall be in Nevada, without giving effect to principles of conflicts of law thereunder.  Each of the parties irrevocably consents and agrees that any legal or equitable action or proceedings arising under or in connection with this Agreement shall be brought exclusively in the federal courts of the United States. By execution and delivery of this Agreement, each party hereto irrevocably submits to and accepts, with respect to any such action or proceeding, generally and u nconditionally, the jurisdiction of the aforesaid court, and irrevocably waives any and all rights such party may now or hereafter have to object to such jurisdiction.
 
8.3  Notices.  Any notice or other communications required or permitted hereunder shall  be in writing and shall be sufficiently given if personally delivered to it or sent by facsimile, overnight courier or registered mail or certified mail, postage prepaid, addressed as follows:
 
 
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If to Grain Wealth or Grain Wealth Shareholders, to:
 
Grain Wealth Holdings Limited
c/o Hunan Xiangmei Food Co., Ltd.
Attn:   Mr. Taiping Zhou
200 Taozhu Road, Wuxi Town
Qiyang County, Yongzhou City
Hunan Province, China
Tel: [insert]

With copies (with shall not constitute notices) to:
 
Anslow & Jaclin LLP
Attn.:   Richard I. Anslow, Esq.
195 Route 9 South, Suite 204
Manalapan, NJ  07726
Tel:  732-409-1212
Fax: 732-577-1188

If to NewEra, to:
 
NewEra Technology Development Co., Ltd.
Attn.: Chen Zengxing
25-1303 Dongjin City Suite
East Dongshan Rd., Huaiana, Anhui Province
P.R.C. 232001
Tel.: (011) 86-0554-6662183

or such other addresses as shall be furnished in writing by any party in the manner for giving notices hereunder, and any such notice or communication shall be deemed to have been given (a) upon receipt, if personally delivered, (b) on the day after dispatch, if sent by overnight courier, (c) upon dispatch, if transmitted by facsimile and receipt is confirmed by telephone, or (d) three (3) days after mailing, if sent by registered or certified mail.
 
8.4   Attorney’s Fees.  In the event that either party institutes any action or suit to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the prevailing party shall be reimbursed by the losing party for all costs, including reasonable attorney’s fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein.
 
8.5   Confidentiality.  Each party hereto agrees with the other parties that, unless and until the Transactions have been consummated, it and its representatives will hold in strict confidence all data and information obtained with respect to another party or any subsidiary thereof from any representative, officer, director or employee, or from any books or records or from personal inspection, of such other party, and shall not use such data or information or disclose the same to others, except (a) to the extent such data or information is published, is a matter of public knowledge, or is required by law to be published; or (b) to the extent that such data or information must be used or disclosed in order to consummate the Transactions.  In the event of the termination of this Agreement, each party shall return to the other parties all documents and other materials obtained by it or on its behalf and shall destroy all copies, digests, work papers, abstracts or other materials relating thereto, and each party will continue to comply with the confidentiality provisions set forth herein.
 
 
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8.6   Public Announcements and Filings.  Unless required by applicable law or regulatory authority, none of the parties will issue any report, statement or press release to the general public, to the trade, to the general trade or trade press, or to any third party (other than its advisors and representatives in connection with the Contemplated Transactions) or file any document, relating to this Agreement and Contemplated Transactions, except as may be mutually agreed by the parties.  Copies of any such filings, public announcements or disclosures, including any announcements or disclosures mandated by law or regulatory authorities, shall be delive red to each party at least one (1) business day prior to the release thereof.
 
8.7   Schedules; Knowledge.  The Grain Wealth Schedules and NewEra Schedules referred to herein and delivered pursuant to and attached to this Agreement (collectively, “Schedules”) are integral parts of this Agreement.  Nothing in a Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein, unless the Schedule identifies the exception with reasonable particularity and describes the relevant facts in reasonable detail, including by cross-reference to another Schedule.  The inclusion of any information in the Schedules sh all not be deemed to be an admission or acknowledgment, in and of itself, that such information is required by the terms hereof to be disclosed, is material to the business of Grain Wealth or NewEra, as the case may be, or is outside the ordinary course of business.  Grain Wealth is responsible for preparing the Grain Wealth Schedules and NewEra is responsible for preparing the NewEra Schedules. Each of the Grain Wealth Schedules and the NewEra Schedules will be arranged in paragraphs corresponding to the numbered and lettered paragraphs contained in this Agreement, and the disclosure in any such numbered and lettered section of the Grain Wealth Schedules or the NewEra Schedules, as the case may be, shall qualify and shall be deemed to qualify such other paragraphs in this Agreement to the extent such qualification is reasonably apparent regardless of the absence of any express cross-reference to such other paragraph.  Each party is presumed to have full knowledge of all information set f orth in the other party’s Schedules delivered pursuant to this Agreement.
 
 8.8  Third Party Beneficiaries.  This contract is strictly between NewEra, Grain Wealth and the Grain Wealth Shareholders, and, except as specifically provided, no director, officer, stockholder (other than the Grain Wealth Shareholders), employee, agent, independent contractor or any other person or entity shall be deemed to be a third party beneficiary of this Agreement.
 
8.9   Expenses.  Subject to Articles VI and VII above, whether or not the Exchange is consummated, each of NewEra, the Grain Wealth Shareholders and Grain Wealth will bear their own respective expenses, including legal, accounting and professional fees, incurred in connection with the Exchange or any of the other Contemplated Transactions.
 
8.10  Entire Agreement.  This Agreement, together with the Schedules and any certificate or agreements delivered on the Closing Date, represents the entire agreement between the parties relating to the subject matter thereof and supersedes all prior agreements, understandings and negotiations, written or oral, with respect to such subject matter.
 
8.11 Survival; Termination.  Except as otherwise set forth in this Agreement, the representations, warranties, and covenants of the respective parties shall survive the Closing Date and the consummation of Transactions for a period of two (2) years.
 
8.12  Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument.
 
 
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8.13   Amendment or Waiver.  Every right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein, at law, or in equity, and may be enforced concurrently herewith, and no waiver by any party of the performance of any obligation by the other parties shall be construed as a waiver or any other default then, theretofore, or thereafter occurring or existing.  At any time prior to the Closing Date, this Agreement may by amended by a writing signed by all parties hereto, with respect to any of the terms contained herein, and any term or condition of this Agreement may be waived or the time for performance may be extended by a writing signed by the party or parties for whose benefit the provision is intended.
 
8.14   Best Efforts.  Subject to the terms and conditions herein provided, each party shall use its best efforts to perform or fulfill all conditions and obligations to be performed or fulfilled by it under this Agreement so that the Contemplated Transactions shall be consummated as soon as practicable.  Each party also agrees that it shall use its best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective this Agreement and the Contemplated Transactions.
 
8.15   References.  References to Sections, Articles, Schedules or Exhibits in this Agreement shall be to Sections, Articles, Schedules or Exhibits to this Agreement unless explicitly provided otherwise.
 

 
[Remainder of Page Intentionally Left Blank]
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first-above written.
 
NEWERA TECHNOLOGY DEVELOPMENT CO., LTD.  
     
By:
/s/   
Name:  Chen Zengxing  
Title: Chief Executive Officer  
     
 
GRAIN WEALTH HOLDINGS LIMITED  
     
By:
/s/   
Name:     
Title:    
     
 
GRAIN WEALTH HOLDINGS LIMITED’S SHAREHOLDERS
 
  EXCEL DEAL INTERNATIONAL LTD     LIPING WANG  
           
           
By:
/s/
  By:
/s/
 
Name:     Name:    
Title:     Title:    
 
  HONGBO WU     MEIHUA WANG  
           
           
By:
/s/
  By:
/s/
 
Name:     Name:    
Title:     Title:    
 
  NEW ELECT LIMITED     JING LI  
           
           
By:
/s/
  By:
/s/
 
Name:     Name:    
Title:     Title:    
 
  GENIUSLAND INTERNATIONAL CAPITAL LIMITED     ZHENGHONG ZHAO  
           
           
By:
/s/
  By:
/s/
 
Name:     Name:    
Title:     Title:    
 

[Signature Page to Share Exchange Agreement]
 
 
24

 
 
EXHIBIT A
GRAIN WEALTH SHAREHOLDERS

 
Name
SHARES OWNED IN
GRAIN WEALTH
SHARES RECEIVING IN EXCHANGE OF GRAIN WEALTH SHARES
Excel Deal International Limited
6,844
6,296,480
Liping Wang
435
400,200
Hongbo Wu
435
400,200
Meihua Wang
490
450,800
New Elect Limited
414
380,880
Jing Li
218
200,560
Zhenghong Zhao
87
80,040
Geniusland International Capital Limited
1,077
990,840
Total Shares
10,000
9,200,000

 
 
25
EX-4.1 3 f8k020111ex4i_neweratech.htm EDUCHINA WARRANT f8k020111ex4i_neweratech.htm
Exhibit 4.1
 
 
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
 


COMMON STOCK WARRANT

TO PURCHASE SHARES OF COMMON STOCK

OF

NEWERA TECHNOLOGY DEVELOPMENT CO., LTD.

Expires January 28, 2016

 
No.:  CSW-001   Number of Shares: 105,745
Date of Issuance: January 28, 2011  

FOR VALUE RECEIVED, the undersigned, NewEra Technology Development Co., Ltd., a Nevada corporation (together with its successors and assigns, the “Issueror theCompany), hereby certifies that Educhina-US International Limited or her registered assigns is entitled to subscribe for and purchase, during the Term (as hereinafter defined), up to One Hundred Five Thousand Seven Hundred Forty Five (105,745) shares (subject to adjustment as hereinafter provided) of the duly authorized, validly issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise price per share equal to the Warrant Price then in effect, subject, however, to the provisions and upon the terms and conditions hereinafter set forth. Capitalized terms used in this Warrant and not otherwise defined herein shall have the respective meanings specified in Section 6 hereof.

1.           Term. The term of this Warrant shall commence on January 28, 2011 and shall expire at 6:00 p.m., Eastern Time, on January 28, 2016 (such period being the “Term).

2.            Method of Exercise; Payment; Issuance of New Warrant; Transfer and Exchange.

(a)           Time of Exercise. The purchase rights represented by this Warrant may be exercised in whole or in part during the Term.
 
 
 
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(b)           Method of Exercise. The Holder hereof may exercise this Warrant, in whole or in part, by delivery to the Company (or such other office or agency of the Issuer as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Issuers) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (“Notice of Exercise Form”); and, within three (3) Trading Days of the date said Notice of Exercise Form is delivered to the Company, the Company shall have received payment of an amount of consideration therefor equal to the Warrant Price in effect on the date of such exercise multiplied by the number of shares of Warrant Stock with re spect to which this Warrant is then being exercised, payable by certified or official bank check or by wire transfer to an account designated by the Issuer. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant, or an indemnification reasonably acceptable to the Issuer undertaking with respect to such Warrant in the case of its loss, theft or destruction, to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise Form is delivered to the Company.  Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases.  The Company shall deliver any objection to any Notice of Exercise Form within one (1) Business Day of receipt of such notice.  In the event of any dispute or discrepancy, the records of the Company shall be controlling and determinative in the absence of manifest error.

(c)           Issuance of Stock Certificates. In the event of any exercise of this Warrant in accordance with and subject to the terms and conditions hereof, certificates for the shares of Warrant Stock so purchased shall be dated the date of such exercise and delivered to the Holder’s Prime Broker as specified in the Holder’s exercise form within a reasonable time, not exceeding five (5) Trading Days after such exercise (the “Delivery Date”) or, at the request of the Holder (provided that a registration statement under the Securities Act providing for the resale of the Warrant Stock is then in effect or that t he shares of Warrant Stock are otherwise exempt from registration), issued and delivered to the Depository Trust Company (“DTC”) account on the Holder’s behalf via the Deposit Withdrawal Agent Commission System (“DWAC”) within a reasonable time, not exceeding five (5) Trading Days after such exercise, and the Holder hereof shall be deemed for all purposes to be the holder of the shares of Warrant Stock so purchased as of the date of such exercise. Notwithstanding the foregoing to the contrary, the Issuer or its transfer agent shall only be obligated to issue and deliver the shares to the DTC on a holder’s behalf via DWAC if such exercise is in connection with sale in reliance upon an effective Registration Statement or other exemption from registration by which the shares may be issued without a restrictive legend and the Issuer and its transfer agent are participating in DTC through the DWAC system.
 
 
 
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(d)           Transferability of Warrant. Subject to Section 2(f) hereof, this Warrant may be transferred by a Holder, in whole or in part, without the consent of the Issuer. If transferred pursuant to this paragraph, this Warrant may be transferred on the books of the Issuer by the Holder upon surrender of this Warrant at the principal office of the Issuer or its designated agent, properly endorsed (by the Holder executing an assignment in the form attached hereto) and upon payment of any necessary transfer tax or other governmental charge imposed upon such transfer. This Warrant is exchangeable for Warrants to purchase the same aggr egate number of shares of Warrant Stock, each new Warrant to represent the right to purchase such number of shares of Warrant Stock as the Holder hereof shall designate at the time of such exchange. All Warrants issued on transfers or exchanges shall be dated the Original Issue Date and shall be identical with this Warrant except as to the number of shares of Warrant Stock issuable pursuant thereto.

(e)           Continuing Rights of Holder. The Issuer shall, at the time of or at any time after each exercise of this Warrant, upon the request of the Holder hereof, acknowledge in writing the extent, if any, of its continuing obligation to afford to such Holder all rights to which such Holder shall continue to be entitled after such exercise in accordance with the terms of this Warrant, provided that if any such Holder shall fail to make any such request, the failure shall not affect the continuing obligation of the Issuer to afford such rights to such Holder.

(f)           Compliance with Securities Laws.

(i)           The Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and the shares of Warrant Stock to be issued upon exercise hereof are being acquired solely for the Holder’s own account and not as a nominee for any other party, and for investment, and that the Holder will not offer, sell or otherwise dispose of this Warrant or any shares of Warrant Stock to be issued upon exercise hereof except pursuant to an effective registration statement, or an exemption from registration, under the Securities Act and any applicable state securities laws.

(ii)           Except as provided in paragraph (iii) below, this Warrant and all certificates representing shares of Warrant Stock issued upon exercise hereof shall be stamped or imprinted with a legend in substantially the following form:

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.
 
 
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(iii)           The Issuer agrees to reissue this Warrant or certificates representing any of the Warrant Stock, without the legend set forth above, if at such time, prior to making any transfer of any such securities, the Holder shall give written notice to the Issuer describing the manner and terms of such transfer and demonstrating that the following conditions are satisfied. Such proposed transfer will not be effected until: (a) either (i) the Issuer has received an opinion of counsel reasonably satisfactory to the Issuer, to the effect that the registration of such securities under the Securities Act is not required in connection with such proposed transfer, or (ii) a registration statement under the Securities Act covering such proposed disposition has been filed by the Iss uer with the Securities and Exchange Commission and has become and remains effective under the Securities Act, or (b) either (i) the Issuer has received an opinion of counsel reasonably satisfactory to the Issuer, to the effect that registration or qualification under the securities or “blue sky” laws of any state is not required in connection with such proposed disposition, or (ii) compliance with applicable state securities or “blue sky” laws has been effected or a valid exemption exists with respect thereto. The Issuer shall respond to any such notice from a holder within three (3) Trading Days. In the case of any proposed transfer under this Section 2(f), the Issuer shall use reasonable efforts to comply with any such applicable state securities or “blue sky” laws, but shall in no event be required, (x) to qualify to do business in any state where it is not then qualified, (y) to take a ny action that would subject it to tax or to the general service of process in any state where it is not then subject, or (z) to comply with state securities or “blue sky” laws of any state for which registration by coordination is unavailable to the Issuer. Whenever a certificate representing the Warrant Stock is required to be issued to the Holder without a legend, in lieu of delivering physical certificates representing the Warrant Stock, the Issuer shall cause its transfer agent to electronically transmit the Warrant Stock to the Holder by crediting the account of the Holder or Holder’s Prime Broker with DTC through its DWAC system (to the extent not inconsistent with any provisions of this Warrant).

3.           Adjustment of Warrant Price. The Warrant Price shall be subject to adjustment from time to time as set forth in this Section 3. The Issuer shall give the Holder written notice of any event described below which requires an adjustment pursuant to this Section 3 in accordance with the notice provisions set forth in Section 10.
 
(a)           Adjustments for Stock Splits, Combinations, Certain Dividends and Distributions.  If the Issuer shall, at any time or from time to time after the Original Issue Date, effect a split of the outstanding Common Stock (or any other subdivision of its shares of Common Stock into a larger number of shares of Common Stock), combine the outstanding shares of Common Stock into a smaller number of shares of Common Stock, or make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in shares of Common Stock, then, in each event (i) the number of shares of Common Stock for which this Warrant shall be exercisable immedi ately after the occurrence of any such event shall be adjusted to equal the number of shares of Common Stock that a record holder of the same number of shares of Common Stock for which this Warrant is exercisable immediately prior to the occurrence of such event would own or be entitled to receive after the happening of such event, and (ii) the Warrant Price then in effect shall be adjusted to equal (A) the Warrant Price then in effect multiplied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (B) the number of shares of Common Stock for which this Warrant is exercisable immediately after such adjustment.
 
 
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(b)           ­Adjustments for Reclassification, Exchange or Substitution. If the Common Stock for which this Warrant is exercisable at any time or from time to time after the Original Issue Date shall be changed to the same or different number of shares of any class or classes of stock, whether by reclassification, exchange, substitution or otherwise (other than by way of a stock split or combination of shares or stock dividends provided for in Section 3(a), or a reorganization, merger, consolidation, or sale of assets provided for in Section 3(c)), then, and in each event, an appropriate revision to the Warrant Price shall be made and provisions shall be made (by adjustments of the Warrant Price or otherwise) so that, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, in lieu of Warrant Stock, the kind and amount of shares of stock and other securities receivable upon reclassification, exchange, substitution or other change, by holders of the number of shares of Common Stock for which this Warrant was exercisable immediately prior to such reclassification, exchange, substitution or other change, all subject to further adjustment as provided herein.
 
(c)           ­Adjustments for Reorganization, Merger, Consolidation or Sales of Assets. If at any time or from time to time after the Original Issue Date there shall be (i) a capital reorganization of the Issuer (other than by way of a stock split or combination of shares or stock dividends or distributions provided for in Section 3(a), or a reclassification, exchange or substitution of shares provided for in Section 3(b)), or (ii) a merger or consolidation of the Issuer with or into another corporation, where the holders of the Issuer’s o utstanding voting securities prior to such merger or consolidation do not own over 50% of the outstanding voting securities of the merged or consolidated entity, immediately after such merger or consolidation, or (iii) the sale of all or substantially all of the Issuer’s properties or assets to any other person (an “Organic Change”), then, as a part of such Organic Change an appropriate revision to the Warrant Price shall be made if necessary and provision shall be made if necessary (by adjustments of the Warrant Price or otherwise) so that, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, in lieu of Warrant Stock, the kind and amount of shares of stock and other securities or property of the Issuer or any successor corporation resulting from the Organic Change. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3(c) with respect to the rights of the Holder after the Organic Change to the end that the provisions of this Section 3(c) (including any adjustment in the Warrant Price then in effect and the number of shares of stock or other securities deliverable upon exercise of this Warrant) shall be applied after that event in as nearly an equivalent manner as may be practicable.  In any such case, the resulting or surviving corporation (if not the Issuer) shall expressly assume the obligations to deliver, upon the exercise of this Warrant, such securities or property as the Holder shall be entitled to receive pursuant to the provisions hereof, and to make provisions for the protection of the rights of the Holder as provided above.
 
(d)           Record Date. In case the Issuer shall take record of the holders of its Common Stock or any other preferred stock for the purpose of entitling them to subscribe for or purchase Common Stock or securities convertible into or exchangeable for, directly or indirectly, Common Stock, then the date of the issue or sale of the shares of Common Stock shall be deemed to be such record date.
 
 
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 (e)           No Impairment. The Issuer shall not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder, but shall at all times in good faith assist in the carrying out of all the provisions of this Section 3 and in the taking of all such action as may be necessary or appropriate in order to protect against impairment the right of the Holder to exercise this Warrant. In the event th e Holder shall elect to exercise this Warrant, in whole or in part, as provided herein, the Issuer cannot refuse exercise based on any claim that the Holder or anyone associated or affiliated with such holder has been engaged in any violation of law, unless (i) the Issuer receives an order from the Securities and Exchange Commission prohibiting such exercise or (ii) an injunction from a court, on notice, restraining and/or adjoining exercise of this Warrant.
 
(f)           Certificates as to Adjustments. Upon occurrence of each adjustment or readjustment of the Warrant Price or number of shares of Common Stock for which this Warrant is exercisable pursuant to this Section 3, the Issuer at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holder a certificate setting forth such adjustment and readjustment, showing in detail the facts upon which such adjustment or readjustment is based. The Issuer shall, upon written request of the Holder, at any time, furnish or cause to be furnished to the Holder a like certificate se tting forth such adjustments and readjustments, the Warrant Price in effect at the time, and the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon the exercise of this Warrant. Notwithstanding the foregoing, the Issuer shall not be obligated to deliver a certificate unless such certificate would reflect an increase or decrease of at least one percent of such adjusted amount; if the Issuer so postpones delivering a certificate, such prior adjustment shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Section 3 and not previously made, would result in an adjustment of one percent or more.
 
(g)           Issue Taxes. The Issuer shall pay any and all issue and other taxes, excluding federal, state or local income taxes, that may be payable in respect of any issue or delivery of shares of Common Stock on exercise of this Warrant; provided, however, that the Issuer shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder in connection with any such conversion.
 
(h)           Fractional Shares. No fractional shares of Common Stock shall be issued upon exercise of this Warrant. In lieu of any fractional shares to which the Holder would otherwise be entitled, the Holder shall round the number of shares to be issued upon exercise up to the nearest whole number of shares.
 
 
 
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(i)           Reservation of Common Stock. The Issuer shall, during the period within which this Warrant may be exercised, reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the exercise of this Warrant, such number of shares of Common Stock equal to at least one hundred percent (100%) of the aggregate number of shares of Common Stock as shall from time to time be sufficient to effect the exercise of this Warrant.
 
(j)           Retirement of this Warrant. Exercise of this Warrant shall be deemed to have been effected on the date of exercise hereof. Upon exercise of this Warrant only in part, the Issuer shall issue and deliver to the Holder, at the expense of the Issuer, a new Warrant covering the unexercised balance of the Warrant Shares.
 
(k)           Regulatory Compliance. If any shares of Common Stock to be reserved for the purpose of exercise of this Warrant require registration or listing with or approval of any governmental authority, stock exchange or other regulatory body under any federal or state law or regulation or otherwise before such shares may be validly issued or delivered upon conversion, the Issuer shall, at its sole cost and expense, in good faith and as expeditiously as possible, endeavor to secure such registration, listing or approval, as the case may be.

4.           No Preemptive Rights. The Holder shall not be entitled to rights to subscribe for, purchase or receive any part of any new or additional shares of any class, whether now or hereinafter authorized, or of bonds or debentures, or other evidences of indebtedness convertible into or exchangeable for shares of any class, but all such new or additional shares of any class, or any bond, debentures or other evidences of indebtedness convertible into or exchangeable for shares, may be issued and disposed of by the Board on such terms and for such consideration (to the extent permitted by law), and to such person or persons as the Board in its absolute discretion may deem advisable.

5.           Exercise Restriction. Notwithstanding anything to the contrary set forth in this Warrant, at no time may the Holder exercise this Warrant, in whole or in part, if the number of shares of Common Stock to be issued pursuant to such exercise would cause the number of shares of Common Stock beneficially owned by the Holder and its affiliates at such time, when aggregated with all other shares of Common Stock beneficially owned by the Holder and its affiliates at such time, result in the Holder beneficially owning (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules thereunder) in excess of 9.99% of the then issued and outstanding shares of Common S tock outstanding at such time; provided, however, that upon the Holder providing the Issuer with sixty-one (61) days notice (pursuant to Section 10 hereof) (the “Waiver Notice”) that the Holder would like to waive Section 5 of this Warrant with regard to any or all shares of Common Stock for which this Warrant is exercisable, this Section 5 shall be of no force or effect with regard to those shares referenced in the Waiver Notice.

6.           Definitions. For the purposes of this Warrant, the following terms have the following meanings:

 
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Board” shall mean the Board of Directors of the Issuer.

Capital Stock” means and includes (i) any and all shares, interests, participations or other equivalents of or interests in (however designated) corporate stock, including, without limitation, shares of preferred or preference stock, (ii) all partnership interests (whether general or limited) in any Person which is a partnership, (iii) all membership interests or limited liability company interests in any limited liability company, and (iv) all equity or ownership interests in any Person of any other type.

Articles of Incorporation” means the Articles of Incorporation of the Issuer, as amended, as in effect on the Original Issue Date, and as hereafter from time to time amended, modified, supplemented or restated in accordance with the terms hereof and thereof and pursuant to applicable law.

Common Stock” means the Common Stock, $0.001 par value per share, of the Issuer and any other Capital Stock into which such stock may hereafter be changed.

Governmental Authority” means any governmental, regulatory or self-regulatory entity, department, body, official, authority, commission, board, agency or instrumentality, whether federal, state or local, and whether domestic or foreign.

Holders” mean the Persons who shall from time to time own any Warrant. The term “Holder” means one of the Holders.

Independent Appraiser” means a nationally recognized or major regional investment banking firm or firm of independent certified public accountants of recognized standing (which may be the firm that regularly examines the financial statements of the Issuer) that is regularly engaged in the business of appraising the Capital Stock or assets of corporations or other entities as going concerns, and which is not affiliated with either the Issuer or the Holder of any Warrant.

Issuer” means NewEra Technology Development Co., Ltd., a Nevada corporation, and its successors.

Original Issue Date” means January 28, 2011.

OTC Bulletin Board” means the over-the-counter electronic bulletin board.

Other Common” means any other Capital Stock of the Issuer of any class which shall be authorized at any time after the date of this Warrant (other than Common Stock) and which shall have the right to participate in the distribution of earnings and assets of the Issuer without limitation as to amount.

Outstanding Common Stock” means, at any given time, the aggregate amount of outstanding shares of Common Stock, assuming full exercise, conversion or exchange (as applicable) of all right, warrants or options to purchase shares of Common Stock that are outstanding at such time.
 
 
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Person” means an individual, corporation, limited liability company, partnership, joint stock company, trust, unincorporated organization, joint venture, Governmental Authority or other entity of whatever nature.

Securities” means any debt or equity securities of the Issuer, whether now or hereafter authorized, any instrument convertible into or exchangeable for Securities or a Security, and any option, warrant or other right to purchase or acquire any Security. “Security” means one of the Securities.

Securities Act” means the Securities Act of 1933, as amended.

Subsidiary” means any corporation at least 50% of whose outstanding Voting Stock shall at the time be owned directly or indirectly by the Issuer or by one or more of its Subsidiaries, or by the Issuer and one or more of its Subsidiaries.

Term” has the meaning specified in Section 1 hereof.

Trading Day” means (a) a day on which the Common Stock is traded on the OTC Bulletin Board or a registered national stock exchange, or (b) if the Common Stock is not traded on the OTC Bulletin Board or a registered national stock exchange, a day on which the Common Stock is quoted in the over-the-counter market as reported by Pink OTC Markets Inc. (or any similar organization or agency succeeding its functions of reporting prices); provided, however, that in the event that the Common Stock is not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall m ean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close.

Voting Stock” means, as applied to the Capital Stock of any corporation, Capital Stock of any class or classes (however designated) having ordinary voting power for the election of a majority of the members of the Board (or other governing body) of such corporation, other than Capital Stock having such power only by reason of the happening of a contingency.

Warrant Price” initially means $4.29, as such price may be adjusted from time to time as shall result from the adjustments specified in this Warrant, including Section 3 hereto.

Warrant Share Number” means at any time the aggregate number of shares of Warrant Stock which may at such time be purchased upon exercise of a Warrant, after giving effect to all prior adjustments and increases to such number made or required to be made under the terms hereof.
 
 
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Warrant Stock” means Common Stock issuable upon exercise of any Warrant or Warrants or otherwise issuable pursuant to any Warrant or Warrants.

7.           Other Notices. In case at any time:

(i) the Issuer shall make any distributions to the holders of Common Stock; or

(ii) the Issuer shall authorize the granting to all holders of its Common Stock of rights to subscribe for or purchase any shares of Capital Stock of any class or other rights; or

(iii) there shall be any reclassification of the Capital Stock of the Issuer; or

(iv) there shall be any capital reorganization by the Issuer; or

(v) there shall be any (i) consolidation or merger involving the Issuer or (ii) sale, transfer or other disposition of all or substantially all of the Issuer’s property, assets or business (except a merger or other reorganization in which the Issuer shall be the surviving corporation and its shares of Capital Stock shall continue to be outstanding and unchanged and except a consolidation, merger, sale, transfer or other disposition involving a wholly-owned Subsidiary); or

(vi) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Issuer or any partial liquidation of the Issuer or distribution to holders of Common Stock;

then, in each of such cases, the Issuer shall give written notice to the Holder of the date on which (i) the books of the Issuer shall close or a record shall be taken for such dividend, distribution or subscription rights or (ii) such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be, shall take place. Such notice also shall specify the date as of which the holders of Common Stock of record shall participate in such dividend, distribution or subscription rights, or shall be entitled to exchange their certificates for Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be. Such notice shall be given at least twenty (20 ) days prior to the action in question and not less than ten (10) days prior to the record date or the date on which the Issuer’s transfer books are closed in respect thereto. This Warrant entitles the Holder to receive copies of all financial and other information distributed or required to be distributed to the holders of the Common Stock.

8.           Amendment and Waiver. Any term, covenant, agreement or condition in this Warrant may be amended, or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), by a written instrument or written instruments executed by (a) the Issuer and (b) the Holders of a majority of the Warrants then outstanding; provided, however, that no such amendment or waiver shall reduce the Warrant Share Number, increase the Warrant Price, shorten the period during which this Warrant may be exerc ised or modify any provision of this Section 8 without the consent of the Holder of this Warrant. No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any provision of this Warrant unless the same consideration is also offered to all holders of the Warrants.
 
 
 
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9.           Governing Law; Jurisdiction. This Warrant shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction. This Warrant shall not be interpreted or construed with any presumption against the party causing this Warrant to be drafted. The Issuer and the Holder agree that venue for any dispute arising under this Warrant will lie exclusively in the state or federal courts located in New York County, New York, and the parties irrevocably waive any right to raise forum non convenie ns or any other argument that New York is not the proper venue. The Issuer and the Holder irrevocably consent to personal jurisdiction in the state and federal courts of the state of New York. The Issuer and the Holder consent to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 9 shall affect or limit any right to serve process in any other manner permitted by law. The Issuer and the Holder hereby agree that the prevailing party in any suit, action or proceeding arising out of or relating to this Warrant, shall be entitled to reimbursement for reasonable legal fees from the non-prevailing party. The parties hereby waive all rights to a trial by jury.

10.           Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by facsimile or three (3) business days following being mailed by certified or registered mail, postage prepaid, return-receipt requested, addressed to the holder of record at its address appearing on the books of the Issuer. The Issuer shall give written notice to the Holder at least twenty (20) calendar days prior to the date on which the Issuer closes its books or takes a record (I) with respect to any dividend or distribution upon the Common Stock, (II) with respect to any pro rata subscription offer to holders of Common Stock or (III) for determining rights to vote w ith respect to any Organic Change, dissolution, liquidation or winding-up and in no event shall such notice be provided to such holder prior to such information being made known to the public. The Issuer shall also give written notice to the Holder at least twenty (20) days prior to the date on which any Organic Change, dissolution, liquidation or winding-up will take place and in no event shall such notice be provided to such holder prior to such information being made known to the public. The addresses for such communications shall be:
 
If to the Issuer:                     NewEra Technology Development Co., Ltd.
c/o Hunan Xiangmei Food Co., Ltd.
Attn:    Mr. Taiping Zhou
200 Taozhu Road, Wuxi Town
Qiyang County, Yongzhou City
Hunan Province, China
Tel: [insert]
 
 
 
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with copies (which copies shall not constitute notice) to:
 
Anslow & Jaclin, LLP
195 Route 9 South, Suite 204
Manalapan, NJ 07726
Attn: Richard I. Anslow, Esq.
Tel. No: (732) 409-1212
Fax No: (732) 577-1188

If to any Holder:
At the address of such Holder set forth on Exhibit A to this Agreement, with copies to Holder’s counsel as set forth on Exhibit A or as specified in writing by such Holder

Any party hereto may from time to time change its address for notices by giving written notice of such changed address to the other party hereto.
 
11.           Warrant Agent. The Issuer may, by written notice to each Holder of this Warrant, appoint an agent having an office in New York, New York for the purpose of issuing shares of Warrant Stock on the exercise of this Warrant pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to Section 12 hereof, or any of the foregoing, and thereafter any such issuance, excha nge or replacement, as the case may be, shall be made at such office by such agent.

12.           Lost or Stolen Warrant. Upon receipt by the Company of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver new Warrant of like tenor and date; provided, however, that the Company shall not be obligated to re-issue warrant(s) if the Holder contemporaneously exercise this Warrant to purchase shares of Co mmon Stock.

13.           Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a Holder’s right to pursue actual damages for any failure by the Company to comply with the terms of this Warrant. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder thereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.
 
 
 
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14.           Specific Shall Not Limit General; Construction. No specific provision contained in this Warrant shall limit or modify any more general provision contained herein. This Warrant shall be deemed to be jointly drafted by the Company and all initial holders of the Warrant and shall not be construed against any person as the drafter hereof.

15.           Successors and Assigns. This Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors and assigns of the Issuer, the Holder hereof and (to the extent provided herein) the Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any such Holder or Holder of Warrant Stock.

16.           Modification and Severability. If, in any action before any court or agency legally empowered to enforce any provision contained herein, any provision hereof is found to be unenforceable, then such provision shall be deemed modified to the extent necessary to make it enforceable by such court or agency. If any such provision is not enforceable as set forth in the preceding sentence, the unenforceability of such provision shall not affect the other provisions of this Warrant, but this Warrant shall be construed as if such unenforceable provision had never been contained herein.

17.           Headings. The headings of the Sections of this Warrant are for convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

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IN WITNESS WHEREOF, the Issuer has executed this Common Stock Warrant as of the day and year first above written.


 
NewEra Technology Development Co., Ltd.
 
By:                                                                     
Name: Taiping Zhou
Title: Chief Executive Officer


 

 
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EXERCISE FORM
COMMON STOCK WARRANT

NewEra Technology Development Co., Ltd.

The undersigned _______________, pursuant to the provisions of the accompanying Common Stock Warrant, hereby elects to purchase _____ shares of Common Stock (the “Warrant Shares”) of NewEra Technology Development Co., Ltd. covered by the accompanying Common Stock Warrant.
 
Dated: _________________   Signature               ___________________________  
       
   
Address                 _____________________
                                _____________________
 
 
Number of shares of Common Stock beneficially owned or deemed beneficially owned by the Holder on the date of Exercise: __________________

The undersigned is an “accredited investor” as defined in Regulation D under the Securities Act of 1933, as amended.    o Yes    o No
 
The undersigned is a not a U.S. person and certifies that the warrant is not being exercised on behalf of a U.S. person.     o Yes   o No
 
 
The undersigned intends that payment of the Warrant Price shall be made as a cash exercise.
 
The Holder shall pay the sum of $________ by certified or official bank check (or via wire transfer) to the Issuer in accordance with the terms of the Warrant.
 
The certificate(s) representing the Warrant Shares shall be delivered by

(a)  
certified mail to the above address, or
(b)  
certified mail to the prime broker of the Holder at

Name:                                                                                        
Address:                                                                                  
Attention:                                                                                 
Tel. No.:                                                                                   
 
(c)  
electronically (DWAC Instructions: ____________________), or
(d)  
other (specify) _____________________________________

If the number of Warrant Shares shall not be all the Warrant Shares purchasable upon exercise of the Warrant, that a new Warrant for the balance of the Warrant Shares purchasable upon exercise of this Warrant be registered in the name of the undersigned Warrantholder or the undersigned’s Assignee as below indicated and delivered to the address stated below.
 
 
 
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Dated: _________________
 
Note:  The signature must correspond with
the name of the Holder as written
on the first page of the Warrant in every
particular, without alteration or enlargement
or any change whatever, unless the Warrant
has been assigned.    
 
Signature:______________________
 
______________________________
Name (please print)
 
______________________________
______________________________
Address
 
______________________________
Email
 
______________________________
Federal Identification or SSN.

Assignee:
 
 
Signature:______________________
 
____________________________
Name (please print)
 
______________________________
______________________________
Address
 
______________________________
Email
 
______________________________
Federal Identification or SSN
 
 
 

                                                                 
        
 
 
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ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the accompanying Common Stock Placement Agent Warrant and all rights evidenced thereby and does irrevocably constitute and appoint _____________, attorney, to transfer said Common Stock Placement Agent Warrant on the books of the corporation named therein.
 
Dated: _________________   Signature               ___________________________  
       
   
Address                 _____________________
                                _____________________
 

 
 
 
 
 
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PARTIAL ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the right to purchase _________ shares of Warrant Stock evidenced by the accompanying Common Stock Placement Agent Warrant together with all rights therein, and does irrevocably constitute and appoint ___________________, attorney, to transfer that part of said Common Stock Placement Agent Warrant on the books of the corporation named therein.
 
Dated: _________________   Signature               ___________________________  
       
   
Address                 _____________________
                                _____________________
 
 
 
 
 
 
 
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FOR USE BY THE ISSUER ONLY:

This Warrant No. ________ canceled (or transferred or exchanged) this _____ day of ___________, _____, shares of Common Stock issued therefor in the name of _______________, Warrant No. ________ issued for ____ shares of Common Stock in the name of _______________.
 
 

 

 
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EXHIBIT A
 
Holder’s Name
Holder’s Address
Name and Address of Holder’s Counsel
     

 
 
 
 
 20

EX-10.1 4 f8k020111ex10i_neweratech.htm SECURITIES PURCHASE AGREEMENT f8k020111ex10i_neweratech.htm
 
Exhibit 10.1
 
SECURITIES PURCHASE AGREEMENT


THIS SECURITIES PURCHASE AGREEMENT (“Agreement”) is made as of the 28th day of January, 2011, by and among NewEra Technology Development Co., Ltd., a Nevada corporation, with an address at 25-1303 Dongjin City Suite, East Dongshan Road, Huaina, Anhui Province, P.R.C. 232001 (the “Company”), and the Investors set forth on the signature pages affixed hereto (each an “Investor” and collectively the “Investors”).

Recitals:

A.           The Company and the Investors are executing and delivering this Agreement in connection with an offering of securities of the Company (the “Offering”) in reliance upon the exemption from securities registration afforded by the provisions of Regulation D (“Regulation D”) and Regulation S (“Regulation S”), as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”); and

B.           The Investors wish to purchase from the Company, and the Company wishes to sell and issue to the Investors, upon the terms and conditions stated in this Agreement, shares of Company’s Common Stock, $0.001 par value per share (the “Common Stock”) aggregating an amount of $3,782,393 (the “Offering Shares”).

C.           The purchase price shall be $3.5769 per share of Common Stock (the “Share Purchase Price”); and

D.           Pursuant to its terms an aggregate of up to 1,057,450 Offering Shares may be sold in this offering; and

In consideration of the mutual promises made herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.            Definitions.  In addition to those terms defined above and elsewhere in this Agreement, for the purposes of this Agreement, the following terms shall have the meanings set forth below:

Affiliate” means, with respect to any Person, any other Person which directly or indirectly through one or more intermediaries Controls, is controlled by, or is under common control with, such Person.

Business Day” means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business.
 
 
 
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Common Stock” means the Company’s common stock, par value $0.001 per share, and any securities into which the common stock may be reclassified.

Company’s Knowledge” means the actual knowledge of the executive officers (as defined in Rule 405 under the 1933 Act) of the Company, after due inquiry.

Confidential Information” means trade secrets, confidential information and know-how (including but not limited to ideas, formulae, compositions, processes, procedures and techniques, research and development information, computer program code, performance specifications, support documentation, drawings, specifications, designs, business and marketing plans, and customer and supplier lists and related information).

Control” (including the terms “controlling”, “controlled by” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

Escrow Agent” means Allbright Law Offices.

Escrow Agreement” means the Escrow Agreement the Company, the Investors and the Escrow Agent will enter into at the Closing, in substantially the form attached hereto as Exhibit A.

Intellectual Property” means all of the following: (i) patents, patent applications, patent disclosures and inventions (whether or not patentable and whether or not reduced to practice); (ii) trademarks, service marks, trade dress, trade names, corporate names, logos, slogans and Internet domain names, together with all goodwill associated with each of the foregoing; (iii) copyrights and copyrightable works; (iv) registrations, applications and renewals for any of the foregoing; and (v) proprietary computer software (including but not limited to data, data bases and documentation).

Material Adverse Effect” means a material adverse effect on (i) the assets, liabilities, results of operations, condition (financial or otherwise), business, or prospects of the Company and its Subsidiaries taken as a whole, or (ii) the ability of the Company to perform its obligations under the Transaction Documents.

Person” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

Purchase Price” means up to a maximum of $3,782,393.

SEC Filings” has the meaning set forth in Section 4.6.

Securities” means the Offering Shares.
 
 
 
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Shares” means the shares of Common Stock and to be purchased in connection with the Offering.

Subsidiary” of any Person means another Person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first Person.

Transaction Documents” means this Agreement, the Escrow Agreement, and certain other papers, agreements, documents, instruments and certificates necessary to carry out the purposes thereof.

Transfer Agent” means Corporate Stock Transfer, the Company’s transfer agent.

1933 Act” has the meaning set forth in the Recitals above.

1934 Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

2.           Purchase and Sale of the Offering Shares.

2.1           Purchase and Sale. Subject to the terms and conditions of this Agreement, on the Closing Date, the Investors shall severally, and not jointly, purchase, and the Company shall sell and issue to the Investors, Offering Shares of the securities in the respective amounts set forth opposite the Investors’ names on the signature pages attached hereto in exchange for payment of each Investor’s pro rata share of the Purchase Price as specified in Section 3 below; provided, however, that not more than $3,782,393 of Offering Shares, in the aggregate, shall be purchased in this Offering.

3.           Closing.  Each Investor shall deliver, or cause to be delivered, their pro rata share of the Purchase Price to the Escrow Agent, in immediately available funds, to be held and disbursed by the Escrow Agent as provided in the Escrow Agreement.  The Escrow Agent shall promptly notify the Company of its receipt of the aggregate Share Purchase Price from any Investor and shall deposit such amount in an interest bearing account, as further set forth in the Escrow Agreement.  The Company shall delive r certificates representing the appropriate number of Offering Shares to the Escrow Agent to be held and disbursed by the Escrow Agent as provided in the Escrow Agreement.  The Escrow Agent shall promptly notify the Investor Agent of its receipt of the Shares for each Investor.  The Share Purchase Price and Offering Shares are hereafter referred to collectively as, the “Escrow Property”).  The Escrow Agent shall hold the Escrow Property in accordance with the terms and conditions of the Escrow Agreement.  In the event there are any inconsistencies between the terms of the Escrow Agreement as discussed herein and the actual Escrow Agreement, the Escrow Agreement shall govern.  On the date (the “Closing Date”) the Escrow Agent receives joint written instructions from the Company and the Investor Agent directin g the manner in which the Escrow Agent shall distribute all or any portion of the Purchase Price, plus any interest earned thereon, and the Shares, and provided each of the conditions set forth in Section 6 hereof have been satisfied or waived by the appropriate party or parties, the Escrow Property shall be released to the Investors and the Company, as applicable (each, a “Closing”).  The Closing(s) shall take place at the offices of Anslow & Jaclin, LLP, 195 Route 9 South, Suite 204, Manalapan, NJ 07726, or at such other location and on such other date as the Company and the Investors shall mutually agree.
 
 
 
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4.           Representations and Warranties of the Company.  The Company hereby represents and warrants to the Investors that, except as set forth in the schedules delivered herewith (collectively, the “Disclosure Schedules”):

4.1           Organization, Good Standing and Qualification.  Each of the Company and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted and to own its properties.  Each of the Company and its Subsidiaries is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or leasing necessary unless the failure to so qualify h as not had and could not reasonably be expected to have a Material Adverse Effect.  The Company’s Subsidiaries are listed on Schedule 4.1 hereto.

4.2           Authorization.  The Company has full power and authority and, except as described in Schedule 4.2, has taken all requisite action on the part of the Company, its officers, directors and stockholders necessary for (i) the authorization, execution and delivery of the Transaction Documents, (ii) the authorization of the performance of all obligations of the Company hereunder or thereunder, and (iii) the authorization, issuance (or reservation for issuance) and delivery of the Securities.  The Transaction Documents constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally.

4.3           Capitalization.  Schedule 4.3 sets forth (a) the authorized capital stock of the Company on the date hereof; (b) the number of shares of capital stock issued and outstanding; (c) the number of shares of capital stock issuable pursuant to the Company’s stock plans; and (d) the number of shares of capital stock issuable and reserved for issuance pursuant to securities (other than the Securities) exercisable for, or convertible into or exchangeable for any shares of capital stock of the Company.  All of the issued and outstanding shares of the Company’s capit al stock have been, or will be, duly authorized and validly issued and are fully paid, nonassessable and free of pre-emptive rights and were, or shall be, issued in full compliance with applicable state and federal securities law and any rights of third parties.  Except as described on Schedule 4.3, all of the issued and outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued and are fully paid, nonassessable and free of pre-emptive rights, were issued in full compliance with applicable state and federal securities law and any rights of third parties and are owned by the Company, beneficially and of record, subject to no lien, encumbrance or other adverse claim.  Except as described on Schedule 4.3, no Person is entitled to pre-emptive or similar statutory or contractual rights with respect to any securities of the Co mpany.  Except as described on Schedule 4.3, there are no outstanding warrants, options, convertible securities or other rights, agreements or arrangements of any character under which the Company or any of its Subsidiaries is or may be obligated to issue any equity securities of any kind and except as contemplated by this Agreement, neither the Company nor any of its Subsidiaries is currently in negotiations for the issuance of any equity securities of any kind.  Except as described on Schedule 4.3, there are no voting agreements, buy-sell agreements, option or right of first purchase agreements or other agreements of any kind among the Company and any of the securityholders of the Company relating to the securities of the Company held by them.  Except as described on Schedule 4.3, no P erson has the right to require the Company to register any securities of the Company under the 1933 Act, whether on a demand basis or in connection with the registration of securities of the Company for its own account or for the account of any other Person.
 
 
 
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Except as described on Schedule 4.3, the issuance and sale of the Securities hereunder will not obligate the Company to issue shares of Common Stock or other securities to any other Person (other than the Investors) and will not result in the adjustment of the exercise, conversion, exchange or reset price of any outstanding security.

Except as described on Schedule 4.3, the Company does not have outstanding stockholder purchase rights or “poison pill” or any similar arrangement in effect giving any Person the right to purchase any equity interest in the Company upon the occurrence of certain events.

4.4           Valid Issuance.  The Shares have been duly and validly authorized and, when issued and paid for pursuant to this Agreement, will be validly issued, fully paid and nonassessable, and shall be free and clear of all encumbrances and restrictions (other than those created by the Investors), except for restrictions on transfer set forth in the Transaction Documents.

4.5           Consents.  Except as described in Schedule 4.5, (a) the execution, delivery and performance by the Company of the Transaction Documents, and (b) the offer, issuance and sale of the Securities, require no consent of, action by or in respect of, or filing with, any Person, governmental body, agency, or official other than filings that have been made pursuant to applicable state securities laws and post-sale filings pursuant to applicable state and federal securities laws or any other notices required thereb y, all of which the Company undertakes to file within the applicable time periods.  Subject to the accuracy of the representations and warranties of each Investor set forth in Section 5 hereof, the Company has taken all action necessary to exempt (i) the issuance and sale of the Offering Shares, and (iii) any other transactions contemplated by the Transaction Documents from the provisions of any stockholder rights plan or other “poison pill” arrangement, any anti-takeover, business combination or control share law or statute binding on the Company or to which the Company or any of its assets and properties may be subject and any provision of the Company’s Certificate of Incorporation or Bylaws that is or could reasonably be expected to become applicable to the Investors as a result of the transactions contemplated hereby, including without limitation, the issuance of the Securities and the ownership, disposition or voting of the Securities by the Investors or the exercise of any r ight granted to the Investors pursuant to this Agreement or the other Transaction Documents.
 
 
 
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4.6           Delivery of SEC Filings; Business.  The Company has made available to the Investors through the EDGAR system, true and complete copies of the Company’s Annual Report on Form 10-KSB for the fiscal year ended September 30, 2010 (the “10-KSB”), and all other reports filed by the Company pursuant to the 1934 Act since the filing of the 10-KSB and prior to the date hereof (collectively, the “SEC Filings”).  Except as indicated in the SEC Filings, the SEC Filings are the only fili ngs required of the Company pursuant to the 1934 Act for such period.  The Company and its Subsidiaries are engaged in all material respects only in the business described in the SEC Filings and the SEC Filings contain a complete and accurate description in all material respects of the business of the Company and its Subsidiaries, taken as a whole.

4.7           Use of Proceeds.  The net proceeds from this Offering will be used primarily for: (a) expenses related to the Offering, and (b) general working capital purposes.
 
4.8           No Material Adverse Change.  Since January 28, 2011, the effective date of the Share Exchange Agreement (the “Share Exchange Agreement”) by and among the Company, Grain Wealth Limited, a company incorporated under the laws of the British Virgin Islands and each of the equity owners of Keenway Limited, except as identified and described on Schedule 4.8, or filed with the SEC on reports publicly available at www.sec.gov, there has not been:

(a)           any change in the consolidated assets, liabilities, financial condition or operating results of the Company from that reflected in the financial statements included in the Company’s Current Report on Form 8-K filed with the SEC on January 24, 2011except for changes in the ordinary course of business which have not had and could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate;

(b)           any declaration or payment of any dividend, or any authorization or payment of any distribution, on any of the capital stock of the Company, or any redemption or repurchase of any securities of the Company;

(c)           any material damage, destruction or loss, whether or not covered by insurance to any assets or properties of the Company or its Subsidiaries;

(d)           any waiver, not in the ordinary course of business, by the Company or any Subsidiary of a material right or of a material debt owed to it;

(e)           any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company or a Subsidiary, except in the ordinary course of business and which is not material to the assets, properties, financial condition, operating results or business of the Company and its Subsidiaries taken as a whole (as such business is presently conducted and as it is proposed to be conducted);

(f)           any change or amendment to the Company’s Certificate of Incorporation or Bylaws, or material change to any material contract or arrangement by which the Company or any Subsidiary is bound or to which any of their respective assets or properties is subject;
 
 
 
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(g)           any material labor difficulties or labor union organizing activities with respect to employees of the Company or any Subsidiary;

(h)           any material transaction entered into by the Company or a Subsidiary other than in the ordinary course of business;

(i)           the loss of the services of any key employee, or material change in the composition or duties of the senior management of the Company or any Subsidiary;

(j)           the loss or threatened loss of any customer which has had or could reasonably be expected to have a Material Adverse Effect; or

(k)           any other event or condition of any character that has had or could reasonably be expected to have a Material Adverse Effect.

4.9           SEC Filings.

(a)           At the time of filing thereof, the SEC Filings complied as to form in all material respects with the requirements of the 1934 Act and did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

(b)           To the Company’s Knowledge, each registration statement and any amendment thereto filed by the Company pursuant to the 1933 Act and/or 1934 Act, and the rules and regulations thereunder, as of the date such statement or amendment became effective, complied as to form in all material respects with the 1933 Act and/or 1934 Act, and did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein not misleading; and each prospectus filed pursuant to Rule 424(b) under the 1933 Act, as of its issue date and as of the closing of any sale of securities pursuant thereto did not contain any untrue stateme nt of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

4.10           No Conflict, Breach, Violation or Default.  The execution, delivery and performance of the Transaction Documents by the Company and the issuance and sale of the Securities will not conflict with or result in a breach or violation of any of the terms and provisions of, or constitute a default under (i) the Company’s Certificate of Incorporation, or the Company’s Bylaws, in effect on the date hereof (true and complete copies of which have been made available to the Investors), or (ii)(a) any statute, rule, regulation or order of any governm ental agency or body or any court, domestic or foreign, having jurisdiction over the Company, any Subsidiary or any of their respective assets or properties, or (b) any agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or a Subsidiary is bound or to which any of their respective assets or properties is subject.
 
 
 
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4.11           Tax Matters.  The Company and each Subsidiary has timely prepared and filed all tax returns required to have been filed by the Company or such Subsidiary with all appropriate governmental agencies and timely paid all taxes shown thereon or otherwise owed by it.  The charges, accruals and reserves on the books of the Company in respect of taxes for all fiscal periods are adequate in all material respects, and there are no material unpaid assessments against the Company or any Subsidiary nor, to the Company’s Knowledge, any basis for the assessment of any additional taxes, penalties or interest for any fiscal period or audits by any federal, state or local taxing authority except for any assessment which is not material to the Company and its Subsidiaries, taken as a whole.  All taxes and other assessments and levies that the Company or any Subsidiary is required to withhold or to collect for payment have been duly withheld and collected and paid to the proper governmental entity or third party when due.  There are no tax liens or claims pending or, to the Company’s Knowledge, threatened against the Company or any Subsidiary or any of their respective assets or property.  Except as described on Schedule 4.11, there are no outstanding tax sharing agreements or other such arrangements between the Company and any Subsidiary or other corporation or entity.

4.12           Title to Properties.  Except as disclosed in Schedule 4.12, the Company and each Subsidiary has good and marketable title to all real properties and all other properties and assets owned by it, in each case free from liens, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or currently planned to be made thereof by them; and except as disclosed in Schedule 4.12, the Company and each Subsidiary holds any leased real or personal property under valid an d enforceable leases with no exceptions that would materially interfere with the use made or currently planned to be made thereof by them.

4.13           Certificates, Authorities and Permits.  The Company and each Subsidiary possess adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by it, and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely to the Company or such Subsidiary, could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.
 
4.14           Labor Matters.

                                (a)           Except as set forth on Schedule 4.14, the Company is not a party to or bound by any collective bargaining agreements or other agreements with labor organizations.  The Company has not violated in any material respect any laws, regulations, orders or contract terms, affecting the collective bargaining rights of employees, labor organizations or any laws, regulations or orders affecting employment dis crimination, equal opportunity employment, or employees’ health, safety, welfare, wages and hours.
 
 
 
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                                (b)           (i) There are no labor disputes existing, or to the Company’s Knowledge, threatened, involving strikes, slow-downs, work stoppages, job actions, disputes, lockouts or any other disruptions of or by the Company’s employees, (ii) there are no unfair labor practices or petitions for election pending or, to the Company’s Knowledge, threatened before any governmental agency or labor commission relating to the Company’s employees, (iii) no demand for recognition or certification heretofore m ade by any labor organization or group of employees is pending with respect to the Company, and (iv) to the Company’s Knowledge, the Company enjoys good labor and employee relations with its employees and labor organizations.

                                (c)           The Company is, and at all times has been, in compliance in all material respects with all applicable laws respecting employment (including laws relating to classification of employees and independent contractors) and employment practices, terms and conditions of employment, wages and hours, and immigration and naturalization.

                                (d)           Except as disclosed in the SEC Filings or as described on Schedule 4.14, the Company is not a party to, or bound by, any employment or other contract or agreement that contains any severance, termination pay or change of control liability or obligation, including, without limitation, any “excess parachute payment,” as defined in Section 2806(b) of the Internal Revenue Code.

                                (e)           Except as specified in Schedule 4.14, to the Company’s Knowledge, none of the Company’s employees is a Person who is either a United States citizen or a permanent resident entitled to work in the United States.  To the Company’s Knowledge, the Company has no liability for the improper classification by the Company of such employees as independent contractors or leased employees pri or to the Closing.

4.15           Intellectual Property. Except as specified in Schedule 4.15:

(a)           All Intellectual Property of the Company and its Subsidiaries is currently in compliance with all legal requirements (including timely filings, proofs and payments of fees) and is valid and enforceable.  No Intellectual Property of the Company or its Subsidiaries which is necessary for the conduct of Company’s and each of its Subsidiaries’ respective businesses as currently conducted or as currently proposed to be conducted has been or is now involved in any cancellation, dispute or litigation, and, to the Company’s Knowledge, no such action is threatened.  No patent of the Company or its Subsidiaries has been or is now involved in any interference, reissue, re-examination or opposition proceeding.

(b)           All of the licenses and sublicenses and consent, royalty or other agreements concerning Intellectual Property which are necessary for the conduct of the Company’s and each of its Subsidiaries’ respective businesses as currently conducted or as currently proposed to be conducted to which the Company or any Subsidiary is a party or by which any of their assets are bound (other than  generally commercially available, non-custom, off-the-shelf software application programs having a retail acquisition price of less than $10,000 per license) (collectively, “License Agreements”) are valid and binding obligations of the Company o r its Subsidiaries that are parties thereto and, to the Company’s Knowledge, the other parties thereto, enforceable in accordance with their terms, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally, and there exists no event or condition which will result in a material violation or breach of or constitute (with or without due notice or lapse of time or both) a default by the Company or any of its Subsidiaries under any such License Agreement.
 
 
 
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(c)           The Company and its Subsidiaries own or have the valid right to use all of the Intellectual Property that is necessary for the conduct of the Company’s and each of its Subsidiaries’ respective businesses as currently conducted or as currently proposed to be conducted and for the ownership, maintenance and operation of the Company’s and its Subsidiaries’ properties and assets, free and clear of all liens, encumbrances, adverse claims or obligations to license all such owned Intellectual Property and Confidential Information, other than licenses entered into in the ordinary course of the Company’s and its Subsidiaries’ businesses.  The Company and its Subsidiaries have a valid and enforceable right to use all third party Intellectual Property and Confidential Information used or held for use in the respective businesses of the Company and its Subsidiaries.

(d)           To the Company’s Knowledge, the conduct of the Company’s and its Subsidiaries’ businesses as currently conducted does not infringe or otherwise impair or conflict with (collectively, “Infringe”) any Intellectual Property rights of any third party or any confidentiality obligation owed to a third party, and, to the Company’s Knowledge, the Intellectual Property and Confidential Information of the Company and its Subsidiaries which are necessary for the conduct of Company’s and each of its Subsidiaries’ respective businesses as currently conducted or as currently proposed to be conducted are not being Inf ringed by any third party.  There is no litigation or order pending or outstanding or, to the Company’s Knowledge, threatened or imminent, that seeks to limit or challenge or that concerns the ownership, use, validity or enforceability of any Intellectual Property or Confidential Information of the Company and its Subsidiaries and the Company’s and its Subsidiaries’ use of any Intellectual Property or Confidential Information owned by a third party, and, to the Company’s Knowledge, there is no valid basis for the same.

(e)           The consummation of the transactions contemplated hereby and by the other Transaction Documents will not result in the alteration, loss, impairment of or restriction on the Company’s or any of its Subsidiaries’ ownership or right to use any of the Intellectual Property or Confidential Information which is necessary for the conduct of Company’s and each of its Subsidiaries’ respective businesses as currently conducted or as currently proposed to be conducted.

(f)           The Company and its Subsidiaries have taken reasonable steps to protect the Company’s and its Subsidiaries’ rights in their Intellectual Property and Confidential Information.  Each employee, consultant and contractor who has had access to Confidential Information which is necessary for the conduct of Company’s and each of its Subsidiaries’ respective businesses as currently conducted or as currently proposed to be conducted has executed an agreement to maintain the confidentiality of such Confidential Information and has executed appropriate agreements that are substantially consistent with the Company’s standard forms thereof, except where the failure to do so has not had and could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.  Except under confidentiality obligations, there has been no material disclosure of any of the Company’s or its Subsidiaries’ Confidential Information to any third party.
 
 
 
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4.16           Environmental Matters.  Except as specified in Schedule 4.16, to the Company’s Knowledge, neither the Company nor any Subsidiary (i) is in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), (i i) owns or operates any real property contaminated with any substance that is subject to any Environmental Laws, (iii) is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or (iv) is subject to any claim relating to any Environmental Laws, which violation, contamination, liability or claim has had or could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate; and there is no pending or, to the Company’s Knowledge, threatened investigation that might lead to such a claim.

4.17           Litigation.  Except as described on Schedule 4.17, there are no pending actions, suits or proceedings against or affecting the Company, its Subsidiaries or any of its or their properties; and to the Company’s Knowledge, no such actions, suits or proceedings are threatened or contemplated.

4.18           Financial Statements.  The financial statements included in each SEC Filing present fairly, in all material respects, the consolidated financial position of the Company as of the dates shown and its consolidated results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with United States generally accepted accounting principles applied on a consistent basis (“GAAP”) (except as may be disclosed therein or in the notes thereto, and, in the case of quarterly financial statements, as permitted by Form 10- QSB under the 1934 Act).  Except as set forth in the financial statements of the Company included in the SEC Filings filed prior to the date hereof or as described on Schedule 4.18, neither the Company nor any of its Subsidiaries has incurred any liabilities, contingent or otherwise, except those incurred in the ordinary course of business, consistent (as to amount and nature) with past practices since the date of such financial statements, none of which, individually or in the aggregate, have had or could reasonably be expected to have a Material Adverse Effect.

4.19           Insurance Coverage.  Except as set forth on Schedule 4.19, the Company and each Subsidiary maintains in full force and effect insurance coverage that is customary for comparably situated companies for the business being conducted and properties owned or leased by the Company and each Subsidiary, and the Company reasonably believes such insurance coverage to be adequate against all liabilities, claims and risks against which it is customary for comparably situated companies to insure.

4.20           Brokers and Finders.  No Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or upon the Company, any Subsidiary or an Investor for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Company, other than as described in Schedule 4.20.
 
 
 
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4.21           No Directed Selling Efforts or General Solicitation.  Neither the Company nor any Person acting on its behalf has conducted any general solicitation or general advertising (as those terms are used in Regulation D) in connection with the offer or sale of any of the Securities.

4.22           No Integrated Offering.  Neither the Company nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any Company security or solicited any offers to buy any security, under circumstances that would adversely affect reliance by the Company on Section 4(2) for the exemption from registration for the transactions contemplated hereby or would require registration of the Securities under the 1933 Act.

4.23           Private Placement.  The offer and sale of the Securities to the Investors as contemplated hereby is exempt from the registration requirements of the 1933 Act.

4.24           Questionable Payments.  Neither the Company nor any of its Subsidiaries nor, to the Company’s Knowledge, any of their respective current or former stockholders, directors, officers, employees, agents or other Persons acting on behalf of the Company or any Subsidiary, has on behalf of the Company or any Subsidiary or in connection with their respective businesses: (a) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payments to any govern mental officials or employees from corporate funds; (c) established or maintained any unlawful or unrecorded fund of corporate monies or other assets; (d) made any false or fictitious entries on the books and records of the Company or any Subsidiary; (e) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment of any nature; or (f) taken any actions that would violate the U.S. Foreign Corrupt Practices Act of 1977, as amended.

4.25           Transactions with Affiliates.  Except as disclosed in the SEC Filings or as disclosed on Schedule 4.25, none of the officers or directors of the Company and, to the Company’s Knowledge, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than as holders of stock options and/or warrants, and for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from , or otherwise requiring payments to or from any officer, director or such employee or, to the Company’s Knowledge, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.
 
 
 
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4.26           Internal Controls.  The Company is in material compliance with the provisions of the Sarbanes-Oxley Act of 2002 currently applicable to the Company.  The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in 1934 Act Rules 13a-14 and 15d-14) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company, including the Subsidiaries, is made known to the certifying officers by others within those entities, particularly during the period in which the Company’s most recently filed periodic report under the 1934 Act, as the case may be, is being prepared.  The Company’s certifying officers have evaluated the effectiveness of the Company's controls and procedures as of the end of the period covered by the most recently filed periodic report under the 1934 Act (such date, the “Evaluation Date”).  The Company presented in its most recently filed periodic report under the 1934 Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no significant changes in the Company’s internal controls (as such term is defined in Item 308 of Regulation S-B) or, to the Company’s Knowledge, in other factors that could significantly affect the Company’s internal controls.  The Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with GAAP and the applicable requirements of the 1934 Act.  In the event that the Company is notified, either by an Investor, the SEC, or some other party, that the Company is not in compliance with the provisions of the Sarbanes-Oxley act of 2002, the Company shall have ten (10) days (or such amount of time as is reasonably practicable) to cure such non-compliance).

4.27           Disclosures.  Neither the Company nor any Person acting on its behalf has provided the Investors or their agents or counsel with any information that constitutes or might constitute material, non-public information.  The written materials delivered to the Investors in connection with the transactions contemplated by the Transaction Documents do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading.

4.28           Dilution; Hedging. The Company acknowledges and agrees that the issuance of the Securities will have a potential dilutive effect on the equity holdings of other holders of the Company’s equity or rights to receive equity of the Company. The Board of Directors of the Company has concluded, in its good faith business judgment, that the issuance of the Securities is in the best interests of the Company.  Subject to compliance with applicable securities laws, the Investors may enter into lawful hedging transactions with third parties, which may in turn engage in short sales of the Securities in the course of hedging the position they assu me and the Investors may also enter into short positions or other derivative transactions relating to the Securities, or interests in the Securities, and deliver the Securities, or interests in the Securities, to close out their short or other positions or otherwise settle short sales or other transactions, or loan or pledge the Securities, or interests in the Securities, to third parties that in turn may dispose of these Securities.
 
 
 
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4.29           No Market Manipulation.  The Company has not taken, and will not take, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilization or manipulation of the price of the Common Stock of the Company to facilitate the sale or resale of the Securities or affect the price at which the Securities may be issued or resold.

5.             Representations and Warranties of the Investors.  Each of the Investors hereby severally, and not jointly, represents and warrants to the Company that:

5.1           Organization and Existence.  Such Investor is an individual or a validly existing corporation, limited partnership, or limited liability company and has all requisite individual, corporate, partnership or limited liability company power and authority to invest in the Securities pursuant to this Agreement.

5.2           Authorization.  The execution, delivery and performance by such Investor of the Transaction Documents to which such Investor is a party have been duly authorized and will each constitute the valid and legally binding obligation of such Investor, enforceable against such Investor in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally.

5.3           Purchase Entirely for Own Account.  The Securities to be received by such Investor hereunder will be acquired for such Investor’s own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the 1933 Act, and such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same in violation of the 1933 Act without prejudice, however, to such Investor’s right at all times to sell or otherwise dispose of all or any part of such Securities in compliance with applicable federal and state sec urities laws.  Nothing contained herein shall be deemed a representation or warranty by such Investor to hold the Securities for any period of time.  Such Investor is not a broker-dealer registered with the SEC under the 1934 Act or an entity engaged in a business that would require it to be so registered.

5.4           Investment Experience.  Such Investor acknowledges that it can bear the economic risk and complete loss of its investment in the Securities and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby.

5.5           Disclosure of Information.  Such Investor has had an opportunity to receive all information related to the Company requested by it and to ask questions of and receive answers from the Company regarding the Company, its business and the terms and conditions of the offering of the Securities.  Such Investor acknowledges receipt of copies of the SEC Filings.  Neither such inquiries nor any other due diligence investigation conducted by such Investor shall modify, amend or affect such Investor’s right to rely on the Company’s representations and warranties contained in this Agreement.
 
 
 
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5.6           Restricted Securities.  Such Investor understands that the Securities are characterized as “restricted securities” under the U.S. federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the 1933 Act only in certain limited circumstances.

5.7           Legends.  It is understood that, except as provided below, certificates evidencing the Securities may bear the following or any similar legend:

(a)           “The securities represented hereby may not be transferred unless (i) such securities have been registered for sale pursuant to the 1933 Act, as amended, (ii) such securities may be sold pursuant to Rule 144(k), or (iii) the Company has received an opinion of counsel reasonably satisfactory to it that such transfer may lawfully be made without registration under the 1933 Act, as amended, or qualification under applicable state securities laws.”

(b)           If required by the authorities of any state in connection with the issuance of sale of the Securities, the legend required by such state authority.

5.8           Accredited Investor.  Such Investor is an “accredited investor” within the meaning of Rule 501(a) of Regulation D promulgated under the 1933 Act for the reasons checked on Schedule 1 hereto.

5.9           No General Solicitation.  Such Investor did not learn of the investment in the Securities as a result of any public advertising or general solicitation.

5.10           Brokers and Finders.  No Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or upon the Company, any Subsidiary or an Investor for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of such Investor.

5.11           Reliance on Exemptions.  Such Investor understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and such Investor’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Investor set forth herein in order to determine the availability of such exemptions and the eligibility of such Investor to acquire the Securities.

5.12           Company Stock Listing.  The Investors understand and acknowledge that the Company is currently publicly reporting but not listed on any trading market, exchange or quotation system.  The Investors agree that the Company, in its sole discretion, may apply to be listed on the OTCBB or a national exchange such as the AMEX, NYSE or Nasdaq.
 
 
 
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6.           Conditions to Closing.

6.1           Conditions to the Investors’ Obligations. The obligation of each Investor to purchase the Offering Shares at the Closing is subject to the fulfillment to such Investor’s satisfaction, on or prior to the Closing Date, of the following conditions, any of which may be waived by such Investor (as to itself only):

(a)           The representations and warranties made by the Company in Section 4 hereof qualified as to materiality shall be true and correct at all times prior to and on the Closing Date, except to the extent any such representation or warranty expressly speaks as of a specific date, in which case such representation or warranty shall be true and correct as of such date, and, the representations and warranties made by the Company in Section 4 hereof not qualified as to materiality shall be true and correct in all material respects at all times prior to and on the Closing Date, except to the extent any such representation or warranty expressly speaks as of a specific date, in which case such representation or warranty shall be true and correct in all material respects as of such specific date.

(b)           The Company shall have performed in all material respects all obligations and covenants herein required to be performed by it on or prior to the Closing Date.

(c)           The Company shall have obtained any and all consents, permits, approvals, registrations and waivers necessary or appropriate for consummation of the purchase and sale of the Offering Shares and the consummation of the other transactions contemplated by the Transaction Documents to be consummated on or prior to the Closing Date, all of which shall be in full force and effect.

(d)           The Company shall have executed and delivered certificates representing the appropriate number of Offering Shares to the Escrow Agent.

(e)           The Company and the Escrow Agent shall have executed and delivered the Escrow Agreement.

(f)           No judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy court or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have been instituted by any governmental authority, enjoining or preventing the consummation of the transactions contemplated hereby or in the other Transaction Documents.

(g)           No stop order or suspension of trading shall have been imposed by the SEC or any other governmental or regulatory body with respect to public trading in the Common Stock.

(h)           The Company shall have received not greater than $3,782,393, in the aggregate.

6.2           Conditions to Obligations of the Company. The Company’s obligation to sell and issue the Offering Shares at the Closing is subject to the fulfillment to the satisfaction of the Company on or prior to the Closing Date of the following conditions, any of which may be waived by the Company:
 
 
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(a)           The representations and warranties made by the Investors in Section 5 hereof, (the “Investment Representations”), shall be true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date with the same force and effect as if they had been made on and as of said date.  The Investment Representations shall be true and correct in all respects when made, and shall be true and correct in all respects on the Closing Date with the same force and effect as if they had been made on and as of said date.  The Investors shall have performed in all material respects all obligations and covenants herein required to be performed by them on or prior to the Closing Date.

(b)           The Investors shall have delivered to the Escrow Agent the Share Purchase Price for the number of Shares to be purchased.

(c)           The Investor Agent and the Escrow Agent shall have executed and delivered the Escrow Agreement.

(d)           No judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy court or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have been instituted by any governmental authority, enjoining or preventing the consummation of the transactions contemplated hereby or in the other Transaction Documents.

(e)           The Company shall have received not greater than $3,782,393, in the aggregate.

6.3           Termination of Obligations to Effect Closing; Effects.

(a)           The outstanding obligations of the Company, on the one hand, and the Investors, on the other hand, to effect the Closing shall terminate as follows:

(i)           Upon the mutual written consent of the Company and the Investors;

(ii)           By the Company if any of the conditions set forth in Section 6.2 shall have become incapable of fulfillment, and shall not have been waived by the Company;

(iii)           By an Investor (with respect to itself only), if such Investor reasonably determines that any condition set forth in Section 6.1 has become incapable of fulfillment, and such Investor does not waive such condition; or

(iv)           By either the Company, or any Investor (with respect to itself only), only upon written notice of its intent to terminate the transaction, if the Closing has not occurred on or prior to February 15, 2011; provided, however, that, except in the case of clause (i) above, the party seeking to terminate its obligation to effect the Closing shall not then be in breach of any of its representations, warranties, covenants or agreements contained in this Agreement or the other Transaction Documents if such brea ch has resulted in the circumstances giving rise to such party’s seeking to terminate its obligation to effect the Closing.
 
 
 
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(b)           In the event of termination by any Investor of its obligations to effect the Closing pursuant to this Section 6.3, written notice thereof shall forthwith be given to the other Investors and the other Investors shall have the right to terminate their obligations to effect such Closing upon written notice to the Company and the other Investors.  Nothing in this Section 6.3 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction Documents.

7.            Covenants and Agreements of the Company.

7.1           Reports.  If the information is not already publicly disclosed in the Company’s public filings available on the SEC’s website, the Company will furnish to the Investors and/or their assignees such information relating to the Company and its Subsidiaries as from time to time may reasonably be requested by the Investors and/or their assignees; provided, however, that the Company shall not disclose material nonpublic information to the Investors, or to advisors to or representatives of the Investors, unless prior to disclosure of such information the Company identifies such information as being material nonpublic information and pro vides the Investors, such advisors and representatives with the opportunity to accept or refuse to accept such material nonpublic information for review and any Investor wishing to obtain such information enters into an appropriate confidentiality agreement with the Company with respect thereto.

7.2           No Conflicting Agreements.  The Company will not take any action, enter into any agreement or make any commitment that would conflict or interfere in any material respect with the Company’s obligations to the Investors under the Transaction Documents.

7.3           Insurance.  The Company shall not materially reduce the insurance coverages described in Section 4.19.

7.4           Compliance with Laws.  The Company will comply in all material respects with all applicable laws, rules, regulations, orders and decrees of all governmental authorities.

7.5           Removal of Legends.  Upon the earlier of (i) registration for resale pursuant to the Registration Rights Agreement or (ii) Rule 144(k) becoming available the Company shall (A) deliver to the transfer agent for the Common Stock (the “Transfer Agent”) irrevocable instructions that the Transfer Agent shall reissue a certificate representing shares of Common Stock without legends upon receipt by such Transfer Agent of the legended certificates for such shares, together with either (1) a customary representation by the Investor that Rule 144 applies to the shares of Comm on Stock represented thereby, and (B) cause its counsel to deliver to the Transfer Agent one or more blanket opinions to the effect that the removal of such legends in such circumstances may be effected under the 1933 Act.  From and after the earlier of such dates, upon an Investor’s written request, the Company shall promptly cause certificates evidencing the Investor’s Securities to be replaced with certificates which do not bear such restrictive legends.
 
 
 
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8.             Survival and Indemnification.

8.1           Survival.  The representations, warranties, covenants and agreements contained in this Agreement shall survive the Closing of the transactions contemplated by this Agreement for a period of one (1) year.

8.2           Indemnification.  The Company agrees to indemnify and hold harmless each Investor and its Affiliates and their respective directors, officers, employees and agents from and against any and all losses, claims, damages, liabilities and expenses (including without limitation reasonable attorney fees and disbursements and other expenses incurred in connection with investigating, preparing or defending any action, claim or proceeding, pending or threatened and the costs of enforcement thereof) (collectively, “Losses”) to which such Person may become subject as a result of any breach of representation, warranty, covenant or agreement made by or to be performed on the part of the Company under the Transaction Documents, and will reimburse any such Person for all such amounts as they are incurred by such Person.

8.3           Conduct of Indemnification Proceedings.  Promptly after receipt by any Person (the Indemnified Person”) of notice of any demand, claim or circumstances which would or might give rise to a claim or the commencement of any action, proceeding or investigation in respect of which indemnity may be sought pursuant to Section 8.2, such Indemnified Person shall promptly notify the Company in writing and the Company shall assume the defense th ereof, including the employment of counsel reasonably satisfactory to such Indemnified Person, and shall assume the payment of all fees and expenses; provided, however, that the failure of any Indemnified Person so to notify the Company shall not relieve the Company of its obligations hereunder except to the extent that the Company is materially prejudiced by such failure to notify.  In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (i) the Company and the Indemnified Person shall have mutually agreed to the retention of such counsel; or (ii) in the reasonable judgment of counsel to such Indemnified Person representation of both parties by the same counsel would be i nappropriate due to actual or potential differing interests between them.  The Company shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, but if settled with such consent, or if there be a final judgment for the plaintiff, the Company shall indemnify and hold harmless such Indemnified Person from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment.  Without the prior written consent of the Indemnified Person, which consent shall not be unreasonably withheld, the Company shall not effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Person from all liability arising out of such proceeding.
 
 
 
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9.            Miscellaneous.

9.1           Successors and Assigns.  This Agreement may not be assigned by a party hereto without the prior written consent of the Company or the Investors, as applicable, provided, however, that an Investor may assign its rights and delegate its duties hereunder in whole or in part to an Affiliate or to a third party acquiring some or all of its Securities in a private transaction without the prior written consent of the Company or the other Investors, after notice duly given by such Investor to the Company provided, that no such assignment or obligation shall affect the obligations of such Investor hereunder.  The provisions of this Agreemen t shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties.  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

9.2           Counterparts; Faxes.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  This Agreement may also be executed via facsimile, which shall be deemed an original.

9.3           Titles and Subtitles.  The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

9.4           Notices.  Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given as hereinafter described (i) if given by personal delivery, then such notice shall be deemed given upon such delivery, (ii) if given by telex or telecopier, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (iii) if given by mail, then such notice shall be deemed given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such notice is deposited in first class mail, postage prepaid, and (iv) if given by an intern ationally recognized overnight air courier, then such notice shall be deemed given one Business Day after delivery to such carrier.  All notices shall be addressed to the party to be notified at the address as follows, or at such other address as such party may designate by ten days’ advance written notice to the other party:

If to the Company:

NewEra Technology Development Co., Ltd.
c/o Hunan Xiangmei Food Co., Ltd.
Attn:   Mr. Taiping Zhou
200 Taozhu Road, Wuxi Town
Qiyang County, Yongzhou City
Hunan Province, China
Tel: [insert]
 
 
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With a copy to:

Anslow & Jaclin, LLP
195 Route 9 South, Suite 204
Manalapan, NJ 07726
Attn: Richard I. Anslow, Esq.
Fax: (732) 577-1188

If to the Investors:

to the addresses set forth on the signature pages hereto.

9.5           Expenses.  The parties hereto shall pay their own costs and expenses in connection herewith.  In the event that legal proceedings are commenced by any party to this Agreement against another party to this Agreement in connection with this Agreement or the other Transaction Documents, the party or parties which do not prevail in such proceedings shall severally, but not jointly, pay their pro rata share of the reasonable attorneys’ fees and other reasonable out-of-pocket costs and expenses incurred by the prevailing party in such proceedings.

9.6           Amendments and Waivers.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Investors.  Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Securities purchased under this Agreement at the time outstanding, each future holder of all such Securities, and the Company.  Notwithstanding the foregoing, no consideration shall be offered or paid by the Company to any Investor to a mend or consent to a waiver or modification of any provision of any of this Agreement unless the same consideration also is offered to all of the holders of the Offering Shares.

9.7           Publicity.  No public release or announcement concerning the transactions contemplated hereby shall be issued by the Company or the Investors without the prior consent of the Company (in the case of a release or announcement by the Investors) or the Investors (in the case of a release or announcement by the Company) (which consents shall not be unreasonably withheld), except as such release or announcement may be required by law or the applicable rules or regulations of any securities exchange or securities market, in which case the Company or the Investors, as the case may be, shall allow the Investors or the Company, as applicable, to the extent reasonably practicable in the circumstances, reasonable time to comment on such release or announcement in advance of such issuance.

9.8           Severability.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect.
 
 
 
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9.9           Entire Agreement.  This Agreement, including the Exhibits and the Disclosure Schedules, and the other Transaction Documents constitute the entire agreement among the parties hereof with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.

9.10           Further Assurances.  The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

9.11           Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.  This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Nevada without regard to the choice of law principles thereof.  Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of Nevada for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby.  Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement.  Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court.  Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

9.12           Independent Nature of Investors' Obligations and Rights.  The obligations of each Investor under any Transaction Document are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under any Transaction Document.  The decision of each Investor to purchase Securities pursuant to the Transaction Documents has been made by such Investor independently of any other Investor.  Nothing contained herein or in any Transaction Document, and no act ion taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.  Each Investor acknowledges that no other Investor has acted as agent for such Investor in connection with making its investment hereunder and that no Investor will be acting as agent of such Investor in connection with monitoring its investment in the Securities or enforcing its rights under the Transaction Documents.  Each Investor shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose. &# 160;The Company acknowledges that each of the Investors has been provided with the same Transaction Documents for the purpose of closing a transaction with multiple Investors and not because it was required or requested to do so by any Investor.

[The remainder of this page is left blank intentionally. Signature pages follow]
 
 
 
-22-

 
 

 
IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first above written.

NEWERA TECHNOLOGY DEVELOPMENT CO., LTD.


By:                                                                          
Name:
Title:
 
 
 
 
 

 
 
-23-

 


 
SECURITIES PURCHASE AGREEMENT
 
 
COUNTERPART SIGNATURE PAGE
 
By signing below, the undersigned agrees to the terms of the Securities Purchase Agreement and to purchase the number of Offering Shares set forth below.
 
 
INVESTOR:
Number of Shares being purchased:
 
                                                                                   
                                                                                  
 
By:                                                                             
Name:
Title:
 
 
Address:                                                           
                                                         
Facsimile:                                                                  
with a copy to:
Aggregate Purchase Price:
 
___________________________________
 
 
Please complete the following:
 
 
 
1.
The exact name that your Offering Shares are to be registered in (this is the name that will appear on your Share certificates). You may use a nominee name if appropriate:
                                                                                           
         
 
2.
The relationship between the Investors of the Offering Shares and the Registered Holder listed in response to item 1 above:
                                                                                           
         
 
3.
The mailing address and facsimile number of the Registered Holder listed in response to item 1 above (if different from above):
                                                                                          
                                                                                          
Facsimile:                                                                    
 
         
 
4.
The Social Security Number or Tax Identification Number of the Registered Holder listed in the response to item 1 above:
                                                                                            
 

 
 
-24-

 

Exhibit A

(Form of Escrow Agreement)


 
 
 
 
 
 
 
 
 
 -25-

EX-10.2 5 f8k020111ex10ii_neweratech.htm CALL OPTION AGREEMENT option.htm
 
Exhibit 10.2

CALL OPTION AGREEMENT
           选择权协议
 

 
BETWEEN

LUCY XIA

 

AND


Individual Listed in Schedule A
附件A所列个人




Date: January 15, 2011
日期:2011115
 
 
1

 
 

 
THIS CALL OPTION AGREEMENT (this "Agreement") is made on January 15, 2011 by and between LUCY XIA, with U.S. Passport number of 075323787 (the "Grantor"), and the individual listed in Schedule A (the "Grantee").
 
 
本选择权协议(“本协议”)由LUCY XIA,一位持有编号075323787的美国护照持有人(“授予人”),和附件A所列个人(“被授予人”)于20111月15日签订。
 
The Grantor and the Grantee are collectively referred to as the "Parties" and each of them as a "Party".
 
授予人和被授予人合称“各方”,单独称为“一方”
 
Whereas, the Grantor owns 100% issued and outstanding shares of Excel Deal International Limited, a company incorporated under the laws of British Virgin Islands, (“BVI Company”)
 
鉴于,授予人拥有英属维京群岛公司,Excel Deal International Limited (BVI 公司”) 100%发行或已发行股份。
 
Whereas, the Grantor has agreed to grant to the Grantee, and the Grantee has agreed to accept from the Grantor, a call option (the “Option”) to purchase certain number of ordinary shares of BVI Company (the "Option Shares") as set forth in Schedule A to this Agreement.
 
鉴于,授予人同意授予被授予人,且被授予人同意从授予人处接受BVI 公司于本协议附件A列明的一定数量普通股(“选择权股份”)的选择权(“选择权”)。
 
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
 
据此,基于前述事实以及各方在本协议项下所做的相互承诺与保证,以及各方在此确认收讫并确认充分的其他良好有价对价,协议各方现达成如下协议,以资信守:
 
1  
DEFINITIONS
定义
 
 
  1.1  Defined Terms : In this Agreement (including the Recitals and the Schedules), unless the context otherwise requires, the following words and expressions shall have the following meanings:
    定义的术语:本协议(包括鉴于条款及附件)中,除上下文另有所指外,下列词语表达的含义如下:
     
    "Business Day" means a day (other than Saturdays, Sundays and public holidays) on which banks are generally open for business in China;
    “工作日”指中国境内银行通常营业日(除周六、周日及公众假日外);
     
    "China" or "PRC" means the People's Republic of China;
    “中国”指中华人民共和国;
 
 
2

 
 
 
    "Completion Date" means the date falling seven (7) Business Days after the service of the Exercise Notice by the Grantee on the Grantor;
    “交割日”指被授予人向授予人发出行权通知后的七(7)个工作日届满之日;
     
    "Completion" means the completion of the sale to and purchase by the Grantee of the Option Shares under this Agreement;
    “交割”指本协议项下选择权股份的买卖完成;
     
    "Distributions" means any cash proceeds arising from or in respect of, or in exchange for, or accruing to or in consequence of the Option Shares from the Effective Date to the Completion Date, including without limitation the Dividends.
    “分红”指自生效日始至交割日止,源自、有关于、基于交换、孳息于、或产生于选择权股份的任何现金收益,包括但不限于红利;
     
    "Dividends" means the dividends declared by BVI Company and accrued in respect of the Option Shares (whether or not such dividends shall have been paid and received by the Grantee);
    “红利”指由选择权股份而产生的经BVI 公司公告并累计的股息(无论该股息是否已被支付并由被授予人获得)
     
    "Effective Date" means the execution date of this Agreement;
    “生效日”指本协议签署之日;
     
    "Exercise" means the exercise by the Grantee or his Nominee(s) of the Option pursuant to the terms of this Agreement;
    “行权”指由选择权之被授予人或其提名人依本协议条款行权;
     
    "Exercise Notice" means the notice substantially in the form set out in Part I of Schedule B;
    “行权通知”指符合附件BI部分中指明格式之通知;
     
    "Exercise Price" means the exercise price to be paid by the Grantee (or his Nominee(s), as the case may be) to the Grantor in respect of the Option Shares issued to such Grantee as set forth opposite his name in Schedule A;
    “行权价”指就发行给附件A所列该被授予人(或其提名人,依情况而定)的相应选择权股份由被授予人向授予人所支付之行权价格。
     
    "Nominee" means such person nominated by a Grantee in the Transfer Notice to be the transferee of the Option or Option Shares;
    “提名人”指由被授予人在转让通知中提名的选择权或选择权股份之受让人;
     
    "Option Effective Date" has the meaning ascribed to it in Clause 2.3;
    “选择权生效日”之定义见第2.3条款;
     
    "RMB" means the lawful currency of China;
    “人民币”指中国合法流通货币;
 
 
3

 
 
    "Transfer Notice" means the notice substantially in the form set out in Part II of Schedule B;
    “转让通知”指符合附件B中指明格式之通知;
     
    "US$" or "United States Dollar" means the lawful currency of the United States of America.
     
    “美元”或“美国元”指美利坚合众国之合法流通货币。
     
     
  1.2 Interpretation: Except to the extent that the context requires otherwise:
    解释:除上下文另有要求外:
     
  1.2.1 words denoting the singular shall include the plural and vice versa; words denoting any gender shall include all genders; words denoting persons shall include firms and corporations and vice versa;
    单数词应包括复数含义,反之亦然;带有一种性别含义的词语包括每一性别,指一个人的词语包括公司和法人,反之亦然;
     
  1.2.2 any reference to a statutory provision shall include such provision and any regulations made in pursuance thereof as from time to time modified or re-enacted whether before or after the date of this Agreement and (so far as liability thereunder may exist or can arise) shall include also any past statutory provisions or regulations (as from time to time modified or re-enacted) which such provisions or regulations have directly or indirectly replaced;
    所指法律规定应包括其规定和依此制定的规章,以及任何修订、重新制定的内容,不论该修订或重新制定发生于本协议日之前或之后。并且(只要该规定项下之责任可能存在或可以出现)也应包括任何过去的被(修订、重新制定)直接或间&# 25509;取代的法律规定或规章;
     
  1.2.3 the words "written" and "in writing" include any means of visible reproduction;
    词语“书面的”或“以书面形式”,包括可见性重现之任何方式;
     
  1.2.4 any reference to "Clauses", "Recitals" and "Schedules" are to be construed as references to clauses and recitals of, and schedules to, this Agreement; and
    引用“条款”、“鉴于条款”及“附件”,应解释为指向本协议之条款、鉴于条款及附件;及
     
  1.2.5 any reference to a time of day is a reference to China time unless provided otherwise.
    除上下文另有所指外,时间指中国时间。
     
  1.3 Headings: The headings in this Agreement are inserted for convenience only and shall be ignored in construing this Agreement.
    标题:本协议标题之加入仅为方便之用且在解释本协议时应予忽略。
 
2  
OPTION
 
  2.1 Option: The Grantor hereby irrevocably and unconditionally grants to the Grantee an Option for such Grantee to acquire from the Grantor, at the Exercise Price, at any time during the Exercise Period (defined below), to the extent that the Option has vested, any or all of the Option Shares set forth opposite his/her name in Schedule A hereto, free from all claims, liens, charges, pledges, mortgages, trust, equities and other encumbrances, and with all rights attaching thereto on the Completion Date.
    选择权  授予人在此不可撤销地、无条件地授予被授予人在行权期间(定义见下文)内的任何时间,在授予的选择权范围内按照行权价向授予人购买与附件A所列姓名相应的选择权股份的选择权,前述选择权股份在交割日不应存在任何索赔、留置、抵押、质押、担保、信托或其他权利负担,且应附有所有相关权利。
 
 
4

 
 
  2.2 Vesting Schedule: Subject to the terms and conditions hereto, the Option may be exercised, in whole or in part, in accordance with the following schedule:
    授予方案:基于本协议条款和条件,选择权根据下列方案全部或部分行权:
     
  2.2 34% of the Option Shares subject to the Option shall vest and become exercisable on January 30, 2012; 33% of the Option Shares subject to the Option shall vest and become exercisable on January 30, 2013 and 33% of the Option Shares subject to the Option shall vest and become exercisable on January 30, 2014.
    选择权中34%的选择权股份应于2012130日授予并可行权;选择权中33%的选择权股份应于2013130日授予并可行权;选择权中33%的选择权股份应于2014130日授予并可行权。
     
  2.3 Exercise Period: The Option shall vest and become effective and exercisable at the times commencing on the dates set forth in Section 2.2 (the “Option Effective Date”) and shall expire five years from the date of the Option.  The Option may be exercised by the Grantee (or his Nominee on behalf of the Grantee), to the extent that the Option shall have vested, and only to that extent, at any time prior to five years from the date of this Option (“Exercise Period”).
  2.3 行权期间  选择权应自第2.2条所述日期起授予、生效和可行权(“选择权生效日”),并于选择权之日起5年到期。被授予人(或代表授予 0154;的提名人)在本选择权日起5年内(“行权期间”)并在选择权已被授予的范围内也仅在该范围内,可以进行行权。
     
  2.4 Nominees: The Grantee may, at any time during the Exercise Period, at his sole discretion, nominate one or more person(s) (each a “Nominee”) to be the transferee(s) of whole or part of the shares subject to his Option, who shall hold and/or exercise the transferred Option on behalf of the Grantee.
  2.4 提名人 被授予人在行权期间内可以随时自行提名一人或多人(均称为“提名人”),作为他所享有受限于选择权的部分或全部股份受让人,前述提名人应代表被授予人持有和/或行使෽ 3;项经转让的选择权。
     
  2.5   Exercise Notice: The Option may be exercised by the Grantee or his Nominee(s), in whole or in part, at any time during the Exercise Period, by serving an Exercise Notice on the Grantor.
  2.5 行权通知 在行权期间内,被授予人或其提名人随时可以通过向授予人递送行权通知的方式行使全部或部分选择权。
 
 
5

 
 
  2.6 Exercise: The Grantor agrees that he shall, upon receipt of the Exercise Notice, transfer to the Grantee (or his/her Nominee(s), as the case may be) any and all of the Option Shares specified in the Exercise Notice, free from all claims, liens, charges, pledges, mortgages, trust, equities and other encumbrances, and with all rights now or hereafter attaching thereto.  The Option shall be exercisable only in compliance with the laws and regulations of the PRC and the British Virgin Islands, and such Grantee (or his Nominee(s), as the case may be) shall complete any and all approval or registration procedures regarding the exercise of his Option at PRC competent authorities in accordance with applicable PRC laws and regulations.
  2.6 行权 授予人同意,其将在收到行权通知的前提下,向被授予人(或其提名人,依情况而定)转让行权通知所述数额的选择权股份。前述选择权股份不应存在任何索赔、留置、抵押、质押、担保、信托或 其他权利负担,且应附有所有相关权利。该等选择权仅在遵守中国和英属维京群岛法律、法规时可行权。且为遵守所适用的中国法律法规,该被授予人(或其提名人,依情况而定)应在中国主管当局就他/她的选择权的行权完成全部批准或登记程序。
     
  2.7 Transfer Notice: In case that a Grantee transfers any or all of his/her Option to one or more Nominee(s) in accordance with Clause 2.4 above, the Grantee shall serve a Transfer Notice on the Grantor.
  2.7 转让通知 如果被授予人根据上述2.4条的规定向一位或多位提名人转让其全部或部分选择权,被授予人应向授予人递送转让通知。
     
  2.8 Transfer to Nominees: The Grantor agrees that he shall, upon receipt of the Transfer Notice, take all actions necessary to allow the Nominee(s) to be entitled to any or all of Option Shares specified in the Transfer Notice.
  2.8 转让给提名人 授予人同意,在收到转让通知后,其将采取必要措施保证提名人按照转让通知载明的数额享有相应的选择权股份。
     
    Upon exercise by any Nominee(s) of the transferred Option on behalf of the Grantee, the Grantee shall serve the Exercise Notice on the Grantor in his own name for the exercising Nominee(s).  Upon receipt of such Exercise Option, the Grantor shall issue to such Nominee(s) any and all of the relevant Option Shares in the same manner as specified in Clause 2.6.
    在提名人代表被授予人行使转让选择权时,被授予人应以自己的名义为行权的提名人向授予人递送行权通知。在收到转让通知后,授予人应依与本协议2.6条款规定相同的方式,向该等提名人发行部分或全部相关选择权股份 290;
     
  2.9 Payment of Exercise Price: Upon Exercise of the Option in whole or in part, the Grantee (or his Nominee(s), as the case may be) shall pay the Exercise Price to the Grantor.
  2.9 行权价款的支付 在上述选择权全部或部分行使之时,行权的被授予人(或其提名人,依情况而定)应向授予人支付行权价款。
     
  2.10 The Grantor’s Obligation upon Exercise: The Grantor agrees that upon the Exercise of any Option by the Grantee (or his Nominee(s)), he shall cause and procure the number of Option Shares provided in the Exercise Notice to be transferred to the Grantee (or his Nominee(s)) within seven (7) Business Days after the date of the Exercise Notice.
  2.10 行权时授予人的义务 授予人同意,在被授予人(或其提名人)行使选择权时,应在行权通知之日起七个工作日内,促使前述通知载明的选择权股份数额转让给被授予人(或其提名人)。
 
 
6

 
 
3  
INFORMATION, DISTRIBUTIONS AND ADJUSTMENTS
3.     信息、分红和调整
 
  3.1 Information: The Grantee shall be entitled to request from the Grantor at any time before the Completion, a copy of any information received from the Grantor which may be in the possession of the Grantor and, upon such request, the Grantor shall provide such information to the Grantee.
  3.1 信息 在上述交割前的任何时间,被授予人有权要求授予人向其提供授予人获得的在授予人处的任何信息副本;授予人应根据此等要求向被授予人提供相应信息。
     
  3.2 Distributions: The Grantor agrees that the Grantee shall be entitled to all the Distributions in respect of his Option Shares.  In the event that any such Distributions have been received by the Grantor for any reason, the Grantor shall cause the existing shareholder at the request of the Grantee to pay an amount equivalent to the Distributions received to the Grantee.
  3.2 分红 授予人同意,被授予人有权获得对于其选择权股份的分红。如果授予人基于任何事由获得上述分红,授予人应促使现有股东应被授予人的要求,按照与获得的分红相同的金额,向上述被授予人支付 等值款项。
     
  3.3 Adjustments: If, prior to the Completion, BVI Company shall effect any adjustment in its share capital (such as share split, share dividend, share combination or other similar acts), then the number of Option Shares and the Exercise Price shall be adjusted accordingly to take into account such adjustment.
  3.3 调整 如果在上述交割前,BVI 公司股本进行有效调整(例如:股份分拆、股份分红、股份合并或是其他类似调整),被授予人在行权时受让的选择权股份数额和行权价应在考虑到此等调& #25972;的情况下进行相应调整。
 
4  
COMPLETION
4        交割
 
  4.1 Time and Venue: Completion of the sale and purchase of the Option Shares pursuant to the Exercise shall take place at such place decided by the Grantee on the Completion Date and reasonably acceptable to the Grantor.  The parties agree that Hong Kong is a reasonable place for the completion of the sale.
  4.1 时间和地点 基于上述行权而进行的选择权股份买卖应于交割日在被授予人确定的并且授予人可合理接受的地点进行交割。各方同意香港是一个出售交割的合理的地点。
     
  4.2 Business at Completion: At Completion of each Exercise, all (but not part only) of the following shall be transacted:
  4.2 交割事项:在每次行权交割之时,以下所有(而非部分)事项均应办理:
     
  4.2.1 the exercising Grantee shall pay the Exercise Price to the Grantor by wire transfer or such other method as shall be reasonably acceptable to Grantor;
  4.2.1 行权的被授予人应以电汇或授予人可合理接受的其他方式向授予人支付行权价;
 
 
7

 
 
  4.2.2  the Grantor shall, and to the extent that any action on the part of other shareholders or the directors is required, procure the then existing shareholders and directors of BVI Company to, within seven (7) Business Days after the date of Exercise Notice, deliver to the exercising Grantee (or his Nominee(s), same below) the following documents and take all corporate actions necessary to give effect to such delivery:
  4.2.2 授予人及某种程度上被要求采取行动的其他股东或董事,应当并促使BVI 公司当时的股东和董事,在行权通知之日起七个工作日内,向行权的被授予人(或其提名人,以下相同)递送下列文件并采取使之生效的所有必备法人 4892;动:
     
  4.2.2.1  a share certificate or share certificates in respect of the number of the Option Shares exercised by the Grantee;
    载明行权的被授予人行权的选择权股份数额的股权凭证;
     
  4.2.2.2  a certified true copy of the register of members of BVI Company updated to show the entry of the Grantee as the holder of the Option Shares so exercised; and
    更新过的BVI 公司的股东名册的经认证的真实副本,该副本应载明此行权的被授予人作为经行权的选择权股份的持有人进入股东名册;及
     
  4.2.2.3  any other documents as the Grantee may reasonably believe necessary to give effect to the transfer of the exercised Option Shares.
    被授予人合理地相信使行权选择权股份转让生效所必需的其他文件
 
5  
CONFIDENTIALITY
5  保密
 
The transaction contemplated hereunder and any information exchanged between the Parties pursuant to this Agreement will be held in complete and strict confidence by the concerned Parties and their respective advisors, and will not be disclosed to any person except: (i) to the Parties’ respective officers, directors, employees, agents, representatives, advisors, counsel and consultants that reasonably require such information and who agree to comply with the obligation of non-disclosure pursuant to this Agreement; (ii) with the express prior written consent of the other Party; or (iii) as may be required to comply with any applicable law, order, regulation or ruling, or an order, request or direction of a government agency; provided, however, that the for egoing shall not apply to information that: (1) was known to the receiving Party prior to its first receipt from the other Party; (2) becomes a matter of public knowledge without the fault of the receiving Party; or (3) is lawfully received by the Party from a third person with no restrictions on its further dissemination.
协议各方及其顾问应对于本协议相关交易及有关信息严格保密,不应向任何人员披露;除非:(i) 在协议各方的管理人员、董事、员工、代理、代表、顾问均同意遵守本条保密义务和无披露约定的前 ;提下,根据前述人员的合理要求向该人员进行披露;(ii) 经本协议另一方书面同意的披露;(iii) 根据相关法律、法令、法规、判令的要求,或是根据有关部门的指示所进行的披露;但是,上述规定不应适用于以下信息:(1) 接 ;受方在从协议另一方取得相关信息之前已经取得的信息;(2) 非因接受方违约而被公众知晓的信息;(3)协议一方从不受传播限制的第三方处合法取得的信息。
 
 
8

 
 
6  
GRANTOR’S UNDERTAKINGS
6.     授予人的保证
 
 
6.1. Grantor agrees that in its capacity as holder of Option Shares, it shall not and shall not cause the BVI Company to, take any action or agree on behalf of the BVI Company to take any action to do the following, without the express written direction of the Grantee:
    授予人同意作为选择权股份持有人,在未经被授予人明示书面指示的前提下,其不得或不得促使BVI公司以BVI公司名义进行任何行动下列行动或同意进行下列活动:
     
  6.1.1 issue new shares, equity interests, registered capital, ownership interests, or equity-linked securities, or any options or warrants that are directly convertible into, or exercisable or exchangeable for, shares, equity, registered capital, ownership interest, or equity-linked securities of the BVI Company, other similar equivalent arrangements;
  6.1.1 发售或创设任何新股份、股权、注册资本、所有权益或类似股权的证券,以及可以直接行权转换为BVI 公司股份、股权、注册股本或所有权益的相关证券、购买选择权、认股权证或类似协议;
     
  6.1.2 alter the shareholding structure of the BVI Company (other than as a result of the transactions contemplated by this agreement);
  6.1.2 变更BVI 公司的持股结构(但依本协议转让现存股份的结果除外);
     
  6.1.3 cancel, redeem, forefeit or otherwise alter the shares of the BVI Company that Grantor holds;
  6.1.3 注销、回赎、取消或变更授予人持有的选择权股份;
     
  6.1.4 amend the register of members or the memorandum and articles of association of the BVI Company;
  6.1.4 修订BVI 公司章程或公司股东名册;
     
  6.1.5 liquidate or wind up the BVI Company;
  6.1.5 对于BVI 公司进行清盘或歇业;
     
  6.1.6 act or omit to act in such a way that would effect the interest in the BVI Company that Grantor holds;
  6.1.6 任何可能对于被授予人的选择权股份产生不利影响的作为或不作为
     
  6.1.7 transfer or dispose of any assets or liabilities of the BVI Company;
  6.1.7 转让或处分任何BVI公司资产或债务
     
  6.1.8 incur any obligations whatsoever, including any financial obligations, or borrow any money or assets from any bank or third party;
  6.1.8 承诺任何种类的义务,包括财务义务,或向银行或第三方借款;
     
  6.1.9 appoint or remove any officer or manager of the BVI Company;
  6.1.9 任命或免职任何BVI公司高级管理人员或经理;
 
 
9

 
 
  6.1.10 acquire property from any person;
  6.1.10 从任何人处取得资产
     
  6.1.11 enter into any contract with any third party;
  6.1.11 与第三方签署合同;
     
  6.1.12 invest funds or assets held by the BVI Company; or
  6.1.12 投资任何BVI公司持有的基金或资产;或
     
  6.1.13 take any action that would circumvent, oppose or interfere with the exercise of Grantees’ rights under this Agreement.
  6.1.13 进行任何限制、阻止或干扰被授予人行使本协议项下权利的行为。
     
  6.2  During the term of this agreement, Grantor hereby further agrees;
  6.2  在本协议期间,授予人同意:
     
 
6.2.1
to execute and deliver to any party any document, agreement, instrument, notice, letter or other item as requested by Grantee in connection with Grantee’s exercise of discretion and its rights hereunder;
 
6.2.1
依被授予人要求就被授予人行使其本协议项下权利签署任何文件、协议、票证、通知、函件等事项并向第三方传送。
     
  6.2.2 Grantor shall take any action as reasonably necessary, whether or not directed by Grantee, in order to realize the intent of the Parties under this Agreement.
  6.2.2 授予人不应采取任何行动变更BVI公司的管理层。
 
7  
MISCELLANEOUS
7     附则
 
  7.1 Indulgence, Waiver Etc: No failure on the part of any Party to exercise and no delay on the part of such Party in exercising any right hereunder will operate as a release or waiver thereof, nor will any single or partial exercise of any right under this Agreement preclude any other or further exercise of it or any other right or remedy.
  7.1 豁免、弃权 任何协议一方对于本协议相关权利的不行使或是迟延行使均不应视为该项权利的弃权或豁免;行使本协议项下的某一或部分权利,并不影响行使进一步权利、行使其他权利或救济。
     
  7.2 Effective Date and Continuing Effect of Agreement: This Agreement shall take effect from the Effective Date.  All provisions of this Agreement shall not, so far as they have not been performed at Completion, be in any respect extinguished or affected by Completion or by any other event or matter whatsoever and shall continue in full force and effect so far as they are capable of being performed or observed, except in respect of those matters then already performed.
  7.2 生效日及协议的持续效力 本协议应自生效日起生效。除已经履行的相关条款外,本协议所有条款如在交割时尚未被履行,应保持完整的效力,均不应基于上述交割而失效或是受到其他相关事由的影响。
 
 
10

 
 
  7.3 Successors and Assigns: This Agreement shall be binding on and shall ensure for the benefit of each of the Parties' successors and permitted assigns. Any reference in this Agreement to any of the Parties shall be construed accordingly.
  7.3 承继人和受让人 本协议基于协议各方及其承继方和许可受让方的利益而订立,并对于上述各方有约束效力。对本协议所涉的各方应作据此解释。
     
  7.4 Further Assurance: At any time after the date of this Agreement, each of the Parties shall, and shall use its best endeavors to procure that any necessary third party shall, execute such documents and do such acts and things as any other Party may reasonably require for the purpose of giving to such other Party the full benefit of all the provisions of this Agreement.
  7.4 进一步保证 自本协议签署之日起,为使协议对方获得本协议项下的充分利益,协议各方均应根据协议对方的合理要求,签署必要文件或采取必要的行动;或尽最大努力促使必要的第三方签署必要文件或 采取必要的行动。
     
  7.5 Remedies: No remedy conferred by any of the provisions of this Agreement is intended to be exclusive of any other remedy which is otherwise available at law, in equity, by statute or otherwise, and each and every other remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity, by statute or otherwise. The election of any one or more of such remedies by any Party shall not constitute a waiver by such Party of the right to pursue any other available remedies.
  7.5  救济 本协议约定的所有救济均不应排除普通法、衡平法、制订法等救济措施的适用;上述救济均应视为累积救济,且不应与前述普通法、衡平法、制订法等救济产生任何关联。协议 ;方选择一项或是多项救济不应视为放弃其他救济措施。
     
  7.6 Severability of Provisions: If any provision of this Agreement is held to be illegal, invalid or unenforceable in whole or in part in any jurisdiction, this Agreement shall, as to such jurisdiction, continue to be valid as to its other provisions and the remainder of the affected provision; and the legality, validity and enforceability of such provision in any other jurisdiction shall be unaffected.
  7.6 条款可分性 如果本协议的任何条款在任何法域被认定为非法、无效或不可履行,则本协议其他条款仍应保持完全的法律效力;并且,前述被认定无效的条款在其他法域内的合法性、有效性和可履行性均 不应影响。
     
  7.7 Governing Law: This Agreement shall be governed by, and construed in accordance with, the laws of the British Virgin Islands.
  7.7 适用法律 本协议应适用英属维京群岛的法律,并根据该法律进行解释。
     
  7.8 Dispute Resolution: In the event of any dispute, claim or difference (the "Dispute") between any Parties arising out of or in connection with this Agreement, the Dispute shall be resolved in accordance with the following:
  7.8 争议解决  协议各方在本协议履行过程中产生的所有争议、索赔或分歧(“争议”)均应通过以下方式解决:
 
 
11

 
 
(a)   Negotiation between Parties; Mediations.  The Parties agree to negotiate in good faith to resolve any Dispute.  If the negotiations do not resolve the Dispute to the reasonable satisfaction of all parties within thirty (30) days, subsection (b) below shall apply.
 
(a)   各方协商;调解 协议各方同意通过善意协商解决相关争议,如果协议各方未能在三十天内通过协商方式满意解决相关争议,则应按照下述约定解决该项争议。

(b)   Arbitration.  In the event the Parties are unable to settle a Dispute in accordance with subsection (a) above, such Dispute shall be referred to and finally settled by arbitration at Hong Kong International Arbitration Centre in accordance with the UNCITRAL Arbitration Rules (the “UNCITRAL Rules”) in effect, which rules are deemed to be incorporated by reference into this subsection (b).  The arbitration tribunal shall consist of three arbitrators to be appointed according to the UNCITRAL Rules.  The language of the arb itration shall be English.
 
(b)   仲裁:如果协议方未能按照上述(a)款约定的方式解决相关争议,该项争议应递交香港国际仲裁中心根据有效的联合国国际贸易法委员会仲裁规则(“联合国仲裁规则”)进行终局裁决,前述规则应视为本款约定不可分割的组成部分。仲裁庭应根据联合国仲裁规则任命的三名仲裁员组成。仲裁程序应使用英语进行。
 
  7.9 Counterparts: This Agreement may be signed in any number of counterparts, all of which taken together shall constitute one and the same instrument.  Any Party hereto may enter into this Agreement by signing any such counterpart.
  7.9 份数  本协议可签署多份,各份共同构成同一协议文件。本协议任何一方均可通过签署任何一份的方式订立本协议。


[SIGNATURE PAGE FOLLOWS]
[以下是签名页]
 
 
12

 
 
IN WITNESS WHEREOF the Parties hereto have executed this Agreement on the date first above written.
兹证明,协议各方于本协议首页载明之日期签署本协议。

The Grantor
授予人

 

By: _____________________
签名:
Name: LUCY XIA
姓名:
 
 
13

 
 

 
IN WITNESS WHEREOF the Parties hereto have executed this Agreement on the date first above written.
兹证明,协议各方于本协议首页载明之日期签署本协议。

The Grantee
被授予人


 

By: _____________________
签名:
Name: ZHOU, Taiping
姓名: 周太平

 
14

 
 
SCHEDULE A
附件A

Grantee and Option Shares
被授予人及选择权股份


Grantee
被授予人
ID Card/Passport Number
身份证/护照号码
Number of
Option Shares
选择权股份数
Exercise Price
行权价
ZHOU, Taiping
周太平
432930195208136313
10,000
USD 0.01

 
15

 
 
SCHEDULE B
 
附件B

Part I
I部分

Form of Exercise Notice
行权通知格式


To: LUCY XIA (the “Grantor”) and board of directors of BVI Company
致:LUCY XIA(“授予人”)与 BVI公司董事会

From: ZHOU Taiping (the “Grantee”)
递送方:周太平(“被授予人”)

We refer to the Call Option Agreement (the "Option Agreement") dated January 15, 2011 made between the Grantee and the Grantor.  Terms defined in the Option Agreement shall have the same meanings as used herein.
我们参照被授予人与授予人于2011115日签订的选择权协议(“选择权协议”)。此处所用术语与选择权协议的定义具有同等含义。

We hereby give you notice that we require you to sell to us / [Nominees' names] in accordance with the terms and conditions of the Option Agreement, the following Option Shares at the Exercise Price set out below, subject to the terms and conditions set out in the Option Agreement. Completion shall take place at [ ] on [                   ] at the office of [                   ].
我们在此通知贵方,我们要求贵方依据选择权协议的条款和条件向我们/[提名人姓名]按下列行权价出售如下选择权股份。根据选择权协议所规定的条款和条件,交割应于【】日【】时在【】办公室进行。

Grantee
被授予人
Option Shares
选择权股份
Exercise Price
行权价
ZHOU Taiping
周太平
 
USD 0.01
 
Dated [               ]
日期【              


Yours faithfully
此致
 
(1) 敬礼
 
___________________________
Name: ZHOU Taiping
姓名:周太平
 
 
16

 
 
Party II
II部分

Form of Transfer Notice I
转让通知格式一

To: LUCY XIA (the “Grantor”) and board of directors of BVI Company
致:LUCY XIA(“授予人”)与BVI公司董事会

From: ZHOU Taiping (the “Grantee”)
递送方:周太平(“被授予人”)

We refer to the Call Option Agreement (the "Option Agreement") dated January 15, 2011 made between the Grantee and the Grantor.  Terms defined in the Option Agreement shall have the same meanings as used herein.
我们参照被授予人与授予人于2011 115日签订的选择权协议(“选择权协议”)。此处所用术语与选择权协议的定义具有同等含义。

We hereby give you notice that we will transfer to [Nominees' names] the following portion of the Option, expressed in terms of the number of Option Shares represented by the portion of the Option transferred in accordance with the terms and conditions of the Option Agreement,.
我们在此通知贵方,我们将按照购买选择权的条款和条件,向[提名人姓名]转让下述部分选择权,以转让的部分选择权代表的选择权股份数额予以表示。


Grantee
被授予人
Nominees
提名人
Option Shares Represented
代表的选择权股份
[  ]
   
     

 
Dated [         ]
日期


Yours faithfully
此致
 
(2) 敬礼


___________________________
ZHOU Taiping
周太平
 
 
17
EX-10.3 6 f8k020111ex10iii_neweratech.htm ENTRUST PLANTING AGREEMENT f8k020111ex10iv_neweratech.htm
Exhibit 10.3
 
Entrust Planting Agreement

Part A: Hunan Xiangmei Food Co., Ltd.
Party B: (Local Township Government)

For the purpose to develop good quality of agriculture, increase the income for local farmers, accelerate the agriculture development, Party A plans to enter the contractor agreement with the Party B to plant the Glutinous Rice within the territory of Party B.  This Agreement is entered into by and between the parties, for the purpose to better manage and develop the producing of the Glutinous Rice crops, upon friendly consultations and negotiations, on terms and conditions mutually agreed upon as follows:

1.  
Party B agrees to lease total 1,000 Mu (666.66 Square Kilometer) land to Party A for the purpose to plant Glutinous Rice with the fee of 150.00/Mu.

2.  
Party A agrees to enter the planting order agreements with the farmers desired by Party B to plant the Glutinous Rice on the above leased total 1,000 Mu land with the planting payment price of 581.00/Mu payable to the farmers.

3.  
Party A agrees to provide Party B the seeds, pesticides and the chemical fertilizer required for the above planting; Party B agrees to provide the necessary tools.

4.  
Party A shall be responsible to form the Planting Leading Groups, constituted of each member from each Party, for the purpose to supervise and manage the related planting daily matters in the processing of planting development and the parties shall be responsible respectively for the related matters.

5.  
Party A shall provide Party B necessary instructions on technologies for the planting and Party B shall supervise the farmers to follow the required technology measures desired by Party A during the planting.

6.  
Party B shall produce the required Glutinous Rice with the standard of 450 kg/ Mu to Party A.  In the event Party B fails to produce the above minimum quantity requirement, Party A has the right to reduce the purchase price payment accordingly at the fair market price for the un-produced total amount (this clause is not applicable in the event of the Force Majeure).

7.  
This Agreement shall be executed in duplicate upon the following signatures of the parties, and each executed copy shall constitute an original but both of which together shall constitute one and the same instrument.

    Party A: (Corporate Seal)                                                                          Party B: (Individual Signature and Seal)
    Date: 02/    /2010

 
 
 
 

EX-10.4 7 f8k020111ex10iv_neweratech.htm GLUTINOUS RICE ORDER AND PLANTING AGREEMENT f8k020111ex10v_neweratech.htm
Exhibit 10.4
 
 
Glutinous Rice (“Sticky Rice”) Order and Planting Agreement with Major Suppliers

Part A: Hunan Xiangmei Food Co., Ltd.
Party B:

1.  
This Agreement is entered into by and between the parties, upon friendly consultations and negotiations, with respect to the raw materials supplied to Party A and for the purpose to expand the financial resources for farmers as major suppliers, on terms and conditions mutually agreed upon as follows:

2.  
Party B will voluntary plaint Glutinous Rice 1750 Mu (1,166.66 Square Kilometers), which requires the seeds of 4,375 kg.  All produced crops shall be delivered to Party A and Party B shall not retain any of the produced crops for own use.  Party B shall study thoroughly the introductions of planting requirements and the planting technologies before planting and shall fully follow the required planting technologies.

3.  
Party A shall provide Party B the following qualified seeds: 1) Purity 99%; 2) cleanliness98%; 3) germination percentage 80%; 4) water contained 13%.  The sales price of seeds is 5.00 /kg and shall be directly deducted from the purchase price paid to Party B at the time when the crops are produced from Party B to Party A.

4.  
The Glutinous Rice produced from Party B to Party A shall meet the Level #2 of the national commercial crops standards. The minimum purchase price paid to Party B by Party A shall be 3.00/kg.

5.  
Party B shall be fully responsible for the seeds qualities and in the event that Party A fails to provide qualified seeds to Party B in accordance with the standards set forth above, Party A shall compensate Party B accordingly.  In the event that Party B fails to deliver any and all crops produced under this Agreement and such failure has an adverse effect on Party A’s raw materials purchase plans, Party B shall compensate Party A three (3) times of the above sales price of the seeds received from Party A.

6.  
This Agreement shall be executed in duplicate upon the following signatures of the parties, and each executed copy shall constitute an original but both of which together shall constitute one and the same instrument.
 
Party A: (Corporate Seal)   Party B: (Individual Signature and Seal)
Date: 03/    /2010  
 
 
 
 
 

EX-10.5 8 f8k020111ex10v_neweratech.htm SUPPLIERS AGREEMENT f8k020111ex10ii_neweratech.htm
Exhibit 10.5
 
 
[Corporate Seal]

Xiangmei Food Co., Ltd.

Suppliers Agreement
 
Raw Material Suppliers Agreement
 

Party A: Hunan Xiangmei Food Co., Ltd.                                      Contract #:
Party B: Tianjin Shuangyi Seasoning and Spices Co., Ltd.

 (Collectively, the parties)

This Agreement is entered into by and between the parties, upon friendly consultations and negotiations under the PRC Contract Law and related rules and regulations, with respect to the raw materials supplied by Party B to Party A, on terms and conditions mutually agreed upon as follows:
 
1.  
Purchase Items: Seasoning and Species.
2.  
Purchase Amount: See the Purchase Order Fax Sheets attached herein.
3.  
Quality Control: Party A authorizes Party B to supply the requested materials under the national quality control standards in accordance to with Party A’s requested manufacturing requirements.
4.  
Specification and Price: The parties shall follow the agreed specifications requirements and prices.
5.  
Payment Methods: Payment upon the delivery of the ordered goods to Party A and the completion of quality inspections.
6.  
Packing Requirement: The packing fee is included in the purchase price.
7.  
Place of Delivery: Party A shall design the place of delivery and Party B shall pay the delivery costs and expenses and assume the risk of damages and losses to the goods before the destination (“DEQ”).
 
 
 

 
 
8.  
Time of Delivery:
1)  
Upon the receipt of the first faxed Purchase Order from Party A, within [ ] business day(s), Party B shall deliver the ordered goods to the destination place.  For the repeated same Purchase Orders afterwards, Party B shall deliver the ordered goods to the destination place within [  ] business day(s).
2)  
[  ]
 
9.  
Rights and Obligations of the Parties:
1)  
In the event that the market of the ordered goods has substantially changed, upon the mutual agreements, the parties can make necessary adjustment to the purchase price in accordance with the market price.  Should the parties fail to reach an agreement on such proposed price adjustment, this Agreement shall be applied as is.
2)  
In the event that Party B fails to supply the required goods in accordance with the standards in packing and/or specifications, Party A shall have right to reject the delivery.  If Party A rejects the delivery, Party B shall correct the defects and re-deliver required goods under the standards.  Any and all losses incurred by the above re-delivery order shall be fully and solely assumed by Party B.
3)  
Party B shall provide Party A the Certificate of Manufacturer, Business License and related documents.  The ordered goods shall be in compliance with the related national standards and industrial requirements.
4)  
Party A shall conduct prompt quality inspection upon the delivery of the goods by Party B at the destination.  Should any quality issue be addressed, Party B shall conduct the on-site resolution immediately and compensate Party A any and all costs and expenses incurred by such quality issues (including, but not limited to, compensations, reasonable attorney’s fees and penalties, etc.)
5)  
Should there be any quality issues of the goods supplied by Party B and be any accidents resulted by such quality issue(s) to Party A, Party B shall compensate Party A any and all costs and expenses incurred by such quality issues (including, but not limited to, compensations, reasonable attorney’s fees and penalties, etc.).  The inspection conducted by Party A shall not constitute a waiver to the above compensation claims.
 
 
 

 
 
6)  
Should Party B fail to deliver the ordered goods to Party A within required time period, or cause any delays in delivery, or there be any discrepancy between the ordered amount and delivered amount, Party A shall pay Party A penalty of [  ].
7)  
The parties shall keep the commercial secrets of each other confidential.
 
10.  
Amendment or Addendum: None.
11.  
Special Declaration Clause: None.
12.  
Effectiveness: 01/25/2010-12/31/2010.
13.  
This Agreement shall be effective upon the following signatures and corporate seals and shall be executed in two counterparts, each of which shall be deemed original and the parties shall have one counterpart each.  Any disputes between the parties under this Agreement shall be resolved through amicable negotiations in good faith.  In the event that the disputes can not resolved through negotiation, either party shall have the right to sue the other in the local People’s Courts in Party A’s location.
 
Party A (Corporate Seal)
Party B (Corporate Seal)
Authorized Signer: [Taiping Zhou]
Authorized Signer:
Agent:
Agent: [Dawei Guo]
Tel:
Tel:
Fax:
Fax:
Bank Account: China Agriculture Bank
Bank Account: Industrial & Commercial Bank
Qiyang County Branch
Dongli Branch 2nd Dept.
Account #: 20343112100100000039899
Account #: 030242209300010445
Date: 01/25/2010
Date: 01/25/2010

 
 
 

EX-10.6 9 f8k020111ex10vi_neweratech.htm AGRICULTURAL PRODUCTS PURCHASE AGREEMENT f8k020111ex10i_neweratech.htm
Exhibit 10.6
 
Agricultural Products Purchase Agreement

Seller: Hunan Xiangmei Food Co., Ltd. (Part A)
Purchaser: Henan Yunhe Cailanzi Development Co., Ltd. (Party B)

For the purpose to develop the long-term cooperation between the parties, this Agreement is entered into by and between the parties on terms and conditions mutually agreed upon as follows:

1.  
For the purpose to ensure the sufficient productions in the second half year, Party B hereby purchases the agriculture products (Glutinous Rice, Sesame, Peanut, etc.) from Party A and the total amount shall be determined at the time when the above ordered products are delivered to Party B’s storages.

2.  
Quality Requirement: The ordered products actually delivered to Party B’s storages shall be the same as the samples previously provided to Party B’s storages: percentage of the water contained shall be between 13.5% to 14%.

3.  
Price: Glutinous Rice (3,300/ton), Peanut (8,000/ton) and Sesame (12,000/ton).  Once the above prices are agreed to by the parties herein, no party shall unilaterally adjust the prices according to the market prices.  Any adjustment made to the prices shall be mutually agreed to by the parties.  Party B shall be responsible for the delivery costs and expenses.

4.  
Delivery and Payment: Upon the delivery from Party A to Party B, Party B shall conduct the quality inspection in Party B’s storages.  Upon passing the inspections, the transaction shall be confirmed as valid and Party B shall make the payment within 60 days.

5.  
This Agreement shall be effective from 07/28/2010 to 04/30/2011 and shall be effective upon the parties’ signatures.  Any disputes between the parties under this Agreement shall be resolved through amicable negotiations in good faith.
 
Party A: (Corporate Seal)
Party B: (Corporate Seal)
Corporate Representative: Jilin Zhou
Corporate Representative: Zihua Zhu
Date: 07/28/2010
Date: 07/28/2010
 
 
 
 
 

EX-10.7 10 f8k020111ex10vii_neweratech.htm PROPERTY LEASE AGREEMENT f8k020111ex10iii_neweratech.htm
Exhibit 10.7
 
PROPERTY LEASE AGREEMENT

Leasor (Party A): Jiling Zhou & Taiping Zhou
Leasee (Party B): Hunan Xiangmei Food Co., Ltd.
 
(Collectively, the parties)

This Agreement is entered into by and between the parties, upon friendly consultations and negotiations under the PRC Contract Law and related rules and regulations, with respect to the matter of land property leasing for the business operation purpose, on terms and conditions mutually agreed upon as follows:

        1.  
Leased Premises
Party B leases herein from Party A the national owned land #01003 [2005] in Qiyang County Wuxi Town Shoujing Road, area of 1,723m2; the national owned land #000769 [2005] in Qiyang County Wuxi Town Shoujing Road, area of 4,115.5m2; the national owned land #000770 [2005] in Qiyang County Wuxi Town Shoujing Road, area of 1,690.5m2.  The total area is 7,529 m2.  The permitted use of the land shall be referred to the authorized scope on the business license.

      2.  
Leasing Period:
Land Use Certificate #
Land Use Permitted Period
Leasing Period
Qiyang National Owned #01003
06/2005-06/2055
03/2006-06/2055
Qiyang National Owned #000769
05/2005-05/2055
03/2006-05/2055
Qiyang National Owned #000770
05/2005-05/2055
03/2006-05/2055

      3.  
Rent:
The rent shall be paid on an annual basis.  The rent is based on the amortization values of each lot of the leased land (see below).  Rent shall be paid in cash payments and be due by the end of each year.

 
 

 

Land Use Certificate #
Area
Unit Price
Total Price ()
Total Period
Monthly Amortization ()
Qiyang National Owned #01003
1,723.00 m2
1,166/ m2
2,009,018
50
3,348.36
Qiyang National Owned #000769
4,115.50m2
316/ m2
1,300,498
50
2,167.50
Qiyang National Owned #000770
1,690.50m2
848/ m2
1,433,544
50
2.389.24
Total
7,526.00 m2
( Note: Typo-shall be 7,529.00)
 
4,743,060
 
7,905.10

4.  
Rights and Obligations of Party A
1)  
Party A shall be responsible to enact any and all internal regulations in connection with the security, the fire protections, hygiene and health, electricity and business operation hours as required by related laws, and supervise the execution of the above internal regulations.
2)  
Party A shall assist the related administrative authorities to supervise, correct, educate Party B or unilaterally terminate this Agreement if there is any violation by Party B.
3)  
Party A shall provide the agreed premises and the related facilities and conditions to Party B under this Agreement for Party B’s normal business operation purpose.

5.  
Rights and Obligations of Party B
1)  
Party B shall have right to supervise Party A to perform the contractual obligations under this Agreement.
2)  
Party B shall have the legal operation qualifications issued from related authorities and shall conduct the business within the scope permitted by the Office of Administration of Industry and Commerce in the business license and other certificates.
3)  
Party B shall operate the business on the leased premises as agreed in this Agreement and shall consciously abide by Party A’s above internal regulations and the rules in connection with the receipts/documents requesting requirements of Party A.  Party B shall also follow Party A’s supervision and management.

 
 

 


4)  
Party B shall pay the rent at the timely basis and shall be fully responsible for any and all tax and expenses related payments incurred in the business operations.
5)  
Party B shall use the provided facilities on the leased premises at a cautious and reasonable basis.  No change to the facilities without Party A’s prior consent is allowed.  Party B shall be fully responsible for any and all compensations to the damages caused thereby.
6)  
Party B shall operate the business under the related rules and regulations by all administrative offices and under the good faith of fair and justice, without endangering the interests of the nation, other business operators and the consumers.  Party B shall be fully responsible for any and all consequences resulted herein by Party B’s illegal business operations.

       6.  
Termination of Agreement
This Agreement shall automatically terminate upon the expiration of the above leasing period.

        7.  
Waiver
In the event that the leased premises is not suitable to be used or leased under this Agreement due to the Force Majeure or any other reasons rather than the parties’ faults, Party A shall reduce and adjust the rent accordingly.

        8.  
Return of Leased Premises
Upon the termination of this Agreement by the expiration of the above leasing period, or the parties terminate this Agreement upon consents, Party B shall return Party A the leased premises and facilities included at good conditions suitable for re-leasing purposes.  In the event that Party B fail to return the properties to Party A as set forth above, Party A shall have the right to claim the repossession of the above properties through necessary measures.  Any and all losses and expenses incurred herein shall be paid by Party B.

 
 

 

        9.  
Disputes
Any disputes between the parties under this Agreement shall be resolved through amicable negotiations in good faith or through mediation by related offices.  In the event that the disputes can not resolved through negotiation or mediation, either party shall have the right to sue the other in the local People’s Courts under the laws.

10.  
Miscellaneous
Any land property ownership changes during the leasing period shall not affect this Agreement and this Agreement shall remain full effectiveness.

11.  
This Agreement shall be effective upon the following signatures and seals and shall be executed in two counterparts, each of which shall be deemed original and the parties shall have one counterpart each.

12.  
This Agreement shall not be changed without written agreements as addendums to the Agreement agreed to by the parties upon the signatures and seals.  Each addendums shall have same effectiveness as this Agreement.

The above internal regulations unilaterally enacted by Party A shall become a party of this Agreement.  Should there be any discrepancies between the internal regulations and this Agreement, this Agreement shall prevail, except as otherwise provided by laws and regulations.
 
Party A: [Jiling Zhou, Taiping Zhou]   Party B: [Corporate Seal]
Date:  08/25/2010    Date: 08/25/2010
                                                                                                                                                ;                                               

 
 
 
 
 

EX-10.8 11 f8k020111ex10viii_neweratech.htm INVESTMENT AGREEMENT f8k020111ex10vi_neweratech.htm
Exhibit 10.8
 
INVESTMENT AGREEMENT

Chapter 1 General Statement
 
Article 1: The Parties
Party A: Hunan Qiyang Industrial Zone Management Committee
Corporate Representative: Xiaochun Liu
Address: Wuxi South Road, Wuxi Town, Qiyang County
Website: www.qdz.gov.cn
Tel.: 086-0746-3270338, 086-0746-3211789
Fax: 086-0746-3270339

Party B: Hunan Xiangmei Food Co., Ltd.
Corporate Representative: Taiping Zhou
Address: 200 Shoujing Road, Wuxi Town, Qiyang County
Tel.: 086-0746-3269828
Fax: 086-0746-3269828

Article 2: This Agreement is entered into and between the parties, upon friendly consultations and negotiations under the PRC Contract Law, Qiyang Industrial Zone Project Management Rules (the “Rules”) and related rules and regulations, on the following terms and conditions mutually agreed upon.

Chapter 2 Introduction of the Project
Article 3: Party B agrees to invest 50,000,000 (including fixed asset investment of 30,000,000 and registered capital of 10,000,000) to incorporate new companies within the Industrial Zone under the Party A’s management for the business operation of producing ice cream and pre-pared frozen food.

Article 4: Party A shall incorporate the new companies within the territory from the north of Dengta Road and within the west of Baizhu Road (see the permitted land use territory by red line on the attached map).  The total permitted land area is 100 Mu (66.66 Sq. Km) (the land use permit will be issue by two installments-the first permit is for 60 Mu and the second permit is for 40 Mu).  The nature of such land use permit is the state-owned land for lease, for the purpose of industrial use only, with the permitted period of 50 years (from the date that the State-Owned Land Use Right Certificate is issued).

Article 5: From the date of this Agreement, Party B shall deposit the lease payment fee of 20,000/Mu with Party A within 15 business days for the first permit of total 60 Mu.  Upon the receipt of the payment of 1,200,000.00 for the first permit from Party B to the bank account desired by Party A (Bank: Qiyang Village and Town Bank; Account Name: Hunan Qiyang Industrial Construction Investment Co., Ltd.; Account #: 800083888503011), Party A shall deliver the desired land to Party B for use.  Upon the completion of the incorporation project, Party A shall settle the deposited payment made by Party B to Party A in accordance with the Rules and issue Party B the State-Owned Land Use Right Certificate.
 
 
 

 

Article 6: Under the Rules and related laws and the state policies, the parties agree that the minimum investment on the project shall be 500,000.00/Mu.  In the event that the investment is less than the above, Party B agrees to reimburse Party A the difference in payment by a lump sum payment calculated by the following formula: 80,000 (the required minimum lease payment fee for the industrial use purpose land) × the investment price agreed in this Agreement (500,000.00/Mu) ÷ actual invested amount.

Article 7: the total construction period for Party B’s project is 24 months, from the date that Party A issued the Notice to Initiate the Project Construction to Party B.  In the event that the project is delayed by the reason of Party A or Force Force Majeure, Party A consents that Party B could defer the project accordingly.

Article 8: Party B shall conduct the business operation within the permitted business scope set forth in the business license issued by the industrial and commercial office.

Chapter 3 Introduction of the Project
Article 9 Rights and Obligations of Party A
1)  
Party A shall be responsible to deliver Party B the land with the access to water, electricity, transportation, gas, communication facilities and usable land conditions.
2)  
Party A shall provide comprehensive assistance to Party B on a timely basis to follow up the project and resolve any possible difficulties and issues incurred to Party B during the project construction and operation.
3)  
Party A shall follow the Regulation to Attract the Investment for Progressive Industrial Development in Qiyang County (the Qi Policy # [2007] 15) and the Rules to grant Party B the entitled favorable policies and treatments.

Article 10 Rights and Obligations of Party B
1)  
Upon the receipt of the related licenses and certificates, Party B shall have the independent right to conduct the business operation without interferences under the laws.
2)  
Party B shall file necessary applications for the project construction and follow the agreed requirements on the investment amount, buildings locations and the desired density.  Party shall not start the construction without Party A’s prior review and consent to the blue prints of the construction plans.
3)  
Party B shall be responsible to the road construction, water supply and drainage, electricity supply, communication supply, green-belts planting, fire protection and other related environmental friendly constructions.  Any related facilities shall be used in business only upon the prior inspection and consent by Party A and related offices.
4)  
Party B shall start and complete the project at a timely basis.  Before the completion of the project, Party B shall submit application for completion to Party A in writing.  In the event Party B fails to submit the above application, the project shall deem uncompleted.
5)  
Party B shall not change the use purpose of the land and shall not lease, pledge or transfer the land use right to a third party before the project is completed.  Otherwise, Party A shall have the right to forfeit the land and any thing that is an appurtenant to land from Party B without any payment or reimbursement to Party B.
6)  
Party B shall conduct the business operation under the laws, file the required taxes, conduct the safety production codes and follow the management and services from Party A.
 
 
 

 
 
Chapter 4 Breach of the Contract
Article 11: Upon the entrance of this Agreement, if Party A fails to follow the Rules and change the permitted land area or reduce the land area as agreed to in this Agreement, it will constitute the breach of contract by Party A.  If Party B fails to start and complete the project at a timely basis, it will constitute the breach of contract by Party B.

Article 12: Upon the entrance of this Agreement, if any party fails to comply with the Rules, the party shall be fully responsible for its breach under this Agreement.  Any party causing the failure to execute this agreement shall pay the other party 10,000.00 for its breach liabilities.  In the event that the other party’s losses exceed the above amount, the breaching party shall compensate the other the losses amount actually incurred.

Chapter 5 Resolution of Disputes
Article 13: Any disputes between the parties under this Agreement shall be resolved through amicable negotiations in good faith.  In the event that the disputes can not be resolved through negotiation, the parties agree to refer the disputes to the Yongzhou City Arbitration Committee for arbitration purpose.

Chapter 6 Miscellaneous
Article 14: Any project proposals, feasibility report, land map, the copies of the Qi Policy # [2007] 15 and the Rules shall be incorporated into this Agreements as addendum with same legal effect of this Agreement.

Article 15: Any matters not described in this Agreement shall be subject to the parties’ negotiation.

Article 16: This Agreement shall be executed in four copies with two copies for each party upon the following signatures of the parties, and each executed copy shall constitute an original but both of which together shall constitute one and the same instrument.
 
Party A: [Corporate Seal]   Party B: [Corporate Seal]
Corporate Representative: Xiaochun Liu    Corporate Representative: Taiping Zhou
09/23/2009  
   

 
 
 
 

EX-10.9 12 f8k020111ex10ix_neweratech.htm EMPLOYMENT AGREEMENT TAIPING ZHOU f8k020111ex10ix_neweratech.htm
Exhibit 10.9
File Number: [2009] # 010
 
Employment Agreement

Party A (Employer): Hunan Xiangmei Food Co., Ltd.
Office Address:  200 Taozhu Road, Wuxi Town, Qiyang County; Tel.: 086-0746-3269828
 
Party B (Employee): Taiping Zhou Sex:         Male  
Date of Birth: 08/13/1952  Ethnic:                      Han  
ID No.:    
Contact:    1) Mobile:    
                           2) Home:    
Home Address: #7 Group, Yuantang Village, Qiliqiao Town, Qiyang County, Hunan Province



FULL TIME EMPLOYMENT AGREEMENT
 
Party A (Employer): Hunan Xiangmei Food Co., Ltd.    
Party B (Employee): Taiping Zhou    Sex: Male     ID No.:
(Collectively, the parties)    
                                                                                                              
This Agreement is entered into and between the parties, upon friendly consultations and negotiations under the PRC Labor Law, PRC Employment Agreement Law and related internal management governance of Party A, on terms and conditions mutually agreed upon as follows:

1.  
Employment Period:
1)  
Period: 3 years from 03/20/2006-03/19/2011; no probation period.

2.  
Position and Responsibilities:
a)  
Job Title: Chairman
b)  
Responsibility: any required works based on actual business operation demands and shall accept the tests of Party A

3.  
Discipline and Legal Responsibility:
1)  
Party B shall keep the commercial secret and technology of Party A confidential.
2)  
Follow Party A’s instruction and assignment without condition.
3)  
Duly perform the job responsibility and cooperate with team members; follow the internal governance.
 
 
 

 
 
4.  
Salary and Benefits:
1)  
Monthly Salary: 11,800
2)  
The Company has one day off each week.
3)  
In the event Party A requires for work over time, shall comply with such order without condition.
4)  
Other benefits are subject to Party A’s profit and shall be determined at Party A’s sole discretion.
5)  
In the event there is a financial crisis or Party A incurs significant losses, the above salary and benefits may be reduced upon the agreement between the parties.

5.  
Amendment, Renewal and Termination
1)  
Any amendment shall be made by written request and the other party shall reply to such request within 10 business days.  Upon the agreement between the parties, this Agreement may be amended.  If no agreement can be reached between the parties, this Agreement shall be continuous in effective.
2)  
Upon the expiration of this Agreement, the parties may renew the employment agreement upon mutual consents.
3)  
This Agreement shall be terminated at the following conditions:
a)  
Expiration of the employment period.
b)  
Party B’s death.
c)  
Party B’s disability to work.
d)  
Party A’s bankruptcy or liquidation.

6.  
Cancellation:
1)  
Party A has the right to cancel this Agreement at the following terms:
a)  
Within Party B’s probation.
b)  
Party B’s absence without cause for continuous 3 days, or accumulated 5 days within one year.
c)  
Party B’s severe failure at the work performance, or has caused severe losses to Party A or a third party.
d)  
Party B’s severe violation of Party A’s internal regulations.
e)  
Party B’s committed crimes and violations of laws.
f)  
Party B’s jail detention or criminal liabilities.
g)  
Party B’s failure to pass the annual inspection.
h)  
Party B’s disqualification on work performance.

7.  
Severance:
1)  
Within the employment period, in the event Party A cancels this Agreement, Party A shall reimburse Party B reasonable severance pay based on Party B’s employment times:
a)  
Party A cancels this Agreement without cause.
 
 
 

 
 
b)  
Any materials changes rendering this Agreement un-executable and upon the parties’ agreement, Party A cancels this Agreement.
c)  
Severance Pay: Upon 1 year full time employment, Party B shall be entitled to a lump sum severance payment equals to 1 month’s salary.
2)  
Within the employment period, in the event that Party A actually has paid training costs and expenses for Party B, Party B shall reimburse Party A the actually paid training costs and expenses at the time of cancellation of this Agreement by Party B, and Party B shall be responsible for Party A’s any losses incurred.

8.  
Disputes Resolution:
1)  
Any disputes between the parties under this Agreement shall be resolved through amicable negotiations in good faith.  In the event that the disputes can not resolved through negotiation, either party shall have the right to submit the dispute to local union or the labor arbitration commission at Party A’s address.  The legal arbitration result shall be binding on the parties.

9.  
Miscellaneous:
1)  
Party B shall inform Party A of his change of address within 3 days.
2)  
Special Clause:
a)  
Party B shall receive the Party A’s inspection and tests and the salary may be adjusted based on the inspection and tests results.
b)  
[Blank]
Any issues not described herein this Agreement, the parties to follow the related laws and regulations.
3)  
This Agreement shall be executed in two copies, upon the parties’ following signatures, each of which shall be deemed original and the parties shall have one counterpart each.
 
Party A (Corporate Seal): [Blank]    Party B: [Individual’s Signature]
Authorized Signer: [Taiping Zhou]
 
Agent: [Blank]
 
  Date: 03/20/2006

 
                                                                                       

EX-10.10 13 f8k020111ex10x_neweratech.htm EMPLOYMENT AGREEMENT WITH JILING ZHOU f8k020111ex10x_neweratech.htm
Exhibit 10.10
 
File Number: [2009] # 010


Employment Agreement

Party A (Employer): Hunan Xiangmei Food Co., Ltd.
Office Address: 200 Taozhu Road, Wuxi Town, Qiyang County; Tel.: 086-0746-3269828
 
 
Party B (Employee): Jiling Zhou Sex: Male
Date of Birth: 10/19/1981    
ID No.:   Ethnic: Han
Contact:       1) Mobile:    
                      2) Home:    
Home Address: #7 Group, Yuantang Village, Qiliqiao Town, Qiyang County, Hunan Province
 

FULL TIME EMPLOYMENT AGREEMENT
 
Party A (Employer): Hunan Xiangmei Food Co., Ltd.      
Party B (Employee): Jiling Zhou Sex: Male  ID No.:  
(Collectively, the parties)      
 
This Agreement is entered into and between the parties, upon friendly consultations and negotiations under the PRC Labor Law, PRC Employment Agreement Law and related internal management governance of Party A, on terms and conditions mutually agreed upon as follows:

1.  
Employment Period:
1)  
Period: 3 years from 03/20/2009-03/19/2012; no probation period.

2.  
Position and Responsibilities:
a)  
Job Title: President
b)  
Responsibility: any required works based on actual business operation demands and shall accept the tests of Party A

3.  
Discipline and Legal Responsibility:
1)  
Party B shall keep the commercial secret and technology of Party A confidential.
2)  
Follow Party A’s instruction and assignment without condition.
3)  
Duly perform the job responsibility and cooperate with team members; follow the internal governance.
 
 
1

 
 
4.  
Salary and Benefits:
1)  
Monthly Salary: 7,000
2)  
The Company has one day off each week.
3)  
In the event Party A requires for work over time, shall comply with such order without condition.
4)  
Other benefits are subject to Party A’s profit and shall be determined at Party A’s sole discretion.
5)  
In the event there is a financial crisis or Party A incurs significant losses, the above salary and benefits may be reduced upon the agreement between the parties.

5.  
Amendment, Renewal and Termination
1)  
Any amendment shall be made by written request and the other party shall reply to such request within 10 business days.  Upon the agreement between the parties, this Agreement may be amended.  If no agreement can be reached between the parties, this Agreement shall be continuous in effective.
2)  
Upon the expiration of this Agreement, the parties may renew the employment agreement upon mutual consents.
3)  
This Agreement shall be terminated at the following conditions:
a)  
Expiration of the employment period.
b)  
Party B’s death.
c)  
Party B’s disability to work.
d)  
Party A’s bankruptcy or liquidation.

6.  
Cancellation:
1)  
Party A has the right to cancel this Agreement at the following terms:
a)  
Within Party B’s probation.
b)  
Party B’s absence without cause for continuous 3 days, or accumulated 5 days within one year.
c)  
Party B’s severe failure at the work performance, or has caused severe losses to Party A or a third party.
d)  
Party B’s severe violation of Party A’s internal regulations.
e)  
Party B’s committed crimes and violations of laws.
f)  
Party B’s jail detention or criminal liabilities.
g)  
Party B’s failure to pass the annual inspection.
h)  
Party B’s disqualification on work performance.

7.  
Severance:
1)  
Within the employment period, in the event Party A cancels this Agreement, Party A shall reimburse Party B reasonable severance pay based on Party B’s employment times:
a)  
Party A cancels this Agreement without cause.
 
 
2

 
 
b)  
Any materials changes rendering this Agreement un-executable and upon the parties’ agreement, Party A cancels this Agreement.
c)  
Severance Pay: Upon 1 year full time employment, Party B shall be entitled to a lump sum severance payment equals to 1 month’s salary.
2)  
Within the employment period, in the event that Party A actually has paid training costs and expenses for Party B, Party B shall reimburse Party A the actually paid training costs and expenses at the time of cancellation of this Agreement by Party B, and Party B shall be responsible for Party A’s any losses incurred.

8.  
Disputes Resolution:
1)  
Any disputes between the parties under this Agreement shall be resolved through amicable negotiations in good faith.  In the event that the disputes can not resolved through negotiation, either party shall have the right to submit the dispute to local union or the labor arbitration commission at Party A’s address.  The legal arbitration result shall be binding on the parties.

9.  
Miscellaneous:
1)  
Party B shall inform Party A of his change of address within 3 days.
2)  
Special Clause:
a)  
Party B shall receive the Party A’s inspection and tests and the salary may be adjusted based on the inspection and tests results.
b)  
[Blank]
Any issues not described herein this Agreement, the parties to follow the related laws and regulations.
3)  
This Agreement shall be executed in two copies, upon the parties’ following signatures, each of which shall be deemed original and the parties shall have one counterpart each.
 
 
Party A (Corporate Seal): [Blank]  Party B: [Individual’s Signature]  
Authorized Signer: [Taiping Zhou]    
Agent: [Blank]    
  Date: 03/20/2009  
 
 
3
EX-10.11 14 f8k020111ex10xi_neweratech.htm VOTING RIGHTS PROXY f8k020111ex10xi_neweratech.htm
Exhibit 10.11

 
VOTING RIGHTS PROXY AGREEMENT

 
This Voting Rights Proxy Agreement (the "Agreement") is entered into in Yongzhou City, Hunan Province, People's Republic of China ("PRC" or "China") as of December 23, 2010 by and among Qiyang County Xiangmei Food Technical Research and Development Co., Ltd. ("Party A") and the undersigned shareholder (the "Shareholder") of Hunan Xiangmei Food Co., Ltd. ("Hunan Xiangmei"). Party A and the Shareholders are each referred to in this Agreement as a "Party" and collectively as the "Parties". Hunan Xiangmei is made a party to this Agreement for the purpose of acknowledging the Agreement

 
RECITALS

 
l.    Party A, a company incorporated in the PRC as a foreign investment enterprise, specializes in the research and development of agriculture products and consulting service, and Hunan Xiangmei is engaged in the sale and production of frozen food, ice cream and other food (collectively the "Business"). Party A and Hunan Xiangmei have entered into a certain Consulting Services Agreement dated December 23,2010 (the "Consulting Services Agreement") in connection with the Business.
 
2.    The Shareholder is the sole shareholders of the Hunan Xiangmei, legally holding such amount of equity interest of Hunan Xiangmei as set forth on the signature page of this Agreement and collectively holding 100% of the issued and outstanding equity interests of the Hunan Xiangmei (collectively the "Equity Interest").
 
3.    In connection with the Consulting Services Agreement, the Parties have entered into a certain Operating Agreement dated December 23,2010, pursuant to which the Shareholders now desire to grant to Party A a proxy to vote the Equity Interest for the maximum period of time permitted by law in consideration of Party A's obligations thereunder.
 
 
1

 
 
NOW THEREFORE, the Parties agree as follows:
 
 
1. The Shareholders hereby agree to irrevocably grant and entrust Party A, for the maximum period of time permitted by law, with all of their voting rights as shareholders of the Hunan Xiangmei. Party A shall exercise such rights in accordance with and within the parameters of the laws of the PRC and the Articles of Association of the Hunan Xiangmei.
 
2. Party A may establish and amend rules to govern how Party A shall exercise the powers granted by the Shareholders herein, including, but not limited to, the number or percentage of directors of Party A which shall be required to authorize the exercise of the voting rights granted by the Shareholders, and Party A shall only proceed in accordance with such rules.
3. The Shareholders shall not transfer or cause to be transferred the Equity Interest to any party (other than Party A or such designee of Party A). Each Shareholder acknowledges that it will continue to perform its obligations under this Agreement even if one or more of other Shareholders no longer hold any part of the Equity Interest
 
4. This Proxy Agreement has been duly executed by the Parties as of the date first set forth above, and in the event that a Party is not a natural person, then such Party's action has been duly authorized by all necessary corporate or other action and executed and delivered by such Party's duly authorized representatives. This Agreement shall take effect upon the execution of this Agreement
 
5. Each Shareholder represents and warrants to Party A that such Shareholder owns such amount of the Equity Interest as set forth next to its name on the signature page below, free and clear of all liens and encumbrances, and such Shareholder has not granted to any party, other than Party A, a power of attorney or proxy over any of such amount of the Equity Interest or any of such Shareholder's rights as a shareholder of Hunan Xiangmei. Each Shareholder further represents and warrants that the execution and delivery of this Agreement by such Shareholder shall not violate any law, regulations, judicial or administrative order, arbi tration award, agreement, contract or covenant applicable to such Shareholder.
 
6. This Agreement may not be terminated without the unanimous consent of all Parties, except that Party A may, by giving a thirty (30) day prior written notice to the Shareholders, terminate this Agreement, with or without cause.
 
7. Any amendment to and/or rescission of this Agreement shall be in writing by the Parties.

 
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8. The execution, validity, creation and performance of this Agreement shall be governed by the laws of PRC.
 
9. This Agreement shall be executed in three (3) duplicate originals in English, and each Party shall receive one (1) duplicate original, each of which shall be equally valid.
 
10. The Parties agree that in the event a dispute shall arise from this Agreement, the Parties shall settle their dispute through amicable negotiations. If the Parties cannot reach a settlement within 45 days following the negotiations, the dispute shall be submitted to be detennined by arbitration through China International Economic and Trade Arbitration Commission ("CIETAC") Shanghai Branch in accordance with CIETAC arbitration rules. The determination of CIETAC shall be conclusively binding upon the Parties and shall be enforceable in any court of competent jurisdiction.
 

[SIGNATURE PAGE FOLLOWS]
 
 
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[SIGNATURE PAGE]

 
IN WITNESS WHEREOF this Agreement is duly executed by each Party or its legal representatives.

 
PARTY A:    Qiyang County Xiangmei Food Technical Research and Development Co., Ltd.

 
Legal/Authorized Representative:
Name: Zhou Taiping
 
Title: Legal Representative
 
 
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SIGNATURE PAGE FOR SHAREHOLDERS

 
Sole Shareholder of Hunan Xiangmei
 
 
 


 
Zhou Taiping
Owns 100% of Hunan Xiangmei
 

 
5

EX-10.12 15 f8k020111ex10xii_neweratech.htm EQUITY PLEDGE AGREEMENT f8k020111ex10xii_neweratech.htm
Exhibit 10.12
 
EQUITY PLEDGE AGREEMENT
 
This Equity Pledge Agreement (hereinafter this "Agreement"! is dated December 23,2010, and is entered into in Yongzhou City, Hunan Province, People's Republic of China (4TRC" or "China") by and among Qiyang County Xiangmei Food Technical Research and Development Co., Ltd. ("Pledgee"), and the shareholder listed on the signature pages hereto ( "Pledgor") of Hunan Xiangmei Food Co., Ltd. ("Hunan Xiangmei"). Hunan Xiangmei is made a party to this Agreement for the purpose of acknowledging the Agreement
 
RECITALS
 
1. The Pledgee incorporated in the PRC as a foreign investment enterprise and specializes in the research and development of agriculture products.
 
2. Hunan Xiangmei is engaged in the sale and production of frozen food, ice cream and other food (collectively the "Business").
 
3. The Pledgor are shareholders of the Hunan Xiangmei, each legally holding such amount of equity interest of theHunan Xiangmei as set forth on the signature page of this Agreement and collectively holding 100% of the issued and outstanding equity interests of the Hunan Xiangmei (collectively the "Equity Interest").
 
4. The Pledgee and the Hunan Xiangmei have executed a Consulting Services Agreement dated December 23, 2010 (the "Consulting Services Agreement") concurrently herewith, pursuant to which the Hunan Xiangmei shall pay consulting and service fees (the "Consulting Services Fee") to the Pledgee for consulting and related services in connection with the Business.
 
 
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5. In order to ensure that the Hunan Xiangmei will perform its obligations under the Consulting Services Agreement, and in order to provide an additional mechanism for the Pledgee to enforce its rights to collect the Consulting Services Fee from the Hunan Xiangmei, the Pledgor agree to pledge all their equity interests in the Hunan Xiangmei as security for the performance of the obligations of the Hunan Xiangmei under the Consulting Services Agreement, including payment of the Consulting Services Fee.
 
NOW THEREFORE, the Pledgee and the Pledgor through mutual negotiations hereby enter into this Agreement based upon the following terms:
 
1. Definitions and Interpretation. Unless otherwise provided in this Agreement, the following terms shall have the following meanings:
 
1.1 "Pledge" refers to the full content of Section 2 hereunder.
 
1.2  "Equity Interest" refers to all the equity interests in the Hunan Xiangmei legally held by the Pledgor.
 
1.3  "Term of Pledge" refers to the period provided for under Section 3.2 hereunder.
 
1.4  "Event of Default" refers to any event in accordance with Section 7.1 hereunder.
 
1.5  "Notice of Default" refers to the notice of default issued by the Pledgee in accordance with this Agreement
 
 
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2. The Pledge. The Pledgor hereby pledge the Equity Interest to the Pledgee as a security for the obligations of the Hunan Xiangmei under the Consulting Services Agreement (the "Pledge"). Pursuant thereto, the Pledgee shall have priority in receiving payments from the evaluation or the proceeds from the auction or sale of the Equity Interest The Equity Interest shall her einafter be referred to as the "Pledged Collateral".
 
3. Term of Pledge.
 
3.1 The Pledge shall take effect as of the date when the Pledge is recorded in the Hunan Xiangmei's Register of Shareholders, and shall expire two (2) years from the Hunan Xiangmei's satisfaction of all its obligations under the Consulting Services Agreement (the "Term").
 
3.2 During the Term, the Pledgee shall be entitled to vote, control, sell, or dispose of the Pledged Collateral in accordance with this Agreement in the event that the Hunan Xiangmei does not perform its obligations under the Consulting Services Agreement, including without limitations thee failures to pay the Consulting Service Fee.
 
3.3 During the Term, the Pledgee shall be entitled to collect any and all dividends declared or paid in connection with the Pledged Collateral.
 
4. Pledge Procedure and Registration.
 
4.1 The Pledge shall be recorded in the Hunan Xiangmei's Register of Shareholders. The Pledgor shall, days after the date of this Agreement, process the registration procedures with the Administration for Industry and Commerce concerning the Pledge.
 
4.2 To the maximum extent permitted by the PRC laws, the Pledgor and Pledgee will file the application with Administration for Industry and Commerce with competent authority to register the Pledge within the term of this Agreement
 
4.3      Pledgor and Pledgee agree to use their best efforts to take any action required for the completion of the registration of the Pledge, mcluding without limitation, the execution of documents, the payment of filing fees and submission of applications.
 
 
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5.  Representation and Warranties of Pledgor.
 
5.1  The Pledgor are the legal owners of the Pledged Collateral.
 
5.2  Other man to the Pledgee, the Pledgor have not pledged the Pledged Collateral to any other party, and the Pledged Collateral is not encumbered to any other party.
 
6.  Covenants of Pledgor.
 
6.1  During the Term, the Pledgor represent and warrant to the Pledgee for the Pledgee's benefit that the Pledgor shall:
 
6.1.1   Not transfer or assign the Pledged Collateral, nor create or permit to create any pledge or encumbrance to the Pledged Collateral which may adversely affect the rights and/or benefits of the Pledgee without the Pledgee's prior written consent
 
6.1.2   Comply with the laws and regulations with respect to the Pledge; present to Pledgee any notices, orders or advisements with respect to the Pledge that may be issued or made by a competent PRC authority within five (5) days upon receiving such notices, orders or advisements; comply with such notices, orders or advisements; or object to the foregoing matters upon the reasonable request of the Pledgee or with consent from the Pledgee.
 
6.1.3   Timely notify the Pledgee of any events which may affect the Pledged Collateral or the Pledgor* rights thereto, or which may change any of the Pledgor* warranties or affect the Pledgor's performance of their obligations under this Agreement.
 
6.2  The Pledgor agree that the Pledgee's right to the Pledge pursuant to this Agreement shall not be suspended or inhibited by any legal proceedings initiated by the Pledgor, jointly or separately, or by any successor of or any person authorized by the Pledgor.
 
6.3  The Pledgor represent and warrant to the Pledgee that in order to protect and perfect the security for the payment of the Consulting Services Fee, the Pledgor shall execute in good faith and cause other parties who have interests in the Pledged Collateral to execute all the title certificates, contracts, and perform actions and cause other parties who have interests to take action, as required by the Pledgee.
 
6.4  The Pledgor represent and warrant to the Pledgee or its appointed representative (whether a natural person or a legal entity) that they will execute all applicable and required amendments in connection with the registration of the Pledge, and within a reasonable amount of time upon request, provide the relevant notice, order and decision regarding such registration to the Pledgee.
 
6.5  The Pledgor represent and warrant to the Pledgee that they will abide by and perform all relevant guarantees, covenants, warranties, representations and conditions necessary to insure the rights of the Pledgee under this Agreement The Pledgor shall compensate all the losses suffered by the Pledgee as a result of the Pledgor* failure to perform any such guarantees, covenants, warranties, representations or conditions.
 
 
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7.        Events of Default
 
7.1  The occurrence of any one of the following events shall be regarded as an "Event of Default":
 
7.1.1  This Agreement is deemed illegal by a governing authority of the PRC, or the Pledgor is incapable of continuing to perform the obligations herein due to any reason except force majeure',
7.1.2 The Hunan Xiangmei fails to timely pay the Consulting Services Fee in full as required under the Consulting Service Agreement;
 
7.1.3 A Pledgor makes any materially false or misleading representations or warranties under Section 5 herein, or breaches any warranties under Section S herein;
 
7.1.4  A Pledgor breaches the covenants under Section 6 herein;
 
7.1.5  A Pledgor breaches any terms and conditions of this Agreement;
 
7.1.6   A Pledgor transfers or assigns, cause to be transferred or assigned, or otherwise abandons the Pledged Collateral without the prior written consent of the Pledgee;
 
7.1.7  The Hunan Xiangmei is incapable of repaying debt;
 
7.1.8 The assets of a Pledgor are adversely affected so as to cause the Pledgee to believe that such Pledgor's ability to perform the obligations herein is adversely affected;
 
7.1.9 The successors or agents of the Hunan Xiangmei refuse, or are only partly able, to perform the payment obligations under the Consulting Services Agreement;
 
 
7.2  A Pledgor shall immediately give a written notice to the Pledgee if such Pledgor is aware of or discovers that any event under Section 7.1 herein, or any event that may result in any one of the foregoing events, has occurred or is likely to occur.
 
7.3  Unless an Event of Default has been resolved to the Pledgee's satisfaction within IS days of its occurrence (the "Cure Period"), the Pledgee may, at any time thereafter, give a written default notice (the "Default Notice") to the Pledgor and require the Pledgor to immediately make full pa yment of the then outstanding Consulting Service Fee and any other outstanding payables in accordance with Section 8 herein.
 
 
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8.  Exercise of Remedies.
 
8.1  Authorized Action by Secured Party, The Pledgor hereby irrevocably appoint Pledgee as the attorney-in-fact of the Pledgor for the purpose of carrying out the security provisions of this Agreement and to take any action and execute any instrument that the Pledgee may deem necessary or advisable to accomplish the purpose of this Agreement. Such power of attorney shall be effective, automatically and without the necessity of any action (including any transfer of any Pledged Collateral) by any person, upon the occurrence an Event of Default Pledgee shall not have any duty to exercise any such right or to preserve the same and shall not be liable for any failure to do so or for any delay in doing so.
 
If an Event of Default occurs, or is already proceeding, Pledgee shall have the right to exercise the following rights:
 
(a)  Collect by legal proceedings or otherwise, and endorse and/or receive all payments, proceeds and other sums and property now or hereafter payable on or on account of the Pledged Collateral;
 
 (b)  Enter into any extension, reorganization, deposit, merger, consolidation or other agreement pertaining to, or deposit, surrender, accept, hold or apply other property in exchange for the Pledged Collateral;
 
 (c)  Transfer the Pledged Collateral under the Pledgee's name or under an appointed nominee;
 
 (d)  Make any compromise or settlement, and take any action the Pledgee deems advisable, with respect to the Pledged Collateral;
 
 (e)  Notify any obligor with respect to the Pledged Collateral to make payment directly to the Pledgee;
 
(f)  All rights of the Pledgor that they would otherwise be entitled to enjoy or exercise with respect to the Pledged Collateral, including without limitations the rights to vote and to receive distributions, shall cease without any further action by or notice, and all such rights shall thereupon become .vested in the Pledgee; and
 
(g)  The Pledgor shall execute and deliver to the Pledgee such other instruments as the Pledgee may request in order to permit the Pledgee to exercise the rights set forth herein.
 
 
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8.2 Other Remedies. Upon the expiration of the Cure Period, the Pledgee, in addition to the remedies set forth in Section 8.1 or such other rights in law, equity or otherwise, may, without notice or demand on the Pledgor, elect any of the following:
 
(a)  Require the Pledgor to immediately pay all outstanding unpaid amounts due under the Consulting Services Agreement;
 
(b)  Foreclose or otherwise enforce the Pledgee's security interest to the Pledged Collateral in any manner permitted by law or provided under this Agreement;
 
(c)  Terminate this Agreement pursuant to Section 11;
 
(d)  Exercise any and all rights as the beneficial and legal owner of the Pledged Collateral, including, without limitation, the transfer and exercise of voting and any other rights to the Pledged Collateral; and
 
(e)  Exercise any and all rights and remedies of a secured party under applicable laws.
 
8.3  The Pledgee has priority in the receipt of payments from the proceeds of auction or sale of the Pledged Collateral, in part or in whole, in accordance with legal procedures, until all payment obligations under the Consulting Services Agreement are satisfied.
 
8.4  The Pledgor shall not hinder the Pledgee from exercising its rights in accordance with this Agreement and shall give necessary assistance so that the Pledgee may exercise its rights in full.
 
9.  Assignment
 
9.1  The Pledgor shall not assign or otherwise transfer the rights and obligations herein without the Pledgee's prior written consent
 
9.2  This Agreement shall be binding upon each of the Pledgor and their respective successors, and shall be binding on the Pledgee and each of its successor and assignee.
 
9.3  Upon the transfer or assignment by the Pledgee of any or all of its rights and obligations under the Consulting Service Agreement, the Pledgee's transferee or assignee shall enjoy and undertake the same rights and obligations as the Pledgee under this Agreement The Pledgor shall be notified of any such transfer or assignment by written notice and at the request of the Pledgee, the Pledgor shall execute such relevant agreements and/or documents with respect to such transfer or assignment.
 
9.4 In the event of the Pledgee's change in control resulting in the transfer or assignment of this Agreement, the successor to the Pledgee and the Pledgor shall execute a new equity pledge agreement
 
 
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10.  Formalities. Fees and Other Charges.
 
10.1 The Pledgor shall be responsible for all the fees and expenses in relation to this Agreement, including, but not limited, to legal fees, cost of production, stamp tax and any other taxes and charges. If the Pledgee pays the relevant taxes in accordance with applicable law, the Pledgor shall fully reimburse the Pledgee of such taxes.
 
10.2 The Pledgor shall be responsible for all expenses (including, but not limited to, any taxes, application fees, management fees, litigation costs, attorney's fees, and various insurance premiums in connection with the disposition of the Pledge) incurred by the Pledgee in its recourse to collect from the Pledgor arising from the Pledgor* failure to pay any relevant taxes and fees.
 
11.  Force Majeure.
 
11.1  "Force Majeure" shall include, but not be limited, to acts of governments, acts of nature, fire, explosion, typhoon, flood, earthquake, tide, lightning, war, and any unforeseen events beyond a Party's reasonable control or which cannot be prevented with reasonable care. However, any shortage of credit, capital or finance shall not be regarded as an event beyond a Party's reasonable control. A Party affected by Force Majeure shall promptly notify the other Parties of such event in order to be exempted from such Party's obligations under this Agreement.
 
11.2  In the event that the affected Party is delayed or prevented from performing its obligations under this Agreement due to Force Majeure, die affected Party shall not be responsible for any damage caused by the delay or prevention of such performance, as long as such damage is within the scope of such delay or prevention. The affected Party shall take appropriate means to minimize or remove the effects of Force Majeure and attempt to resume performance of the obligations delayed or prevented by Force Majeure. When such Force Majeure ceases to exist, both Parties covenant and agree to resume the performance of this Agreement with their best efforts.
 
12.  Confidentiality. The Parties hereby acknowledge and agree to ensure the confidentiality of all oral and written materials exchanged relating to this Agreement No Party shall disclose any confidential information to any other third party without the other Parties' prior written approval, unless: (a) such information was in the public domain at the time it was communicated (unless it entered the public domain without the authorization of the disclosing Party); (b) the disclosure was in response to the relevant laws, regulations, or stock exchange rules; or (c) the disclosure was required by any of the Party's legal counsel or financial consultant for the purpose of the transaction underlying this Agreement However, such legal counsel and/or financial consultant shall also comply with the confidentiality as stated hereof The disclosure of confidential information by employees or agents of the disclosing Party is deemed to be an act of the disclosing Party, and such disclosing Party shall bear all liabilities for any breach of confidentiality.
 
 
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13.  Dispute Resolution.
 
13.1 This Agreement shall be governed by and construed in accordance with the laws of the PRC.
 
13.2 The Parties shall strive to resolve any disputes arising from the interpretation or performance of this Agreement through amicable negotiations. If a dispute cannot be settled, any Party may submit such dispute to China International Economic and Trade Arbitration Commission ("C1ETAC") for arbitration. The arbitration shall abide by the then current rules of CIETAC, and the arbitration proceedings shall be conducted in Shanghai, China in Chinese. The decision of CIETA shall be final and binding upon the parties.
 
14.   Notices. Any notice given by the parties hereto for the purpose of performing the rights and obligations hereunder shall be in writing. If such notice is delivered by messenger, the time of receipt is the time when such notice is received by the addressee; if such notice is transmitted by facsimile, the time of receipt is the time when such notice is transmitted. If t he notice does not reach the addressee by the end of the business day, the following business day shall be the date of receipt The place of delivery is the Party's address as set forth in the signature pages hereto or the address advised in writing including via facsimile.
 
15.  Entire Contract The Parties agree that this Agreement constitutes the entire agreement of the Parties upon its effectiveness and supersedes all prior oral and/or written agreements and understandings relating to this Agreement
 
16.  Severability. If any provision or provisions of this Agreement shall be held by a proper authority to be invalid, illegal, unenforceable or in conflict with the laws and regulations of the PRC, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
 
17.  Appendices. The appendices to this Agreement are incorporated into and are a part of this Agreement
 
 
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18.  Amendment or Supplement
 
18.1 The Parties may amend this Agreement in writing, provided that such amendment shall be duly executed and signed by the Pledgee, the Hunan Xiangmei, and such Pledgor collectively holding a majority of the Equity Interests, and such amendment shall thereupon become a part of this Agreement and shall have the same legal effect as this Agreement.
 
18.2 This Agreement and any amendments, modification, supplements, additions or changes hereto shall be in writing and come into effect upon being executed and stamped by the parties hereto. The registration of the Pledge under section 4 will not affect the validity and enforcement of this Agreement.
 
19.  Language and Copies of the Agreement This Agreement shall be executed in English in threer (3) original copies. Each Party shall receive one (1) original copy, all of which shall be equally valid and enforceable.

 
[SIGNATURE PAGE FOLLOWS]
 
 
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[SIGNATURE PAGE]

 
IN WITNESS WHEREOF this Agreement is duly executed by each Party or its legal representatives as of the date first set forth above.

 
PLEDGEE:   Qiyang County Xiangmei Food Technical Research and Development Co., Ltd.
 
Legal/Authorized Represent!
 
Name: ZHOU Taiping
 
Title: Legal Representative
 
 
 
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PLEDGOR SIGNATURE PAGE

 
PLEDGOR:

Zhou Taiping
Owns 100% of Hunan Xiangmei
 
 
12

 
 
ACKNOWLEDGED BY:
 
 
Hunan XiangmeiHunan Xiangmei Food Co., Ltd.
 
Legal/Authorized Representative:
 
 
 
 
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EX-10.13 16 f8k020111ex10xiii_neweratech.htm OPERATING AGREEMENT f8k020111ex10xiii_neweratech.htm
Exhibit 10.13
 
OPERATING AGREEMENT
 
This Operating Agreement (this "Agreement") is dated December 23,2010, and is entered into in Huainan City, Anhui Province, People's Republic of China ("PRC or "China") by and among Qiyang County Xiangmei Food Technical Research and Development Co., Ltd. ("Party A") and Hunan Xiangmei Food Co., Ltd. ("Hunan Xiangmei" or "Party B"), and the sole shareholder holding 100% of the issued and outstanding equity interests of Party B (the "Shareholder of Party B" or "Party CV Party A, Party B, and Party C are each refer red to in this Agreement as a "Party" and collectively as the "Parties."

 
RECITALS
 
1.   Party A, a company incorporated in the PRC as a foreign investment enterprise, specializes in the research and development of agriculture products and consulting service;
 
2.   Party B is engaged in the sale and production of frozen food, ice cream and other food (collectively the "Business").
 
3.   The Shareholders of Party B collectively own 100% of the equity interests of Party B;
 
4.    Party A has established a business relationship with Party B pursuant to that certain Consulting Services Agreement dated December 23, 2010 (hereinafter "Consulting Services Agreement"):
 
5.    Pursuant to that the Consulting Services Agreement, Party B is obligated to make regular payments of consulting services fee to Party A during the term of the Consulting Services Agreement However, no payment has yet been made, and Party B's daily operation has a material effect on its ability to make such payments to Party A; and
 
 
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6.    The Parties are entering into this Agreement to clarify certain matters in connection with Party B's operations in order to ensure Party B's ability to meet its obligations under the Consulting Services Agreement, including payment of consulting services fee.

 
NOW THEREFORE, all Parties of this Agreement hereby agree as follows through negotiations:
 
1.          Party A agrees, subject to Party B's agreement to relevant provisions of this Agreement, to be Party B's guarantor in connection with the contracts, agreements and transactions executed between Party B and any third party, and to provide full guarantee for the performance of such contracts, agreements or transactions by Party B. Party B agrees, as a counter-guarantee, to pledge all of its relevant assets, including accounts receivable, to Party A. Pursuant to such guarantee arrangement, Party A may, pursuant to Section 5, enter into written guarantee agreements with Party B's counter-parties to assume guarantor liability, upon which Party B and Party C shall take all necessary actions (including, but not limited to, executing relevant documents and commencing relevant registrations) to carry out the counter-guarantee arrangements to be provided to Party A.
 
2.          In consideration of Section 1 herein and to ensure the performance of the various arrangements between Party A and Party B, including related payment obligations of Party B to Party A, Party B and the Party C hereby jointly agree that Party B shall not, without the prior written consent of Party A, conduct any transactions which may materially affect the assets, ™ obligations, rights or the operations of Party B (excluding proceeding with Party B's normal business operation and the lien obtained by relevant counter parties due to such proceedings).
 
Such transactions shall include, without limitation the following:
 
 
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2.1 To borrow money from any third party or assume any debt;
 
2.2 To sell or acquire from any third party any asset or right, including, but not limited to, any intellectual property rights;
 
2.3 To provide any guarantees to any third parties using its assets or intellectual property rights; or
 
2.4 To assign to any third party its business agreements.
 
3.   In order to further ensure Party B's performance of the various arrangements between Party A and Party B, including related payment obligations of Party B to Party A, Party B and Party C hereby jointly agree to accept the corporate policies provided by Party A in connection with Party B's daily operations, financial management and the employment and dismissal of Party B's employees.
 
4.   Party B and Party C hereby jointly agree that Party C shall appoint such individuals as recommended by Party A to be Directors of Party B, and shall appoint members of Party A's senior management as Party B's General Manager, Chief Financial Officer, and other senior officers. If any member of such senior management leaves or is dismissed by Party A, he or she will lose the qualification to take any other position with Party B, and Party B shall appoint another member of Party A's senior management as recommended by Party A to take such position. The person recommended by Party A in accordance with this section shall have the qualifications necessary to be a Director, General Manager, Chief Finan cial Officer, and/or other relevant senior officers pursuant to applicable laws.
 
 
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5.   Party B, together with Party C, hereby jointly agree and confirm that Party B shall first seek guarantee from Party A if Party B requires any guarantee for its performance of any contract or loan in the course of its business operation. Under such circumstances, Party A shall have the right, but not the obligation, to provide the appropriate guarantee to Parry B at its sole discretion. If Party A decides not to provide such guarantee, Party A shall issue a written notice to Party B immediately and Party B shall seek a guarantee from other third party.
 
6.   In the event that any of the agreements between Party A and Party B terminates or expires, Party A shall have the right, but not the obligation, to terminate all agreements between Party A and Party B, including, but not limited to, the Consulting Services Agreement.
 
7.   Any amendment to this Agreement shall be made in writing. The amendments duly executed by all Parties shall be deemed as a part of this Agreement and shall have the same legal effect as this Agreement
 
8.   If any provision or provisions of this Agreement shall be held to be invalid, illegal, unenforceable or in conflict with the laws and regulations of the jurisdiction, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
 
9.    Party B and Party C shall not assign its rights and obligations under this Agreement to any third party without the prior written consent of Party A, Party B and Party C hereby agree that Party A may assign its rights and obligations under this Agreement if necessary and such transfer shall only be subject to a written notice sent to Party B and Party C by Party A, and no any further consent from Party B or Party C will be required.
 
 
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10.    The Parties hereby acknowledge and agree the confidentiality of all oral and written materials exchanged relating to this Agreement No Party shall disclose the confidential information to any other third party without the other Party's prior written approval, unless: (a) it was in the public domain at the time it was communicated (unless it entered the public domain w ithout the authorization of the disclosing Party); (b) the disclosure was in response to the relevant laws, regulations, or stock exchange rules; or (c) the disclosure was required by any of the Party's legal counsel or financial consultant for the purpose of the transaction of this Agreement However, such legal counsel and/or financial consultant shall also comply with the confidentiality as stated hereof. The disclosure of confidential information by employees or agents of any Party is deemed to be an act of such Party, and such Party shall bear all liabilities of the breach of confidentiality. If any provision of this Agreement is found by a proper authority to be unenforceable or invalid, such unenforceability or invalidity shall not render mis Agreement unenforceable or invalid as a whole.
 
11.   This Agreement shall be governed and construed in accordance with PRC law.
 
12.   The Parties shall strive to settle any disputes arising from the interpretation or performance of this Agreement through amicable negotiations. If such dispute cannot be settled, any Party may submit such dispute to China International Economic and Trade Arbitration Commission ("CEETAC") for arbitration. The arbitration shall abide by the current rules of CDETAC, and the arbitration proceedings shall be conducted in Shanghai, China in Chinese. The judgment of the arbitration shall be final and binding upon the Parties.
 
 
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13.    This Agreement shall be executed by a duly authorized representative of each Party as of the date first written above and becomes effective simultaneously.
 
14.   The Parties confirm that this Agreement shall constitute the entire agreement of the Parties with respect to the subject matters therein and supersedes and replaces all prior or contemporaneous verbal and written agreements and understandings.
 
15.   The term of this Agreement is twenty (20) years unless early terminated in accordance with the relevant provisions herein or by any other agreements reached by all Parties. The term may only be extended upon Party A's written confirmation prior to the expiration of this Agreement and the extended term shall be determined by the Parties hereto through mutual negotiations.
 
16.   This Agreement shall be terminated on the expiration date unless it is renewed in accordance with the relevant provisions herein. During the effective term of this Agreement, neither Party B nor Party C may terminate this Agreement Party A shall have the right to terminate this Agreement at any time by giving a thirty (30) day prior written notice to Party B and Party C.
 
17.    This Agreement has been executed in four (3) duplicate originals in both English and Chinese.  Each Party has received one (1) original, and all originals shall be equally valid.

 
[SIGNATURE PAGE FOLLOWS]
 
 
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 [SIGNATURE PAGE]

 
IN WITNESS WHEREOF this Agreement is duly executed by each Party or its legal representatives.

 
  PARTY A:  Qiyang County Xiangmei Food Technical Research and Development Co., Ltd.
     
    Legal/Authorized Representative
     
    Name: Zhou Taiping
     
    Title: Legal Representative
     
     
  PARTY B: Hunan Xiangmei Food Co., Ltd.
     
    Name: Zhou Taiping
     
    Title: Legal Representative
 
 
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SIGNATURE PAGE FOR SHAREHOLDERS OF PARTY B

 
Shareholders of Hunan Xiangmei
 


 
Zhou Taiping
Owns 100% of Hunan Xiangmei
 
 
 
 
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EX-10.14 17 f8k020111ex10xiv_neweratech.htm OPTION AGREEMENT f8k020111ex10xiv_neweratech.htm
Exhibit 10.14
 
OPTION AGREEMENT
 
This Option Agreement (this "Agreement") is dated December 23, 2010, and is entered into in Yongzhou City, Hunan Province, People's Republic of China ("PRC" or "China") by and among Qiyang County Xiangmei Food Technical Research and Development Co., Ltd. ("Party_A") and Hunan Xiangmei Food Co., Ltd. ("Hunan Xiangmei" or "Party B"), and the sole shareholder holding 100% of the issued and outstanding equity interests of Party B (the "Shareholder of Party B" or "Party C"). Party A, Party B, and Party C are each referred to in this Agreement as a "Party" and collectively as the "Parties."
 
RECITALS
 
1.           Party A, a company incorporated in the PRC as a foreign investment enterprise, specializes in the research and development of agriculture products and consulting service, and Hunan Xiangmei is engaged in sale and production of frozen food, ice cream and other food (collectively the "Business"). Party A and Hunan Xiangmei have entered into a certain Consulting Services Agreement dated December 23, 2010 (the "Consulting Services Agreement") in connection with the Business.
 
2.           The Shareholder is the sole shareholder of Party B, legally holding such amount of equity interest of the Party B as set forth on the signature page of this Agreement and collectively holding 100% of the issued and outstanding equity interests of Party B (collectively the "Equity Interest").
 
3.           The Parties are entering into this Agreement in connection with the Consulting
 
Services Agreement

 
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NOW, THEREFORE, the Parties to this Agreement hereby agree as follows:
 
1.        PURCHASE AND SALE OF EQUITY INTEREST

 
1.1 Grant of Rights. The Shareholders (hereinafter the "Transferors") hereby collectively and irrevocably grant to Party A or a designee of Party A (the "Designee") an option to purchase at any time, to the extent permitted under PRC Law, all or a portion of the Equity Interest in accordance with such procedures as determined by Party A, at the price specified in Section 1.3 of this Agreement (the "Option"). No Option shall be granted to any party other than to Party A and/or a Designee. Party B hereby agrees to Party C's grant of the Option to Party A and/or the Designee. As used herein, Designee may be an individual person, a corporatio n, a joint venture, a partnership, an enterprise, a trust or an unincorporated organization.
 
1.2 Exercise of Rights. According with the requirements of applicable PRC laws and regulations, Parry A and/or the Designee may exercise the Option at any time by issuing a written notice (the "Notice") to one or more of the Transferors and specifying the amount of the Equity Interest to be purchased from such Transferors) and the manner of purchase.
 
1.3          Purchase Price.
 
1.3.1 The purchase price of the Equity Interest pursuant to an exercise of the Option shall be equal to the original paid-in price of the Transferors, adjusted pro rata for purchase of less than all of the Equity Interest, unless applicable PRC laws and regulations require an appraisal of the Equity Interest or stipulate other restrictions regarding the purchase price of the Equity Interest

1.3.2 If the applicable PRC laws and regulations require an appraisal of the Equity Interest or stipulate other restrictions regarding the purchase price of the Equity Interest at the time Party A exercises the Option, the Parties agree that the purchase price shall be set at the lowest price permissible under the applicable laws and regulations.
 
1.4     Transfer of Equity Interest.   Upon each exercise of the Option under this Agreement:
 
1.4.1 The Transferors shall hold or cause to be held a meeting of shareholders of Party B in order to adopt such resolutions as necessary in order to approve the transfer of the relevant Equity Interest (such Equity Interest hereinafter the "Purchased Equity Interest") to Party A and/or the Designee;
 
1.4.2 The relevant Parties shall enter into an Equity Interest Purchase Agreement in a form reasonably acceptable to Party A, setting forth the terms and conditions for the sale and transfer of the Purchased Equity Interest;
 
1.4.3 The relevant Parties shall execute, without any security interest, all other requisite contracts, agreements or documents, obtain all requisite approval and consent of the government, conduct all necessary actions, transfer the valid ownership of the Purchased Equity Interest to Party A and/or the Designee, and cause Party A and/or the Designee to be the registered owner of the Purchased Equity Interest As used herein, "security interest" means any mortgage, pledge, the right or interest of the third party, any purchase right of equity interest, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements; however, such term shall not include any securi ty interest created under that certain Equity Pledge Agreement dated as of December 23,2010 by and among the Parties (the "Pledge Agreement").

 
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1.5 Payment. Payment of the purchase price shall be determined through negotiation between the Transferors and Party A in accordance with the applicable laws at the time of the exercise of the Option.
 
  2.       REPRESENTATIONS RELATING TO EQUITY INTEREST
 
 
2.1      Party B's Representations.    Party B hereby represents and warrants:
 
2.1.1 Without Party A's prior written consent, Party B's Articles of Association shall not be supplemented, changed or renewed in any way, Party B's registered capital of shall not be increased or decreased, and die structure of Party B's registered capital shall not be changed in any form;
 
2.1.2 To maintain the corporate existence of Party B and to prudently and effectively operate the Business according with customary fiduciary standards applicable to managers with respect to corporations and their shareholders;
 
2.1.3 Upon the execution of this Agreement, to not sell, transfer, mortgage or dispose, in any other form, any asset, legitimate or beneficial interest of business or income, or encumber or approve any encumbrance or imposition of any security interest on Party B's assets without Party A's prior written consent;
 
2.1.4 To not issue or provide any guarantee or permit the existence of any debt without Party A's prior written consent, other than (i) such debt that may arise from Party B's ordinary course of business (excepting a loan); and (ii) such debt which has been disclosed to Party A;
 
2.1.5 To operate and conduct all business operations in the ordinary course of business, without damaging the Business or the value of Party B's assets;
 
2.1.6 To not enter into any material agreements without Party A's prior written consent, other than agreements entered into in the ordinary course of business (for purpose of this paragraph, if any agreement for an amount in excess of One Hundred Thousand Renminbi (RMB 100,000) shall be deemed a material agreement);
 
2.1.7 To not provide loan or credit to any other party or organization without Party A's prior written consent;
 
2.1.8 To provide to Party A all relevant documents relating to the Business and its operations and finance at the request of Party A;
 
2.1.9 To purchase and maintain general business insurance of the type and amount comparable to those held by companies in the same industry, with similar business operations and assets as Party B, from an insurance company approved by Party A;
 
 
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2.1.10 To not enter into any merger, cooperation, acquisition or investment without Party A's prior written consent;
 
2.1.11 To notify Party A of the occurrence or the potential occurrence of litigation, arbitration or administrative procedure relating to Party B's assets, business operations and/or income;
2.1.12 In order to guarantee the ownership of Party B's assets, to execute all requisite or relevant documents, take all requisite or relevant actions, and make and pursue all relevant claims;
 
2.1.13 To not assign the Equity Interest in any form without Party A's prior written notice; however, Party B shall distribute dividends to the Shareholders upon the request of Party A; and
 
2.1.14 In accordance with Party A's request, to appoint any person designated by Party A to a management position for Party B.
 
2.2      Transferors' Representations.   The Transferors hereby represent and warrant:
 
2.2.1 Without Party A's prior written consent, upon the execution of this Agreement, to not sell, transfer, mortgage or dispose in any other form any legitimate or beneficial interest of the Equity Interest, or to approve any security interest, except as created pursuant to the Pledge Agreement;
 
2.2.2 Without Party A's prior written notice, to not adopt or support or execute any shareholders resolution at any meeting of the shareholders of Party B that seeks to approve any sale, transfer, mortgage or disposal of any legitimate or beneficial interest of the Equity Interest, or to allow any attachment of security interests, except as created pursuant to the Pledge Agreement;
 
2.2.3 Without Party A's prior written notice, to not agree or support or execute any shareholders resolution at any meeting of the shareholders of Party B that seeks to approve Party B's merger, cooperation, acquisition or investment;
 
2.2.4 To notify Party A the occurrence or the potential occurrence of any litigation, arbitration or administrative procedure relevant to the Equity Interest;
 
2.2.5 To cause Party B's Board of Directors to approve the transfer of the Purchased Equity Interest pursuant to this Agreement;
 
2.2.6 In order to maintain the ownership of Equity Interest, to execute all requisite or relevant documents, conduct all requisite or relevant actions, and make all requisite or relevant claims, or make requisite or relevant defense against all claims of compensation;
 
22.7 Upon the request of Party A, to appoint any person designated by Party A to be a director of Party B; and
 
 
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2.2.8 To prudently comply with the provisions of this Agreement and any other agreements entered into with Party A and Party B in connection therewith, and to perform all obligations under all such agreements, without taking any action or nonfeasance that may affect the validity and enforceability of such agreements.
 
3.         Representations and Warranties. As of the execution date of this Agreement and on each transfer of Purchased Equity Interest pursuant to an exercise of the Option, Party B and the Transferors hereby represent and warrant as follows:
 
3.1 Such Parties shall have the power and ability to enter into and deliver this Agreement and to perform their respective obligations thereunder, and at each transfer of Purchased Equity Interest, the relevant Equity Interest Purchase Agreement and to perform their obligations thereunder. Upon execution, this Agreement and each Equity Interest Purchase Agreement will constitute legal, valid and binding obligations and be fully enforceable in accordance with their terms;
 
3.2 The execution and performance of this Agreement and any Equity Interest Purchase Agreement shall not: (i) violate any relevant laws and regulations of the PRC; (ii) conflict with the Articles of Association or other organizational documents of Party B; (iii) cause to breach any agreements or instruments or having binding obligation on it, or constitute a breach under any agreements or instruments or having binding obligation on it; (iv) breach relevant authorization of any consent or approval and/or any effective conditions; or (v) cause any authorized consent or approval to be suspended, removed, or cause other added conditions;
 
3.3 The Equity Interest is transferable in whole and in part, and neither Party B nor the Transferors has permitted or caused any security interest to be imposed upon the Equity Interest other than pursuant to the Pledge Agreement;
 
3.4 Party B does not have any unpaid debt, other than (i) such debt that may arise during the ordinary course of business; and (ii) debt either disclosed to Party A or incurred pursuant to Party A's written consent;
 
3.5 Party B has complied with all applicable PRC laws and regulations in connection with this Agreement;
 
3.6 There are no pending or ongoing litigation, arbitration or administrative procedures with respect Party B, its assets or the Equity Interests, and Party B and the Transferors have no knowledge of any pending or threatened claims to the best of then-knowledge; and
 
3.7 The Transferors own the Equity Interest free and clear of encumbrances of any kind, other than the security interest pursuant to the Pledge Agreement

 
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4.         ASSIGNMENT OF AGREEMENT
 
4.1 Party B and the Transferors shall not transfer their rights and obligations under this Agreement to any third party without Party A's prior written consent.
 
4.2 Party B and the Transferors hereby agrees that Party A shall be able to transfer all of its rights and obligations under this Agreement to any third party, and such transfer shall only be subject to a written notice of Party A to Party B and the Transferors without any further consent from Party B or the Transferors.
 
5.         EFFECTIVE DATE AND TERM
 
5.1 This Agreement shall be effective as of the date first set forth above.
 
5.2 The term of this Agreement is ten (10) years unless it is early terminated in accordance with this Agreement This Agreement may be extended by Party A's written consent prior to the expiration of this Agreement   The terms of any such extension shall be determined through mutual agreement of the Parties.
 
5.3 At the end of the term of this Agreement (including any extension thereto), or if earlier terminated pursuant to Section 52, the Parties agree that any transfer of rights and obligations pursuant to Section 4.2 shall continue to be in effect.
 
6.         APPLICABLE LAWS AND DISPUTE RESOLUTION
 
6.1 Applicable Laws. The execution, validity, interpretation and performance of this Agreement and the dispute resolution under this Agreement shall be governed by the laws of PRC.
 
6.2 Dispute Resolution. The Parties shall strive to resolve any disputes arising from the interpretation or performance of this Agreement through amicable negotiations. If such dispute cannot be settled within thirty (30) days, any Party may submit such dispute to China International Economic and Trade Arbitration Commission ("CIETAC") for arbitration.  The arbitration shall abide by the current rules of CIETAC, and the arbitration proceedings shall be conducted in Shanghai, China in Chinese. The determination of CIETAC shall be final and binding upon the Parties.
 
7.         Taxes and Expenses. Each Party shall, according with PRC laws, bear any and all registration taxes, costs and expenses for the transfer of equity arising from the preparation, execution and completion of this Agreement and all Equity Interest Purchase Agreements.
 
8.         Notices. Notices or other communications required to be given by any Party pursuant to this Agreement shall be written in English and Chinese and delivered personally or sent by registered mail or prepaid mail or by a recognized courier service or by facsimile transmission to the relevant address of each Party as set forth below or other addresses of the Party as specified by such Party from time to time. The date when the notice is deemed to be duly served shall be determined as follows: (a) a notice delivered personally is deemed duly served upon the delivery; (b) a notice sent by mail is deemed duly served t he tenth (10th) day after the date of the air registered mail with the postage prepaid has been sent out (as is shown on the postmark), or the fourth (4th) day after the delivery by an internationally recognized courier service; and (c) a notice sent by facsimile transmission is deemed duly served upon the receipt time as shown on the transmission confirmation.

 
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Party A
Qiyang   County   Xiangmei   Food   Technical   Research   and Development Co., Ltd.
 
Address:
 
Attn: Zhou Taiping
 
Fax:
 
Tel:
Party B:
Hunan Xiangmei Food Co., Ltd.
 
Address:
 
Attn:
 
Fax:
 
Tel:
Party C:
 
 
Zhou Taiping
 
9.         Confidentiality. The Parties acknowledge and confirm that any oral or written information exchanged by the Parties in connection with this Agreement is confidential. The Parties shall maintain the confidentiality of all such information. Without the written approval by the other Parties, any Party shall not disclose to any third party any confidential information except as follows:
 
(a)  Such information was in the public domain at the time it was communicated;
 
(b)  Such information is required to be disclosed pursuant to the applicable laws, regulations, policies relating to the stock exchange; or
 
(c)  Such information is required to be disclosed to a Party's legal counsel or financial consultant, provided however, such legal counsel and/or financial consultant shall also comply with the confidentiality as stated hereof. The disclosure of confidential information by employees or agents of the disclosing Party is deemed to be an act of the disclosing Party, and such Party shall be responsible for all breach of confidentiality arising from such disclosure. This provision shall survive even if certain clauses of this Agreement are subsequently amended, revoked, terminated or determined to be invalid or unable to implement for any reason.
 
10.          Further Warranties. The Parties agree to promptly execute such documents as required to perform the provisions of this Agreement, and to take such actions as may be reasonably required to perform the provisions of this Agreement.
 
11.          MISCELLANEOUS
 
11.1 Amendment Modification and Supplement Any amendments and supplements to this Agreement shall only take effect if executed by both Parties in writing.
 
11.2 Entire Agreement Notwithstanding Article 5 of this Agreement, the Parties acknowledge that this Agreement constitutes the entire agreement of the Parties with respect to the subject matters therein and supercede and replace all prior or contemporaneous agreements and understandings, whether oral or in writing.
 
 
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11.3 Severability. If any provision of this Agreement is deemed invalid or non-enforceable according with relevant laws, such provision shall be deemed invalid only within the applicable laws and regulations of the PRC, and the validity, legality and enforceability of the other provisions hereof shall not be affected or impaired in any way. The Parties shall, through reasonable negotiation, replace such invalid, illegal or non-enforceable provisions with valid provisions in order to bring similar economic effects of those invalid, illegal or non-enforceable provisions.
 
11.4 Headings. The headings contained in this Agreement are for reference only and shall not affect the interpretation and explanation of the provisions in this Agreement.
 
11.5 Language and Copies. This Agreement shall be executed in English in three (3) duplicate originals. Each Party shall hold one (1) original, each of which shall have the same legal effect.
 
11.6  Successor. This Agreement shall be binding on the successors of each Party and the transferee allowed by each Party.
 
11.7  Survival. Each Party shall continue to perform its obligations notwithstanding the expiration or termination of this Agreement Article 6, Article 8, Article 9 and Section 11.7 hereof shall continue to be in full force and effect after the termination of this Agreement
 
11.8  Waiver. Any Party may waive the terms and conditions of this Agreement in writing with the written approval of all the Parties. Under certain circumstances, any waiver by a Party to the breach of other Parties shall not be construed as a waiver of any other breach by any other Parties under similar circumstances.
 
 
[SIGNATURE PAGE FOLLOWS]

 
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[SIGNATURE PAGE]
 
IN WITNESS WHEREOF this Agreement is duly executed by each Party or its legal representatives.
 
PARTY A:    Qiyang County Xiangmei Food Technical Research and Development Co., Ltd.
Legal/Authorized Representatr
Name: Zhou Taiping
Tide: Legal Representative

PARTY B:    Hunan Xiangmei Food Co., Ltd.
Legal/Authorized Representative:
Name: Zhou Taiping
 
Title: Legal Representative
 
 
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SIGNATURE PAGE FOR SHAREHOLDERS OF PARTY B

Shareholders of Hunan Xiangmei

Zhou Taiping
Owns 100% of Hunan Xiangmei
 
 
 
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EX-10.15 18 f8k020111ex10xv_neweratech.htm CONSULTING SERVICES AGREEMENT f8k020111ex10xv_neweratech.htm
Exhibit 10.15
 
CONSULTING SERVICES AGREEMENT
 
This Consulting Services Agreement (this "Agreement") is dated December 23, 2010, and is entered into in Yongzhou City, Hunan Province, People's Republic of China ("PRC" or "China") by and among Qiyang County Xiangmei Food Technical Research and Development Co., Ltd. ("Party A"), and Hunan Xiangmei Food Co., Ltd. ("Party B"). Party A and Party B are referred to collectively in this Agreement as the "Parties."

 
RECITALS
 
(1)  
Party A, a company incorporated in the PRC as a foreign investment enterprise, specializes in the research and development of agriculture products and consulting service;
 
(2)  
Party B is engaged in the sale and production of frozen food, ice cream and other food (collectively the "Business").
 
(3)  
The Parties desire that Party A provide Party B with consulting and other relevant services in connection with the Business; and
 
(4)  
The Parties are entering into this Agreement to set forth the terms and conditions under which Party A shall provide consulting and other related services to Party B.

 
NOW THEREFORE, the Parties agree as follows:
 
1.   DEFINITIONS
 
1.1   In this Agreement the following terms shall have the following meanings:

"Affiliate," with respect to any Person, shall mean any other Person that directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, "control" shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether by ownership of securities or partnership or other ownership interests, or by contract or otherwise);

 
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“Consulting Services Fee" shall be as defined in Clause 3.1;
 
"Indebtedness" shall mean, as to any Person, any one of the following: (i) money borrowed by such Person (including principal, interest, fees and charges) for the deferred purchase price of any property or services, (ii) the face amount of all letters of credit issued to such Person and all drafts drawn thereunder, (iii) all liabilities secured by any Lien on any property owned by such Person, whether or not such liabilities have been assumed by such Person, (iv) the aggregate amount required to be capitalized under any lease for which such Person is the lessee, or (v) all contingent obligations (including, without limitation, all guarantees to third parties) of such Person;
"Lien" shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under recording or notice statute, and any lease having substantially the same effect as any of the foregoing);

"Person" shall mean any individual, corporation, company, voluntary association, partnership, joint venture, trust, unincorporated organization, entity or other organization or any government body;

"PRC" means the People's Republic of China;
 
"Services" means the services to be provided under the Agreement by Party A to Party B, as more specifically described in Clause 2.
 
1.2 The headings in this Agreement shall not affect the interpretation of this Agreement

 
2.   RETENTION AND SCOPE OF SERVICES

 
2.1    Party B hereby agrees to retain the services of Party A, and Party A accepts such appointment, to provide to Party B services in relation to the current and proposed operations of Party B's business in the PRC pursuant to the terms and conditions of this Agreement (the "Services").   The Services shall include, without limitation:
 
General Business Operation. Provide general advice and assistance relating to the management and operation of Party B's business.
 
(a)   Human Resources
 
(i)  Provide general advice and assistance in relation to the staffing of Party B, including assistance in the recruitment, employment and secondment of management personnel, administrative personnel and staff of Party B;
 
 
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(ii) Provide training of management, staff and administrative personnel;

(iii) Assist Party B to establish an efficient payroll management system and;

(iv) Provide assistance in the relocation of Party B's management and staff;
 
(b)   Business Development.  Provide advice and assistance in business growth and development of Party B.
 
(c)   Other.   Such other advice and assistance as may be agreed upon by the Parties.
 
 
2.2   Exclusive Services Provider. During the term of this Agreement, Party A shall be the exclusive provider of the Services. Party B shall not seek or accept similar services from other providers without the prior written approval of Party A.
 
2.3   Intellectual Property Rights Related to the Services. Party A shall own all intellectual property rights developed or discovered through research and development in the course of providing Services, or derived from the provision of the Services. Such intellectual property rights shall include patents, trademarks, trade names, copyrights, patent application rights, copyright and trademark application rights, research and technical documents and materials, and other related intellectual property rights including the right to license or transfer such intellectual property rights. If Party B requires the use of Party A 's intellectual property rights, Party A agrees to grant such intellectual property rights to Party B on terms and conditions to be set forth in a separate agreement.
 
2.4   Pledge. Party B shall permit and cause the owners of Party B to pledge then-equity interests in Party B to Party A for securing the payment of the Consulting Services Fee as required pursuant to this Agreement

 
    PAYMENT

3.1   General.

 
(a)          In consideration of the Services to be provided by Party A hereunder, Party B shall pay to Party A a consulting services fee (the "Consulting Services Fee") during the term of this Agreement, payable in Renminbi ("RMB") each quarter, equal to all of Party B's net income for such quarter based on the quarterly financial statements provided under Clause 5.1 below. Such quarterly payment shall be made within fifteen (15) days after receipt by Party A of the financial statements referenced above.
 
 
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(b)          Party B will permit, from time to time during regular business hours as reasonably requested by Party A, its agents or representatives (including independent public accountants, which may be Party B's independent public accountants), (i) to conduct periodic audits of the financial books and records of Party B, (ii) to examine and make copies and  abstracts from all books, records and documents (including, without limitation, computer tapes and disks) in the possession or under the control of Party B, (Hi) to visit the offices and properties of Party B for the purpose of examining such materials described in clause (ii) above, and (iv) to discuss matters relating to the performance by Party B hereunder with any of the officers or employees of Party B having knowle dge of such matters. Party A may exercise die audit rights described herein at any time, provided that Party A provides a ten (10) day written notice to Party B specifying the scope, purpose and duration of such audit. All such audits shall be conducted in such a manner as not to interfere with Party B's normal operations.

 
3.2    Party B shall not be entitled to set off any amount it may claim is owed to it by Party A against any Consulting Services Fee payable by Party B to Party A unless Party B first obtains Party A's prior written consent
 
3.3    The Consulting Services Fee shall be paid in RMB by telegraphic transfer to Party A's bank account No._____________or to such other account or accounts as may be specified in writing from time to time by Party A.
 
3.4    Should Party B fail to pay all or any part of the Consulting Services Fee due to Party A in RMB under this Clause 3 within the time limits stipulated, Party B shall pay to Party A interest in RMB on the amount overdue based on the three (3) month lending rate for RMB published by the People's Bank of China on the relevant due date.
 
3.5    All payments to be made by Party B hereunder shall be made free and clear and without any consideration of tax deduction, unless Party B is required to make such payment subject to the deduction or withholding of tax.

 
4.   FURTHER TERMS OF COOPERATION

All business revenue of Party B shall be directed in full by Party B into a bank account designated by Party A.

 
    UNDERTAKINGS OF PARTY A
 
Party B hereby agrees that, during the term of the Agreement:
 
5.1   Information Covenants.   Party B shall provide to Party A:

 
5.1.1   Preliminary Monthly Reports. Within five (5) days after the end of each calendar month the preliminary income statements and balance sheets of Party B made up to as of the end of such calendar month, in each case prepared in accordance with the generally accepted accounting principles of the PRC.
 
 
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5.1.2   Final Monthly Reports. Within ten (10) days after the end of each calendar month, a final report from Party B on the financial and business operations of Party B as of the end of such calendar month, setting forth the comparison of financial and operation figures for the corresponding period in the preceding financial year, in each case prepared in accordance with generally accepted accounting principles of the PRC.
 
5.1.3   Quarterly Reports. As soon as available and in any event within forty-five (45) days after each Quarterly Period (as defined below), unaudited consolidated and consolidating statements of income, retained earnings and changes in financial positions of Party B and its subsidiaries for such Quarterly Period, and for the period from the beginning of the relevant fiscal year to such Quarterly Date, and the related consolidated and consolidating balance sheets as of such Quarterly Period, setting forth in each case the actual versus budgeted comparisons and a comparison of the corresponding consolidated and consolidating figures for the corresponding period in the preceding fiscal year, accompanied by a certificate of Party B's Chief Financial Officer, and such certificate shall state that the said financial statements fairly represent the consolidated and consolidating financial conditions and results of operations, as the case may be, of Party B and its subsidiaries, in accordance with roe general accepted accounting principles of the PRC for such period (subject to normal year-end audit adjustments and the preparation of notes for the audited financial statements). For the purpose of this Agreement, a "Quarterly Period" shall mean the last day of March, June, September and December of each year, the first of which shall be the first Quarterly Period following the date of this Agreement; provided that if any such Quarterly Period is not a business day in the PRC, then such Quarterly Period shall be the next succeeding business day in the PRC.
 
5.1.4   Annual Audited Accounts. Within 90 days after the end of the financial year, Party B's annual audited accounts (setting forth in each case the comparison of the corresponding figures for the preceding financial year), shall be prepared in accordance with the generally accepted accounting principles of the PRC.

 
5.1.5   Budgets. At least ninety (90) days prior to the beginning of Parry B's fiscal year, Party B shall prepare a budget in a form satisfactory to Party A (including budgeted statements of income and sources and uses of cash and balance sheets) for each of the four quarters of such fiscal year accompanied by the statement of Party B's Chief Financial Officer, to die effect that, to the best of his or her knowledge, the budget is a reasonable estimate for the corresponding period.
 
5.1.6   Notice of Litigation. Party B shall notify Party A, within one (1) business day of obtaining the knowledge thereof, of (i) any litigation or governmental proceeding pending against Party B which could materially adversely affect the business, operations, property, assets, condition or prospects of Party B, and (ii) any other event which is likely to materially adversely affect the business, operations, property, assets, condition or prospects of Party B.
 
5.1.7   Other Information.  From time to time, such other information or documents as Party A may reasonably request.
 
5.2   Books. Records and Inspections. Party B shall keep accurate books and records of its business activities and transactions according with PRC's generally accepted accounting principles and all other legal requirements. During an appropriate time and within a reasonable scope requested by Party A, Party B will permit Party A's officers and designated representatives to visit the premises of Party B and to inspect, under the guidance of Party B's officers, Party B's books and records, and to discuss the affairs, finances and accounts of Party B.
 
 
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5.3   Corporate Franchises. Party B will do or cause to be done, all things necessary to preserve and keep in full force and effect its existence and maintain its material rights and licenses.
 
5.4   Compliance with Laws. Party B shall abide by all applicable laws, regulations and orders of all relevant governmental administration, in respect to its business and the ownership of its property, including, without limitation, maintenance of valid and proper governmental approvals and licenses necessary to provide the services, unless such noncompliance could not, in the aggregate, have a material adverse effect on the business, operations, property, assets, condition or prospects of Party B.

 
6.   NEGATIVE COVENANTS

Party B covenants and agrees that, during the term of this Agreement, without the prior written consent of Party A:
 
6.1   Equity.  Party B will not issue, purchase or redeem any equity or debt securities of Party B.
 
6.2   Liens. Party B will not create, incur, assume or suffer to exist any Lien upon or with respect to any property or assets (real or personal, tangible or intangible) of Party B whether existing or hereafter acquired, provided that the provisions of this Clause 6.2 shall not prevent the creation, incurrence, assumption or existence of:

 
6.2.1    Liens for taxes not yet due, or Liens for taxes being contested in good faith and by appropriate proceedings for which adequate reserves have been established; and
 
6.2.2    Liens in respect to Party B's property or assets imposed by law, which were incurred in the ordinary course of business, and (i) which do not in the aggregate, materially detract from the value of Party B's property or assets or materially impair the use thereof in the operation of Party B's business or (ii) which are being contested in good faith by appropriate proceedings and proceedings which have the effect of preventing the forfeiture or sale of the property of assets subject to any such Lien.
 
 
6

 
 
6.3   Consolidation. Merger Sale of Assets, etc. Party B will not wind up, liquidate or dissolve its affairs or enter into any transaction of merger or consolidation, or convey, sell, lease or otherwise dispose of (or agree to do any of the foregoing at any future time) all or any part of its property or assets, or purchase or otherwise acquire (in one or a series of related transactions) any part of the property or assets (other than purchases or other acquisitions of inventory, materials and equipment in the ordinary course of business) of any Person, except mat (i) Party B may sell inventory in the ordinary course of business and (ii) Party B may sell equipment which is uneconomic or obsolete, in t he ordinary course of business.
 
6.4   Dividends.   Party B will not declare or pay any dividends, or return any capital, to its shareholders or authorize or make any other distribution, payment or delivery of property or cash to its shareholders as such, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for a consideration, any shares of any class of its capital stock now or hereafter outstanding (or any options or warrants issued by Party B with respect to its capital stock), or set aside any funds for any of the foregoing purposes.
 
6.5   Leases.   Party B will not permit the aggregate payments (including, without limitation, any property taxes paid as additional rent or lease payments) by Party B under agreements to rent or lease any real or personal property to exceed US$1 million in any fiscal year of Party B.
 
6.6   Indebtedness. Party B will not contract, create, incur, assume or suffer to exist any indebtedness, except accrued expenses and current trade accounts payable incurred in the ordinary course of business, and obligations under trade letters of credit incurred by Party B in the ordinary course of business, which are to be repaid in full not more than one (1) year after the date on which such indebtedness is originally incurred to finance the purchase of goods by Party B.
 
6.7   Advances. Investment and Loans. Party B will not lend money or grant credit or make advances to any Person, or purchase or acquire any stock, obligations or securities of, or any other interest in, or make any capital contribution to, any other Person, except that Party B may acquire and hold receivables owing to it, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms.
 
6.8   Transactions with Affiliates. Party B will not enter into any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate of Party B, other than on terms and conditions substantially as favorable to Party B as would be obtainable by Party B at the time in a comparable arm's-length transaction with a Person other than an Affiliate and with the prior written consent of Party A.
 
6.9   Capital Expenditures. Party B will not make any expenditure for fixed or capital assets (including, without limitation, expenditures for maintenance and repairs which are capitalized in accordance with generally accepted accounting principles in the PRC and capitalized lease obligations) during any quarterly period which exceeds the aggregate the amount contained in the budget as set forth in Section 5.1.5.
 
 
7

 
 
6.10   Modifications to Debt Arrangements. Agreements or Articles of Association. Party B will not (i) make any voluntary or optional payment or prepayment on or redemption or acquisition for value of (including, without limitation, by way of depositing with the trustee with respect thereto money or securities before due for the purpose of paying when due) any existing Indebtedness or (ii) amend or modify, or permit the amendment or modification of, any provision of any existing Indebtedness or of any agreement (including, without limitation, any purchase agreement, indenture, loan agreement or security agreement) relating to any of the foregoing or (iii) amend, modify or change its Articles of Association or business lice nse, or any agreement entered into by it, with respect to its capital stock, or enter into any new agreement with respect to its capital stock.
 
6.11   Line of Business. Party B will not engage (directly or indirectly) in any business other than those types of business prescribed within the business scope of Party B's business license except with the prior written consent of Party A.
 
 
7.   TERM AND TERMINATION
 
7.1    This Agreement shall take effect on the date of execution of this Agreement and shall remain in full force and effect unless terminated pursuant to Clause 7.2.
 
7.2    The term of this Agreement is twenty (20) years unless early terminated in accordance with die relevant provisions herein or by any other agreements reached by all Parties. The term may only be extended upon Parry A's written confirmation prior to the expiration of this Agreement and the extended term shall be determined by the Parties hereto through mutual negotiations.
 
7.3    This Agreement may be terminated;
 
7.3.1   By either Party giving written notice to the other Party if the other Party has committed a material breach of this Agreement (including, but not limited to, the failure by Party B to pay the Consulting Services Fee) and such breach, if capable of remedy, has not been so remedied within fourteen (14) days, in the case of breach of a non-financial obligation, following the receipt of such written notice;
 
7.3.2   By either Party giving written notice to the other Party if the other Party becomes bankrupt or insolvent or is the subject of proceedings or arrangements for liquidation or dissolution or ceases to carry on business or becomes unable to pay its debts as they become due;
 
7.3.3   By either Party giving written notice to the other Parry if, for any reason, the operations of Party A are terminated;
 
7.3.4   By either Party giving written notice to the other Party if the business license or any other license or approval material for the business operations of Parry B is terminated, cancelled or revoked;
 
 
8

 
 
7.3.5   By either Parry giving written notice to the other Party if circumstances arise which materially and adversely affect the performance or the objectives of this Agreement; or
 
7.3.6   By election of Party A with or without reason.
 
7.4    Any Party electing to terminate this Agreement pursuant to Clause 7.2 shall have no liability to the other Party for indemnity, compensation or damages arising solely from the exercise of such termination right, provided that the expiration or termination of this Agreement shall not affect the continuing obligation of Party B to pay any Consulting Services Fees already accrued or due and payable to Party A. Upon expiration or termination of this Agreement, all amounts then due and unpaid to Party A by Party B hereunder, as well as all other amounts accrued but not yet payable to Party A by Party B, shall thereby become due and payable by Party B to Party A.
 
 
8.   PARTY A'S REMEDY UPON PARTY B'S BREACH
 
In addition to the remedies provided elsewhere under this Agreement, Party A shall be entitled to remedies permitted under PRC laws, including, without limitation, compensation for any direct and indirect losses arising from the breach and legal fees incurred to recover losses from such breach.

 
9.   AGENCY

The Parties are independent contractors, and nothing in this Agreement shall be construed to constitute either Party to be the agent, partner, legal representative, attorney or employee of the other for any purpose whatsoever. Neither Party shall have the power or authority to bind the other except as specifically set out in this Agreement.

10.   GOVERNING LAW AND JURISDICTION
 
10.1   Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the PRC.
 
10.2   Arbitration. Any dispute arising from, out of or in connection with this Agreement shall be settled through amicable negotiations between the Parties. Such negotiations shall begin immediately after one Party has delivered to the other Party a written request for such negotiation. If, within ninety (90) days following the date of such notice, the dispute cannot be settled through negotiations, the dispute shall, upon the request of either Party with notice to the other Party, be submitted to arbitration in China under the auspices of China International Economic and Trade Arbitration Commission (the "CIETAC"). The Parties shall jointly appoint a qualified interpreter for the arbitration proceeding a nd shall be responsible for sharing in equal portions the expenses incurred by such appointment. The arbitration proceeding shall take place in Shanghai, China. The outcome of the arbitration shall be final and binding and enforceable upon the Parties.
 
10.2.1   Number and Selection of Arbitrators. There shall be three (3) arbitrators. Party B shall select one (1) arbitrator and Party A shall select one (1) arbitrator, and both arbitrators shall be selected within thirty (30) days after giving or receiving the demand for arbitration. Such arbitrators shall be freely selected, and the Parties shall not be limited in their selection to any prescribed list The chairman of the CIETAC shall select the third arbitrator. If a Party does not appoint an arbitrator who consents to participate within thirty (30) days after giving or receiving the demand for arbitration, the relevant appointment shall be made by the chairman of the CIETAC.
 
 
9

 
 
10.2.2   Arbitration Language and Rules. Unless otherwise provided by the arbitration rules of CIETAC, the arbitration proceeding shall be conducted in Chinese. The arbitration tribunal shall apply the arbitration rules of the CIETAC in effect on the date of execution of this Agreement However, if such rules are in conflict with the provisions of this clause, or with Section 10 of this Agreement, then the terms of Section 10 of this Agreement shall prevail.
 
10.2.3   Cooperation: Disclosure. Each Party shall cooperate with the other Party in making full disclosure of and providing complete access to all information and documents requested by the other Party in connection with such proceedings, subject only to any confidentiality obligations binding on such Parties.
 
10.2.4   Jurisdiction. Judgment rendered by the arbitration may be entered into by any court having jurisdiction, or application may be made to such court for a judicial recognition of the judgment or any order of enforcement thereof.

 
10.3   Continuing Obligations. The Parties shall continue their implementation of this Agreement during the period when the relevant dispute is being resolved.

 
    ASSIGNMENT
 
No part of this Agreement shall be assigned or transferred by either Party without the prior written consent of the other Party. Any such assignment or transfer shall be void, provided that Party A may assign its rights and obligations under this Agreement to an Affiliate without Party B's consent

 
12.   NOTICES
 
Notices or other communications required to be given by any Party pursuant to this Agreement shall be written in English and Chinese and delivered personally or sent by registered mail or prepaid mail or by a recognized courier service or by facsimile transmission to the address of die other Party set forth below or to such other address of the Party as specified by such Party from time to time. The date when the notice is deemed to be duly served shall be determined as the follows: (a) a notice delivered personally is deemed duly served upon the delivery; (b) a notice sent by mail is deemed duly served the tenth (10th) day after the date, or the fourth (4*^ day after the delivery date of an internationally recognized courier service; and (c) a notice sent by facsimile transmission is deemed duly served upon the time shown on die transmission confirmation of relevant documents.
 
  Party A: Qiyang County Xiangmei Food Technical Research and Development Co., Ltd.
     
    Attn:
    Fax:
    Tel:
 
 
10

 

  Party B: Hunan Xiangmei Food Co., Ltd.
     
    Address:
    Attn:
    Fax:
    Tel:

 
13.   GENERAL
 
13.1   The failure or delay in exercising a right or remedy under this Agreement shall not be constituted as a waiver of the right or remedy, and no single or partial exercise of any right or remedy under this Agreement shall prevent any further exercise of the right or remedy.
 
13.2   Should any clause or any part of any clause contained in this Agreement be declared invalid or unenforceable for any reason whatsoever, all other clauses or parts of clauses contained in this Agreement shall remain in full force and effect
 
13.3   This Agreement constitutes the entire agreement between the Parties relating to the subject matter of this Agreement and supersedes all previous agreements.
 
13.4   No amendment or variation of this Agreement shall be valid unless it is in writing and executed by the Parties or their authorized representatives.
 
13.5   This Agreement shall be executed in two (2) duplicate originals in both English and Chinese. Each Party shall receive one (1) duplicate original, and all originals shall be equally valid.

 
[SIGNATURE PAGE FOLLOWS]
 
 
11

 
 
[SIGNATURE PAGES ]

 
IN WITNESS WHEREOF this Agreement is duly executed by each Party or its legal representatives.
 
 
  PARTY A:  
Qiyang County Xiangmei Food Technical Research and Development Co., Ltd.
     
   
Name: ZHOU Taiping
     
   
Title: Legal Representative
     
     
     
  PARTY B: Hunan Xiangmei Food Co., Ltd.

 
 
 
12
EX-16.1 19 f8k020111ex16i_neweratech.htm CONSENT AUDITOR'S LETTER f8k020111ex16i_neweratech.htm
Exhibit 16.1
                                                                                          
Patrizio & Zhao, LLC
 
Certified Public Accountants and Consultants
322 Route 46 West
Parsippany, NJ 07054
Tel:  (973) 882-8810
Fax: (973) 882-0788
www.pzcpa.com
 
 
January 28, 2011
 
 
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549
 
Commissioners:
 
We have read and agree with the comments contained in Item 4.01 to Form 8-K of NewEra Technology Development Co., Ltd., dated January 28, 2011, as they relate to our firm.  We consent to the inclusion of this letter to be filed as Exhibit 16.1 in the Form 8-K.
 
 
 
Regards,





Patrizio & Zhao, LLC
Certified Public Accountants and Consultants

Parsippany, New Jersey
January 28, 2011
EX-99.1 20 f8k020111ex99i_neweratech.htm AUDITED FINANCIAL STATEMENTS f8k020111ex99i_neweratech.htm
Exhibit 99.1
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2010 and 2009

 
 

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS  
Report of Independent Registered Public Accounting Firm
F-2
   
Consolidated Financial Statements:
 
   
Consolidated Balance Sheets - As of June 30, 2010 and 2009
F-3
   
Consolidated Statements of Income and Comprehensive Income - For the Years ended June 30, 2010 and 2009
F-4
   
Consolidated Statements of Changes in Stockholders’ Equity - For the Years ended June 30, 2010 and 2009
F-5
   
Consolidated Statements of Cash Flows - For the Years ended June 30, 2010 and 2009
F-6
   
Notes to Consolidated Financial Statements
F-7 to F-20
 
 
 

 
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Grain Wealth Limited and subsidiaries
 
We have audited the accompanying consolidated balance sheets of Grain Wealth Limited and subsidiaries (“the Company”) as of June 30, 2010 and 2009, and the related consolidated statements of income and comprehensive income, cash flows and changes in stockholders' equity for the years ended June 30, 2010 and 2009. The Company’s management is responsible for these 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 audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2010 and 2009, and the consolidated results of its operations and its cash flows for the years ended June 30, 2010 and 2009 in conformity with accounting principles generally accepted in the United States of America.
 
/s/Friedman LLP
 
Marlton, New Jersey
January 28, 2011
 
 

 
F-2

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

   
As of June 30,
 
   
2010
   
2009
 
             
ASSETS
           
             
CURRENT ASSETS:
           
    Cash and cash equivalents
  $ 1,802,342     $ 1,563,002  
    Accounts receivable
    642,021       374,653  
    Inventories
    5,570,594       4,148,070  
    Advances to suppliers and other prepaid expense
    123,016       8,861  
        Total Current Assets
    8,137,973       6,094,586  
                 
Property, plant and equipment, net
    8,917,152       8,240,600  
Farmland development costs, net
    5,807,431       1,398,087  
Land use rights under capital lease
    189,792       192,983  
Deposit on land use right
    176,248       -  
                 
        Total Assets
  $ 23,228,596     $ 15,926,256  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
CURRENT LIABILITIES:
               
    Short-term loan payable
  $ 5,045,090     $ 3,360,215  
    Short-term obligation under capital lease
    858       803  
    Accounts payable
    729,996       522,467  
    Advance from customers
    -       725,328  
    Payroll payable
    106,814       98,482  
    Taxes payable
    127,714       83,781  
    Dividends Payable
    926,017       -  
    Due to related parties
    379,570       349,131  
        Total Current Liabilities
    7,316,059       5,140,207  
                 
Long-term loan payable
    734,365       1,446,354  
Long-term obligation under capital lease
    203,746       203,522  
                 
        Total Liabilities
  $ 8,254,170     $ 6,790,083  
                 
COMMITMENTS
               
                 
STOCKHOLDERS' EQUITY:
               
    Common stock, par value $1;  10,000 shares authorized, 10,000 shares issued and outstanding as of June 30, 2010 and 2009
    10,000       10,000  
    Additional paid in capital
    3,867,215       1,197,729  
    Retained earnings
    9,837,623       6,708,817  
    Statutory reserve
    704,289       704,289  
    Accumulated other comprehensive income -
    555,299       515,338  
            Total Stockholder' Equity
    14,974,426       9,136,173  
                 
        Total Liabilities and Stockholders' Equity
  $ 23,228,596     $ 15,926,256  
 
The accompanying footnotes are an integral part to the consolidated financial statements
 
 
F-3

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


   
For the Years Ended
 
   
June 30,
 
   
2010
   
2009
 
             
NET REVENUES
  $ 25,098,672     $ 18,734,371  
COST OF REVENUES
    15,978,235       12,083,734  
GROSS PROFIT
    9,120,437       6,650,637  
                 
OPERATING EXPENSES:
               
     Selling and marketing expenses
    1,239,766       1,125,819  
     General and administrative expenses
    967,548       761,331  
        Total Operating Expenses
    2,207,314       1,887,150  
                 
INCOME FROM OPERATIONS
    6,913,123       4,763,487  
                 
OTHER (EXPENSE) INCOME:
               
     Interest income
    5,334       5,604  
     Interest expense
    (397,272 )     (463,397 )
     Non-operational income
    166,935       85,414  
        Total Other (Expense) Income
    (225,003 )     (372,379 )
                 
INCOME BEFORE INCOME TAXES
    6,688,120       4,391,108  
INCOME TAXES
    -       -  
NET INCOME
  $ 6,688,120     $ 4,391,108  
                 
COMPREHENSIVE INCOME:
               
      Net Income
  $ 6,688,120     $ 4,391,108  
      Other Comprehensive Income:
               
          Foreign currency translation gain
    39,961       20,810  
TOTAL COMPREHENSIVE INCOME
  $ 6,728,081     $ 4,411,918  
                 
BASIC AND DILUTED INCOME PER COMMON SHARE
  $ 668.81     $ 439.11  
                 
DIVIDEND PER COMMON SHARE
  $ 355.93     $ -  
 
               
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
    10,000       10,000  
 
The accompanying footnotes are an integral part to the consolidated financial statements
 
 
F-4

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the years ended June 30, 2010 and 2009
 
   
Common stock stock
   
Additional Paid-in Capital
   
Retained Earnings
   
Statutory Reserve
   
Accumulated Other Comprehensive Income
   
Total Stockholders' Equity
 
Balance, June 30, 2008
  $ 10,000     $ 1,197,729     $ 2,713,941     $ 308,057     $ 494,528     $ 4,724,255  
                                                 
Adjustment to statutory reserve
                (396,232 )     396,232              
                                                 
Comprehensive income:
                                               
Net income for the year
                4,391,108                   4,391,108  
                                                 
Foreign currency translation adjustment
                            20,810       20,810  
                                                 
Balance, June 30, 2009
  $ 10,000     $ 1,197,729     $ 6,708,817     $ 704,289     $ 515,338     $ 9,136,173  
                                                 
Cash dividends declared
                (3,559,314 )                 (3,559,314 )
                                                 
Cash dividends reinvested
          2,669,486                         2,669,486  
                                                 
Comprehensive income:
                                               
Net income for the year
                6,688,120                   6,688,120  
                                                 
Foreign currency translation adjustment
                            39,961       39,961  
                                                 
Balance, June 30, 2010
  $ 10,000     $ 3,867,215     $ 9,837,623     $ 704,289     $ 555,299     $ 14,974,426  
 
The accompanying footnotes are an integral part to the consolidated financial statements

 
F-5

 

GRAIN WEALTH LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
   
For the Years Ended June 30,
 
   
2010
   
2009
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income
  $ 6,688,120     $ 4,391,108  
Adjustments to reconcile net income from operations to net cash provided by operating activities:
               
Depreciation
    609,181       493,855  
Amortization-long-term prepayments
    259,651       35,831  
Amortization-land use rights under capital lease
    4,200       4,193  
Changes in assets and liabilities:
               
Accounts receivable
    (264,287 )     (32,626 )
Inventories
    (1,394,719 )     (1,745,656 )
Advances to suppliers and other prepaid expense
    (113,641 )     21,734  
Accounts payable
    203,910       133,634  
Advance from customers
    (726,191 )     456,265  
Payroll payable
    7,776       7,147  
Taxes payable
    43,309       27,171  
Due to related party
    34,975       193,418  
NET CASH PROVIDED BY OPERATING ACTIVITIES
    5,352,284       3,986,074  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchase of property and equipment
    (1,239,321 )     (2,017,005 )
Increase in farmland development cost
    (4,643,489 )     (1,433,225 )
Increase in deposit on land use rights
    (175,524 )      
NET CASH USED IN INVESTING ACTIVITIES
    (6,058,334 )     (3,450,230 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Short-term Loan Payable
    943,442       2,321,781  
Repayment of loan from related party
    (7,314 )     (2,984,037 )
                 
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
    936,128       (662,256 )
                 
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS
    9,262       89,115  
                 
NET INCREASE IN CASH AND CASH EQUIVALENTS
    230,078       (126,412 )
                 
CASH AND CASH EQUILAVENTS - beginning of year
    1,563,002       736,189  
                 
CASH AND CASH EQUIVALENTS - end of year
  $ 1,802,342     $ 1,563,002  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
               
Cash paid for:
               
Interest
  $ 361,502     $ 269,200  
Income taxes
  $     $  
                 
NON-CASH FINANCING ACTIVITIES:
               
Cash dividends declared
  $ (3,688,859 )   $  
Cash dividends reinvested
  $ 2,766,644     $  
Accrual of capital lease payments to related party
  $ 804     $ 754  
 
The accompanying footnotes are an integral part to the consolidated financial statements

 
F-6

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2010 and 2009
 
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Organization

Grain Wealth Limited is a limited liability company organized under the laws of the British Virgin Island (the “Grain Wealth” ) on September 8, 2010.  Grain Wealth owns 100% of the issued and outstanding capital stock of Qiyang County Xiangmei Food Technical Research and Development Co., Ltd. (“Xiangmei Food”), a wholly foreign-owned enterprise (“WFOE”) with limited liability incorporated under the People’s Republic of China (the “PRC”) on December 20, 2010.  Xiangmei Food has entered into a series of contractual agreements with the owner of Hunan Xiangmei Food Co., Ltd. (“Hunan Xiangmei”).

Hunan Xiangmei is a limited liability company formed under laws of the PRC on March 27, 2006, with a total registered capital of RMB 10 million (approximate to $1.2 million), contributed by two individual stockholders, Mr. Wu YaoTian and Mr. Zhou Taiping. On December 24, 2009, Mr. Wu YaoTian transferred all of his ownership interest to Mr. Zhou Taiping, the Chairman of Hunan Xiangmei, and Mr. Zhou became the sole owner of Hunan Xiangmei, which is engaged in the business of growing, processing and distributing glutinous rice and other consumer food products such as frozen stuffed dumplings and ice cream products in the PRC.

On December 23, 2010, Xiangmei Food entered into a series of contractual arrangements with Hunan Xiangmei.  These contractual agreements require the pledge of Mr. Zhou’s equity interests in Hunan Xiangmei to Xiangmei Food. At any time during the agreement period, Xiangmei Food has exclusive rights to acquire any portion of the equity interests of Hunan Xiangmei. In addition, Xiangmei Food has sole discretion to appoint directors of Hunan Xiangmei and is entitled to certain management fees from Hunan Xiangmei.

Under these contractual arrangements, which obligate Xiangmei Food to absorb a majority of the risk of loss from Hunan Xiangmei’s activities and entitle it to receive a majority of its residual returns, Xiangmei Food has gained effective control over Hunan Xiangmei. Through these contractual arrangements, Xiangmei Food now holds the variable interests of Hunan Xiangmei, and Xiangmei Food becomes the primary beneficiary of Hunan Xiangmei. Based on these contractual arrangements, Hunan Xiangmei is considered as a Variable Interest Entity (“VIE”)  under ASC 810, "Consolidation of Variable Interest Entities, an Interpretation of ARB No.51", because the equity investor in Hunan Xiangmei no longer has the characteristics of a controlling financial interest. Accordingly, Hunan Xiangmei sh ould be consolidated under ASC 810.

Grain Wealth is effectively controlled by the sole stockholder of Hunan Xiangmei, Mr. Zhou Taiping, and Grain Wealth has 100% equity interest in Xiangmei Food as of September, 30, 2010. Therefore, Xiangmei Food and Hunan Xiangmei are considered under common control. The consolidation of Xiangmei Food and Hunan Xiangmei has been accounted for at historical cost and prepared on the basis as if the aforementioned exclusive contractual agreements between Xiangmei Food and Hunan Xiangmei had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements.

Collectively, Grain Wealth, Xiangmei Food and Hunan Xiangmei are hereinafter referred to as the “Company”.

NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. Significant estimates in 2010 and 2009 include the allowance for doubtful accounts, the reserve for slow moving or perishable inventory, the useful life of property and equipment and intangible assets, and assumptions used in assessing impairment of long-term assets.
 
 
F-7

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2010 and 2009
 
NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair value of financial instruments

The Company adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
 
Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other then quoted prices that are observable, and inputs derived from or corroborated by observable market data.
 
Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The carrying amounts reported in the balance sheets for cash, accounts payable and accrued expenses, and due to Stockholders approximate their fair market value based on the short-term maturity of these instruments. The Company did not identify any assets or liabilities that are required to be presented on the balance sheets at fair value in accordance with the accounting guidance.

The fair value of the long-term loan as of June 30, 2010 and 2009 also approximated their recorded value because the interest rate charged under the loan term are not substantially different than current interest rates.

The Company evaluated the fair value of the capital lease obligation – related parties, net of current portion at the year end of 2010 and 2009 and determined that the book value of capital lease obligation approximated the fair market value based on level 3 inputs. The fair market value was calculated using present value of capital lease payment discounted at rate of 6.39%.
 
Cash and cash equivalents

For purposes of the statements of cash flows, the Company considers all highly liquid instruments purchased with an original maturity of three months or less and money market accounts to be cash equivalents. The Company maintains cash and cash equivalents with various financial institutions in the PRC. Balances in banks in the PRC are uninsured.

Concentrations of credit risk

The Company's operations are carried out in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC's economy. The Company's operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. The Company's results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.
 
 
F-8

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2010 and 2009

NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. All of the Company’s cash is maintained with state-owned banks within the People’s Republic of China of which no deposits are covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts. A significant portion of the Company's sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is limited due to generally short payment terms.  The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk.

Accounts receivable

Accounts receivable are presented net of an allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, customer’s historical payment history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. The Company does not have any allowance for doubtful accounts at June 30, 2010 and 2009.

Inventories

Inventories, consisting of raw materials, work in process and finished goods related to the Company’s products are stated at the lower of cost or market utilizing the weighted average method. An allowance is established when management determines that certain inventories may not be saleable. If inventory costs exceed expected market value due to obsolescence or quantities in excess of expected demand, the Company will record reserves for the difference between the cost and the market value. The Company maintains inventory on hand throughout the year and has not experienced any slow moving or perishable items. The Company does not consider it necessary to record any inventory reserve at June 30, 2010 and 2009.

Prepayment for growing crops, which  is considered work in process,  are reported at lower of cost or markets,  are mainly costs incurred to grow the crops. The costs included direct cost such as seed selections, fertilizer, labor costs and contract fee that are spent in growing glutinous rice, peanuts and sesame in the contracted farmland and indirect cost – amortization of farmland development cost. All the costs are accumulated until the time of harvest and then allocated to glutinous rice, peanuts and sesame based on usage of the farmland. In July and October, the harvest seasons of glutinous rice, and August, the harvest season of peanuts and sesame.

Property and equipment

Property and equipment are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized.  When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

Impairment of long-lived assets

In accordance with ASC Topic 360, the Company reviews, long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The
 
 
F-9

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2010 and 2009
 
NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not record any impairment charges for the years ended June 30, 2010 and 2009.

Income taxes

The Company is governed by the Income Tax Law of the People’s Republic of China.  The Company accounts for income taxes under the provisions of ASC740 “Income Taxes”, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns. Deferred income taxes are recognized for all significant temporary differences between tax and financial statement basis of assets and liabilities. Valuation allowances are established against net deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company had no deferred taxes as of June 30, 2010 and 2009.
 
 
Pursuant to accounting standards related to the accounting for uncertainty in income taxes, the evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first su bsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. The accounting standard also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition.

Advances from customers

Advances from customers consist of prepayments from customers for merchandise that had not yet been shipped. The Company recognizes the deposits as revenue as customers take delivery of the goods, in accordance with its revenue recognition policy.  At June 30, 2010 and 2009, advances from customers amount to $0 and $725,328 respectively.

Revenue recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is reasonably assured. The Company recognizes revenues from the sale of glutinous rice and other consumer food upon shipment and transfer of title.

Shipping costs

Shipping costs are included in selling expenses and totaled $503,316 and $468,577 for the year ended June 30, 2010 and 2009, respectively.

Advertising

Advertising is expensed as incurred and is included in selling expenses on the accompanying statement of operations. For the years ended June 30, 2010 and 2009, advertising expense amounted to $70,273 and $72,596, respectively.
 
 
F-10

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2010 and 2009

NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign currency translation

The reporting currency of the Company is the U.S. dollar. The functional currency of the Company is the local currency, the Chinese Renminbi (“RMB”). Results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income.  The cumulative translation adjustment and effect of exchange rate changes on cash for the year ended June 30, 2010 and 2009 was $9,262 and $89,115, respectively. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any transaction gains and losses, if any, that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. All of the Company’s revenue transactions are transacted in the functional currency. The Company does not enter any material transaction in foreign currencies and accordingly, transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company.

Asset and liability accounts at June 30, 2010 and 2009 were translated at 6.8086 RMB to $1.00 and at 6.8448 RMB to $1.00, respectively. Equity accounts were stated at their historical rate. The average translation rates applied to the statements of income for the years ended June 30, 2010 and 2009 were 6.8367 RMB and 6.8482 RMB to $1.00, respectively. Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rate. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.

Comprehensive income
 
Comprehensive income is comprised of net income and all changes to the statements of Stockholders’ equity, except those due to investments by Stockholders, changes in paid-in capital and distributions to Stockholders. For the years ended June 30, 2010 and 2009, comprehensive income includes net income and unrealized gains from foreign currency translation adjustments.

Earnings per share (EPS)

Earnings per share is calculated in accordance with the ASC 260 (Originally issued as Statement of Financial Accounting standards No. 128, “Earnings per share”) superseded Accounting Principles Board Opinion No.15 (APB 15). Earnings per share for all periods presented has been restated to reflect the adoption of ASC 260 Basic earnings per share is based upon the weighted average number of common shares outstanding. Diluted earnings per share are based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purch ase common stock at the average market price during the period.
 
 
F-11

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2010 and 2009

NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Related parties

Parties are considered to be related to the Company if the parties that, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, Stockholders of the immediate families of principal owners of the Company and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company shall disclose all related party transactions. All transactions shall be recorded at fair value of the goods or services exchanged. Property purchased from a related party is recor ded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as a distribution to related party.

Recent accounting pronouncements

In December 2009, the FASB issued ASU No. 2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. This Accounting Standards Update amends the FASB Accounting Standards Codification for the issuance of FASB Statement No. 167, Amendments to FASB Interpretation No. 46®. The amendments in this Accounting Standards Update replace the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which reporting entity has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. An approach that is expected to be primarily qualitative will be more effective for identifying which reporting entity has a controlling financial interest in a variable interest entity. The amendments in this Update also require additional disclosures about a reporting entity’s involvement in variable interest entities, which will enhance the information provided to users of financial statements. The adoption of this ASU did not have a material impact on its consolidated financial statements. 

In January 2010, the FASB issued ASU No. 2010-01- Accounting for Distributions to Stockholders with Components of Stock and Cash. The amendments in this Update clarify that the stock portion of a distribution to Stockholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all Stockholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings Per Share). The amendments in this update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis. The adoption of this ASU did not have a material impact on the Company’s consolid ated financial statements.

In January 2010, the FASB issued ASU No. 2010-02 – Accounting and Reporting for Decreases in Ownership of a Subsidiary – a Scope Clarification. The amendments in this Update affect accounting and reporting by an entity that experiences a decrease in ownership in a subsidiary that is a business or nonprofit activity. The amendments also affect accounting and reporting by an entity that exchanges a group of assets that constitutes a business or nonprofit activity for an equity interest in another entity.  The amendments in this update are effective beginning in the period that an entity adopts SFAS No. 160, “Non-controlling Interests in Financial Statements – An Amendment of ARB No. 51.” If an entity has previously adopted SFAS No. 160 as of the date the amendments i n this update are included in the Accounting Standards Codification, the amendments in this update are effective beginning in the first interim or annual reporting period ending on or after December 15, 2009. The amendments in this update should be applied retrospectively to the first period that an entity adopted SFAS No. 160. The adoption of this ASU did not have any material impact on the Company’s consolidated financial statements.

In January 2010, the FASB issued ASU 2010-06, “Improving Disclosures about Fair Value Measurements”. ASU 2010-06 requires additional disclosures about fair value measurements including transfers in and out of Levels 1 and 2 and a higher level of disaggregation for the different types of financial instruments. For the reconciliation of Level 3 fair value measurements, information about purchases, sales, issuances and settlements are presented separately. This standard is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of revised Level 3 disclosure requirements which are effective for interim and annual reporting periods beginning after December 15, 2010. Comparative disclosures are not required in the year of adoption. The Company adopted the provisions of the standard on January 1, 2010, which did not have a material impact on the Company’s consolidated financial statements.
 
 
F-12

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2010 and 2009
 
 
NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
In May 2010, the FASB issued ASU 2010-19, Foreign Currency (Topic 830): Foreign Currency Issues: Multiple Foreign Currency Exchange Rates.  The amendments in this Update are effective as of the announcement date of March 18, 2010. The adoption of this update did not have a material effect on the financial position, results of operations or cash flows of the Company.

NOTE 3 – ACCOUNTS RECEIVABLE

At June 30, 2010 and 2009, accounts receivable consisted of the following:

   
June 30, 2010
   
June 30, 2009
 
Accounts receivable
  $ 642,021     $ 374,653  
Less: allowance for doubtful accounts
    -       -  
    $ 642,021     $ 374,653  

NOTE4 - INVENTORIES

At June 30, 2010 and 2009, inventories consisted of the following:
   
June 30, 2010
   
June 30, 2009
 
Raw materials
  $ 301,985     $ 233,203  
Work in progress     5,209,735       3,876,183  
Finished goods
    58,874       38,684  
                 
Less: Reserve for slowing moving or perishable inventory
    -       -  
    $ 5,570,594     $ 4,148,070  
 
NOTE5 - PROPERTY AND EQUIPMENT

At June 30, 2010 and 2009, property and equipment consist of the following:
   
Useful Life
 
June 30, 2010
   
June 30, 2009
 
Office equipment and furniture
5 Years
  $ 38,296     $ 25,802  
Manufacturing equipments
5-10 Years
    3,640,276       3,363,835  
Vehicles
5 Years
    138,215       99,777  
                   
Building and building improvements
5-30 Years
    6,187,938       5,803,968  
                   
Less: accumulated depreciation
      (1,677,415 )     (1060,086 )
Construction-in-progress
      589,842       7,304  
      $ 8,917,152     $ 8,240,600  

 
F-13

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2010 and 2009

NOTE5 - PROPERTY AND EQUIPMENT (continued)

For the years ended June 30, 2010 and 2009, depreciation expense amounted to $ 609,181 and $ 493,855 of which $316,298 and $232,978 is included in cost of sales, $28,380 and $24,867 included in selling expense, and $264,503 and $236,010 is included in general and administrative expenses, respectively. 

NOTE 6 – FARMLAND DEVELOPMENT COSTS

There is no private ownership of land in the PRC. All land is owned by the government, which grants land use rights for a specified period of time. The Company has entered into several land developing agreements with a number of farming cooperatives since 2006. The farmland development costs were the costs to develop the farmland included water distribution systems and drainage tile. The Company hires labor to grow and harvest glutinous rice, peanuts and sesame by itself. The agreements have terms of 10 years with various due dates. .
 
The Company uses the straight-line method to amortize the farmland development costs over the life of the contracts. As of June 30, 2010 and 2009, the Company has farmland development costs (net) in the amount of $5,807,431 and $1,398,087 respectively.

The details of the farmland development costs are listed as of June 30, 2010 and 2009:
 
Useful Life
 
June 30, 2010
   
June 30, 2009
 
Farmland development costs
10 Years
    6,104,192       1,433,935  
Less: accumulated amortization
      (296,761 )     (35,848 )
      $ 5,807,431     $ 1,398,087  
 
NOTE 7 – DEPOSIT ON LAND USE RIGHTS

There is no private ownership of land in China. Land is owned by the government and the government grants land use rights for specified terms. As of June 30, 2010, the company has made deposit of 1,200,000RMB ($176,248) on the land use right of 100 Chinese acre in the Hunan QiYang Industry Development Zone. The land use rights will have 50 years term upon delivery of certificate of land use rights title from local government. As of June 30, 2010, the Company has not started using the land and recorded no amortization.
 
 
F-14

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2010 and 2009

NOTE 8 – SHORT-TERM LOANS

At June 30, 2010 and 2009, loans payable consisted of the following:

   
June 30,
 
   
2010
   
2009
 
Loan payable to Agriculture Development Bank of China, due on May 30, 2011 and April 29, 2010 with annual interest at of 5.31% and 6.1065%, respectively and  secured by certain equipments of the Company and real estate owned by Zhou Taiping and Zhou Jiling, Director and CEO of the Company respectively
  $ 2,643,715     $ 2,629,734  
                 
Loan payable to Village Bank of Qiyang County due on March 18, 2011 with annual interest of 9.558% secured by assets of the Company
     719,678       -  
                 
Loan payable to Agriculture Development Bank of China, due on August 24, 2010 with annual interest of 5.31% and all repaid by September 25, 2010
    1,028,112       -  
 
Loan payable to Agriculture Development Bank of China, due on August 30, 2009 with annual interest of 5.31% and repaid on due date
    -       730,481  
 
Loan payable to Agriculture Development Bank of China, originally due on June 28, 2010 but extended with annual interest of 5.31% and all repaid by August 10, 2010.
    653,585       -  
Total
  $ 5,045,090     $ 3,360,215  

NOTE 9 – LONG-TERM LOAN

At April 29, 2008, the Company borrowed long-term loan of $734,365 (RMB 5,000,000) from Agriculture Development Bank of China, due on April 28, 2013, with annual interest rate of 7.74%, and secured by commercial real estate owned by Zhou Taiping and Zhou Jilin, Director and CEO of the Company respectively. The loan is utilized in purchasing glutinous rice powder product line and constructing warehouses.

At March 18, 2009, the Company borrowed long-term loan of $715,872 (RMB 4,900,000) from Village Bank of Qiyang County due on March 18, 2011 with annual interest of 9.558% secured by assets of the Company. As of June 30, 2010, this loan included in short-term loans (See note 8).
 
 
F-15

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2010 and 2009
 
NOTE 9 – LONG-TERM LOAN (continued)

Future annual principal payments of the loans payable as of June 30, 2010 are as follows:

Years ending June 30,
 
Amount
 
2011
  $ 308,433  
2012
    220,310  
2013
    205,622  
Total
  $ 734,365  
 
NOTE 10 - OBLIGATIONS UNDER CAPITAL LEASES

The following leased properties meeting capital lease criteria are capitalized at lower of present value of the related lease payments or the fair value of the leased assets at inception of the lease.

The Company leases a total of 7,529 square meters of lands as its manufacturing site from Zhou Jiling and Zhou Taiping CEO and Director of the Company respectively. The annual lease payment is RMB 94,861 (approximately $13,933) commencing on 2006. The lease is set to expire on June 30, 2055. The present value of the total lease payments at inception was RMB 1,414,260 (approximately $207,717), which was calculated with a discount rate of 6.39%, a prevailing PRC long-term borrowing rate in April, 2006.

As of June 30, 2010, future rental payments applicable to the above capital leases with remaining terms in excess of one year were as follows:

Years ending June 30,
 
Capital lease payments
 
2011
  $ 13,933  
2012
    13,933  
2013
    13,933  
2014
    13.933  
2015
    13,933  
Thereafter
    555,389  
Total minimum lease payments
    625,054  
Less amount representing interest
    420,450  
Present value of net minimum lease payments
    204,604  
Less current obligation
    858  
Long-term obligations
  $ 203,746  

NOTE 11 – INCOME TAXES
 
The Company accounts for income taxes pursuant to the accounting standards that require the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry forwards.  Additionally, the accounting standards require the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Realization of deferred tax assets is dependent upon future earnings, if any, of which the timing and amount are uncertain.

The Company is governed by the Income Tax Law of the People’s Republic of China.
 
 
F-16

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2010 and 2009

NOTE 11 – INCOME TAXES (continued)
 
According to China State Administration to Taxation in Qiyang County in Hunan Province, from June 1, 2006 to December 24, 2009, the Company is foreign invested joint venture, which enjoyed income tax waiver in the first five years and half income tax waiver in the following three years. According to China State Administration to Taxation in Qiyang County in Hunan Province, because the Company was awarded as “a Leading Agricultural Enterprise in Hunan Province” and invested in Qiyang Industrial Development Zone, starting from December 24, 2009, the Company continues to enjoy income tax waiver. As a result, the Company had not incurred any income tax since its inception. All tax years since inception remain subject to examination by the tax authorities.
 
Value Added Tax
 
The Company is subject to value added tax (“VAT”) for manufacturing products including frozen foods and ice-cream. The applicable VAT tax rate is 17% for products sold in the PRC. The Company is exempt from paying VAT for sale of crops including glutinous rice, sesame and peanuts cultivated by the Company itself in accordance with VAT regulation in PRC. VAT payable in the PRC is charged on an aggregated basis at a rate of 17% on the full price collected for the goods sold or, in the case of taxable services provided, at a rate of 17% on the charges for the taxable services provided, but excluding, in respect of goods, any amount paid in respect of VAT included in the price or charges, and less any deductible VAT already paid by the taxpayer on purchases of goods in the same financial year. As of June 30, 2010 and 2009, the Company has accrued $127,714 and $83,781 of value-added tax.

NOTE 12 – DUE TO RELATED PARTY

On June 30, 2009, the Company owed $7,305 (RMB 50,000) to Zhou Taiping, Director of the Company. From time to time, Zhou Taiping provided advances to the Company for working capital purpose. The advances were usually short-term in nature and bear interest at the bank interest rate available to the Company for the   period. On June 30, 2010, the Company has paid off all advances from Zhou Taiping with the accrued interest outstanding. As of June 30, 2010 and 2009, the Company owed the accrued interest of $320,357 and $296,785 respectively.

The Company leases a total of 7,529 square meter of land as its manufacturing site from Zhou Jiling, CEO of the Company. As of June 30, 2010 and 2009, the Company owed to Zhou Jiling and Zhou Taiping, CEO and Director of the Company respectively, current capital lease obligation and interest expense of $59,213 and $45,041, respectively.

NOTE 13  – COMMITMENTS

On September 23, 2009, the Company signed a contract with the Management Committee of Qiyang Industrial Development Zone to purchase about 100 acre land use rights. Based on the contract, the Company is required to make investments worth at least RMB50,000,000 (approximately $7.5 million), including equipments and construction of building on the purchased land within two years of contract date.  If the Company’s total investments are below RMB 50,000,000, the Company needs to make payments of additional RMB 80,000 per acre, which adds up to four million RMB (approximately $0.6 million). As of June 30, 2010, the Company did not start the investment.  The Company will start the investment in accordance with the term of the contract.

In March 2010, the Company entered into one-year purchase agreements with several farmers to purchase glutinous rice after harvest. The purchase price is RMB 3 yuan per kilogram (equivalent to $ 0.44 per kilogram). According to the agreements, the Company is responsible for providing the seeds to these farmers. The costs of the seeds will be deducted from the glutinous rice purchase amount.   The net purchase amount is estimated to be $1,972,820 in total.
 
 
F-17

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2010 and 2009
 

NOTE 13  – COMMITMENTS (continued)

The Company entered into annual land lease agreement with farming cooperatives to cultivate various crops. As mentioned Note 6, the Company also entered in farmland development agreements with these farming cooperatives, which automatically extend the land lease term to 10 years. The annual land lease fee is RMB 150 yuan ($22) per mu. As of June 30, 2010, future lease payments related to the land lease agreement was as follows:

Years ending June 30,
 
Land lease payments
 
2011
  $ 1,101,386  
2012
    1,101,386  
2013
    1,101,386  
2014
    1,101,386  
2015
    1,101,386  
Thereafter
    5,506,932  
Total minimum lease payments
  $ 11,013,864  
 
NOTE 14 – CONCENTRATION OF RISKS

Three major vendors accounted for approximately 45.05% of the total purchase for the year ended June 30, 2010, with each customer individually accounting for 19.24%, 15.55% and 10.25%, respectively. Three major vendors accounted for approximately 48.94% of the total purchase for the year ended June 30, 2009, with each customer individually accounting for 22.82%, 15.51% and 10.61%, respectively.
 
 
No single customer accounted more than 10% of the total revenue for the year ended June 30, 2010 and 2009.

NOTE 15 – SEGMENT INFORMATION

The Company sells glutinous rice and glutinous rice powder, frozen rice dumplings, frozen dumplings, frozen pasta, and ice cream, etc. The Company’s chief operating decision-makers (i.e. the chief executive officer and his direct reports) review financial information presented on a basis, accompanied by disaggregated information about revenues and cost of goods by product lines for purposes of allocating resources and evaluating financial performance. There are no segment managers who are held accountable for operations, operating results and plans for levels or components below the unit level.  Based on qualitative and quantitative criteria established by the accounting standard, “Disclosures about Segments of an Enterprise and Related Information”, the Company considers itself to be o perating within one reportable segment.
 
 
F-18

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2010 and 2009
 
NOTE 15 – SEGMENT INFORMATION (continued)

The Company’s net revenue and cost of goods sold by product lines for the year ended June 30, 2010 and 2009 are as follows:

2010
 
Glutinous Rice and Glutinous Rice Powder
   
Frozen Rice Dumplings
   
Frozen Dumplings
   
Frozen Pasta
   
Ice Cream
   
Peanut and Sesame
   
Total
 
Net Revenues
    7,676,297       5,907,076       2,947,368       2,719,930       3,848,626       1,999,374       25,098,672  
                                                         
Cost of Sales
    6,638,769       2,793,228       1,524,063       1,382,164       1,925,712       1,714,299       15,978,235  
                                                         
Gross Profit
    1,037,528       3,113,848       1,423,305       1,337,766       1,922,915       285,075       9,120,437  
 
2009
 
Glutinous Rice and Glutinous Rice Powder
   
Frozen Rice Dumplings
   
Frozen Dumplings
   
Frozen Pasta
   
Ice Cream
   
Peanut and Sesame
   
Total
 
Net Revenues
    6,532,067       4,340,404       1,965,649       1,905,483       2,788,307       1,202,462       18,734,371  
                                                         
Cost of Sales
    5,645,276       2,160,681       1,092,026       922,193       1,326,252       937,306       12,083,734  
                                                         
Gross Profit
    886,791       2,179,723       873,623       983,290       1,462,054       265,156       6,650,637  
NOTE 16– STOCKHOLDERS’ EQUITY
 
 Grain Wealth was organized under the laws of British Virgin Islands on September 8, 2010. The Company is authorized to issue 10,000 shares of a single class with a par value of $1. Upon its inception, the Company issued common stock of 10,000 shares.

As of June 30, 2010, there were 10,000 shares of common stock issued and outstanding.

NOTE 17– CASH DIVIDENDS

On October 4, 2009, Board of Directors of the Company announced a total of $3,559,314 (RMB 25,219,507) cash dividends, of which $889,828 (RMB 6,304,877) and $2,669,486 (RMB 18,914,630) will be distributed to Wu Yaotian and Zhou Taiping, respectively.  Zhou Taiping, Director of the Company re-invested his cash dividends into the Company, which is recorded as Additional Paid-in Capital.
 
 
F-19

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30, 2010 and 2009
NOTE 18 – STATUTORY RESERVES

The Company is required to make appropriations to reserve funds, comprising the statutory surplus reserve, statutory public welfare fund and discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (the “PRC GAAP”). Appropriation to the statutory surplus reserve should be at least 10% of the after tax net income determined in accordance with the PRC GAAP until the reserve is equal to 50% of the entities’ registered capital. The Company reserved up to 50% of the entities’ register capital at the year ended September 30, 2009.For the years ended June 30, 2010 and 2009, statutory reserve activity is as follows:
       
Balance – June 30, 2008
  $ 308,057  
Additional to statutory reserves
    396,232  
Balance – June 30, 2009
    704,289  
Additional to statutory reserves
    -  
Balance – June 30, 2010
  $ 704,289  

NOTE 19 – SUBSEQUENT EVENTS
 
On August 13, 2010 and September 25, 2010, the Company borrowed $1,909,350 (RMB 13,000,000) and $ 1,468,731 (RMB 10,000,000), respectively from Agriculture Development Bank of China in Qiyang County, due on May 12, 2011 and September 16, 2011, respectively, with annual interest rate of 5.31%, and secured by assets of the Company.

On January 28, 2011, the Company and its shareholders entered into a Share Exchange Agreement (“Exchange Agreement”) with NewEra Technology Development Co., Ltd, (“NewEra”), a public traded company in US. Pursuant to the terms of the Exchange Agreement, the shareholders of Grain Wealth transferred to all of the shares of the Company in exchange for the issuance of 9,200,000 shares of the common stock of NewEra as set forth in the Exchange Agreement, so that the shareholders of Grain Wealth shall own at least a majority of the outstanding shares of NewEra. The Share Exchange resulted in a change in the control of NewEra as the Shareholders of the Company became the majority shareholders of NewEra. Also, the original shareholders and directors of the NewEra resigned and the shareholders of the Company were elected as directors of the Company and appointed as its executive officers.

For accounting purpose, this transaction has been accounted for as a reverse acquisition. Accordingly, the Company and its subsidiaries are treated as the continuing entity for accounting purposes.

Immediately after the  Share Exchange, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with four investors (the “Investors”) for the issuance and sale in a private placement of shares of Common Stock, for aggregate gross proceeds of $3,782,393 at a per share purchase price of $3.5769.
 
F-20
EX-99.2 21 f8k020111ex99ii_neweratech.htm UNAUDITED FINANCIAL STATEMENTS f8k020111ex99ii_neweratech.htm
Exhibit 99.2
 
 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 
 
 
 

 
 

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
INDEX TO CONDENCED CONSOLIDATED FINANCIAL STATEMENTS
 
CONTENTS
 
Unaudited Condensed Consolidated Financial Statements:
 
   
Condensed Consolidated Balance Sheets - As of September 30, 2010 and June 30, 2010
F-2
   
Condensed Consolidated Statements of Income and Comprehensive Income - For the Three Months ended September 30, 2010 and 2009
F-3
   
Condensed Consolidated Statements of Changes in Stockholders’ Equity - For the Three Months ended September 30, 2010 and 2009
F-4
   
Condensed Consolidated Statements of Cash Flows - For the Three Months ended September 30, 2010 and 2009
F-5
   
Notes to Unaudited Condensed Consolidated Financial Statements
F-6 to F-19

 
 

 

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 
   
As of
 
   
September 30, 2010
   
June 30, 2010
 
ASSETS
 
 
       
CURRENT ASSETS:
           
Cash and cash equivalents
  $ 3,571,209     $ 1,802,342  
Accounts receivable
    2,872,054       642,021  
Inventories
    6,098,290       5,570,594  
Advances to suppliers and other prepaid expense
    142,497       123,016  
Total Current Assets
    12,684,050       8,137,973  
                 
Property, plant and equipment, net
    8,924,178       8,917,152  
Farmland development costs,net
    5,748,115       5,807,431  
Land use rights under capital lease
    191,851       189,792  
Deposit on land use right
    179,155       176,248  
                 
Total Assets
  $ 27,727,349     $ 23,228,596  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
                 
CURRENT LIABILITIES:
               
Short-term loan payable
  $ 6,852,690     $ 5,045,090  
Short-term obligation under capital lease
    887       858  
Accounts payable
    1,327,831       729,996  
Advance from customers
    168,383       -  
Payroll payable
    128,352       106,814  
Taxes payable
    189,588       127,714  
Dividends Payable
    941,293       926,017  
Due to related parties
    389,373       379,570  
Total Current Liabilities
    9,998,397       7,316,059  
                 
Long-term loan payable
    746,480       734,365  
Long-term obligation under capital lease
    206,875       203,746  
                 
Total Liabilities
  $ 10,951,752     $ 8,254,170  
                 
COMMITMENTS
    -       -  
                 
STOCKHOLDERS’ EQUITY:
               
Common stock, par value $1, 10,000 shares authorized, 10,000 shares issued and outstanding as of September 30, 2010 and June 30, 2010
    10,000       10,000  
Additional paid in capital
    3,867,215       3,867,215  
Retained earnings
    11,372,910       9,837,623  
Statutory reserve
    704,289       704,289  
Accumulated other comprehensive income -
    821,183       555,299  
Total Stockholders’ Equity
    16,775,597       14,974,426  
                 
Total Liabilities and Stockholders’ Equity
  $ 27,727,349     $ 23,228,596  

The accompanying footnotes are an integral part of these condensed consolidated financial statements
 
 
F-2

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)

   
For the three months Ended September 30,
 
     2010      2009  
NET REVENUES
  $ 7,523,433     $ 3,829,380  
COST OF REVENUES
    5,447,965       2,377,195  
GROSS PROFIT
    2,075,468       1,452,185  
      -          
OPERATING EXPENSES:
    -          
Selling and marketing expenses
    245,660       204,507  
General and administrative expenses
    212,456       164,027  
Total Operating Expenses
    458,116       368,534  
      -          
INCOME FROM OPERATIONS
    1,617,352       1,083,651  
                 
OTHER (EXPENSE) INCOME:
               
Interest income
    -       -  
Interest expense
    (96,814 )     (80,336 )
Non-operational income
    14,749       20,359  
Total Other (Expense) Income
    (82,065 )     (59,977 )
      -          
INCOME BEFORE INCOME TAXES
    1,535,287       1,023,674  
INCOME TAXES
    -       -  
NET INCOME
  $ 1,535,287     $ 1,023,674  
                 
COMPREHENSIVE INCOME:
               
Net Income
  $ 1,535,287     $ 1,023,674  
Other Comprehensive Income:
               
Foreign currency translation gain
    265,884       10,144  
TOTAL COMPREHENSIVE INCOME
  $ 1,801,171     $ 1,033,818  
                 
BASIC AND DILUTED INCOME PER COMMON SHARE
  $ 153.53     $ 102.37  
                 
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
    10,000        10,000   

The accompanying footnotes are an integral part of these condensed consolidated financial statements


 
F-3

 


GRAIN WEALTH LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATE STATEMENTS OF CHANGE IN STOCKHOLDERS' EQUITY
For the three months ended September 30, 2010 and 2009 (UNAUDITED)
 
     Common Stock Par value $1   Additional     Retained     Statutory      Accumulated Other Comprehensive      Total Stockholders'  
    No. of Shares       Amount   Paid-in Capital    Earnings    
Reserve
   
Income
   
Equity
 
Balance, June 30, 2009
    10,000     $ 10,000     $ 1,197,729     $ 6,708,817     $ 704,289     $ 515,338     $ 9,136,173  
                                                         
Cash dividends declared
    -       -       -       (3,559,314 )     -       -       (3,559,314 )
                                                         
Cash dividends reinvested
    -       -       2,669,486       -       -       -       2,669,486  
                                                         
Comprehensive income:
                                                       
Net income for the period
    -       -       -       1,023,674       -       -       1,023,674  
                                                         
Foreign currency translation adjustment
    -       -       -       -       -       10,144       10,144  
                                                         
Balance, September 30, 2009
    -     $ 10,000     $ 2,669,486     $ 1,023,674     $ -     $ 10,144     $ 3,703,304  
                                                         
                                                         
Balance, June 30, 2010
    10,000     $ 10,000     $ 3,867,215     $ 9,837,623     $ 704,289     $ 555,299     $ 14,974,426  
                                                         
Comprehensive income:
                                                       
Net income for the period
    -       -       -       1,535,287       -       -       1,535,287  
                                                         
Foreign currency translation adjustment
    -       -       -       -       -       265,884       265,884  
                                                         
Balance, September 30, 2010
    10,000     $ 10,000     $ 3,867,215     $ 11,372,910     $ 704,289     $ 821,183     $ 16,775,597  

The accompanying footnotes are an integral part of these condensed consolidated financial statements

 
F-4

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

    For the three months Ended September 30,  
    2010     2009  
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income
  $ 1,535,287     $ 1,023,674  
Adjustments to reconcile net income from operations to net cash provided by (used in) operating activities:
               
Depreciation
    158,926       131,118  
Amortization-farmland development costs
    153,241       35,868  
Amortization-land use rights under capital lease
    1,059       1,049  
Changes in assets and liabilities:
               
Accounts receivable
    (2,192,527 )     (513,591 )
Inventories
    (430,512 )     (1,845,519 )
Advances to suppliers and other prepaid expense
    (17,240 )     (673 )
Accounts payable
    578,690       138,134  
Advance from customers
    166,341       (725,720 )
Payroll payable
    19,536       11,869  
Taxes payable
    59,042       24,312  
Due to related party
    3,283       3,266  
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
    35,126       (1,716,213 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchase of property and equipment
    (20,542 )     (153,547 )
                 
NET CASH USED IN INVESTING ACTIVITIES
    (20,542 )     (153,547 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Short-term Loan Payable
    1,703,459       730,877  
Repayment of loan from related party
    -       1,242,490  
                 
NET CASH PROVIDED BY FINANCING ACTIVITIES
    1,703,459       1,973,367  
                 
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS
    50,824       1,699  
                 
NET INCREASE IN CASH AND CASH EQUIVALENTS
    1,768,867       105,306  
                 
CASH AND CASH EQUILAVENTS - beginning of period
    1,802,342       1,563,002  
                 
CASH AND CASH EQUIVALENTS - end of period
  $ 3,571,209     $ 1,668,308  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
               
Cash paid for:
               
Interest
  $ 93,369     $ 77,070  
Income taxes
  $ -     $ -  

The accompanying footnotes are an integral part of these condensed consolidated financial statements
 
 
F-5

 

GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended September 30, 2010 and 2009
 
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Organization

Grain Wealth Limited is a limited liability company organized under the laws of the British Virgin Island (the “Grain Wealth”) on September 8, 2010.  Grain Wealth owns 100% of the issued and outstanding capital stock of Qiyang County Xiangmei Food Technical Research and Development Co., Ltd. (“Xiangmei Food”), a wholly foreign-owned enterprise (“WFOE”) with limited liability incorporated under the People’s Republic of China (the “PRC”) on December 20, 2010.  Xiangmei Food has entered into a series of contractual agreements with the owner of Hunan Xiangmei Food Co., Ltd. (“Hunan Xiangmei”).

Hunan Xiangmei is a limited liability company formed under laws of the PRC on March 27, 2006, with a total registered capital of RMB 10 million (approximate to $1.2 million), contributed by two individual shareholders, Mr. Wu YaoTian and Mr. Zhou Taiping. On December 24, 2009, Mr. Wu YaoTian transferred all of his ownership interest to Mr. Zhou Taiping, the Chairman of Hunan Xiangmei, and Mr. Zhou became the sole owner of Hunan Xiangmei, which is engaged in the business of growing, processing and distributing glutinous rice and other consumer food products such as frozen stuffed dumplings and ice cream products in the PRC.

On December 23, 2010, Xiangmei Food entered into a series of contractual arrangements with Hunan Xiangmei.  These contractual agreements require the pledge of Mr. Zhou’s equity interests in Hunan Xiangmei to Xiangmei Food. At any time during the agreement period, Xiangmei Food has exclusive rights to acquire any portion of the equity interests of Hunan Xiangmei. In addition, Xiangmei Food has sole discretion to appoint directors of Hunan Xiangmei and is entitled to certain management fees from Hunan Xiangmei.

Under these contractual arrangements, which obligate Xiangmei Food to absorb a majority of the risk of loss from Hunan Xiangmei’s activities and entitle it to receive a majority of its residual returns, Xiangmei Food has gained effective control over Hunan Xiangmei. Through these contractual arrangements, Xiangmei Food now holds the variable interests of Hunan Xiangmei, and Xiangmei Food becomes the primary beneficiary of Hunan Xiangmei. Based on these contractual arrangements, Hunan Xiangmei is considered as a Variable Interest Entity (“VIE”)  under ASC 810, "Consolidation of Variable Interest Entities, an Interpretation of ARB No.51", because the equity investor in Hunan Xiangmei no longer has the characteristics of a controlling financial interest. Accordingly, Hunan Xiangmei should be consolidated under ASC 810.

Grain Wealth is effectively controlled by the sole stockholder of Hunan Xiangmei, Mr. Zhou Taiping, and Grain Wealth has 100% equity interest in Xiangmei Food as of September, 30, 2010. Therefore, Xiangmei Food and Hunan Xiangmei are considered under common control. The consolidation of Xiangmei Food and Hunan Xiangmei has been accounted for at historical cost and prepared on the basis as if the aforementioned exclusive contractual agreements between Xiangmei Food and Hunan Xiangmei had become effective as of the beginning of the first period presented in the accompanying condensed consolidated financial statements.

Collectively, Grain Wealth, Xiangmei Food and Hunan Xiangmei are hereinafter referred to as the “Company”.

Basis of presentation
 
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles of the United States (“US GAAP”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. These condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated June 30, 2010 and 2009 financial statements and notes contained elsewhere in this Form 8-K. Operating results for the three months ended September 30, 2010 and 2009 may not be necessarily indicative of the results that may be expected for the full years.

 
F-6

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended September 30, 2010 and 2009
 
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION (continued)

Principal of Consolidation

The condensed consolidated financial statements include the financial statements of Grain Wealth, Xiangmei Food and its 100% controlled subsidiary Hunan Xiangmei (collectively, “Company”). All significant inter-company balances and transactions are eliminated upon consolidation.

NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. Significant estimates in 2010 and 2009 include the allowance for doubtful accounts, the reserve for slow moving or perishable inventory, the useful life of property and equipment and intangible assets, and assumptions used in assessing impairment of long-term assets.

Fair value of financial instruments

The Company adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
 
Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other then quoted prices that are observable, and inputs derived from or corroborated by observable market data.
 
Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The carrying amounts reported in the balance sheets for cash, accounts payable and accrued expenses, and due to shareholders approximate their fair market value based on the short-term maturity of these instruments. The Company did not identify any assets or liabilities that are required to be presented on the condensed consolidated balance sheets at fair value in accordance with the accounting guidance.

The fair value of the long-term loan as of September 30, 2010 and 2009 also approximated their recorded value because the interest rate charged under the loan term are not substantially different than current interest rates.

The company evaluated the fair value of the capital lease obligation – related parties, net of current portion at the balance sheet dates and determined that the book value of equipment loans payable approximated the fair market value based on level 3 inputs. The fair market value was calculated using present value of capital lease payment discounted at rate of 6.39%
 
Cash and cash equivalents

For purposes of the statements of cash flows, the Company considers all highly liquid instruments purchased with an original maturity of three months or less and money market accounts to be cash equivalents. The Company maintains cash and cash equivalents with various financial institutions in the PRC. Balances in banks in the PRC are uninsured.
 
 
F-7

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended September 30, 2010 and 2009
 
NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Concentrations of credit risk

The Company's operations are carried out in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC's economy. The Company's operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. The Company's results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. All of the Company’s cash is maintained with state-owned banks within the People’s Republic of China of which no deposits are covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts. A significant portion of the Company's sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is limited due to generally short payment terms.  The Company also performs ongoing credit evaluations of its customers to help further r educe credit risk.

Accounts receivable

Accounts receivable are presented net of an allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, customer’s historical payment history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. The Company does not have any allowance for doubtful accounts at September 30, 2010 and June 30, 2010.

Inventories

Inventories, consisting of raw materials, work in process and finished goods related to the Company’s products are stated at the lower of cost or market utilizing the weighted average method. An allowance is established when management determines that certain inventories may not be saleable. If inventory costs exceed expected market value due to obsolescence or quantities in excess of expected demand, the Company will record reserves for the difference between the cost and the market value. The Company maintains a relatively small balance of inventory on hand throughout the year and has not experienced any slow moving or perishable items. The Company does not consider it necessary to record any inventory reserve at September 30, 2010 and June 30, 2010. Prepayment for  growing crops, which is considered work in process, are reported at lower of cost or markets,  are mainly costs incurred to grow the crops. The costs included direct cost such as seed selections, fertilizer, labor costs and contract fee that are spent in growing glutinous rice, peanuts and sesame in the contracted farmland and indirect cost – amortization of farmland development cost. All the costs are accumulated until the time of harvest and then allocated to glutinous rice, peanuts and sesame based on usage of the farmland. In July and October, the harvest seasons of glutinous rice, and August, the harvest season of peanuts and sesame.

Property and equipment

Property and equipment are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized.  When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.
 
 
F-8

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended September 30, 2010 and 2009
 
NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairment of long-lived assets

In accordance with ASC Topic 360, the Company reviews, long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not record any impairment charges for the three months ended September 30, 2010 and 2009.

Income taxes

The Company is governed by the Income Tax Law of the People’s Republic of China.  The Company accounts for income taxes under the provisions of ASC740 “Income Taxes”, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns. Deferred income taxes are recognized for all significant temporary differences between tax and financial statement basis of assets and liabilities. Valuation allowances are established against net deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company had no deferred taxes as of June 30, 2010 and 2009.

Pursuant to accounting standards related to the accounting for uncertainty in income taxes, the evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. The accounting standard also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition.

Advances from customers

Advances from customers consist of prepayments from customers for merchandise that had not yet been shipped. The Company recognizes the deposits as revenue as customers take delivery of the goods, in accordance with its revenue recognition policy.  At September 30, 2010 and June 30, 2010, advances from customers amount to $ 168,383 and $0 respectively.

Revenue recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is reasonably assured. The Company recognizes revenues from the sale of glutinous rice and other consumer food upon shipment and transfer of title.

Shipping costs

Shipping costs are included in selling expenses and totaled $ 159,182 and $ 140,546 for the three months ended September 30, 2010 and 2009, respectively.
 
 
F-9

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended September 30, 2010 and 2009
 
NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Advertising

Advertising is expensed as incurred and is included in selling expenses on the accompanying statement of operations. For the three months ended September 30, 2010 and 2009, advertising expense amounted to $ 5,876 and $ 7,241, respectively.

Foreign currency translation

The reporting currency of the Company is the U.S. dollar. The functional currency of the Company is the local currency, the Chinese Renminbi (“RMB”). Results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income.  The cumulative translation adjustment and effect of exchange rate changes on cash for the three months ended September 30, 2010 and 2009 was $50,824 and $1,699, respectively. Transactions denominated in foreign currencies are translated into the functional currency a t the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any transaction gains and losses, if any, that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. All of the Company’s revenue transactions are transacted in the functional currency. The Company does not enter any material transaction in foreign currencies and accordingly, transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company.

Asset and liability accounts at September 30, 2010 and June 30, 2010 were translated at 6.6981 RMB to $1.00 and at 6.8086RMB to $1.00, respectively. Equity accounts were stated at their historical rate. The average translation rates applied to the statements of income for the three months ended September 30, 2010 and 2009 were 6.7803RMB and 6.8411RMB to $1.00, respectively. Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rate. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.

Comprehensive income
 
Comprehensive income is comprised of net income and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. For the three months ended September 30, 2010 and 2009, comprehensive income includes net income and unrealized gains from foreign currency translation adjustments.

Earnings per share (EPS)

Earnings per share is calculated in accordance with the ASC 260 (Originally issued as Statement of Financial Accounting standards No. 128, “Earnings per share”) superseded Accounting Principles Board Opinion No.15 (APB 15). Earnings per share for all periods presented has been restated to reflect the adoption of ASC 260 Basic earnings per share is based upon the weighted average number of common shares outstanding. Diluted earnings per share are based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
 
 
F-10

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended September 30, 2010 and 2009
 
NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Related parties

Parties are considered to be related to the Company if the parties that, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company shall disclose all related party transactions. All transactions shall be recorded at fair value of the goods or services exchanged. Property purchased from a rela ted party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as a distribution to related party.

Recent accounting pronouncements

In December 2009, the FASB issued ASU No. 2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. This Accounting Standards Update amends the FASB Accounting Standards Codification for the issuance of FASB Statement No. 167, Amendments to FASB Interpretation No. 46®. The amendments in this Accounting Standards Update replace the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which reporting entity has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. An appr oach that is expected to be primarily qualitative will be more effective for identifying which reporting entity has a controlling financial interest in a variable interest entity. The amendments in this Update also require additional disclosures about a reporting entity’s involvement in variable interest entities, which will enhance the information provided to users of financial statements. The adoption of this ASU did not have a material impact on its condensed consolidated financial statements. 

In January 2010, the FASB issued ASU No. 2010-01- Accounting for Distributions to Shareholders with Components of Stock and Cash. The amendments in this Update clarify that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings Per Share). The amendments in this update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis. The adoption of this ASU did not have a material impact on the Company’s financial statements.

In January 2010, the FASB issued ASU No. 2010-02 – Accounting and Reporting for Decreases in Ownership of a Subsidiary – a Scope Clarification. The amendments in this Update affect accounting and reporting by an entity that experiences a decrease in ownership in a subsidiary that is a business or nonprofit activity. The amendments also affect accounting and reporting by an entity that exchanges a group of assets that constitutes a business or nonprofit activity for an equity interest in another entity.  The amendments in this update are effective beginning in the period that an entity adopts

ASC 810, “Non-controlling Interests in Consolidated Financial Statements – An Amendment of ARB No. 51.” If an entity has previously adopted ASC 810 as of the date the amendments in this update are included in the Accounting Standards Codification, the amendments in this update are effective beginning in the first interim or annual reporting period ending on or after December 15, 2009. The amendments in this update should be applied retrospectively to the first period that an entity adopted ASC 810. The adoption of this ASC did not have any material impact on the Company’s condensed consolidated financial statements.

In January 2010, the FASB issued ASU 2010-06, “Improving Disclosures about Fair Value Measurements”. ASU 2010-06 requires additional disclosures about fair value measurements including transfers in and out of Levels 1 and 2 and a higher level of disaggregation for the different types of financial instruments. For the reconciliation of Level 3 fair value
 
 
F-11

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended September 30, 2010 and 2009
 
NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

measurements, information about purchases, sales, issuances and settlements are presented separately. This standard is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of revised Level 3 disclosure requirements which are effective for interim and annual reporting periods beginning after December 15, 2010. Comparative disclosures are not required in the year of adoption. The Company adopted the provisions of the standard on January 1, 2010, which did not have a material impact on the Company’s condensed consolidated financial statements.

In May 2010, the FASB issued ASU 2010-19, Foreign Currency (Topic 830): Foreign Currency Issues: Multiple Foreign Currency Exchange Rates.  The amendments in this Update are effective as of the announcement date of March 18, 2010. The adoption of this update did not have a material effect on the financial position, results of operations or cash flows of the Company.

NOTE 3 – ACCOUNTS RECEIVABLE

At September 30, 2010 and June 30, 2010, accounts receivable consisted of the following:

   
September 30, 2010
   
June 30, 2010
 
Accounts receivable
  $ 2,872,054     $ 642,021  
Less: allowance for doubtful accounts
    -       -  
    $ 2,872,054     $ 642,021  
 
NOTE4 – INVENTORIES

At September 30, 2010 and June 30, 2010, inventories consisted of the following:
 
   
September 30, 2010
   
June 30, 2010
 
Raw materials
  $ 620,317     $ 301,985  
Work in process     2,703,607        5,209,735   
Finished goods
    2,774,366       58,874  
                 
Less: Reserve for slow moving or perishable inventory
    -       -  
    $ 6,098,290     $ 5,570,594  

NOTE5 – PROPERTY AND EQUIPMENT

At September 30, 2010 and June 30, 2010, property and equipment consist of the following:

  Useful Life     September 30, 2010       June 30, 2010  
Office equipment and furniture
5 Years
  $ 40,546     $ 38,296  
Manufacturing equipments
5-10 Years
    3,724,164       3,640,276  
Vehicles
5 Years
    135,838       138,215  
                   
Building and building improvements
5-30 Years
    6,290,021       6,187,938  
                   
Less: accumulated depreciation
      (1,865,964 )     (1,677,415 )
Construction-in-progress
      599,573       589,842  
      $ 8,924,178     $ 8,917,152  
 
 
F-12

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended September 30, 2010 and 2009
 
NOTE5 – PROPERTY AND EQUIPMENT (continued)

For the three months ended September 30, 2010 and 2009, depreciation expense amounted to $158,926 and $131,118 of which $98,078 and $ 73,440 is included in cost of sales, $7,932 and $ 6,911 included in selling expense, and $52,916 and $ 50,767 is included in general and administrative expenses, respectively.

NOTE 6 – FARMLAND DEVELOPMENT COSTS

There is no private ownership of land in the PRC. All land is owned by the government, which grants land use rights for a specified period of time. The Company has entered into several land developing agreements with a number of farming cooperatives since 2006. The farmland development costs were the costs to develop the farmland included water distribution systems and drainage tile. The Company hires labor to grow and harvest glutinous rice, peanuts and sesame by itself. The agreements have terms of 10 years with various due dates. .
 
The Company uses the straight-line method to amortize the long-term prepayments over the life of the contracts. As of September 30, 2010 and 2009, the Company has farmland development costs (net) in the amount of $ 5,748,115 and $5,807,431 respectively.

The details of the farmland development costs are listed as of September 30, 2010 and 2009:
 
  Useful Life     September 30, 2010       June 30, 2010  
Farmland development costs
10 Years
    6,204,894       6,104,192  
                   
Less: accumulated amortization
      (456,779 )     (296,761 )
                   
      $ 5,748,115     $ 5,807,431  
 
NOTE 7 – DEPOSIT ON LAND USE RIGHTS

There is no private ownership of land in China. Land is owned by the government and the government grants land use rights for specified terms. As of September 30, 2010, the company has made deposit of 1,200,000RMB ($176,248) on the land use right of 100 Chinese acre in the Hunan QiYang Industry Development Zone. The land use rights will have 50 years term upon delivery of certificate of land use rights title from local government. As of September 30, 2010, the Company has not started using the land and recorded no amortization.
 
 
F-13

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended September 30, 2010 and 2009
 
NOTE 8 – SHORT-TERM LOANS

At September 30, 2010 and June 30, 2010, loans payable consisted of the following:

   
September 30, 2010
   
June 30, 2010
 
Loan payable to Agriculture Development Bank of China, due on May 30, 2011 with annual interest at of 5.31% and secured by certain equipments of the Company and real estate owned by Zhou Taiping and Zhou Jiling, Director and CEO of the Company respectively
  $ 2,687,329     $ 2,643,715  
                 
Loan payable to Village Bank of Qiyang County due on March 25, 2011 with annual interest of 9.558% secured by assets of the Company
    731,551        719,678  
                 
Loan payable to Agriculture Development Bank of China, due on May 12, 2011 and August 24, 2010 with annual interest of 5.31% and repaid by September 25, 2010
    746,480       1,028,112  
                 
Loan payable to Agriculture Development Bank of China, due on May 18, 2011 with annual interest of 5.31%
    746,480       -  
                 
Loan payable to Agriculture Development Bank of China, due on May 12, 2011 and September 28, 2010 but extended with annual interest of 5.31% and repaid by August 10, 2010
        447,888       653,585  
                 
Loan payable Agriculture Development Bank of China, due on September 16, 2011 with annual interest of 5.31%
    1,492,961       -  
                 
Total
  $ 6,852,690     $ 5,045,090  
 
 
F-14

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended September 30, 2010 and 2009
 
NOTE 9 – LONG-TERM LOAN

At April 29, 2008, the Company borrowed long-term loan of $746,480 (RMB 5,000,000) from Agriculture Development Bank of China, due on April 28, 2013, with annual interest rate of 7.74%, and secured by commercial real estate owned by Zhou Taiping and Zhou Jilin, Director and CEO of the Company respectively. The loan is utilized in purchasing glutinous rice powder product line and constructing warehouses.

Future annual principal payments of the loan payable subsequent to September 30, 2010 are as follows:

Twelve months ending September 30,
 
Amount
 
2011
  $ 313,958  
2012
    223,944  
2013
    209,578  
Total
  $ 746,480  

NOTE 10 - OBLIGATIONS UNDER CAPITAL LEASES

The following leased properties meeting capital lease criteria are capitalized at lower of present value of the related lease payments or the fair value of the leased assets at inception of the lease.

The Company leases a total of 7,529 square meters of lands as its manufacturing site from Zhou Jiling and Zhou Taiping CEO and Director of the Company respectively. The annual lease payment is RMB 94,861 (approximately $13,933) commencing on 2006. The lease is set to expire on September 30, 2055. The present value of the total lease payments at inception was RMB 1,414,260 (approximately $207,717), which was calculated with a discount rate of 6.39%, a prevailing PRC long-term borrowing rate in April, 2006.

As of September 30, 2010, future rental payments applicable to the above capital leases with remaining terms in excess of one year were as follows:

Twelve months ending September 30,
 
Capital lease
payments
 
2011
  $ 13,933  
2012
    13,933  
2013
    13,933  
2014
    13.933  
2015
    13,933  
Thereafter
    555,389  
Total minimum lease payments
    625,054  
Less amount representing interest
    417,292  
Present value of net minimum lease payments
    207,762  
Less current obligation
    887  
Long-term obligations
  $ 206,875  

NOTE 11 – INCOME TAXES
 
The Company accounts for income taxes pursuant to the accounting standards that requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry forwards.  Additionally, the accounting standards require the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Realization of deferred tax assets is dependent upon future earnings, if any, of which the timing and amount are uncertain.

 
F-15

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended September 30, 2010 and 2009
NOTE 11 – INCOME TAXES (continued)
 
The Company is governed by the Income Tax Law of the People’s Republic of China. According to China State Administration to Taxation in Qiyang County in Hunan Province, from September 1, 2006 to December 24, 2009, the Company is foreign invested joint venture, which enjoyed income tax waiver in the first five years and half income tax waiver in the following three years. According to China State Administration to Taxation in Qiyang County in Hunan Province, because the Company was awarded as “a Leading Agricultural Enterprise in Hunan Province” and invested in Qiyang Industrial Development Zone, starting from December 24, 2009, the Company continues to enjoy income tax waiver. As a result, the Company had not incurred any income tax since its inception. All tax years since inception remain subject to examination by the tax author ities.

Value Added Tax
 
The Company is subject to value added tax (“VAT”) for manufacturing products including frozen foods and ice-cream. The applicable VAT tax rate is 17% for products sold in the PRC. The Company is exempt from paying VAT for sale of crops including glutinous rice, sesame and peanuts cultivated by the Company itself in accordance with VAT regulation in PRC. VAT payable in the PRC is charged on an aggregated basis at a rate of 17% on the full price collected for the goods sold or, in the case of taxable services provided, at a rate of 17% on the charges for the taxable services provided, but excluding, in respect of goods, any amount paid in respect of VAT included in the price or charges, and less any deductible VAT already paid by the taxpayer on purchases of goods in the same financial year. As of September 30, 2010 and 2009, the Company has accrued $189,588 and $127,714 of value-added tax.

NOTE 12 – DUE TO RELATED PARTY                                                                           

On September 30, 2010 and June 30, 2010, the Company owed $0 and $7,305 (RMB 50,000) to Zhou Taiping, Director of the Company. From time to time, Zhou Taiping provided advances to the Company for working capital purpose. The advances were usually short-term in nature and bear interest rate same as popular bank interest rate in the same period. On September 30, 2010, the Company has paid off all advances from Zhou Taiping with the accrued interest outstanding. As of September 30, 2010 and June 30, 2010, the Company owed the accrued interest of $325,642 and $320,357 respectively.

The Company leases a total of 7,529 square meter of land as its manufacturing site from Zhou Jiling, CEO of the Company. As of September 30, 2010 and June 30, 2010, the Company owed to Zhou Jiling and Zhou Taiping, CEO and Director of the Company respectively, current capital lease obligation and interest expense of $ 63,731 and $59,213, respectively.

NOTE 13  – COMMITMENTS

On September 23, 2009, the Company signed a contract with the Management Committee of Qiyang Industrial Development Zone to purchase about 100 acre land use rights. Base on the contract, the Company is required to make investments worth at least RMB50,000,000 (approximately $7.5 million), including equipments and construction of building on the purchased land within two years of contract date.  If the Company’s total investments are below RMB 50,000,000, the Company needs to make payments of additional RMB 80,000 per acre, which adds up to four million RMB (approximately $0.6 million). As of September 30, 2010, the Company did not start the investment; the Company will start the investment in accordance with the term of the contract.

In March 2010, the Company entered into one-year purchase agreements with several farmers to purchase glutinous rice after harvest. The purchase price is RMB 3 yuan per kilogram (equivalent to $ 0.44 per kilogram). According to the agreements, the Company is responsible for providing the seeds to these farmers. The costs of the seeds will be deducted from the glutinous rice purchase amount. As of September 30, 2010, the purchase payment to be made is estimated to be $1,972,820 in total.

 
F-16

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended September 30, 2010 and 2009
 
NOTE 13  – COMMITMENTS (continued)

The Company entered into annual land lease agreement with farming cooperatives to cultivate various crops. As mentioned Note 6, the Company also entered in farmland development agreements with these farming cooperatives, which automatically extend the land lease term to 10 years. The annual land lease fee is RMB 150 yuan ($22) per mu. As of June 30, 2010, future lease payments related to the land lease agreement was as follows:

Years ending September 30,
 
Land lease
payments
 
2011
  $ 1,101,386  
2012
    1,101,386  
2013
    1,101,386  
2014
    1,101,386  
2015
    1,101,386  
Thereafter
    5,506,932  
Total minimum lease payments
  $ 11,013,864  
 
NOTE 14 – CONCENTRATION OF RISKS

Three major customers accounted for approximately 42.4% of the total sales for the three months ended September 30, 2010, with each customer individually accounting for 12.22%, 10.46% and 10.10%, respectively. No major customers accounted for more than 10% for the three months ended September 30, 2009.
 
No single vendor accounted more than 10% of the total revenue for the year ended June 30, 2010 and 2009.

NOTE 15 – SEGMENT INFORMATION

The Company sells glutinous rice and glutinous rice powder, frozen rice dumplings, frozen dumplings, frozen pasta, and ice cream, etc. The Company’s chief operating decision-makers (i.e. the chief executive officer and his direct reports) review financial information presented on a consolidated basis, accompanied by disaggregated information about revenues and cost of goods by product lines for purposes of allocating resources and evaluating financial performance. There are no segment managers who are held accountable for operations, operating results and plans for levels or components below the consolidated unit level.  Based on qualitative and quantitative criteria established by the accounting standard, “Disclosures about Segments of an Enterprise and Related Information”, the Company considers itself to be operating with in one reportable segment.

 
F-17

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended September 30, 2010 and 2009
 
NOTE 15 – SEGMENT INFORMATION (continued)

The Company’s net revenue and cost of goods sold by product lines for the year ended September 30, 2010 and 2009 are as follows:
 
Three months ended September 30, 2010
 
Glutinous Rice and Glutinous Rice Powder
 
Frozen Rice Dumplings
 
Frozen Dumplings
 
Frozen Pasta
 
Ice Cream
 
Peanut and Sesame
 
Total
Net Revenues
 
1,661,098
 
646,346
 
383,690
 
271,794
 
1,813,927
 
2,746,577
 
7,523,433
                             
Cost of Sales
 
1,500,751
 
353,305
 
175,544
 
143,834
 
960,570
 
2,313,961
 
5,447,965
                             
Gross Profit
 
160,347
 
293,041
 
208,146
 
127,960
 
853,358
 
432,616
 
2,075,468
 
Three months ended September 30, 2009
 
Glutinous Rice and Glutinous Rice Powder
   Frozen Rice Dumplings    
Frozen Dumplings
   
Frozen Pasta
   
Ice Cream
   
Peanut and Sesame
   Total
Net Revenues
 
866,884
 
484,271
 
221,984
 
184,267
 
1,557,829
 
514,145
 
3,829,380
                             
Cost of Sales
 
744,020
 
216,026
 
106,301
 
87,187
 
719,546
 
504,115
 
2,377,195
                             
Gross Profit
 
122,864
 
268,245
 
115,683
 
97,080
 
838,282
 
10,030
 
1,452,185
 
NOTE 16 – STOCKHOLDERS’EQUITY
 
Grain Wealth was organized under the laws of British Virgin Islands on September 8, 2010. The Company is authorized to issue 10,000 shares of a single class with a par value of $1. Upon its inception, the Company issued common stock of 10,000 shares.

As of September 30, 2010, there were 10,000 shares of common stock issued and outstanding.

NOTE 17  – CASH DIVIDENDS

On October 4, 2009, Board of Directors of the Company announced a total of $3,560,314 (RMB 25,219,507) cash dividends, of which $890,078 (RMB 6,304,877) and $2,670,236 (RMB 18,914,630) will be distributed to Wu Yaotian and Zhou Taiping, respectively.  Zhou Taiping, Director of the Company re-invested his cash dividends into the Company, which is recorded as Additional Paid-in Capital.
 
 
F-18

 
 
GRAIN WEALTH LIMITED AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the three months ended September 30, 2010 and 2009
 
NOTE 18  – STATUTORY RESERVES

The Company is required to make appropriations to reserve funds, comprising the statutory surplus reserve, statutory public welfare fund and discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (the “PRC GAAP”). Appropriation to the statutory surplus reserve should be at least 10% of the after tax net income determined in accordance with the PRC GAAP until the reserve is equal to 50% of the entities’ registered capital. The Company reserved up to 50% of the entities’ register capital at the year ended September 30, 2009. For the three months ended September 30, 2010, statutory reserve activity is as follows:
       
Balance – June 30, 2010
  $ 703,873  
Additional to statutory reserves
    -  
Balance – September 30, 2010
  $ 703,873  

NOTE 19 – SUBSEQUENT EVENTS

On January 28, 2011, the Company and its shareholders entered into a Share Exchange Agreement (“Exchange Agreement”) with NewEra Technology Development Co., Ltd, (“NewEra”), a public traded company in US. Pursuant to the terms of the Exchange Agreement, the shareholders of the Company transferred to all of the shares in exchange for the issuance of 9,200,000 shares of the common stock of NewEra as set forth in the Exchange Agreement, so that the shareholders of the Company shall own at least a majority of the outstanding shares of NewEra. The Share Exchange resulted in a change in the control of NewEra as the Shareholders of the Company became the majority shareholders of NewEra. Also, the original shareholders and directors of the NewEra resigned and the shareholders of the Company were elected as directors of the Company and a ppointed as its executive officers.

For accounting purpose, this transaction has been accounted for as a reverse acquisition. Accordingly, the Company and its subsidiaries are treated as the continuing entity for accounting purposes.

Immediately after the  Share Exchange, the Company entered into a securities purchase agreement  with four investors for the issuance and sale in a private placement of shares of Common Stock, for aggregate gross proceeds of $3,782,393 at a per share purchase price of $3.5769.
 
F-19
EX-99.3 22 f8k020111ex99iii_neweratech.htm PRO FORMA FINANCIAL STATEMENTS f8k020111ex99iii_neweratech.htm
Exhibit 99.3
 
 
 
 
 
NEWERA TECHNOLOGY DEVELOPMENT CO., LTD.
UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
 
 
 
 
 
 
 
 

 
 
NEWERA TECHNOLOGY DEVELOPMENT CO., LTD.
INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLODATED
FINANCIAL STATEMENTS
 
Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2010 (Unaudited)
1
   
Pro Forma Condensed Consolidated Statement of Operations for the three months ended September 30, 2010 (Unaudited)
2
   
Pro Forma Condensed Consolidated Statement of Operations for the year ended June 30, 2010 (Unaudited)
3
   
Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited)
4-5

 
 

 
 
NEWERA TECHNOLOGY DEVELOPMENT CO., LTD.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2010
(UNAUDITED)

   
NewEra Technology Development Co., Ltd.
   
Grain Wealth Limited
   
Adjustments
 
Notes
 
Pro Forma
 
ASSETS
                         
CURRENT ASSETS:
                         
Cash and cash equivalents
  $ 55,188     $ 3,571,209     $ (55,188 )
Note 2.a
  $ 3,571,209  
Accounts receivable
    -       2,872,054                 2,872,054  
Inventories
    -       6,098,290                 6,098,290  
Advances to suppliers and other prepaid expense
    142,497       142,497                    
Total current assets
    55,188       12,684,050                 12,684,050  
                                   
Property, plant and equipment, net
    -       8,924,178                 8,924,178  
Farmland development costs, net
    -       5,748,115                 5,748,115  
Land use rights under capital lease
    -       191,851                 191,851  
Deposit on land use right
    -       179,155                 179,155  
Total non-current assets
    -       15,043,299                 15,043,299  
                                   
Total Assets
  $ 55,188     $ 27,727,349               $ 27,727,349  
                                   
LIABILITIES AND STOCKHOLDERS' EQUITY
                                 
                                   
CURRENT LIABILITIES:
                                 
Short-term loan payable
  $ -     $ 6,852,690               $ 6,852,690  
Short-term obligation under capital lease
    -       887                 887  
Accounts payable
    54,000       1,327,831     $ (54,000 )
Note 2.a
    1,327,831  
Advance from customers
    -       168,383                 168,383  
Payroll payable
    -       128,352                 128,352  
Taxes payable
    -       189,588                 189,588  
Dividends Payable
    -       941,293                 941,293  
Due to related parties
    -       389,373                 389,373  
Due to stockholders
    100,000       -     $ (100,000 )
Note 2.a
    -  
Total Current Liabilities
    154,000       9,998,397                 9,998,397  
      -                            
Long-term loan payable
    -       746,480                 746,480  
Long-term obligation under capital lease
    -       206,875                 206,875  
Total non-current liabilities
    -       953,355                 953,355  
      -                            
Total liabilities
    154,000       10,951,752                 10,951,752  
                                   
Stockholders' equity
                                 
                                   
Preferred stock, $0.001 par value, 10,000,000 shares authorized; - 0 - shares issued and outstanding at September 30, 2010
    -                            
Common stock, $0.001 par value, 100,000,000 shares authorized
                                 
10,000,000 shares issued and outstanding at September 30, 2010
    1,000       10,000     $ (1,000 )
Note 2.a & b
    10,000  
Additional paid-in-capital
    -       3,867,215          
Note 2.b
    3,867,215  
Statutory reserve
    -       11,372,910                 11,372,910  
(Accumulated deficit) Retained earnings
    (99,812 )     704,289     $ 99,812  
Note 2.a
    704,289  
Accumulated other comprehensive income
             821,183                  821,183   
Total stockholders' equity
    (98,812 )     16,775,597                 16,775,597  
                                   
Total Liabilities and Stockholders' Equity
  $ 55,188     $ 27,727,349               $ 27,727,349  
 
The accompanying footnotes are an integral part to the pro forma condensed consolidated financial statements

 
F-1

 

 
NEWERA TECHNOLOGY DEVELOPMENT CO., LTD.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010
(UNAUDITED)
 
    NewEra Technology Development Co., Ltd.     Grain Wealth Limited    
Adjustments
   
Notes
  PRO FORMA  
NET REVENUES
  $ -   $ 7,523,433.00           $ 7,523,433  
COST OF REVENUES
    -     5,447,965             5,447,965  
GROSS PROFIT
    -     2,075,468             2,075,468  
                             
OPERATING EXPENSES:
                           
Selling and marketing expenses
    -     245,660             245,660  
General and administrative expenses
    11,522     212,456     (11,522 )
Note 2.a
    212,456  
Total Operating Expenses
    11,522     458,116               458,116  
                               
INCOME FROM OPERATIONS
    (11,522 )   1,617,352               1,617,352  
                               
OTHER (EXPENSE) INCOME:
                             
Interest income
    -     -               -  
Interest expense
    -     (96,814 )             (96,814 )
Non-operational income
    -     14,749               14,749  
Total Other (Expense) Income
    -     (82,065 )             (82,065 )
                            -  
INCOME BEFORE INCOME TAXES
    (11,522 )   1,535,287               1,535,287  
INCOME TAXES
    -     -               -  
NET INCOME
  $ (11,522 ) $ 1,535,287             $ 1,535,287  
                               
COMPREHENSIVE INCOME:
                             
Net Income
    (11,522 )   1,535,287               1,535,287  
Other Comprehensive Income:
                             
Foreign currency translation gain
    -     265,884               265,884  
TOTAL COMPREHENSIVE INCOME
  $ (11,522 ) $ 1,801,171             $ 1,801,171  
                               
BASIC AND DILUTED INCOME PER COMMON SHARE
  $ (0.01 ) $ 153.53   $ (153.36 )
Note 2.a
  $ 0.15  
                               
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
    1,000,000     10,000     8,990,000  
Note 2.a
    10,000,000  
 
 
The accompanying footnotes are an integral part to the pro forma condensed consolidated financial statements

 
F-2

 

 
NEWERA TECHNOLOGY DEVELOPMENT CO., LTD.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2010
(UNAUDITED)

   
NewEra Technology
   
Grain
               
   
Development Co., Ltd.
   
Wealth Limited
   
Adjustments
 
Notes
 
PRO FORMA
 
                           
NET REVENUES
  $ -     $ 25,098,672             $ 25,098,672  
COST OF REVENUES
    -       15,978,235               15,978,235  
GROSS PROFIT
    -       9,120,437               9,120,437  
                                 
OPERATING EXPENSES:
                               
Selling and marketing expenses
    -       1,239,766               1,239,766  
General and administrative expenses
    86,566       967,548       (86,566 )
Note 2.a
    967,548  
Total Operating Expenses
    86,566       2,207,314                 2,207,314  
                                   
INCOME FROM OPERATIONS
    (86,566 )     6,913,123                 6,913,123  
                                   
OTHER (EXPENSE) INCOME:
                                 
Interest income
    -       5,334                 5,334  
Interest expense
    -       (397,272 )               (397,272 )
Non-operational income
    -       166,935                 166,935  
Total Other (Expense) Income
    -       (225,003 )               (225,003 )
                                   
INCOME BEFORE INCOME TAXES
    (86,566 )     6,688,120                 6,688,120  
INCOME TAXES
    -       -                 -  
NET INCOME
  $ (86,566 )   $ 6,688,120               $ 6,688,120  
                                   
COMPREHENSIVE INCOME:
                                 
Net Income
    (86,566 )     6,688,120                 6,688,120  
Other Comprehensive Income:
                                 
Foreign currency translation gain
    -       39,961                 39,961  
TOTAL COMPREHENSIVE INCOME
  $ (86,566 )   $ 6,728,081               $ 6,728,081  
                                   
BASIC AND DILUTED INCOME PER COMMON SHARE
  $ (0.10 )   $ 668.81     $ (668.04 )
Note 2.a
    0.67  
                                   
DIVIDEND PER COMMON SHARE
  $ -     $ 355.93               $ 355.93  
                                   
BASIC AND DILUTED WEIGHTED AVERAGE COMMON
                                 
SHARES OUTSTANDING
    846,575       10,000       9,143,425  
Note 2.a
    10,000,000  
 
 
The accompanying footnotes are an integral part to the pro forma condensed consolidated financial statements

 
F-3

 
 
NEWERA TECHNOLOGY DEVELOPMENT CO., LTD.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION
 
NewEra Technology Development Co., Ltd. (the “Company” or “NewEra”) is a corporation organized under the laws of the State of Nevada.
 
On January 28, 2011, NewEra entered into Share Exchange Agreement (the “Share Exchange”) with Grain Wealth Limited, a British Virgin Islands Company (“Grain Wealth”) and the shareholders of Grain Wealth (“Grain Wealth Shareholders”). Pursuant to the Share Exchange, NewEra acquired all of the outstanding shares of Grain Wealth by issuing a total of 9,200,000 shares of  NewEra Common Stock (the “Exchange”), representing approximately 92% of the shares outstanding of NewEra at the Closing of the Share Exchange.

In addition, such Exchange shall close simultaneously with an offering (the “Offering”) pursuant to a Securities Purchase Agreement (the “Purchase Agreement”) by and among NewEra and named Investors (the “Investors”) therein in connection with a private placement of an amount up to $6,000,000 (the “Offering Amount”), provided, however, the Offering may close at the Company’s and Placement Agent’s mutual consent (the “Initial Closing”) upon receipt of $3,000,000 (the “Minimum Closing Amount”).

Grain Wealth is a holding company whose only asset is 100% of the registered capital of Qiyang County Xiangmei Food Technical Research and Development Co., Ltd. (“Xiangmei Food”), a wholly foreign-owned enterprise with limited liability incorporated under the People’s Republic of China (the “PRC”).  Substantially all of the Grain Wealth’s operations are conducted in China through Xiangmei Food, and through a series of contractual arrangements with Xiangmei Food’s affiliated entity in China, Hunan Xiangmei Food Co., Ltd. (“Hunan Xiangmei”). Hunan Xiangmei is engaged in the business of growing, processing and distributing glutinous rice and other consumer food products such as frozen stuffed d umplings and ice cream products in the PRC.

Under those contractual arrangements, which obligate Xiangmei Food to absorb a majority of the risk of loss from Hunan Xiangmei’s activities and entitle it to receive a majority of its residual returns, Xiangmei Food has gained effective control over Hunan Xiangmei.  In addition, Hunan Xiangmei's shareholder has pledged his equity interest in Hunan Xiangmei to Xiangmei Food, irrevocably granted Xiangmei Food an exclusive option to purchase, to the extent permitted under PRC law, all or part of the equity interests in Hunan Xiangmei.  Through these contractual arrangements, Grain Wealth, through Xiangmei Food, holds the variable interests in Hunan Xiangmei, and Grain Wealth and Xiangmei Food have been determined to be the most closely associated with Hunan Xiangmei. Therefore, Grain Wealth is the primary beneficiary of Hun an Xiangmei. Based on these contractual arrangements, the Company believes that Hunan Xiangmei should be considered as a Variable Interest Entity (“VIE”)  under ASC 810, "Consolidation of Variable Interest Entities, an Interpretation of ARB No.51", because the equity investor in Hunan Xiangmei no longer has the characteristics of a controlling financial interest and Grain Wealth through Xiangmei Food is the primary beneficiary of
 
 
F-4

 
 
NEWERA TECHNOLOGY DEVELOPMENT CO., LTD.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION (Continued)
 
Hunan Xiangmei. Accordingly, the Company believes that Hunan Xiangmei should be consolidated under ASC 810.
 
In addition, on the closing date of the Share Exchange, immediately prior to and as a condition to the completion of the Exchange Agreement, the Company entered into a stock cancellation agreement (the ”Cancellation Agreement”) with Mr. Chen Zhengxing, the Company’s then Chairperson, President, Chief Executive Officer and sole director. Pursuant to the Cancellation Agreement, Mr. Chen agreed to cancel 700,000 shares of the Company’s common stock, par value $0.001 owned by him.
 
Upon completion of the Share Exchange, there will be a total of 10,000,000 shares of common stock issued and outstanding.

NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited pro forma consolidated balance sheet has been presented as if the share exchange had occurred as of the balance sheet at September 30, 2010. The unaudited pro forma consolidated statements of operations for the three months ended September 30, 2010 and for the year ended June 30, 2010 have been presented as if the acquisition had occurred July 1, 2009.

The acquisition will be accounted for as a reverse merger under the purchase method of accounting since there was a change of control. In accordance with FASB ASC 805 Business Combinations, Grain Wealth and its subsidiaries are the accounting acquirer. Accordingly, Grain Wealth and its subsidiaries will be treated as the continuing entity for accounting purposes.

The unaudited pro forma adjustments are included in the accompanying unaudited pro forma consolidated balance sheet as of September 30, 2010, the unaudited pro forma consolidated statements of operation for three months ended September 30, 2010 and for the year ended June 30, 2010 to reflect the acquisition of Grain Wealth by the Company:

a.  
To record the spin-off of the Company’s assets and liabilities prior to the reverse acquisition;

b.  
These adjustments reflect the recapitalization as a result of the transactions related to the share exchange.

The unaudited pro forma consolidated statements do not necessarily represent the actual results that would have been achieved had the companies been combined at the beginning of the year, nor may they be indicative of future operations. These unaudited pro forma financial statements should be read in conjunction with the companies’ respective historical financial statements and notes included thereto.

F-5 

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